BRUCE JAMES STINSON v. GU MING GAO

HCA 2352/2012

[2019] HKCFI 43

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2352 OF 2012

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DECISION

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I.  INTRODUCTION

1.  The plaintiff (“P”) was/is a businessman. The defendant (“D”) was/is a university professor in statistics. There were 2 summonses before this court:

(a)

on 18 November 2016, P filed a summons for leave to amend the Statement of Claim filed on 21 January 2013 (“SoC”) in the manner marked in red as per the draft annexed thereto (“Amendment Summons”);

(b)

on 20 April 2017, P filed a summons out of time for relief from sanction imposed in the unless order granted by Registrar K W Lung (“Registrar”) on 22 August 2014 (“Unless Order”) so that P be at liberty to take out and/or proceed with (i) the Amendment Summons and (ii) (if leave to amend were granted in P’s favour pursuant to the Amendment Summons) an application for non-party discovery against Hong Kong Jockey Club (“HKJC”) for discovery of records of the betting account(s) maintained by Leung Man Kit (“Leung”) with HKJC (“Relief Summons”).

2.  It is necessary to set out the background matters relevant for the disposal of the Amendment/Relief Summonses. The parties went to great lengths into the background of the case in the affirmations filed for such summonses as did their respective counsel in their submissions. The affirmations were laced with subjective views as to the history of this litigation, and the submissions were peppered with critique as to alleged litigation gamesmanship. The account of the litigation history below benefited from reasoned judgments/decisions by the Registrar and other judges/justices who had seized of this matter, and also from the more recent judgment that fell from the Court of Appeal on 12 January 2018 (“CA Judgment”)[1] after the hearing before this court on 28 September 2017 (“Hearing”).

II.  DISPUTE

3.  By a written agreement dated 27 January 2004 (“Agreement”), P and D agreed to work together to establish and operate a horse racing betting operation[2] (“Partnership”) using mathematical and/or statistical models that would provide accurate probability estimates for Hong Kong horse races (“Partnership Business”).[3] Unless otherwise stated, “Clauses” below are references to clauses in the Agreement.

4.  The Agreement contained a number of material terms although the parties had differing views as to their contents and effect:

(a)	P claimed that under Clause 2 D undertook to manage a team (including himself and assistants as deemed necessary, “Modeling Team”) for providing/developing a mathematical model (“Model”) that would provide accurate probability estimates for Hong Kong horse races, and further undertook the Modeling Team (whose services were to be available for the life of the Partnership Business) would carry out whatever services, improvements or modifications to the Model deemed necessary for ongoing success of the Partnership Business. On the other hand, although D agreed Clause 15 provided any continuing developments of the Model were considered to belong to the Partnership Business, he claimed the relevant undertaking in Clause 2 was limited to provision of the Model together with improvements/modifications deemed necessary for ongoing success of the Partnership Business.
(b)	P claimed that pursuant to Clauses 2-3 he undertook to manage all other aspects of the Partnership Business, including (i) securing necessary investments, (ii) providing required data, office space, plant and equipment including computers/software, (iii) building required software/means for betting and (iv) arranging/paying for whatever staff and ancillary personnel required, and P’s role was to be referred as “management” and P was to be referred to as the “Management Team” (and services of the Management Team were to be available for the life of the Partnership Business). On the other hand, D averred P’s undertaking to manage all other aspects of the Partnership Business arose by virtue of Clause 3 (not Clause 2) which required services of the Management Team to be available for the Partnership Business to ensure its ongoing success.
(c)	P claimed (but D denied) that by Clause 15 the parties agreed the Model[4] and its continuing development belonged to the Partnership Business[5] such that neither P nor D would deal with, sell or share with others any part of such business means of operation. D averred that instead the Model comprised the following 4 discrete elements (“D’s 4 Elements”), and such Model along with the betting software required of the Management Team belonged to the Partnership Business:
	(i)	a statistical model using mathematical concepts/language and reduced to a series of written mathematical formulae;
	(ii)	a variable generation programme (together with written operating instructions) written in the publicly available “MatLab” software capable of receiving HKJC and “RaceMate” data feed and converting such data into a series of specific race meeting variables;
	(iii)	a computer values programme written in the publicly available “Excel” software (together with written description of and series of commands used) capable of converting specific race meeting variables into numerical values to be assigned to each of the horses listed to start for each race meeting;
	(iv)	written formulae enabling such numerical values to be represented as probability estimates for each of the 4 bet types of Win, Place, Quinella and Quinella Place.
(d)	D claimed Clause 5 provided that up to 10% of capital raised would be used to pay operating costs during any year of operation. But P claimed Clause 5 provided inter alia that “[potential] short term investors will, in addition to their entitlements, be advised that not more than ten per cent of the capital raised will be used to pay costs during any year of operation”.
(e)	D claimed Clause 7 provided that capital/profits of the Partnership Business would be fully distributed at the end of each racing season. But P averred the capital and profits to be distributed would include capital and profits due to short-term investors under Clause 6[6] and Clause 9[7].
(f)	D claimed Clause 6 provided that any short-term investors admitted would be entitled to 40% of profit made on their investment in any racing season.
(g)	D claimed Clause 10 provided that the Modeling Team would thereafter be entitled to 1/3 of the remaining gross profit. But P averred the Modeling Team would be entitled to 1/3 of the remaining profit/capital after short-term investors had been paid.
(h)	D claimed Clause 11 provided that the Modeling Team’s entitlement would be set aside monthly and placed into a bank account in the name of D or his nominee but would be made available to the Partnership Business temporarily if required to maintain required betting levels. But P averred the Modeling Team’s entitlement would only be set aside when a pattern of profitability had been established, and it would not impinge on the successful operation of the business.
(i)	D claimed P and D would meet at the end of each racing season to determine the amount of capital to be raised for the following season (Clause 12), such amount to include but never to exceed any amount paid out by way of the most recent end of season dividend (Clause 8).

5.  P claimed that since 2004 D / Modeling Team worked towards developing the Model, and he brought his knowledge of the horse racing industry to the Partnership Business, made suggestions as to factors which might assist the Modeling Team, and arranged meetings between D and Bill Benter (“Benter”).[8] P claimed that from 2004 to 2007 the Model was not profitable as originally envisaged, so in 2007 P insisted D meet Benter (and P arranged such meeting) to obtain further detailed advice,[9] so afterwards D / Modeling Team finally developed the Model that worked consistently. On the other hand, D claimed (a) he met Benter without P’s assistance in/about 2000 and shared with Benter a common interest in and worked with him on horse race betting,[10] (b) before execution of the Agreement he had already developed a Logit model with necessary programmes for Hong Kong horse racing probability estimations, (c) after execution of the Agreement the Modeling Team derived from that earlier Logit model/programmes the Model as required by the Agreement, and (d) it was Benter’s email dated 7 February 2007 that proposed the February 2007 meeting with D. D claimed that for the 2004/2005, 2005/2006 and 2006/2007 racing seasons, betting operations using the Model resulted in profit of $493,445.00, loss of $195,197.50 and profit of $1,807,510.00 respectively, but P’s suggestions as to factors which might assist the Modeling Team were not causative of the Model’s success, and the loss of $607,990.00 for the 1^st race meeting of the 2005/2006 racing season was largely due to P’s misrepresentation as to the magnitude of the betting pool. D claimed the Model’s success was due to the Modeling Team’s continued efforts, and not on account of anything from the February 2007 meeting, other discussions with Benter or P’s suggestions as to factors which might assist the Modeling Team.

6.  P claimed that since 2007 the Partnership Business applied the Model to horse race betting, which yielded consistent results/winnings. D disagreed, and averred the introduction of the Betting Duty (Amendment) Ordinance 2006 (which permitted HKJC to introduce 10% rebates to higher value bettors) gave significant advantage to professional bettors such as the Partnership Business over amateur bettors. D claimed that for the 2007/2008, 2008/2009, 2009/2010, 2010/2011 and 2011/2012 racing seasons, betting operations using the Model resulted in profits of $611,827.50, $11,416,053.50, $13,700,960.50, $24,671,077.30 and $26,950,920.00 respectively.

7.  P claimed that:

(a)	from at least the start of the 2011/2012 racing season, D in breach of Clause 15 and/or his duties arising out of his position as partner of the Partnership Business converted the Model (property of the Partnership Business) to his own use, and made private profits by utilising the Model to place bets “on his own account and not for the Partnership Business”;[11]
(b)	from about mid-2012, D in breach of the Agreement and/or his duties arising out of his position as partner of the Partnership Business refused to provide the Model and all services/support in relation thereto to the Partnership Business for its operation, and despite requests refused to deliver up to P a written working copy of the Model for the operation and benefit of the Partnership Business;
(c)	unless restrained by court order D threatened and intended to continue the aforesaid acts;
(d)	he suffered and (unless D were restrained) he would continue to suffer loss and damage.

I flag for discussion below the plea in (a) above that the SoC averred D made profits from alleged use of the Model “on his own account” for private betting. P claimed his case as pleaded covered D’s private betting through agents/nominees (see paragraph 17 below), but D said there was nothing in the SoC that raised such allegation.

8.  D disputed P’s claim, and averred that following the final race meeting of the 2011/2012 racing season on 15 July 2012 he terminated the Partnership by written notice dated 27 July 2012 sent by email on the same date, so the Partnership Business ceased and he was willing to deliver up the then current version of the Model to facilitate the winding up of the Partnership Business.

9.  On another note, D complained P retained and kept from him financial information about the Partnership Business with disclosed information restricted to Excel tabulations of sums placed by horse racing bets made in pursuance of the Partnership Business, type of bets placed, dividend received and resultant gross profit/loss per race, meeting and season, but without actual costs of the Partnership Business. P disagreed, and averred (a) D was provided detailed reports from time to time showing the investment/return for each bet type, betting outlay, returns for every race, and running total profit for the season for each bet type, (b) P was solely responsible for costs of running the Partnership Business, and (c) D did not make any enquiries about the operating costs of such business.

10.  Even though 8 years of the Excel tabulations showed the Partnership Business produced gross profits of over $78,000,000.00, D claimed (but P denied) that (i) in breach of Clauses 2-3 P failed to fulfil duties/obligations to competently manage such business by failing to cause the following matters, and (ii) P had to look to D from time to time to meet the salaries of members of the Modeling Team:

(a)	the Partnership Business to be registered pursuant to the requirements of the Business Registration Ordinance Cap 310;
(b)	proper books of account to be kept of the income/expenditure and assets/liabilities of such business;
(c)	bank accounts to be opened in the name or on behalf of such business, or alternatively disclosure to D as to the existence of any such bank accounts;
(d)	annual or other periodical statements to be drawn up showing profit/loss of such business;
(e)	profits tax returns to be filed in respect of such business.

11.  D further claimed that in breach of Clause 11 and commencing with the 2006/2007 racing season P failed to set aside monthly and place the Modeling Team’s gross profit sharing entitlement into a bank account in the name of D or his nominee. P averred (but D disagreed) (a) there was no pattern of profitability during the early life of the Partnership Business so no bank account was opened for holding the Modeling Team’s entitlement,[12] (b) the Modeling Team was always duly paid its share of profits according to the terms of the Agreement during the later stage of the Partnership Business when it began to yield consistent profits, and (c) D did not raise any request for opening a bank account for holding the Modeling Team’s entitlement. On the other hand, D claimed a pattern of profitability was established at the very earliest from the conclusion of the 2004/2005 racing season, and P’s contractual obligation to open a bank account to hold the Modeling Team’s entitlement was neither conditional nor dependent upon D’s request.

12.  D next claimed (but P did not admit) that P in breach of Clauses 10 and 14 refused to pay D the Modeling Team’s gross profit sharing entitlement for the 2011/2012 racing season in the sum of $5,390,184.00. P averred that even if the Modeling Team was so entitled (which was not admitted), P’s loss and damage as a result of D’s breach of the Agreement and/or his duties arising out of his position as partner of the Partnership Business could be set off against any alleged entitlement of the Modeling Team.

13.  Still further, D claimed that P in breach of his duties as partner of the Partnership Business failed to gain his consent for or to inform him of significant contracts purportedly made in the name of the Partnership with inter alia third party investors in the Partnership Business. D averred he received correspondence from solicitors acting for Christopher Parker (“Parker”) on 10 December 2012 alleging that D refused to (a) permit payment of $6,935,303.13 due to Parker as dividend on a $30,000,000.00 investment made in the Partnership Business, and (b) make available information to show the whereabouts of such $30,000,000.00 investment, but P did not disclose such facts to D who learnt of Parker and his investment/dividend from Parker’s solicitors. On the other hand, P denied such allegations, and averred (i) he had authority and was solely responsible under the Agreement for raising capital from third parties for the Partnership Business, and (ii) D had not taken any part in raising such capital/enquiries and showed no interest when on various occasions P offered to show him agreements made by P and third parties for raising capital for the Partnership. D disagreed, and averred he (1) repeatedly assured P he was always prepared to meet potential investors, and (2) at P’s request he did meet a potential investor on/about 20 May 2008 to discuss raising capital for the Partnership.

III.  PROCEEDINGS

14.  On 19 December 2012, P commenced the present action against D to claim for the following reliefs:

(a)	a declaration that the Model belonged to the Partnership Business;
(b)	an injunction to restrain D, whether acting by himself, his servants, employees, agents or any of them or otherwise howsoever from using and/or dealing with the Model howsoever save and except for the operation and benefit of the Partnership Business;
(c)	an order for delivery up by D to P a current working version of the Model;
(d)	damages for breach of the Agreement;
(e)	an account of all profits made by D from horse race betting using the Model on his own account;
(f)	an order for payment of all sums found due to P together with interest.

15.  On 21 January 2013, P filed his SoC. On 18 February 2013, D filed his Defence and Counterclaim (“D&C”). D denied P’s claim, and sought the following reliefs:

(a)	an account of the profit/loss and assets/liabilities of the Partnership Business from commencement of operations on 27 January 2004 to termination of the Partnership Business on 27 July 2012;
(b)	an account of all obligations entered into on behalf of the Partnership Business with third party investors together with an order for delivery up of copies of all agreements made and obligations entered into on behalf of the Partnership;
(c)	payment of $5,390,184.00 being the Modeling Team’s gross profits entitlement for the 2011/2012 racing season together with interest.

16.  On 18 March 2013, P filed his Reply and Defence to Counterclaim. On 28 March 2013, D filed his Reply to Defence to Counterclaim. In August 2013, P and D filed their respective witness statements. The allegation that D had been betting through agents/ nominees was canvassed in paragraphs 57 and 63 of P’s witness statement dated 16 August 2013, paragraphs 9-12 of the witness statement of Wong Lai Yi dated 19 August 2013 and paragraphs 7-10 of the witness statement of Lam Chui Fung Mimi dated 16 August 2013. Thus, P made the agency allegation as early as in August 2013.

17.  D in his 10^th affirmation filed on 6 July 2017 (“D 10^th Aff”) claimed the SoC did not contain any reference to such agency allegation, so “[one] should expect that [P] was prepared to apply in due course to amend his [SoC] to include a plea that [D] has been betting through agents or nominees if he wished to rely on this at trial”. P in his 14^th affirmation filed on 20 April 2017 (“P 14^th Aff”) acknowledged such plea had not been expressly pleaded. P in his 15^th affirmation filed on 7 September 2017 (“P 15^th Aff”) claimed it was not apparent then that it was necessary to do so in the whole context of the proceedings and the conduct of the parties in pursuing these proceedings. It was then believed that the existing plea of D placing bets “on his own account” in the SoC did not mean by himself (as opposed to placing bets through agents/nominees) but rather “for his own benefit” (in contrast to “for the Partnership Business”). It was also thought that the plea in the SoC was sufficient as it was clear the disputed issue between the parties was whether D placed private bets using the Model (be it by himself or through agents), which was reinforced by the terms of the Discovery Order and Varied Discovery Order (see paragraphs 19-20 below), and it was not until the Au-Yeung Decision handed down on 26 February 2016 (see paragraph 42 below) that it became apparent the SoC had to be amended. P further claimed (but D denied) it was apparent from the account below in respect of the present litigation that D himself accepted/treated the agency allegation as a live issue between the parties.

18.  On 19 September 2013, P filed a summons for inspection of the Partnership’s Model referred to in paragraph 8 of the D&C that comprised D’s 4 Elements, and discovery of all statements/records of betting accounts with HKJC under D’s name and of his alleged agents/ nominees, including Leung, Lam Yuk Fai (“Lam”) and Xiong Liying Ivan (“Xiong”). On 14 November 2013, such summons was amended and re-filed (“Discovery Summons”). D filed affirmation evidence by himself, Leung, Lam and Xiong to deny he had placed bets through nominees.

19.  On 27 November 2013, Master de Souza granted an order (“Discovery Order”) inter alia that D was to (i) “produce for inspection by [P] and his solicitors at the office of [D’s] solicitors” the documents referred to in paragraph 8 of the D&C ie D’s 4 Elements, and “permit [P] and/or his solicitors and/or agents to peruse the documents so produced, and to make notes of their contents”, (ii) give specific discovery of (a)-(b) below, and (iii) supply P with copies of the documents referred to in (i)-(ii) above within 7 days from the date of such order on payment of reasonable charges:

(a)	“all statements and records of all betting accounts on horse racing with [HKJC] under the name of [D] and/or his nominees or agents on his behalf (including but not limited to [Leung], [Lam] and [Xiong]) covering the period from the start of 2004/2005 racing season to the end of the 2011/2012 racing season; and”
(b)	“all statements and records of all betting accounts on horse racing with [HKJC] under the name of [D] and/or his nominees or agents on his behalf (including but not limited to [Leung], [Lam] and [Xiong]) covering the period from the start of 2012/2013 racing season onwards”.

20.  D appealed against the Discovery Order, and in the meantime the parties consented to stay execution of such order. On 2 April 2014, L Chan J handed down his reasoned decision (“Chan1 Decision”) and dismissed such appeal (“Varied Discovery Order”). L Chan J varied the Discovery Order inter alia to the effect that the Model referred to in the Discovery Order “shall include all versions of the model and its discrete elements developed by [D] and/or the modeling team working under [D] from time to time up to the date of delivery up”, and he lifted the stay of execution of the Discovery Order.

21.  The CA Judgment helpfully summarised the Chan1 Decision as follows:

“10. …... It was acknowledged by [D] that ‘one major issue between the parties is whether [D] had used the model in his private betting’ [‘Main Issue’]. [P] submitted before L Chan J that it is necessary to have ‘possession and use’ of the model and ‘delivery up of the model is important’, as ‘[P] intends to engage an expert to study the contents of the model and [D’s] private bets to see if the bets were placed with the benefit of the output of the model’. The judge took the view [P’s] stance is reasonable and ‘it is necessary to have the model delivered up by [D] to [P]’. He also expressed the view there should not be ‘any condition to be imposed on [P] for the model to be delivered to him unless [D] be subject to the same.’[13]

11.  L Chan J noted in his decision that at the end of the hearing, the parties had jointly proposed they would work out an undertaking for the custody of the model in the event the court should dismiss the appeal.  The parties were not able to reach agreement on any undertaking by the time the decision was handed down.”

22.  I note the Discovery Order and Varied Discovery Order both required D to provide discovery of the betting records of Leung, Lam and Xiong even though there was at that time no express pleading that D had been placing bets through agents/nominees. P suggested this meant Master de Souza and L Chan J must have considered whether or not D placed bets through agents/nominees was a live/relevant issue covered by the SoC as pleaded.

23.  On 4 April 2014 (ie 2 days after the Varied Discovery Order), D filed a summons for an order that the Varied Discovery Order “be varied or corrected as set out in the annexure enclosed herein or as per any revisions thereto” (“Variation Annexure”) allegedly pursuant to the slip rule in Order 20 rule 11 of the Rules of the High Court (“RHC”) and the inherent jurisdiction of the court (“Variation Summons”). The Variation Annexure sought to replace the Discovery Order as varied by the Varied Discovery Order that required production of the Partnership’s Model that included all versions of the Model and D’s 4 Elements with certain undertakings to be given by D that would include:

(a)

“[to] deliver identical copies of the following (hereafter called “the Models”) to the parties’ respective Solicitors …… within 14 days of the date of this Order: (1) a copy of the [Model] referred to in Paragraph 8 of the [D&C] …… comprising: [D’s 4 Elements]; and (2) a copy of each and every other mathematical model derived from and/or developed from the [Model], if any, as well as each and every current and previous version of the [Model] developed from 2004 to the date of the delivery …… as are in his possession, power, custody or control”;

(b)

“[to] delete each and every copy of the Models, being the items set out in [(a)(1) and (a)(2) above] of his undertaking herein, as are in his possession, power, custody or control”.

The Variation Annexure also proposed and asked the court to order D to give specific discovery of the betting records “under the name of [D] and/or his nominees or agents on his behalf, if any, covering the period from the start of the 2004/2005 racing season to the [date on which D delivers up the [Model] to his Solicitors pursuant to this Order] ……”.

24.  The Varied Discovery Order was sealed before the hearing of the Variation Summons. P submitted that L Chan J had no jurisdiction to entertain such summons, and at the hearing D’s senior counsel tried to rely on Order 24 rule 17 of the RHC. On 15 April 2014, L Chan J dismissed the Variation Summons, and handed down his reasoned decision (“Chan2 Decision”):

“8. The order suggested by [D’s senior counsel] this morning is a wholesale replacement of my order as it imposes stringent conditions on the custody of and access to the model to be kept by the solicitors for the parties. I cannot accede to this draft order because it is outside the scope of Order 20 rule 11. Nor can I accede to the application under Order 24 rule 17, because if [D] was minded to rely on this rule, it should have made it plain to [P]. The application on the basis of this rule should have been a fresh one. I also do not accept the submission that my inherent jurisdiction would include the force and effect of this rule.

9. On these grounds, I dismiss the application, but without prejudice to [D] making a fresh application by relying on Order 24, rule 17.”

In opposing P’s HKJC Summons (see paragraph 36 below), P’s senior counsel argued that the Variation Annexure showed “[D] had not sought to remove the provision about discovery of betting records of his alleged agents”, but the Au-Yeung Decision handed down on 26 February 2016 (see paragraph 42 below) did not consider this relevant because “[the] hearing before L Chan J had ended. The draft terms of variation were a desperate attempt to change the order and could not be taken as an admission by [D] that the alleged agents’ records were relevant to the claim”.

25.  D did not make any fresh application under Order 24 rule 17 of the RHC to vary the Discovery Order and Varied Discovery Order. Instead, D acted in the following manner as explained in his 9^th affirmation filed on 28 August 2015:

“46. I have duly complied with the [Varied Discovery Order]. ……

(1) Following the handing down of the Decision [on 2 April 2014] and the making of the [Varied Discovery Order], I took steps to locate, duplicate and disclose the Documents Ordered to be Produced.[14]

(2) The discovery exercise was labour intensive. A total of more than 14,000 separate individual documents were included in two identical USB portable thumb drives (the ‘USB Drives’) one of which was provided to [P’s] solicitors. ……

47. In light of the indications made by Mr Justice L Chan that both parties were to be subject to the same restrictions of access to the Partnership Model (such that neither of [P] nor myself is able to bet using the Partnership Model), I made two copy-protected copies of the Partnership Model (i.e. the probability model defined in paragraph 8 of the [D&C]) using the Kaka Software with its default permission setting and saved those copies onto two USB Drives. As I have explained …, those copies were the only two copies of the only version of the Partnership Model that I had in my possession and I have not removed or deleted from the Partnership Model I retained any elements or any other file or component of the Partnership Model. I provided the two USB drives to my solicitors and erased the copy of the Partnership Model that was stored on my computer hard disk. My solicitors provided one of the USB drives to [P’s] solicitors [“USB Drive”[15]] and I instructed my solicitors to retain the other USB for safe keeping. The reason for my encryption and deletion of my version of the Partnership Model was because I believed that, as per the intention of Mr Justice L Chan mentioned above, both parties should be placed on equal footing to prevent any unauthorised use or duplication of the model until the determination of this action. ……”

26.  As for disclosure of the betting records, on 8 April 2014 D made a request to HKJC for copies of “his” betting records under his account held with HKJC “for period as long as possible”. Upon receipt from HKJC the betting records/statements of an online HKJC betting account in D’s own name (“D’s Betting Records”), D provided copies thereof to P’s solicitors on 12 May 2014. D then filed D’s 5^th affirmation on 19 May 2014 (ie more than 1½ months after the deadline under the Varied Discovery Order) by which he confirmed the following:

(a)	D had applied to HKJC for betting records “for period as long as possible” but was only provided 3 years of records;
(b)	D did not have possession, custody or power of any copy of betting records apart from those already disclosed to P;
(c)	D did not have possession, custody or power of any betting records of any agents/nominees because he did not conduct any private betting on horse racing through agents/nominees;
(d)	D did not engage in any betting activities since 18 December 2013;
(e)	the Model delivered to P’s solicitors was an exact copy of the only copy of the only version of the Model D had in his possession, and he had not removed or deleted any element or file from it before delivering it to his solicitors.

27.  D’s expert Bai Zhaojun (“Bai”) explained that the Model could be viewed, read, analysed and executed on the USB Drive despite copy-protection.[16] P’s experts William Ziemba (“Ziemba”) and Alan Wagner (“Wagner”) also perused/studied the contents of the USB Drive, and Wagner deposed that encryption of the files/data in the USB Drive “makes it virtually impossible for one to use the Model to generate bets, not to mention betting patterns”, so he was unable to compare the betting patterns generated by the model in the USB Drive with the betting patterns shown in D’s Betting Records. Ziemba/Wagner came to the conclusion that certain discrete elements were missing from the USB Drive which should form part of the Model that D ought to have produced (“Ziemba’s Discrete Elements”), but as D admitted, he had purportedly deleted the original version of the Model.

28.  P also complained that D’s Betting Records covered 2½ years from 13 April 2011 to 18 December 2013 even though he could have followed up with HKJC and obtained up to 7 years’ betting records from HKJC, and that D did not disclose any betting records of Leung, Lam and Xiong.[17] In the P 15^th Aff, P claimed he had repeatedly told D that an account-holder could request/obtain up to 7 years’ betting records from HKJC, and P did obtain from HKJC 7 years’ betting records of the Partnership Business and disclosed them pursuant to the order by DHCJ Seagroatt dated 19 June 2014.[18]

29.  At the case management conference (“CMC”) on 21 May 2014, the Registrar granted inter alia the following directions:

(a)	P shall within 14 days from the date thereof take out an application for enforcement of the Discovery Order as varied by the Varied Discovery Order if so advised (“Time Order”);
(b)	“[P] shall seek Counsel’s advice on whether he has to adduce expert evidence to establish what the model as pleaded in the [SoC] within 28 days from the date hereof”;
(c)	all interlocutory applications as might be advised shall be taken out within 14 days thereafter, and such interlocutory applications, if contested, shall be fixed before the Registrar for argument.

30.  P did not comply with the Time Order. On 11 June 2014, P filed a summons for 21 days’ extension of time to take out an application to enforce the Discovery Order as varied by the Varied Discovery Order if so advised (“Time Summons”). P claimed he needed more time to gather evidence, including seeking expert evidence to support the intended application. D opposed the Time Summons. On 13 June 2014, Master M Wong adjourned such summons for argument before the Registrar with directions for filing affirmation evidence. D claimed that in breach of such directions P filed affirmation in support of the Time Summons on 11 August 2014 out of time. On 12 August 2014, P filed a summons for leave to amend the Time Summons to seek extension of time for 98 instead of 21 days for taking out the proposed enforcement application. P claimed more time was needed to obtain supporting expert evidence because the original intended expert dropped out at/about end of July 2014 due to discovery of potential conflict of interest, and P had to look for alternative overseas expert.

31.  On 22 August 2014, the Registrar granted inter alia the following order:

“1. Unless [P] by 4:00pm on 28^th November 2014 takes out all interlocutory applications that may be advised, [P] is debarred from taking out further interlocutory applications [‘Unless Order’].

2. The interlocutory applications, if contested, shall be fixed before the Registrar for argument. ……”

P in the P 15^th Aff claimed the Unless Order only constrained P and not D to take out all interlocutory applications by the specified deadline, which he believed was unusual.

32.  The Unless Order came about in the manner described below. Prior to the hearing on 22 August 2014, the Registrar raised 2 sets of requisitions upon receipt of written submissions by counsel. By the 1^st set of requisitions dated 20 August 2014, the Registrar queried how the Time Order[19] would affect the validity of the Discovery Order and Varied Discovery Order, and why it was P and not D who should make the application for time extension to comply with such orders. Counsel for both parties lodged further written submissions on 20 August 2014. P’s counsel suggested it was for D to apply for time extension to comply with the Discovery Order as varied by the Varied Discovery Order. But D’s counsel submitted as follows:

(a)

the Time Order was granted at the CMC on 21 May 2014 because the Registrar indicated he “was minded to make an order that all interlocutory applications, if so advised, be taken out within a certain period of time” and inquired if the parties intended to take out any outstanding applications, whereupon P’s counsel advised that P intended to take out application to enforce the Discovery Order and Varied Discovery Order within 21 days, so if P failed to take out such application “he would need to remedy it by seeking to vary the non-milestone date”;

(b)

D was obliged to comply with the Discovery Order and Varied Discovery Order, but “[D’s] position is that he has complied with the Order”.

33.  By the 2^nd set of requisitions dated 21 August 2014, the Registrar noted P asserted D had failed to comply but D insisted he had complied with the Discovery Order and Varied Discovery Order, and he made observations on the Time Order as follows:

“7. In the circumstances, [P] was simply directed to take out further interlocutory applications relating to the [Discovery Order and Varied Discovery Order] within the time as directed in the CMC and [P] now asks for extended time to take out interlocutory application. Since this is not a milestone date, the Court expects the parties to act reasonably with a view to compromising the extension of time for [P] to take out the application to address those issues above; such applications, if contested, shall be fixed before the Registrar for argument. The remaining question is the costs of the application. If the parties are unable to come to an agreement, the hearing will proceed and the Court will deal with those issues accordingly.”

34.  At the hearing on 22 August 2014, the Registrar took the view that P would need expert assistance at trial. According to P’s 14^th Aff, D’s counsel adopted the stance that an unless order should be made as regards P’s intended application to enforce the Discovery Order and the Varied Discovery Order such that if P failed to take out such intended application by a certain deadline he would be debarred from doing so, and neither counsel suggested any unless order to cover all interlocutory applications to be made by P. Nevertheless, the Registrar proceeded to make the Unless Order covering interlocutory applications that were not limited to the intended application to enforce the Discovery Order and Varied Discovery Order.

35.  In the D 10^th Aff D disagreed the Unless Order would result in obvious unfairness, but in the P 15^th Aff P alleged otherwise:

(a)	D claimed that as early as at the CMC on 21 May 2014 the Registrar had contemplated a timetable for taking out all interlocutory applications, and the Unless Order was consistent with such contemplation.
(b)	D claimed that by the time of the hearing of the Time Summons P had been dragging their feet and not progressing the present action to trial, and the Registrar had considered submissions from D’s counsel that the expert evidence which P intended to file went beyond the enforcement of the Varied Discovery Order. P disagreed, and claimed the main reason for not proceeding to trial was because D refused to disclose clearly critical evidence, ie the full 7 years’ betting records of D and those of his agents/nominees as well as a clean, unencrypted copy of the Model, so P had to take out the HKJC and 27/11/14 Summonses (see paragraphs 36-37 below) to compel D to do so, and in the course of doing so P’s original expert dropped out at the last minute due to potential conflict of interest and P needed time to look for overseas expert. P pointed out he had nothing to gain from delaying the proceedings as the Model being the Partnership’s most valuable asset was in D’s sole possession/custody. Even before the present litigation, P had proposed to resolve the dispute by each of them walking away with a copy of the Model, but D tried to keep it to himself and was unwilling to part with the same or to deliver it up to facilitate winding up of the Partnership Business (upon dissolution of the Partnership as he alleged).
(c)	D claimed P did not even appeal against the Unless Order. P understood it was difficult to appeal against a case management order, but he was confident he would be able to take out application to enforce the Discovery Order and Varied Discovery Order in time, which he did by way of the HKJC and 27/11/14 Summonses (see paragraphs 36-37 above), and he believed at that time the Unless Order only applied to interlocutory applications that “may be advised” by the deadline imposed and not to other interlocutory applications necessitated after such deadline.

36.  The deadline imposed by the Unless Order for P to take out interlocutory applications if so advised was 4:00pm on 28 November 2014. Pursuant to the Unless Order, on 27 November 2014 P filed a summons against HKJC to seek non-party discovery (together with inspection and copies) of 7 years’ betting records of D and his agents/nominees (particularly Leung) (“HKJC Summons”) as particularised below, which P claimed was necessitated by D’s failure to supply the same:

(a)	all documents showing details of all betting made by and/or on behalf of D for each race from commencement of the racing season in 2004 to the present;
(b)	statements/records of all D’s betting accounts relating to the betting in (a) above;
(c)	statements/records of all betting accounts for each race from the commencement of the racing season in 2004 to the present under Leung’s name;
(d)	statements/records of all other betting accounts relating to betting made on behalf of D under (a) above.

37.  Pursuant to the Unless Order, on 27 November 2014 P filed a summons against D for various orders, including leave to amend the SoC, leave to adduce expert evidence at trial, and orders for production of a clean, unencrypted copy of the Model and its discrete elements for enforcing the Discovery Order and Varied Discovery Order (“27/11/14 Summons”):

(a)	leave to amend the SoC in the manner marked in red as per the draft annexed thereto by proposing to add after the words “Mathematical Model” where they appeared in various places the words “and/or a mathematical model / mathematical models derived and/or developed from the Mathematical Model” (paragraph 1);
(b)	leave to adduce expert evidence on whether D had used the Model referred to in paragraph 4 of the SoC and/or mathematical model(s) derived and/or developed from the Model for placing his own private bets on his own account (paragraph 2-5);
(c)	an order that D do within 7 days of the order to be made produce for inspection by P and his solicitors/agents the “Probit model” referred to in D’s 1st and 2nd affirmations filed on 31 October and 13 December 2013 and all documents comprising such model, and the “Logit mathematical model along with the necessary programs for Hong Kong horse racing probability estimation” referred to in paragraph 11(c) of the D&C and all documents comprising such model (paragraph 6);
(d)	an unless order that the Defence be struck out and judgment be entered in P’s favour if D failed within 7 days from the date of the order to be made produce for inspection and supply P with inter alia (i) “a clean, unencrypted copy of the Model (which [D] was obliged to produce for inspection under Paragraph 1 of the [Discovery Order], and Paragraph 2 of the [Varied Discovery Order]), which is capable of being executed on a computer and being studied, analyzed and verified”, and (ii) “the following documents comprising the discrete elements of [such model]” that comprised various discrete elements missing from the USB Drive D provided to P’s solicitors which should form part of the Model that ought to have been produced by D as identified by Ziemba/Wagner (ie Ziemba’s Discrete Elements)[20] (paragraph 7);
(e)	as alternative to (d)(ii) above, an order that D do within 7 days from the date of the order to be made “(i) make an affidavit stating whether any document specified or described in [Ziemba’s Discrete Elements] has at any time been, in his possession, custody or power, and if not then in his possession, custody or power when he parted with it and what has become of it, and (ii) produce for inspection by [P] and his solicitors and/or his agents the documents in the possession, custody or power of [D] disclosed pursuant to the order to be made under [(i) above]” (paragraph 8).

38.  The P 14^th Aff claimed P had tried his best to comply with the Unless Order by taking out the HKJC and 27/11/14 Summonses being “all interlocutory applications that could have been advised by [P’s] legal representatives, and that could have been taken out by [him], as at the deadline imposed by the Unless Order, in light of the matters and the state of affairs in these proceedings at the time”. By the D 10^th Aff, D disagreed because ever since August 2013 P (who had full legal representation) had already been advancing a case that D was betting through nominees/agents, which as a matter of law was an assertion that had to be but was not pleaded in the SoC, so P could have been advised to amend the SoC to introduce a claim of betting through nominees/agents.

39.  As regards the HKJC Summons, HKJC took a neutral stance and was open to provide discovery of full 7 years of D’s betting records and those of his agent(s)/nominee(s) (including Leung) provided such agent(s)/nominee(s) could be clearly identified. By the P 15^th Aff, P claimed D disputed agency (ie D had not placed bets through agents/nominees (including Leung) so no useful evidence could be gleaned from Leung’s betting records) to resist the HKJC Summons for non-party discovery of the betting records of D’s nominees/agents (including Leung) which he could have raised (but did not raise) on previous occasions, eg at the hearing of the Discovery Summons before Master de Souza that resulted in the Discovery Order, and at the hearing of P’s appeal before L Chan J that resulted in the Varied Discovery Order.[21] P claimed if D were correct in that he did not place bets through agents/nominees, disclosure of Leung’s betting records would serve to advance his case, so P suspected D’s opposition (and his present opposition of the Amendment Summons to amend the SoC to expressly plead that D placed bets through agents/nominees including Leung) was because he realised Leung’s betting records would assist P’s case.

40.  On 17 April 2015, the Registrar dismissed the HKJC Summons. In his reasoned decision handed down on the same day (“Registrar Decision”), the Registrar noted D objected to discovery of betting records of D’s agents/nominees on the basis that “[P] has not pleaded any agent betting on behalf of [D] on [his] pleadings”, but D accepted he conducted private betting based on a Probit model whereas the Partnership’s Model was a Logit model (paragraph 17). The Registrar went on to say as follows:

“26. [P] has in this morning taken on board this pleading issue by referring to paragraph 7 of the [SoC], in which [P] pleaded that [D] had used the [Model] to place bets ‘on his own account’, by which Senior Counsel submits that it should be construed as any other accounts used by [D’s] agents on the defendant’s behalf. He refers to the mode of practice of the partnership, which provides 4 patterns of making bets. [D’s] accounts only frequently made bets on 2 of the 4 patterns. He submits that [P] has the reason to believe that [D’s] agent(s) must have placed bets on the other 2 patterns. Hence [Leung] was suspected to be the agent as he had accumulated substantial amount of wealth that cannot be explained. Senior Counsel admits that [Leung] or names of other agents or even the expression of agents were not pleaded in the [SoC], however, he submits that it is unnecessary to do so because pleadings only plead the material facts.

……

28. If [P] is to make such allegations as in his affidavit about [Leung] and other witnesses, it is incumbent upon him to plead those factual issues clearly in the pleadings. If those facts are in dispute, they form the issues at trial.

29. It is therefore obvious from the above authorities that [P’s] application under this category must be refused though HKJC has no objection to it.”

41.  P claimed at the time he was advised that the Registrar erred in refusing discovery of the betting records of D’s agents/nominees (including Leung), especially when the Discovery Order and Varied Discovery Order required D to disclose such documents, hence the question whether D placed bets through agents/nominees was plainly an issue in dispute to be resolved at trial. On the other hand, the D 10^th Aff noted P did not apply to amend the SoC to plead the agency point, and claimed that even if P genuinely believed he was not debarred by the Unless Order to take out other interlocutory applications, he could have filed a simple application by summons to amend the SoC shortly after the Registrar Decision. In the P 15^th Aff, P responded by saying that for the reasons in paragraphs 17 and 35(c) above, it was not apparent then it would be necessary to amend the SoC.

42.  On 22 April 2015, P appealed against the Registrar Decision. At the hearing of such appeal on 19 October 2015, P limited the discovery sought in respect of betting records of D’s agents/nominees to those of Leung, and Au-Yeung J ordered that pending determination of such appeal HKJC shall refrain from destroying D’s/Leung’s betting records from 2004/2005 betting season onwards. On 26 February 2016, Au-Yeung J handed down her reasoned decision (“Au-Yeung Decision”). The learned judge considered P’s attempt to put in affirmation evidence filed for the 27/11/14 Summons after closure of affirmation evidence for the HKJC Summons (ie after the appeal against the Registrar Decision was launched and hence they were caught by Order 58 rule 1(5) of the RHC) reflected lack of discipline, and she did not rely on such affirmation evidence except for the expert affirmation of Professor Fan Jian Qing (“Fan”) to which D did not object. In the Au-Yeung Decision, the learned judge held as follows:

(a)

partly allowed P’s appeal to the extent that HKJC do within 7 days of such order by its director or other authorised officer make an affirmation stating whether the following category of documents, ie “all documents showing details of all betting made by [D] for each race counting from the commencement of the racing season in 2004/2005 to the date of delivery up of the [Model] as ordered by [the Varied Delivery Order]”, are or had been in HKJC’s possession, custody or power, and if not, whether it had parted with them and what had become of them, and produce for inspection by P and his solicitors such documents that were in HKJC’s possession, custody or power;

(b)

dismissed P’s appeal in relation to the statements/records of the betting accounts for each race from commencement of the racing season in 2004 to the present under Leung’s name.

43.  In the Au-Yeung Decision, Au-Yeung J noted the discovery sought on appeal was greatly narrowed to discovery of betting records of D and Leung but not those of other agents (paragraph 22). As for further discovery of D’s betting records, the learned judge agreed P would need them for expert examination to find out whether they showed a pattern that was related to the output of the Model (paragraph 33). Although D’s senior counsel submitted P already had sufficient evidence to prove the central issue on D’s betting and discovery of full 7 years of D’s betting records would go only to quantum (and hence unnecessary at that stage) and would impose disproportionate burden on HKJC, D and the court (paragraph 34), the learned judge considered (a) it was justified for Ziemba “to study as many of these records as possible to identify [D’s] betting pattern, to prove [P’s] case” and “[D] should not be allowed to circumvent [the Varied Discovery Order] by a back door by purportedly relying on disputed expert’s views” (paragraphs 41-42), (b) D’s undisclosed HKJC records were relevant to the issue of liability and in any event needed to be preserved (paragraphs 47-48), and (c) the narrowed scope of discovery meant the administrative effort would not be too onerous and could not override the need to do justice (paragraph 50). The learned judge concluded as follows at paragraph 51 of the Au-Yeung Decision:

“In summary, [D] has not established any of the grounds in opposition in respect of Issue 1. His discovery under [the Varied Discovery Order] was inadequate. It is necessary and fair to order HKJC to make discovery of [D’s] betting records for 7 years to cure the inadequacy.”

44.  As for discovery of Leung’s betting records, Au-Yeung J noted it was P’s case that D had been betting through agents on the following bases (paragraph 52):

(a)	the highly successful strategy which D devised for the Partnership Business using the Model placed bets on 4 betting options (Win, Place, Quinella and Quinella Place), so it was inconceivable that D would only bet on Place and Quninella in his private betting, especially when his private betting was about 3 times more than the Partnership Business’ bets, and Ziemba opined D must have placed bets on Win and Quinella Place through other HKJC accounts of his nominees;
(b)	P’s witness statements asserted that P and his staff were aware of the alleged private betting by Leung purportedly on behalf of D from 2004 to 2012, and Leung was also seen logging into his betting account which showed extraordinarily high balances (from $1,300,000 to $1,700,000) for someone of his income;
(c)	despite earning a modest salary before resigning from the Partnership in July 2012, Leung and his family members in recent years had been able to purchase 7 properties with substantial amounts of money;
(d)	P contended Leung had been working with D in placing bets using the Model and was handsomely rewarded by D, and the incomplete D’s Betting Records showed D had made over $56,000,000.00 in profits through betting merely via his own betting account, so D must also have made more profits through other betting accounts including Leung’s;
(e)	P also invited the court to draw adverse inferences from Leung’s alleged evasion of service.

45.  Au-Yeung J held that “despite [D’s] denial, those bases do disclose a case that Leung has been an agent of [D]” (paragraph 53), but noted D’s senior counsel objected to the requested discovery on the following grounds (paragraph 54):

(i)	betting through agents had not been pleaded;
(ii)	discovery of betting records of agents was not necessary for the fair trial of the action as P claimed to have sufficient evidence even without non-party discovery;
(iii)	the issue of Leung betting on behalf of D was peripheral to the central issue concerning D’s use of the Model in his private betting;
(iv)	this present action required strong case management to prevent proliferation of non-essential issues.

46.  In relation to (i) above, Au-Yeung J held that agency must be specifically pleaded but was not expressly pleaded in the SoC (paragraphs 60 and 57), and an issue would not become an issue simply because it was hotly contested in affirmations, witness statements or expert reports (paragraph 56). The learned judge considered a fair reading of the averment of D placing bets “on his own account and not for the Partnership Business” in paragraph 7 of the SoC did not include betting through an agent (paragraphs 61-62) (see paragraphs 17 and 35(c) above), and since “the case of agency is based on inference from the matters in [paragraph 44(a)-(e) above], there is all the more reason to plead it before discovery”. The learned judge found the lack of the plea of agency fatal to the application for Leung’s betting records (paragraph 65). In relation to (ii)-(iv) above, for completeness Au-Yeung J said as follows in paragraph 66 of the Au-Yeung Decision:

“…… If betting through Leung as an agent had been pleaded, discovery of Leung’s betting records would clearly have been necessary for the same reasons given in respect of [D’s] betting records. Betting through an agent would not be peripheral to the issue of which model [D] used in his private betting. It would be in itself an act of breach of the Partnership Agreement. In that case, it would not be a question of case management but that the discovery ought to be ordered for the fair trial of liability of the action. [D] has denied on oath that he had betting records of agents. That was conclusive on the issue of possession in the context of discovery but not the issue of agency. In respect of discovery, [P] would have been entitled to seek discovery from HKJC.”

It was quite evident from such observations by the learned judge that if P could successfully apply to amend the SoC to expressly plead the agency allegation, P would have basis to again apply against HKJC for discovery of Leung’s betting records.

47.  On 1 March 2016, P made an ex parte application to Au-Yeung J who granted an order that HKJC was to preserve and refrain from erasing and/or destroying Leung’s betting records in its possession from the start of the 2004/2005 racing season until the hearing/determination of the inter partes summons returnable on 11 March 2016 before the Summons Judge. The P 14^th Aff explained that such application made on the basis that P would in due course make further applications to amend the SoC to add the agency plea and to seek non-party discovery against HKJC for Leung’s betting records (collectively, “Further Applications”) as HKJC would erase/destroy such records going back beyond 7 years. The P 15^th Aff also noted D did not complain such ex parte summons was barred by the Unless Order. Eventually, on 12 August 2016, DHCJ Kwok SC (who in the Kwok1 Decision (see paragraph 54 below) handed down on 15 June 2016 in respect of inter alia the 27/11/14 Summons held that P was debarred from taking out interlocutory applications after 28 November 2014) granted an order by consent that HKJC was to preserve and refrain from erasing/destroying Leung’s betting records from 1 January 2005 to end of the 2011/2012 racing season then in HKJC’s possession until determination of the trial herein or further order.

48.  P did not make the Further Applications shortly after Au-Yeung J handed down the Au-Yeung Decision.[22] In the P 14^th/15^th Affs, P explained he was waiting for the outcome of the hearing of the 27/11/14 Summons scheduled to be heard in late December 2016. By such summons P applied to amend the SoC to plead that the Model included models which were derived/developed from the Model (see paragraph 37(a) above), and P waited to see whether such amendment would be allowed because, according to P, this would affect how the amendment for the agency point would be formulated. In the D 10^th Aff, D claimed there was no reason for P to wait even though the 27/11/14 Summons also concerned proposed amendment of the SoC because such proposed amendment had no bearing on whether or not P should have applied for leave to add the separate plea of agency.

49.  The solicitors for both parties jointly wrote to the court on 16 March 2016 to seek directions and to adjourn the pending CMC on 23 March 2016 (“Joint Letter”). In the P 14^th/15^th Affs, P said the Joint Letter clearly advised P would in due course make the Further Applications but noted D did not say such intended applications would be barred by the Unless Order and did not query the reasons P put forward for awaiting the outcome of the 27/11/14 Summons, and instead P and D jointly sought an order from the Registrar to adjourn the pending CMC based on reasons put forward in the Joint Letter. But D in the D 10^th Aff claimed his solicitors’ consent to adjourn the CMC by way of the Joint Letter did not amount to any admission that P was entitled to take out the Further Applications as he proposed, that the Further Applications had any merit and/or that D would suffer no prejudice if P were allowed to take out the intended applications substantially out of time, but D saw no point in challenging P’s propositions in the Joint Letter when the CMC had to be adjourned due to various other outstanding loose ends and when no issue was taken over the directions jointly proposed by the parties.

50.  On 17 March 2016, the Registrar granted the order sought, and P in the P 14^th/15^th Affs noted that even though it was the Registrar who made the Unless Order, he did not raise issue that P’s intended applications ran afoul of the Unless Order.

51.  The 27/11/14 Summons was originally fixed to be heard by the Registrar, but by consent it was re-fixed to be heard by a judge. D in the D 10^th Aff claimed he required some time extensions to file affirmations in opposition which were of some complexity (including Bai’s affirmation and Fan’s expert affirmation), but the P 15^th Aff claimed D was merely trying to downplay his delay of 8 months for filing affirmation evidence to oppose the 27/11/14 Summons which required 4 extensions of time[23] beyond the original period of 107 days from the date of Registrar Ho’s order dated 15 December 2014. Pursuant to such last court-ordered time extension for D under the Chow Order (see footnote 23 above), P was consequentially ordered (but not by way of an unless order) to file/serve his affirmations in reply by 10 December 2015. P eventually filed 5 affirmations in reply on 11 December 2015 and Ziemba’s 4^th affirmation in reply on 22 December 2015 out of time.[24] The 27/11/14 Summons was scheduled to be heard by DHCJ Kwok SC on 21-22 December 2015 (but D disagreed the delay in fixing such hearing was attributable to him).

52.  Shortly before the hearing of the 27/11/14 Summons scheduled to commence on 21 December 2015, P filed a summons on 14 December 2015 to add a further expert issue under paragraph 37(b) above for clarifying the scope of the expert directions sought under the 27/11/14 Summons on the basis it was not an application which he could have been advised to take before the deadline under the Unless Order (see paragraph 38 above) (but such contention was rejected by DHCJ Kwok SC (see paragraph 58(c) below) and by the Court of Appeal (see paragraph 59 below)), and D filed a summons on 18 December 2015 to expunge certain parts (but not the whole) of P’s reply affirmation evidence with alternative reliefs that P do disclose some data and that D be given leave to file evidence in reply to the disputed evidence on the basis that such disputed evidence was new and not reply evidence.

53.  The 27/11/14 Summons and the 2 summonses in paragraph 52 above was heard by DHCJ Kwok SC on 21-22 December 2015 and 1-2 February 2016. Although the point about P’s reply affirmations being 1 day late was raised by D’s senior counsel (albeit not forcefully), the learned judge at the hearing took the view “this is not a matter for decision or argument”. The P 15^th Aff claimed that upon such observation and upon P’s undertaking to provide the required data, DHCJ Kwok SC concluded he would not expunge P’s reply affirmation evidence whereupon it would not be necessary for D to put in expert evidence for the purpose of the hearing before him. P claimed D’s senior counsel asked for separate treatment for Wagner’s 2^nd affirmation filed on 11 December 2015 (being 1 of the reply affirmations), so it was considered on de bene esse basis. But the D 10^th Aff claimed all P’s reply affirmations were considered on de bene esse basis in light of D’s summons filed on 18 December 2015.

54.  On 15 June 2016, the learned judge handed down his reasoned decision (“Kwok1 Decision”), and refused all reliefs sought by P and made no order in relation to D’s summons filed on 18 December 2015. In paragraph 17 of the Kwok1 Decision, DHCJ Kwok SC said he would not rely on P’s reply affirmations as they were filed “after 10 December 2015 after the evidence was closed under [the Chow Order]” (see footnote 23 above). The learned judge further observed that even though witness statements were filed more than 2½ years ago in August 2013 “the parties did not proceed to trial. The parties ([P] in particular) seemed more interested in making one interlocutory application after another …..”, and he criticised the proliferation of the such interlocutory applications even after service of witness statements (paragraph 7). But in the P 15^th Aff P explained the shape of the present action had changed after service of witness statements,[25] and his interlocutory applications (eg the HKJC and 27/11/14 Summonses) were necessitated by D’s uncooperative attitude in disclosing clearly relevant evidence.[26]

55.  I do not propose to go into the Kwok1 Decision in detail since it was overturned by the CA Judgment, but will briefly summarise the outcome of such decision below:

(a)	P’s summons filed on 14 December 2015 was dismissed as it was barred by the Unless Order (paragraph 13);
(b)	the 27/11/14 Summons was dismissed (paragraphs 24-28 and 32-34);
(c)	since DHCJ Kwok SC declined to rely on P’s reply affirmations, no order was made on D’s summons filed on 18 December 2015 (paragraphs 16-17 and 36).

In the P 14^th/15^th Affs, P claimed that (a) above must be understood in its proper context: (i) neither D nor DHCJ Kwok SC raise such contention at 4-day hearing, and counsel was not invited to make submissions to address the point before dismissal of P’s summons filed on 14 December 2015, (ii) the proposed amendments to clarify the scope of expert directions sought in the 27/11/14 Summons were uncontroversial and at the hearing both D and DHCJ Kwok SC accepted expert evidence was necessary, and (iii) (as seen below) leave was granted for P to appeal against the dismissal of his application for expert evidence under the 27/11/14 Summons and the dismissal of his summons filed on 14 December 2015.

56.  On 29 June 2016, P filed a summons for leave to appeal against the Kwok1 Decision. On 18 November 2016, P filed the Amendment Summons. The essence of the proposed amendments to the SoC was to add a plea that D had been betting (using the Partnership’s Model) not only by himself but also “and/or through his agent(s) and/or nominees, for his own benefit and/or for the benefit of his agents and/or nominees”, and such agent(s)/nominee(s) included Leung who was a member of the Modeling Team.

57.  The P 14^th/15^th Affs explained P did not take out the Amendment Summons earlier because the pending appeal against DHCJ Kwok SC’s dismissal of the 27/11/14 Summons and P’s Summons filed on 14 December 2015 would have impact on how the proposed amendments would be formulated, but nevertheless the whole basis for the proposed amendments had been set out in the Au-Yeung Decision and was relatively straightforward, and P filed the Amendment Summons in November 2016 due to concerns over the time required to appeal. However, the D 10^th Aff complained that although P’s initial explanation for the delay was to await the Kwok1 Decision P still dragged his feet for another 6 months after such decision was handed down before he filed the Amendment Summons, which delay could not be justified as it was a simple enough application, and there was no justification not to apply in tandem for relief from sanction under the Unless Order. In the P 15^th Aff, P explained he did not take out the Relief Summons when he filed the Amendment Summons because:

“37. …… I did not apply for relief from sanctions from the Unless Order when I took out the Amendment Summons because I verily believe that the Amendment Summons was not barred by the Unless Order. The need to take out the Amendment Summons was necessitated by Au-Yeung J’s Order, affirming [the Registrar’s] Order regarding his decision not to order discovery of the betting records of [D’s] nominees/agents (including Leung) on the basis that the issue of [D] betting through nominees or agents has not been pleaded.

38. It should be noted that [D] has never raised any issue regarding interlocutory applications taken out by me would be barred by the Unless Order …… before the DHCJ Kwok unilaterally made a decision regarding the Unless Order in DHCJ Kwok’s Judgment.

39. I took out the [Relief Summons] on 20 April 2017 out of an abundance of caution. Although my primary position is that the Unless Order does not apply to the Amendment Summons, [D] has raised, in particular at the call over hearing of the Summons, that [D] will oppose the Summons on the basis that it is barred by the Unless Order.”

At the call-over hearing of the Amendment Summons on 6 December 2016, D drew Master Chow’s attention to the Unless Order, and the Amendment Summons was eventually adjourned for argument before a judge.

58.  The summons for leave to appeal against the Kwok1 Decision was heard on 2 December 2016. On 21 December 2016, the learned judge dismissed the summons, and refused leave to appeal. DHCJ Kwok SC in his reasoned decision (“Kwok2 Decision”) made some observations on the Unless Order:

(a)	P’s legal team had actual knowledge of the Unless Order (paragraph 10) which was deliberately included in the hearing bundle (paragraph 11);
(b)	P’s legal team had ample opportunity to deal with the sanction under the Unless Order but failed to do so at the hearing, and P’s senior counsel confirmed it was his considered decision not to seek relief from sanction (paragraphs 12-17);
(c)	P by his senior counsel contended the Unless Order did not cover applications advised by P’s legal team after expiry of the specified deadline on 28 November 2014 and only covered applications “that may be advised” prior to such deadline, but such interpretation would defeat the very purpose of imposing such deadline in the Unless Order, and the proper reading was that P could but was not bound to take out any interlocutory application (paragraphs 18-22).

59.  On 4 January 2017, P renewed her application to the Court of Appeal for leave to appeal in HCMP16/2017. On 24 February 2017, the Court of Appeal granted leave for P to appeal on 4 of the grounds in the draft Notice of Appeal, but declined to grant leave for the remaining 5 grounds (“CA Leave Judgment”). As helpfully summarised in paragraph 1 of the CA Judgment, “[leave] to appeal was given in relation to the following: (1) the refusal of leave to amend the statement of claim; (2) the refusal to give leave to adduce expert evidence; (3) the refusal to make an unless order; and (4) the dismissal of the discovery application made in the alternative”. The Court of Appeal refused leave to appeal on inter alia the following intended grounds of appeal:

(a)

In respect of the intended ground that DHCJ Kwok SC was wrong in dismissing P’s summons filed on 14 December 2015 on the ground that it was barred by the Unless Order, the Court of Appeal was in agreement with DHCJ Kwok SC’s reasoning, and held that “[the] construction of the [Unless Order] contended by [P’s senior counsel] is untenable” (paragraph 18). P’s senior counsel had been given opportunity to advance his arguments, and it was his own considered decision not to draw the court’s attention to the Unless Order (paragraph 18).

(b)

In respect of the intended ground that DHCJ Kwok SC was wrong in refusing to rely on P’s reply affirmations filed after 10 December 2015 without leave or application for leave, the Court of Appeal noted Au-Yeung J and DHCJ Kwok SC both alluded to P’s lack of discipline and declined to rely on affirmations filed after close of evidence save where it was not objected to by D (paragraph 20), and bearing  in mind D had taken issue with the filing of such affirmations (paragraph 22),[27] DHCJ Kwok SC could not be said to be plainly wrong or his decision exceeded the generous ambit within which reasonable disagreement was possible (paragraph 23).

60.  On 2 March 2017, P filed his Notice of Appeal in CACV61/2017. On 16 March 2017, D filed his Respondent’s Notice. On 20 April 2017 (about 2 months after the Court of Appeal granted P leave to appeal), P filed the Relief Summons out of time for liberty to take out and/or proceed with the Amendment Summons, and in the event that leave to amend was granted, an application for non-party discovery against HKJC for records of Leung’s betting account(s) maintained with the HKJC. On 20 April and 6 September 2017, P filed the P 14^th/15^th Affs in support of the Relief Summons, and on 5 July 2017 D filed the D 10^th Aff in opposition. The Amendment and Relief Summonses came before me at the Hearing on 28 September 2017, and decision was reserved.

61.  P’s appeal to the Court of Appeal was heard on 20 December 2017, and the CA Judgment was handed down on 12 January 2018. I summarise the rulings in the CA Judgment as follows:

(a)	Leave to amend the SoC (paragraphs 29-37) –
	(i)	the proposed amendments did not fall foul of Order 18 rule 15(2) of the RHC, but were in respect of the cause of action in the writ of summons or were arisen from facts which gave rise to the cause of action so mentioned, ie D’s breach of the Agreement;
	(ii)	on the basis of P changing the proposed amendments to “and/or a mathematical model / mathematical models improved, modified and/or developed from the Mathematical Model” that tracked the wording of Clauses 2 and 15, the Court of Appeal considered it would be a drastic measure to preclude P from amending the SoC to plead a case which closely tracked the wording of the relevant provisions in the Agreement (which could only be done in a plain case), and came down to the firm view that the proposed amendments be allowed;
(b)	Leave to adduce expert evidence (paragraphs 38-43) –
	(i)	since leave was granted to amend the SoC, the Court of Appeal considered there was change in circumstances such that leave to adduce expert evidence should be considered afresh;
	(ii)	it was clearly appropriate to grant leave to adduce expert evidence on the Main Issue of whether D had used the Model referred to in paragraph 4(b) of the SoC and/or the mathematical model(s) improved, modified and/or developed from the Model for placing his own private bets, and also on the subsidiary issue of whether the Model was a Logit model or a Probit model, and for each party to appoint a maximum of 2 experts;
(c)	Unless order to produce the Model (paragraphs 44-67) –
	(i)	since DHCJ Kwok SC had not taken into account the pertinent considerations that the purpose of the application was to compel compliance with the Varied Discovery Order and whether D had complied with the court order, the Court of Appeal needed to exercise the discretion anew;
	(ii)	neither the Discovery Order nor Varied Discovery Order would allow D to produce for inspection only a copy of the Model and not the original stored in D’s computer, and D could not have been under any misapprehension of the obligation to produce the original for inspection;
	(iii)	D’s explanation was not credible when viewed against the contemporaneous events, and in making 2 encrypted copies and delivering 1 of them in a USB Drive to P’s solicitors and erasing the Model stored in his computer hard disk, D did what he had been told by L Chan J (who dismissed the Variation Summons) he was not permitted to do without a fresh application and court order;
	(iv)	D must have known from the Chan1 Decision (if not before) that the Model was to be used by P’s expert to generate bets to compare the betting patterns so generated with D’s betting records, so clearly encryption was to prevent that from happening;
	(v)	D was not permitted to encrypt what he was to produce for inspection, and erasure of the Model stored in the computer made it impossible to check if the copies in the 2 USB Drives were the exact copies of what was stored in the hard disk;
	(vi)	the Court of Appeal did not accept D could have been acting in good faith, and held he had acted in flagrant breach of the Discovery Order and Varied Discovery Order;
	(vii)	P was clearly entitled under such orders to have production for inspection a clean, unencrypted Model and should be supplied with a copy of the same and not an encrypted version, but such crucial piece of evidence to establish the main issue on liability had been deliberately erased;
	(viii)	D’s alleged difficulties (if they were difficulties as contended) in reconstruction of the Model were of his own making brought about by his disobedience of the court orders;
	(ix)	it was immaterial there might be other ways for P to prove his case as it had not been shown that the other ways were just as effective;
	(x)	an unless order would be appropriate because D’s non-compliance with the court orders was not excusable and there was need to redress the prejudice suffered by P as a result and to secure a fair trial in accordance with due process of law;
	(xi)	the Court of Appeal ordered that unless D shall produce for inspection a clean, unencrypted copy of the Model which he was obliged to produce for inspection under the Discovery Order and Varied Discovery Order within 28 days, parts of the Defence in paragraphs 13, 14, 16 and 17 thereof would be struck out, which effect was to debar D from contesting liability to P and/or contesting that P had suffered loss and damage by reason of his breaches;
(d)	Unless order to produce discrete elements – the Court of Appeal declined to grant an unless order in relation to production of Ziemba’s Discrete Elements for inspection (paragraphs 68-70);
(e)	Discovery relating to Ziemba’s Discrete Elements (paragraphs 71-77) –
	(i)	this application was an alternative to the order sought under (d) above;
	(ii)	D agreed with Ziemba there were materials/elements other than the probability model that were necessary to run a horse racing betting operation, in particular the 1st 2 of Ziemba’s Discrete Elements, and in D’s 9th affirmation D deposed that some if not most of the last 3 of Ziemba’s Discrete Elements had been provided to P, that he did not have any other document for the last 3 elements, and that none of the 1st 2 elements formed part of the Model;
	(iii)	the Court of Appeal did not consider such vague and general assertions could be regarded as providing properly the specific discovery sought, and the obligation to produce for inspection was not discharged by just providing the USB Drive to P without identifying the relevant element(s) as might be stored in it;
	(iv)	the Court of Appeal granted the relevant order for discovery with consequential order for compliance within 28 days.

62.  On 24 January 2018, P filed the Amended SoC. On 9 February 2018, D filed his 11^th affirmation in purported compliance with the order by the Court of Appeal in paragraph 61(e) above. This court has no views on whether there had been due compliance with the orders by the Court of Appeal in paragraph 61(c) and (e) above. On 20 March 2018, D filed his Amended Defence and Counterclaim.

IV.  LEGAL PRINCIPLES

63.  Both Mr Yan SC (and Mr Pun with him), counsel for P, and Ms Tam SC (and Mr Yu with her), counsel for D, had no disagreement over the relevant legal principles, and the nub of the matter was how such legal principles were to be applied to the applications before me. So I will not labour too much on the relevant principles.

64.  Amendment of pleadings  I reiterate but will not repeat here my observations on the legal principles for amendment of pleadings in Chan Kon Fung v Gallop Pioneer Limited & anor[28] and Incorporated Owners of Western Court v Conrad Salat Czakat Rumjahn appointed to represent the Estate of Usuf Rumjahn, deceased.[29] These principles have been reiterated and confirmed in paragraphs 35-36 of the CA Judgment.

65.  Relief against sanctions  I reiterate but will not repeat here the legal principles concerning unless orders, proportionate sanction, relief from sanction and extension of time to seek relief from sanction set out in Lee Sai Nam v Li Shu Chung & ors (No 2).[30]

66.  It is useful to also note the following on granting of relief from sanction:

(a)

Mr Yan SC invited me to consider the observations of Johnson Lam J (as he then was) in Re Estate of Nina Kung (No 2).[31] In that case, the learned judge directed the plaintiff to disclose the identity of the witness by a specified deadline failing which the plaintiff would be debarred from calling such witness at trial. The plaintiff made a considered decision not to call the witness, but 9 days into the trial the plaintiff sought relief from sanction to call such witness. The learned judge observed at page 165 that pursuant to Order 1A rule 2(2) of the RHC, the probative value of the proposed evidence was an important, though not sole, consideration as to whether the court should grant relief, but in that case the witness’ evidence was not probative. Mr Yan SC suggested that the relevance/necessity of the proposed amendment must be an important consideration as to whether relief from sanction should be granted.

(b)

Mr Yan SC also referred me to Daimler AG v Leiduck[32] in which Fok JA (as he then was) observed that a weighty factor in the court’s weighing exercise on whether to grant relief from sanction is “the question of proportionality of the sanction in the circumstances of this case”. In that case, the effect of the sanction (and hence the effect of refusal to grant relief) was to debar the plaintiff from contesting the allegation of fraud against it without trial, and “[it] is not in the interests of the administration of justice that serious findings go by way of default against a party, especially since, pursuant to O.1 r.2(2), the Court is enjoined to recognize that the primary aim in exercising its powers is to secure the just resolution of disputes in accordance with the substantive rights of the parties (O.2 r.5(1)(a))” (see also paragraphs 141 and 159 in Lee Sai Nam (No 2)).

67.  As regards application for time extension to apply for relief from sanction, Mr Yan SC drew on Cheung JA’s observations in The Decurion[33] which concerned time extension for service of the Defence. It was said the applicable principle was to look at all relevant matters and consider the overall justice of the case and not to apply a rigidly mechanistic approach, which principle would resolve 2 conflicting considerations: (a) that a party should observe procedural rules, default of which could result in judgment being entered against it, and (b) that a party should not be deprived of an adjudication on the merits unless there had been prejudice to the other party that could not be compensated by costs.

V.  P’S AFFIRMATION EVIDENCE

68.  P’s case  P claimed there were 2 main issues for trial: (a) the Main Issue as to whether D had used the Model and/or its improved, modified and/or developed versions for placing his own private bets,[34] and (b) whether the Model used by the Partnership Business was a Logit model or a Probit model (which was relevant to D’s Probit/Logit Defence – see footnote 25 above).

69.  P had to prove D used the Model and/or its improved, modified and/or developed versions for placing his private bets, which he claimed would be by expert analysis/comparison of betting patterns gleaned from the betting records of inter alia the Partnership Business and D, and Master de Souza and L Chan J in making the Discovery Order and Varied Discovery Order that required D to disclose his betting records must have accepted those documents to be relevant to the Main Issue and aforesaid manner of proof, and Au-Yeung J also agreed by holding D’s betting records to be relevant documents that HKJC ought to disclose.

70.  In the P 14^th Aff, P claimed it was also his case (but D denied) that aside from placing bets using his own HKJC account, D also betted through HKJC accounts of his agents/nominees (including Leung). Given the Au-Yeung Decision, P acknowledged this aspect of his case had not been expressly pleaded, but he claimed it had been canvassed in the statement evidence (see paragraph 16 above), affirmation evidence[35] and paragraphs 19-32 of Ziemba’s 1^st affirmation filed on 1 December 2014 that outlined/explained the matters (eg analysis of D’s Betting Records[36]) that led him to conclude D must have placed private bets via the HKJC accounts of agent(s)/nominee(s):

(a)	the Partnership Business used the Model to place bets on 4 betting options, ie Win, Place, Quinella and Quinella Place,[37] which strategy was developed by D and proved to be highly successful during the life of the Partnership Business;
(b)	there was no conceivable reason for a disciplined statistician like D to depart from such highly successful betting strategy, and to adopt an alternative betting strategy with higher risk when placing his own bets using his own money, but D’s Betting Records in relation to his own HKJC account showed that (except for a few odd days) only Place and Quinella bets and not Win and Quinella Place bets were placed, so it was to be inferred that D must have been utilising other HKJC accounts (ie accounts of his agents/nominees) for placing Win and Quinella Place bets;
(c)	P believed the missing Win and Quinella Place bets would be found in Leung’s betting records, which would advance P’s case and debunk D’s case, and would explain why D resisted P’s non-party discovery application against HKJC (who took a neutral stance) for Leung’s betting records, but if D were right in that Leung was not his agent/nominee, D should not have resisted disclosure as Leung’s betting records would have strengthened D’s case.

71.  Consequently, P claimed Leung’s betting records ought to be disclosed for the parties’ respective experts to study/analyse and to compare the betting patterns of the Partnership Business and those of D/Leung to draw conclusions on the Main Issue. Although D claimed it would be impossible to draw conclusive opinion from such exercise, P said Master de Souza and L Chan J in making the Discovery Order and Varied Discovery Order that required D to disclose the betting records of his agents/nominees clearly accepted whether D betted through agents/ nominees (including Leung) was a live/relevant issue. Au-Yeung J considered D’s private betting through agents/nominees (if any) could amount to breach of the Agreement, which would be a central and not peripheral issue between the parties, and it would not be for the court to decide at an interlocutory stage (especially given the dispute in expert opinion) which expert’s approach/conclusion were correct. P claimed this would be a matter for trial, so it was important for all relevant evidence (including Leung’s betting records) to be obtained/adduced to enable the court to eventually come to an informed decision regarding whose experts’ approach/conclusion were correct. Au-Yeung J refused discovery of Leung’s betting records only because agency was not pleaded (which merely meant such records were not relevant as against P’s then pleaded case), but the learned judge accepted the available evidence disclosed a case that Leung had been betting as D’s agent/nominee, so had the agency issue been expressly pleaded Leung’s betting records ought to have been disclosed for P to prove (if he could) that D used the Model for placing private bets. Consequently, the P 14^th Aff claimed that in taking out or intending to take out the Further Applications P was adhering to the course of action alluded to in Au-Yeung J’s observations without opening any new battlefront. P 15^th Aff therefore disagreed with D’s suggestion that Au-Yeung J did not deal with the necessity of Leung’s betting records.

72.  The P 15^th Aff contended the issue before this court in respect of the Amendment and Relief Summonses was essentially the same as that before Au-Yeung J, ie whether P should be allowed to study/examine Leung’s betting records that (as Master de Souza, L Chan J and Au-Yeung J accepted) were relevant for advancing P’s case that D had been using the Model or its improved, modified and/or developed versions for placing his private bets (either by himself or through agents/nominees), or for debunking D’s case that he had not been placing his private bets through agents/nominees. In the P 15^th Aff, P claimed his efforts to obtain Leung’s betting records were to seek relevant evidence to fairly present his case for the fair/just resolution of the disputed issues, and were not attempts to exert pressure on D, who had no justification not to give discovery of the betting records of Leung being his former student who had worked for the Partnership as part of the Modeling Team under D’s influence/directions. After all, if D had not betted through Leung as alleged, disclosure of Leung’s betting records would in fact advance his case (and damage P’s case), so D should not have resisted non-party discovery of Leung’s betting records, and P suspected D in denying disclosure of Leung’s betting records was trying to shut P out from his case at an interlocutory stage based solely on D’s side of the story, which stance clearly demonstrated the detriment to P’s case if the Amendment and Relief Summonses were refused.

73.  In the P 15^th Aff, P explained there was no reason for him not to raise the agency issue. He drew attention to paragraph 7 of the SoC that averred D made private profits by utilising the Model to place bets on his own account and not for the Partnership Business, and D “made bets on Hong Kong races on his own account using the Mathematical Model ……” (my emphasis), which P thought covered the plea of agency without need for any express averment. P claimed such view was reinforced by (a) D repeatedly addressing such issue in the statement/affirmation evidence filed on his behalf, (b) Master de Souza and L Chan J making the Discovery Order and Varied Discovery Order that required D to disclose betting records of D’s agents/nominees (including Leung) on the basis it was relevant evidence for live/relevant issue(s) that required resolution in the present action, and (c) Au-Yeung J confirming the same by the Au-Yeung Decision.

74.  Unless Order  P’s primary position was that the Unless Order would not debar the Further Applications. He claimed he had tried his best to comply with the Unless Order, and had no intention to flout it as evident from his taking out the 27/11/14 and HKJC Summonses before the deadline imposed. It was said it was not then apparent that it would be necessary to take out the Amendment Summons in light of the Discovery Order and Varied Discovery Order as explained in paragraphs 69 - 70 and 73 above, and the need for the Further Applications (eg to expressly plead the agency issue) “…… have arisen by reason of [the Au-Yeung Decision]” after expiry of the deadline imposed under the Unless Order. P also gave explanation as to why he did not take out the Relief Summons together with the Amendment Summons (see paragraph 57 above).

75.  But if the above stance was not accepted by the court, P’s fallback position was the Relief Summons (filed out of abundance of caution) for relief from sanction to enable him to take out and proceed with the Further Applications. In the P 15^th Aff, P noted D only took issue over the Amendment Summons based on the Unless Order at the call-over hearing on 6 December 2016 despite having been informed of P’s intention to amend the SoC in the Joint Letter dated 16 March 2016.

76.  Relief from sanction: fairness  P claimed it would be in the interests of the administration of justice to grant relief from sanction otherwise he would be deprived of the opportunity to fairly present his case by shutting out highly relevant evidence being Leung’s betting records that were necessary to advance his case and debunk D’s case (see paragraphs 68 - 72 above), and that would prevent/undermine fair trial of P’s claim and just resolution of the inter partes disputes according to substantive rights, which could not further the objectives of the administration of justice. Further, according to the terms of the Unless Order, P was the only party prevented from taking out interlocutory applications under the Unless Order, but D would be free to take out such interlocutory applications as he saw necessary. P claimed this would result in obvious unfairness between P and D in their respective abilities to conduct the present litigation, and P would suffer grave prejudice/injustice as a result.

77.  Relief from sanction: alleged delay and litigation conduct  P noted D relied heavily on P’s alleged delay in taking out the Amendment Summons, but P denied there was any intentional contumelious conduct on his part. In the P 15^th Aff, P claimed he had nothing to gain from delaying the present action, and in fact wished for the dispute to be resolved as soon as possible. P said whilst he actively pursued his claim against D and tried his best to take out all interlocutory applications as advised and/or could have been taken out as at the deadline imposed, D abused the imbalance of information between them[38] by adopting delaying tactics and finding excuses to resist P’s efforts to obtain relevant evidence, to withhold his full betting records, to oppose disclosure of Leung’s betting records and to deny provision of a clean, unencrypted copy of the Model for expert examination. P claimed it lied ill in D’s mouth to accuse P of deploying tactical gamesmanship.

78.  P denied he tried to delay the present action by engaging in “interlocutory skirmishes”, and claimed it lied ill in D’s mouth to complain about delay to his counterclaim when he was the one to cause delay by withholding relevant evidence (his/Leung’s betting records), by deleting the Model and by encrypting copies thereof in breach of the Discovery Order and Varied Discovery Order. P claimed it was D who forced him to take out many of his interlocutory applications (especially the 27/11/14 and HKJC Summonses) which were not “interlocutory skirmishes” but necessary applications to obtain clearly relevant evidence for advancing his own case against D for misuse/misappropriation of the Model, and for debunking D’s denial thereof and/or the Probit/Logit Defence. Despite D’s resistance before DHCJ Kwok SC and the Court of Appeal, P’s request for a clear, unencrypted copy of the Model was vindicated by the CA Judgment. Further, despite D’s resistance before the Registrar and Au-Yeung J, P’s request for discovery of the full extent of D’s own betting records was vindicated by the Au-Yeung Decision.

79.  In the P 15^th Aff, P disagreed he did not plead the agency issue on purpose to try to avoid costs consequences in relation to joinder of third parties on their own volition. P said there was no evidence to suggest Leung wanted to be joined as a third party to the present action, and on the contrary Leung tried not to get involved, eg (a) P twice attempted personal service of the HKJC Summons and relevant documents on Leung between December and February 2014, but on the 1^st occasion Leung asked the security at his building to refuse entry to P’s process server and on the 2^nd occasion Leung repeatedly avoided the process server and refused to accept service, and (b) despite attempt to effect postal service of such documents to Leung’s residential address they were returned.

80.  Relief from sanction: prejudice  P claimed even if he were allowed to take out the Further Applications there would be no prejudice to D. The proposed amendments sought to be introduced by the Amendment Summons would not cause surprise/prejudice because, as D himself admitted, he was aware of such agency allegation as early as in August 2013, and the issue had since been hotly contested between the parties. D was also aware of P’s intention to take out the Further Applications at least since about 16 March 2016 when he was asked to agree to the Joint Letter to adjourn the pending CMC to be heard on 23 March 2016. D had not objected then to the Further Applications based on the Unless Order, and instead he consented to the intended Further Applications being one of the reasons for seeking to adjourn the pending CMC. In any event, no trial date had been fixed, and no trial date would be fixed for quite some time in view of the outcome of the CA Judgment.

VI.  D’S AFFIRMATION EVIDENCE

81.  D claimed the Relief Summons was significantly out of time being filed 2 years and 4 months after the Unless Order, 2 years after the Registrar Decision (when the need to amend pleadings became clear), 1 year after the Au-Yeung Decision (which made the need for amendment of pleadings even clearer), 5 months after the Amendment Summons, 4 months after the Kwok1 Decision (which made clear the need for relief from sanction), and 2 months after the CA Leave Judgment (which made it even clearer relief was required).

82.  D claimed P’s breach of the Unless Order was intentional since (a) P was all along represented by senior counsel, (b) P and his legal representatives were bound to consider what interlocutory applications should be taken out before the expiry of the deadline imposed in the Unless Order and hence should have spotted the failure to plead agency in the SoC, (c) P was not forthcoming with the real reasons for failure to raise the agency plea in the SoC and it could well be that he omitted such plea to avoid joinder of alleged agents/nominees to the present action with costs consequences, and (d) even if the initial failure to plead the agency point was due to oversight, continued breach could not be justified when P’s legal representatives admitted it was a considered decision not to apply for relief until a later stage despite relevant judicial comments/rulings otherwise.

83.  D claimed P’s deliberate flouting of the Unless Order was evident from P’s insistence as late as the P 14^th Aff that the Further Applications arose by reason of the Au-Yeung Decision and was not debarred even though (a) the Kwok1 Decision and CA Leave Judgment that rejected such interpretation were binding on P, and (b) the Amendment Summons could not have arisen from the Au-Yeung Decision which merely ruled on the consequences of P’s failure to put forward a proper plea of agency but did not enjoin D to take out such application.

84.  D noted the courts had criticised P’s litigation gamesmanship and lack of discipline that resulted in frequent breaches of court orders, eg disregard of deadlines for filing affirmation evidence, maintenance of contrived interpretation of the Unless Order, repeated requests for time extension to enforce the Varied Disclosure Order with threat to cite D for contempt, and delay in prosecuting his claim with excessive number of interlocutory skirmishes. D claimed it would not be appropriate to grant relief from sanction when P displayed a defiant attitude in denying the effect of the Unless Order that resulted in the parties being bogged down in interlocutory skirmishes.

85.  The present action commenced in 2012, but had not been set down for trial. D claimed that if the Relief and Amendment Summonses were allowed, it would open up a battlefront based on alleged betting by D’s alleged agents/nominees with need for further discovery, witness statements, expert evidence or even joinder of other parties, and the trial would be significantly delayed to the prejudice of all, including D and other litigants who had command on the court’s time. D denied feet-dragging on his part, and tried to justify his refusal to provide the Model (which arguments were rejected in the CA Judgment).

86.  D also claimed he would suffer prejudice if relief from sanction were granted since:

(a)	progress of his counterclaim would be delayed;
(b)	P’s attempt to obtain records of D’s purported agents/nominees was to put pressure on him with threat of perjury/contempt as he had deposed he did not have his alleged agents’ betting records / other documents;
(c)	witness’ memory would be adversely affected with further delay;
(d)	time/money would be wasted in engaging experts to extend the exercise for comparative analysis of massive volume of betting records to those of his purported agents (when D believed and Fan noted it would be impossible to draw any conclusive results from such exercise);
(e)	P’s purpose of getting Leung’s betting records to “debunk” D’s case was vindictive;
(f)	even if Leung’s betting records showed strong correlation to bets placed by D, it would not demonstrate Leung was D’s agent/nominee (which was said to be also HKJC’s stance).

87.  D claimed it was unnecessary for P to obtain Leung’s betting records or to amend the SoC to plead the agency point to have a fair trial because:

(a)	P had already adduced ample factual evidence to support his case, including circumstantial evidence of D’s alleged misuse of the Model for private betting (including through agents/nominees);
(b)	P and his experts had expressed great confidence in his case;
(c)	P merely wanted more evidence of doubtful utility to bolster his case so as to “cross the t’s and dot the i’s”, and in any event the question before the court was different from that before Au-Yeung J (who did not have to deal with the necessity of Leung’s betting records given her conclusion of lack of relevance and she did not have to deal with the request for relief from sanction) so her observations would not assist P.

VII.  DISCUSSION

88.  There was no dispute over the validity of the Unless Order, which was clearly a peremptory order with sanction imposed upon default. There was also no appeal against the Unless Order, and indeed P’s primary stance was that he had complied with the Unless Order. Thus, the Unless Order was valid and binding on the parties.

(a)  Nature of the Unless Order

89.  As explained above, the Unless Order was peremptory in nature in directing P to perform some requirement by a certain date and in specifying the consequences of default. Under Order 2 rule 4 of the RHC,[39] the sanction imposed in an unless order takes effect automatically unless relief from sanction is obtained, so the non-defaulting party does not have to make any application to enforce the sanction.[40] Rather, it is for the party in default to apply for relief from sanction whereupon the court is then (and only then) required to consider whether, in all the circumstances, it is just to make an order granting relief from the consequences of default.[41]

90.  As I have explained in paragraph 71 of Lee Sai Nam (No 2), it is important to distinguish between (a) operation of the sanction which is automatic and (b) exercise of the court’s discretion to grant relief. For (a) above, the court must confine itself to deciding where there has been any breach of the unless order, and must not embark on the exercise of examining whether there is any plausible explanation or justification for the default. Hence, in deciding whether the sanction under the Unless Order had come into effect, P’s subjective wishes and personal circumstances as well as the views/advice of his own legal representatives were neither here nor there. In short, the Unless Order should be considered objectively to see whether there was compliance with the specified requirement. Further, as the sanction under any unless order becomes operative automatically upon breach, it is not for the court in deciding whether or not there has been breach of such unless order to question the suitability of the sanction vis-à-vis the default or to re-write the sanction imposed under the order.

(b)  Requirement under the Unless Order

91.  According to the terms of the Unless Order (see paragraph 31 above), P was required to take out “all interlocutory applications that may be advised” by 4:00pm on 28 November 2015. Mr Yan SC submitted the Unless Order could not have been intended to cover interlocutory applications the need of which only became apparent after the deadline imposed, especially in light of its peculiar nature (ie it targeted P and not D) and the unusual circumstances surrounding the making of the Unless Order (see paragraphs 29-34 above).

92.  I have no doubt the plain and natural meaning of the Unless Order (given that it was a peremptory court order which consequences upon breach the court had to police) was as DHCJ Kwok SC explained in the Kwok2 Decision (see paragraph 58(c) above), ie P was not bound to take out any interlocutory application, but if he wished to do so (as advised by his legal representatives since P was all along legally represented) he must do so before the deadline imposed. This meant P could not choose to take out some and not all interlocutory applications, and to take out other interlocutory applications some later time (eg when he would seek further legal advice or when his legal representatives would see fit to render further legal advice on what other interlocutory applications to take out).

93.  P took out the 27/11/14 and HKJC Summonses before the deadline imposed by the Unless Order, but Mr Yan SC submitted it was not apparent that it was necessary to take out the Amendment Summons given the Discovery Order and Varied Discovery Order as explained in paragraphs 69 - 70 and 73 above, so P was not then “advised” to take out the Amendment Summons for leave to expressly plead the agency point. In short, P’s argument ran thus: P was required to take out only those interlocutory applications as advised by his legal representatives before the deadline under the Unless Order, but he was free to take out other interlocutory applications after such deadline. In my view, this could not be right for it would cause the Unless Order and the sanction imposed thereunder to become a toothless tiger with an empty bite.

94.  First, as explained above, the requirement in an unless order must be objectively ascertainable so that any affected party and the court would be able to appreciate (without investigation/enquiry into subjective and/or one-sided views/considerations) whether and when (a) there was default of the specified requirement and (b) the sanction became operative. Mr Yan SC’s interpretation of the Unless Order turned on confidential (or even legally privileged) advice that P’s legal representatives would give to P, so how could the non-defaulting party D and/or the court know whether there had or had not been breach of the requirement under the Unless Order simply from P taking out the 27/11/14 and HKJC Summonses before the deadline imposed and P taking out the Amendment Summons afterwards. Neither D nor the court would know whether P’s legal representatives advised or not advised taking out the Amendment Summons before the deadline imposed. This flied against the underlying rationale for having an unless order, which is an end-of-the-road order with guillotine effect upon breach.

95.  Secondly, Mr Yan SC further suggested a modified reading of the Unless Order, ie such order only required P to take out interlocutory applications that “could have been advised by [P’s] legal representatives” and/or “could have been taken out by [P] …… in light of the matters and the state of affairs in these proceedings at the time [ie the deadline imposed in the Unless Order]” (see paragraph 38 above). But careful study of the terms of the Unless Order did not reveal such caveat/qualification as suggested, and in the absence of such caveat/qualification P’s contention in paragraph 93 above meant P could defer taking out interlocutory applications in respect of which he had not sought advice or his legal representatives did not advise before the deadline imposed for one reason or another. Such reading of the Unless Order would render it quite meaningless.

96.  But even if the Unless Order was to be read in the modified manner as set out in the above paragraph, it would only lead to uncertainty and not clarity given likely debate over what interlocutory applications “could have been advised” by P’s legal representatives and/or “could have been taken out” by P before the deadline imposed meant (as evident from the parties’ differing views now presented to this court on the subject). In my view, a requirement in an unless order must be precisely formulated to enable any affected party and the court to know with clarity and certainty what is required for compliance without inquiry/investigation into subjective views and without controversial debate over what would amount to compliance and/or default.

97.  Thirdly, Mr Yan SC’s reading of the Unless Order (whether in primary or modified form) did not sit well with the sanction imposed in the Unless Order, ie that P would be debarred from “taking out further interlocutory applications”. If P was left free to take out those interlocutory applications that had not been or could not have been advised by his legal representatives before the deadline imposed, in light of the then state of affairs, why would P be debarred from taking out “further interlocutory applications” without any reservation for P to take out those applications that his legal representatives might advise or could only have advised after the deadline imposed. In my view, the sanction imposed in the Unless Order automatically guillotined “further interlocutory applications” by P, and it spoke strongly against Mr Yan SC’s reading of the Unless Order.

98.  Fourthly, DHCJ Kwok SC in the Kwok2 Decision rejected Mr Yan SC’s reading of the Unless Order (see paragraph 58(c) above). More importantly, the Court of Appeal by the CA Leave Judgment agreed with DHCJ Kwok SC’s reasoning by rejecting P’s intended ground of appeal against the learned judge’s dismissal of P’s summons filed on 14 December 2015, and went further to hold “[the] construction of the [Unless Order] contended by [P’s senior counsel] is untenable” (see paragraph 59(a) above). Such conclusion by the Court of Appeal was binding on P, and I am unable to understand how P could still maintain the construction of the Unless Order in paragraph 93 or paragraph 95 above at the Hearing which was after the CA Leave Judgment.[42] There could not have been any subsequent change in circumstances since (a) the reading of the Unless Order turned on its terms at the time it was made, and (b) the sanction was to apply automatically upon any default.

99.  I disagree with P’s position, and find the proper reading of the requirement in the Unless Order was that P was not bound to take out any interlocutory application, but if he wished to take out any interlocutory application(s) (pursuant to legal advice as he was legally represented), he must do so before the deadline imposed.

(c)  Sanction under the Unless Order

100.  As explained in paragraph 90 above, the court has no discretion to revise or re-write the sanction imposed under the Unless Order. As further explained in paragraph 97 above, the sanction imposed was that the defaulting party (which under the Unless Order could only have been P) would be debarred from taking out any further interlocutory applications. Still further, as also explained in paragraph 97 above, the sanction imposed did not distinguish between interlocutory applications that could have been advised by P’s legal representatives and/or could have been taken out by P before the deadline imposed and those that could not have been so advised and/or could not have been taken out by such deadline. Quite simply, the sanction would automatically debar P from taking out any further interlocutory application after the deadline imposed.

(d) Compliance or breach?

101.  P filed the 27/11/14 and HKJC Summonses before the deadline imposed in the Unless Order. Ms Tam SC submitted it was a basic pleading rule that material facts such as agency should be pleaded, and since the SoC was settled by senior counsel on 21 January 2013, P or at least his legal representatives must have been alive to the need to amend the SoC to plead the agency point at the time of the Unless Order, but the 27/11/14 and HKJC Summonses did not seek such amendment of the SoC. D claimed that P in taking out the Amendment Summons in November 2016 (ie long after expiry of the deadline imposed under the Unless Order) was in breach of the Unless Order.

102.  As explained in paragraph 74 above, it was P’s primary position that he had complied with the Unless Order. P claimed it did not become clear there would be a need to expressly plead the agency point until the Au-Yeung Decision (which confirmed the Registrar Decision on this point) was handed down in February 2016 long after the deadline of 28 November 2014 imposed under the Unless Order. However, such contention was premised on Mr Yan SC’s reading of the requirement/sanction under the Unless Order which I have rejected. In my view, on proper reading of the Unless Order as explained in paragraph 99 above P was in breach of the requirement in the Unless Order by taking out the Amendment Summons after the deadline imposed.

103.  P reminded that he made an ex parte application on 1 March 2016 subsequent to the Unless Order, and pursuant to such application Au-Yeung J ordered HKJC to preserve Leung’s betting records until the hearing/determination of the inter partes summons returnable on 11 March 2016 (see paragraph 47 above), and by a consent order made by DHCJ Kwok SC on 15 June 2016 HKJC was required to preserve Leung’s betting records until determination of the trial herein or further order (see paragraph 47 above).

104.  Mr Yan SC noted no issue was raised about the debarring effect of the sanction in the Unless Order in relation to P’s such application. But it was unclear whether, in light of Mr Yan SC’s reading of the Unless Order, P actually brought Au-Yeung J’s attention to the true effect of the requirement/sanction as I have found (or at least informed the learned judge of such countervailing meaning when P made his ex parte application). This, in my view, was a matter of real concern because as late as the hearing of inter alia the 27/11/14 Summons before DHCJ Kwok SC in December 2016 P’s legal team failed to deal with the Unless Order and made a considered decision not to seek relief from sanction (see paragraphs 58(a) – (c) and 59(a) above). Further, the order by DHCJ Kwok SC on 15 June 2016 was made by consent, so there must have been implicit relief from or waiver of the automatic effect of the sanction upon such joint application by agreement of the parties and approval by the court. But even if there was no such implicit relief/waiver, it would only mean P, HKJC and DHCJ Kwok SC fell into error, which error could not defeat or undo the sanction that had become operative upon P’s breach. I do not believe the matters in the above paragraph would aid P as the defaulting party in breach of the Unless Order when D as non-defaulting party took issue over such default.

105.  Much effort was spent in P’s affirmation evidence and written/oral submissions in criticising D’s “litigation gamesmanship” and vice versa. But for the purpose of determining whether P was in breach of the Unless Order, P’s intentions/motives were irrelevant, and it would be unnecessary for me to determine whether P had tried his best to comply with the Unless Order, whether P’s breach was deliberate and/or contumelious or whether the assertion that P was not debarred by the Unless Order from proceeding with the Further Applications was, as Ms Tam SC submitted, “preposterous”. I will deal with such matters when I consider the Relief Summons.

(e)  Amendment Summons

106.  Since I have found that by taking out the Amendment Summons P was in breach of the Unless Order that would automatically trigger the operation of the sanction imposed, P could not seek leave to amend the SoC unless relief from sanction was obtained. The issue of relief from sanction would be considered in Part VII(g) below, but it is useful to now consider whether the Amendment Summons of itself would be meritorious. If it was unmeritonous, there would be little point to grant relief for P to pursue the Amendment Summons.

107.  Ms Tam SC submitted it was a trite pleading rule that material facts such as agency should be pleaded, and as the SoC was settled by senior counsel there was no good reason why P did not apply to amend the SoC to plead the agency point until November 2016. There was some suggestion on behalf of P that the existing plea in the SoC (ie D placing bets “on his own account”) was wide enough to cover the agency point without the proposed amendments on the basis that such existing plea did not mean D placed bets by himself (as opposed to placing bets through agents/nominees) but rather it meant D did so for his own benefit (in contrast to “for the Partnership Business”) (see paragraph 17 above). But such argument did not find favour with the Registrar and Au-Yeung J, and the Registrar and Au-Yeung Decisions held otherwise (see paragraphs 40 and 46 above). There was no appeal against the Au-Yeung Decision, and the P 14^th Aff acknowledged P had not expressly/specifically pleaded the agency point in the SoC (see paragraph 17 above). P eventually took out the Amendment Summons for leave to amend the SoC to add the agency point, ie that D not only used the Model to place private horse racing bets with HKJC in his own name but also through his agents/nominees (including Leung) (see paragraph 56 above). Plainly, P now recognised the existing plea in the SoC did not sufficiently raise/address the agency point.

108.  Nevertheless, P and D were in agreement that the Main Issue in the present action was whether D used the Model (and/or its modified, improved and/or developed versions) to make private betting for his private profit. On such Main Issue, I agree with Au-Yeung J that betting through agents/nominees would not be a peripheral matter. In my view, even though Au-Yeung J’s observations were expressly obiter, their vitality turned not on whether they were ratio or obiter but on the cogency of the reasoning that led to such observations.

109.  Ms Tam SC argued that betting through agents would only form part of P’s larger allegation that D made private betting using the Model. It was said the main focus of the evidence so far was D’s own private betting, and all the peripheral agency issue showed was D conducted more private betting with the Model than disclosed in D’s betting records, which contention went to the question of quantum, ie the extent to which D’s private betting was done through others and the issue of profits from such private betting would be determined upon taking accounts and inquiries.[43] Ms Tam SC submitted there was no suggestion it would be impossible for P to run his case on D’s private betting without the agency point, which point paled in significance when compared with the Main Issue of whether the Model was used for D’s own private betting, which issue could be run at trial independent of the agency point.

110.  D had run such arguments before Au-Yeung J who did not find favour with such contentions. Although I am not bound by her obiter observations, I find myself unable to disagree with the learned judge’s views given the vitality/cogency of her reasoning. First, Ms Tam SC conceded that betting through agents might constitute a breach of the Agreement. On such basis, the proposed amendments necessarily went to the heart and not the periphery of the Main Issue between the parties, ie whether D placed private bets using the Model and/or its modified, improved and/or developed versions by way of private betting whether by himself and via agents/nominees. Indeed, by the reliefs sought in the SoC, P asked for an injunction to restrain D whether by himself, his servants, employees, agents or any of them or otherwise howsoever from using the Model except for the Partnership Business (see paragraph 14(b) above). I further note it was P’s case as drawn from inferences based on primary facts and bolstered by his expert’s views (but irrespective whether D and his experts might disagree) that D’s private betting was likely to have been structured with D placing bets in his own name on 2 betting options and in the names of his agents/nominees on the other 2 betting options (see paragraphs 40, 44 and 70 above), hence the agency issue must necessarily be part and parcel of the Main Issue that would go to the question of liability and not just to quantum. As Au-Yeung J said, there were sufficient bases for P to raise the agency issue (see paragraph 45 above) , and I see no reason why P should be required to pursue this litigation with his hands tied behind his back without being afforded the opportunity to present his full case on liability.

111.  Such recognition that the agency issue was actually part and parcel of the Main Issue (albeit not expressly pleaded in the SoC but without protest by D of such fact until later on in the present action) was addressed/reflected in the following:

(a)	in various witness statements that P filed in August 2013 (see paragraph 16 above);
(b)	in the Discovery Summons filed in November 2013 that sought specific discovery of inter alia the betting records of D’s agents/nominees (including Leung, Lam and Xiong) which D opposed with affirmations that responded to the agency issue on the merits (see paragraph 18 above);
(c)	in the Discovery Order granted by Master de Souza in November 2013 that ordered specific discovery and inspection of inter alia all betting records with HKJC under the names of D’s agents/nominees (including but not limited to Leung, Lam and Xiong) for specified periods (see paragraph 19 above);
(d)	in the Varied Discovery Order granted by L Chan J which affirmed the Discovery Order in (c) above (see paragraph 20 above);
(e)	in the Variation Annexure (attached to D’s Variation Summons filed in April 2014) that set out undertakings offered and varied orders sought in proposed replacement of the Varied Discovery Order including a proposed order that required D to give specific discovery of the betting records under the names of “his nominees or agents on his behalf, if any” (see paragraph 23 above).

112.  In respect of (a) above, Ms Tam SC submitted that the agency point only bore marginal significance in P’s own witness statements and such point only came to the forefront of argument at a much later stage. I disagree. The significance of the agency point could not be measured by the extent it was canvassed in P’s own witness statements when (i) P essentially relied on inferences from objective evidence and expert opinion to establish this point (see Au-Yeung Decision in paragraphs 43-46 above and discussion in paragraphs 116, 126-128 and 139 below), and (ii) shortly after filing his own witness statements P sought discovery of relevant documents in support of the agency point (see paragraph 111(b)-(d) above). In my view, it was clear from the above that at least up to April 2014 the parties and the court assumed the agency point was part and parcel of the Main Issue notwithstanding the lack of express plea of the agency point in the SoC. Au-Yeung J noted the Chan1 Decision did not explain the relevance of Leung’s betting records (see footnote 21 above), but I am unable to discern any cogent reason for granting specific discovery of the betting records of D’s agents/nominees (including those of Leung, Lam and Xiong) under the Discovery Order and Varied Discovery Order other than a belief that the agency point was germane to the Main Issue. Indeed, the Chan1 Decision explained that P would need to engage experts to study the Model and D’s private bets (hence the Discovery Order and Varied Discovery Order required delivery up of the Model and betting records in names of D and his agents/nominees) “to see if [D’s] bets were placed with the benefit of the output of the [Model]” (see paragraph 21 above and also the Au-Yeung Decision in paragraph 43 above).

113.  Au-Yeung J held that the Variation Annexure could not be taken as D’s admission that the betting records of D’s alleged agents/ nominees were “relevant to the claim” (see paragraph 24 above). In my view, there was no need to regard D’s stance as any admission. But it was clear from the matters in paragraphs 111-112 above that both P and D (both of whom had the benefit of representation by counsel before Master de Souza and by senior counsel before L Chan J) laboured under the misapprehension that the existing pleas in the SoC sufficiently raised/ addressed the agency issue, and they had not enlightened Master de Souza and L Chan J of the absence of sufficient plea of agency as subsequently explained in the Registrar and Au-Yeung Decisions and now accepted by P. I accept such error was an honest mistake on the part of P’s legal representatives, and there was no deliberate omission. After all, P openly sought specific discovery of the betting records of D’s agents/nominees, which gave opportunity for D to raise opposition, but he did not object to the irrelevance of such documents due to absence of relevant pleading in this respect until a later stage. It appeared D’s legal representatives also fell into the same procedural trap.

114.  Mr Yan SC submitted that allowance of the proposed amendments would enable P to obtain disclosure of Leung’s betting records from HKJC, which evidence would be highly material, important and necessary for determining the Main Issue (inclusive of the agency point) between the parties. Ms Tam SC complained that P’s intention for the proposed amendments to trigger further discovery application would only lead to “duplication of cost and effort”.

115.  But, in my view, the true question is not whether P should be allowed to plead the agency point to enable him to obtain non-party discovery of documents which he wished to lay hands on, but whether such plea was germane to the true dispute between the parties and whether there was sufficient basis for P to raise such plea. If the answers to the latter questions were in the affirmative, then the propo#sed amendments to the SoC would arguably be necessary for determining the real question in controversy between the parties, and may support non-party discovery for gathering relevant evidence that would go to such real/relevant dispute for resolution at trial. I am unable to accept D’s complaint of duplication of cost and effort, but more of this in paragraphs 127 below.

116.  I have in paragraphs 108-113 above explained why the agency point was germane to the Main Issue. It was true D claimed he had not placed bets through agents/nominees, but the real question in controversy would not be dictated merely by D’s denial. D’s private betting (whether by himself and/or by his agents/nominees if any) was necessarily a matter within D’s knowledge and outside P’s knowledge, so P must rely on inferences drawn from statement evidence, objective documents and expert opinion. The Registrar and Au-Yeung Decisions succinctly explained that P had laid the foundation for his contention that D had been betting through agents (see paragraphs 40 and 44 above), and I agree with Au-Yeung J that despite D’s denial the bases set out in paragraph 44(a)-(e) above did disclose a case that Leung had been an agent of D (see paragraph 45 above). In my view, but for the Unless Order, there was a strong case for allowing P to plead the agency point. Like Au-Yeung J, I reject D’s complaint that the issue of Leung betting on behalf of D was peripheral to the Main Issue. Indeed, I am of the view it was central to the Main Issue, and fair trial on the issue of liability would require the agency point to be properly raised, contested and resolved. On such basis, D’s complaint that the proposed amendments should be disallowed to prevent proliferation of non-essential issues could not be supported.

117.  Ms Tam SC complained that the proposed amendments were unfocused and broad in scope in that P failed to specify who were D’s agents (ie “by himself, and/or through his agent(s) and/or nominee(s), including but not limited to [Leung] ……”), which suggested P would wish to mount a fishing investigation at trial as to who else might have placed bets on D’s behalf. I disagree. As explained in the above paragraph, P at this interlocutory stage had set out arguable bases for raising the agency point, but evidence of agency in respect of D’s private betting was unlikely to be readily available to P, who therefore had to rely on discovery, inferences and expert opinion. The fact that some of D’s agents/nominees were unknown to P did not necessarily detract from his case that D did place private bets via agents/nominees. In my view, it would be inappropriate to shut out P’s agency point on the suggested basis.

118.  D complained of delay on the part of P in taking out the Amendment Summons. D suggested (a) P was legally represented all along and should have been aware of the need to amend of the SoC to plead the agency point which was raised as early as August 2013, and (b) if P genuinely believed he was not debarred by the Unless Order from taking out other interlocutory applications he could have filed the Amendment Summons shortly after the Registrar Decision that was handed down in April 2015 and not 19 months later in November 2016.

119.  In respect of (a) above, I refer to paragraphs 111-113 above and find that P’s (and likewise D’s) legal team was under initial misapprehension that the existing pleas in the SoC sufficiently raised the agency issue. But in respect of (b) above, D did have a point about delay on P’s part. Any misapprehension on the part of P’s legal team would have been cleared by the Registrar Decision handed down in April 2015 which noted the agency point had not been pleaded in the SoC (see paragraph 40 above). Ms Tam SC suggested P could not have seriously believed this aspect of the Registrar Decision would have been overturned on appeal. But even if P’s legal team considered the Registrar had erred in coming to such conclusion (see paragraph 41 above), the fallacy of such stance was made clear by the Au-Yeung Decision handed down in February 2016 which made clear the agency point had to be but was not expressly pleaded (which proper pleading was all the more necessary as P relied on inferences for proof of the agency point) even though it had been raised/contested in affirmations, witness statements and/or expert reports (see paragraph 46 above).

120.  In my view, there was no good/sufficient reason for the delay of 8 months from March to November 2016. I bear in mind there was no appeal against the Au-Yeung Decision. P offered the following reasons for such delay, but I am not convinced they amounted to good explanations:

(a)	at first P was awaiting the outcome of the 27/11/14 Summons (which included an application to amend the SoC – see paragraph 37(a) above) that was heard in December 2015 and February 2016;
(b)	P alluded to taking out the Further Applications in due course in the Joint Letter that was submitted to the Registrar for vacating and adjourning the pending CMC scheduled to be heard on 23 March 2016 to which D did not raise objection;
(c)	later P was awaiting the outcome of the application for leave to appeal against the Kwok1 Decision handed down in June 2016 that dismissed inter alia the 27/11/14 Summons, which application was due to be heard in December 2016.

121.  For (a) above, I cannot see how the hearing and outcome of the 27/11/14 Summons would have a bearing on the need to amend the SoC to plead the agency point. The proposed amendments in the 27/11/14 Summons and in the Amendment Summons dealt with quite different matters, and I am unable to see how the former would have affected the formulation of the latter. Indeed, P was able to file the Amended SoC on 14 January 2018 pursuant to the CA Judgment without impact on the Amendment Summons. Anyway, had there be any concern, given the need to amend the SoC to plead the agency point as shown by the Registrar and Au-Yeung Decisions, it would have been a simple enough matter to take out an application to amend the 27/11/14 Summons to replace the draft Amended SoC attached thereto with a fresh one with proposed amendments to expand the scope of the Model (see paragraph 37(a) above) and to raise the agency point, which would have enabled consideration of all proposed amendments at the hearing of the 27/11/14 Summons in December 2015 rather than at the hearing of the Amendment Summons in September 2017.

122.  For (b) above, I cannot see how the Joint Letter would assist. In my view, the fact P expressed a wish to defer taking out the Further Applications would not alter the fact that there was delay, and would not amount to (a) D’s concession that P could take out the Further Applications at any time P would choose, and (b) D’s waiver of any protest of delay/prejudice, and also the Joint Letter could not amount to any endorsement by the Registrar in respect of any deferral of the Further Applications.

123.  For (c) above, I am unable to see why, upon dismissal of the 27/11/14 Summons by DHCJ Kwok SC, P could not have promptly taken out an application for leave to amend the SoC to plead the agency point as there was nothing further to affect the formulation of the proposed amendments on the subject. Even if P intended to seek leave to appeal against the Kwok1 Decision, such reason as put forward for deferring application to amend the SoC to plead the agency point was exploded by the fact P filed the Amendment Summons in November 2016 without even waiting for the hearing in December 2016 for leave to appeal against the Kwok1 Decision,[44] which showed there was really no need to await the result of any appeal from the Kwok1 Decision. In my view, there was delay on the part of P in taking out the Amendment Summons. However, there was no merit to Ms Tam SC’s suggestion that the court should not be sympathetic to P “given his penchant for taking appeals and appeals”. In my view, P was justified in taking his appeals when after all the Registrar Decision was partly allowed by the Au-Yeung Decision, the Kwok2 Decision was partly allowed by the CA Leave Judgment, and the Kwok1 Decision was allowed by the CA Judgment.

124.  But would such delay sway the court’s discretion to refuse leave for P to amend the SoC to plead the agency point? Ms Tam SC cited Coulson J’s observations in CIP Properties (AIPT) Limited v Galliford Try Infrastructure Limited v EIC Limited & ors[45] and my observations in Lam Sik Ying, Administrator of the Estate of Lam Tim alias Stan Lam Tim, deceased v Lam Sik Shi & anor[46] to submit that the Amendment Summons would likely to be refused on the grounds of lateness (as it could have been advanced earlier), prejudice to D and proportionality. In my view, whilst the legal principles for the exercise of discretion and case management are trite, each case turns on its own circumstances. Having carefully considered all circumstances and the submissions by Mr Yan SC and Ms Tam SC, I come to the view that subject to P obtaining relief from sanction the Amendment Summons should be allowed.

125.  First, although after the Civil Justice Reform (“CJR”) the courts do not smile kindly on delay in the conduct of litigation, I am not persuaded the aforesaid delay (notwithstanding its length) was of any significant moment in the particular context of the present action. Although the present action was commenced in 2012, it was still a far cry from being ready to set down for trial. This was plainly evident from the CA Judgment in which the Court of Appeal granted leave to amend the SoC, granted leave for the parties to adduce expert evidence, and granted orders for production of the Model and discovery of the Ziemba’s Discrete Elements (see paragraph 61 above). More work had to be done before the present action would be ready for trial.

126.  Secondly, I am also not persuaded D would suffer prejudice because of the delay. Although the agency point was not expressly pleaded in the SoC, D was aware of the agency issue all along. Indeed, D in the D 10^th Aff recognised that ever since August 2013 P had been advancing a case that D was betting through agents/nominees even though it had not been expressly pleaded (see paragraph 38 above). As seen above, P had already explained/outlined the evidence on the agency issue in statement and affirmation evidence which was there for D to see, and P had also already explained the bases of his case on the agency issue from which he would ask the court to draw appropriate inferences. Even since August 2013 P was upfront with the fact that he would seek Leung’s betting records for his experts to compare the betting patterns to be gleaned from D’s/Leung’s betting records with those gleaned from the betting records of the Partnership Business and output from the Model, and Leung’s betting records had been preserved by HKJC pending trial. These matters were already known to D.

127.  Further, it was D’s case that he did not place any private betting through agents/nominees, and he had filed his own affirmations evidence as well as those of Leung, Lam and Xiong to such effect. Thus, D had available evidence to answer the agency issue. As regards expert evidence, D claimed no useful evidence could be gleaned from Leung’s betting records, and questioned whether betting patterns could be elicited from the betting records. But D’s denial would not be conclusive on the issue of agency, and P was entitled to put forward his case as he could to persuade the court on the agency issue. As Au-Yeung J held, “despite [D’s] denial, those bases [in paragraph 44(a)-(e) above] do disclose a case that Leung has been an agent of [D]” (see paragraph 45 above). More importantly, the CA Judgment granted leave for the parties to adduce expert evidence on inter alia the Main Issue, ie whether D had used the Model and/or the mathematical model(s) improved, modified and/or developed from the Model for placing his own private bets (see paragraph 61(b)(ii) above). Thus, the parties would have to move forward to adduce expert report/evidence on comparison of betting patterns drawn from the full extent of D’s betting records with HKJC under non-party discovery granted by the Au-Yeung Decision with those drawn from the Partnership Business and output from the Model (and its improved, modified and/or developed versions), and D could adduce expert opinion to challenge the approach by P’s experts. The agency issue called for a similar exercise with Leung’s betting records (which were available and had been preserved), which did not require investigation into new tangents and/or raking around for new evidence.

128.  As Mr Yan SC submitted, if D (as he alleged) had not been making private bets via agents/nominees (including Leung), such fact should be reflected in Leung’s betting records upon proper analysis by the experts or at least the experts might say no useful conclusion could be drawn from Leung’s betting records, so the proposed amendments to the SoC would not cause D to suffer material prejudice, and there was even possibility that Leung’s betting records could help in substantiating/ advancing D’s stance. I am not persuaded D would be prejudiced.

129.  Thirdly and more importantly, whilst I take into account the ideals of efficiency, proportionality and speed in the underlying objectives, I must also have regard to the primary aim of ensuring a just resolution of the dispute between the parties on substantive merits. Where, as I have found, the delay was of no substantial moment in the present context and would not cause prejudice to D, I see room for allowing the proposed amendments on the agency point which I have found to be part and parcel of the Main Issue on liability, and which P would be disadvantaged if the Amendment Summons was refused.

130.  Whilst D might be disappointed by permission for P to amend the SoC (if relief from sanction were granted), what the court must strive to achieve would be to avoid injustice and not disappointment. In Gale v Superdrug Stores Plc, Lord Millett in dealing with an application to withdraw an admission of liability said as follows:[47]

“…… In my judgment leave should normally be granted if the application is made in good faith, raises a triable issue with a reasonable prospect of success, and will not prejudice the plaintiff in a manner which cannot be adequately compensated. ……

Of course, the unexpected nature of the defence must have been a disappointment to the plaintiff; but I cannot think that this should count for anything. The sounder the defence sought to be raised by the amendment, the greater the disappointment to the plaintiff if it is allowed and the greater the injustice to the defendant if it is not. What the court must strive is to avoid injustice, not disappointment.”

131.  But in coming to the aforesaid conclusion, there was no need for me to go so far, as Mr Yan SC would have me do, to view D’s adamant resistance to the Amendment Summons (and also refusal to let P and his experts assess Leung’s betting records) in a sinister light, ie that D must have known Leung’s betting records would show D had placed private bets through Leung using the Model and hence had no defence to the agency plea.

132.  But notwithstanding my aforesaid views on the Amendment Summons, they are subject to the Relief Summons, which hurdle P must cross in order to amend the SoC. However, before I turn to the Relief Summons, it is useful to consider the merits of the other Further Application, ie intended application for non-party discovery against HKJC for Leung’s betting records, which P wished to take out but for the Unless Order if P were to have leave to amend the SoC pursuant to the Amendment Summons.

(f)  Non-party discovery of Leung’s betting records

133.  Assuming that the Amendment Summons were granted in P’s favour upon relief from sanction, I find there was viable basis for non-party discovery against HKJC for Leung’s betting records, which merits would also inform the exercise of discretion as to whether or not to grant relief from sanction for such application.

134.  Ms Tam SC raised the spectre that if the Amendment Summons were allowed it would open the way to wide-ranging discovery applications against as-yet unspecified “agent(s)” which would amount to a fishing exercise[48] and which could not succeed in light of the CJR emphasis on limiting discovery,[49] and she drew support from P’s unsuccessful non-party discovery against HKJC for betting records of unspecified agents on behalf of D. But by the Relief Summons P only asked to be allowed to seek non-party discovery from HKJC in respect of Leung’s betting records which were available and had been preserved. I see nothing of the open-ended discovery Ms Tam SC feared now that P had abandoned request for betting records of unspecified persons from HKJC, and D’s denial of possession of any betting records of agents/nominees would be conclusive for discovery against D pending trial. This, of course, would not prevent P from seeking discovery of betting records of specified agent(s)/nominee(s) if P were allowed to plead the agency point and in due course be able to acquire relevant factual/evidential basis to pierce the conclusiveness of D’s assertion of non-possession of such documents and/or to raise an arguable case of agency of particularised persons. But in that case, such discovery (which P had not even alluded he would wish to seek or would be able to seek at this stage) would not be wide-ranging or fishing.

135.  Turning back to Leung’s betting records, once the agency issue is pleaded, it would become part and parcel of the Main Issue of whether D made private betting by himself or via agents/nominees by using the Model and/or its improved, modified and/or developed versions. As explained by Au-Yeung J (and which I agree – see paragraph 46 above), the agency issue would be a material rather than peripheral aspect of the Main Issue. On such material issue and on the bases of P’s case in this respect as explained by the Registrar and Au-Yeung J in the Registrar and Au-Yeung Decisions (see paragraphs 40 and 44 above), Leung’s betting records would be key/central evidence for the Main Issue.

136.  I disagree that non-party discovery of Leung’s betting records was not necessary for the fair trial of the present action because P claimed to have sufficient evidence even without such non-party discovery. In my view, such discovery would be necessary for a fair trial of liability (and not just quantum) in the present action. It is difficult to understand why, if the agency point were allowed to be pleaded, P should not be allowed to assess the betting records of Leung (being the alleged agent/nominee) to prove his case if he could. As Au-Yeung J said in the Au-Yeung Decision, it was justified for Ziemba to study as many of the betting records as possible to identify D’s betting pattern to prove P’s case (see paragraph 43 above).

137.  Ms Tam SC suggested P had D’s betting records for 3 years (from D) and for 7 years (from HKJC) from which P’s own experts could allegedly come to firm conclusions that D’s private betting using the Model and through nominees, and Leung’s betting records was nothing more than an attempt to get more of what was already an abundance of betting records. Ms Tam SC also pointed out there was statement evidence from P’s witnesses to the effect they were aware of alleged private betting by Leung purportedly on behalf of D from 2004 to 2012, and P sought to rely on inferences to be drawn from Leung’s evasion of service and substantial purchases of landed properties.

138.  I am unable to accept Ms Tam SC’s submissions as any sufficient basis to oppose the intended non-party discovery of Leung’s betting records. Although P intended to rely on all of the facts/matters in the above paragraph on the agency issue (if P were allowed to plead the same), there was really no answer as to why P should not be able to assess the most direct, objective and probably undisputed evidence being Leung’s betting records to prove his case.

139.  As P explained, he was not privy to D’s private betting and necessarily had to rely on inferences to be drawn from primary facts/ documents and expert opinion to establish his case on the Main Issue (which would include the agency point if P were allowed to amend the SoC as per the Amendment Summons). To assist the court to draw such inferences, P had leave of the court to commission experts to compare betting patterns from the betting records and output from the Model. More importantly, as explained in paragraph 44 above, P set out grounds for suspecting that D had placed bets on Place and Quinella in private betting in his own name and that he must have placed bets on Win and Quienella Place through his agents/nominees, so Leung’s betting records would be particularly relevant. It was true that D denied this and that his experts suggested the aforesaid comparative exercise would at best prove correlation but not use of the Model, but relevance would not dictated by D’s denial and possible success at trial. As Au-Yeung J said (see paragraph 46 above), although D’s denial on affirmation that he made private betting through agents/nominees and that he did not have betting records of agents/nominees was conclusive on the issue of possession in the context of discovery against him, it was not conclusive on the agency issue and would not diminish the relevance/probity of Leung’s betting records which had been kept/preserved by HKJC, even though they (a) might advance P’s case and debunk D’s denial (as P alleged), (b) might support D’s denial and debunk P’s case (as D alleged), or (c) might not lead to any useful conclusion on Leung’s betting patterns (which presumably would not aid P’s case). I also do not lose sight of the fact the Discovery Order and Varied Discovery Order did order D to provide discovery of the betting records of his agents/nominees (including Leung).

140.  In my view, there were merits to the Further Applications (ie the Amendment Summons and intended application for non-party discovery against HKJC of Leung’s betting records) which applications were not simply just for crossing the t’s and dotting the i’s of P’s case or for feeding P’s desire to obtain more evidence, and this should be taken into account in considering the Relief Summons.

(g)  Relief from sanction

141.  Pursuant to Order 2 rule 4 of the RHC, application for relief from sanction should be made within 14 days of the failure to comply with the unless order, and requires the court considering such application to take into account the 10 factors set out in Order 2 rule 5(1) of the RHC set out below[50] and any other relevant factor:

(a)	the interests of the administration of justice;
(b)	whether the application for relief had been made promptly;
(c)	whether the failure to comply was intentional;
(d)	whether there is a good explanation for the failure to comply;
(e)	the extent to which the party in default has complied with other rules and court orders;
(f)	whether the failure to comply was caused by the party in default or his legal representatives;
(g)	in the case where the party in default is not legally represented, whether he was aware of the rule or court order, or if he was aware of it, whether he was able to comply with it without legal assistance;
(h)	whether the trial date or the likely trial date can still be met if relief is granted;
(i)	the effect which the failure to comply had on each party;
(j)	the effect which the granting of relief would have on each party.

142.  Mr Yan SC complained that D threw up the hurdle of the Unless Order because D could not put up any viable objection to the Further Applications, which P saw as another attempt by D to prevent clearly relevant issue and probative evidence from being placed before the court. I do not agree. Whatever views P might have in respect of D’s motives, I have found that P was in breach of the Unless Order, so P had to apply for relief from sanction to take out the Further Applications.

143.  Here, the application for relief from sanction must be made within 14 days from the failure, ie 2 December 2016 which was 14 days after the filing of Amendment Summons on 18 November 2016. However, the Relief Summons was not issued until 4½ months later on 20 April 2017, so P was substantially out of time in making such application. Ms Tam SC complained that the Amendment Summons was made 2 years and 4 months after the deadline imposed under the Unless Order and 2 years after the Registrar Decision which highlighted the absence of express plea of agency, and was not accompanied by any application for relief from sanction. However, notwithstanding P’s intention to take out the Further Applications, there was no breach of the Unless Order until P actually took out the Amendment Summons, and the application for relief should have been made within 14 days thereafter. But, of course, the fact the Amendment Summons was taken out more than 2 years after the deadline imposed in the Unless Order would necessarily be part of all the circumstances that had to be taken into account in the exercise of discretion to extend or not to extend time to grant relief.

144.  In considering whether to extend time to grant relief from sanction, the court has to consider all relevant factors, particularly (a) the length of the delay, (b) the reasons for the delay, (c) the merits of the proposed application for relief from sanction, and (d) the degree of prejudice to the other party, and the factor in (c) above will bring into focus the 9 factors in Order 2 rule 5(1) of the RHC.[51] I propose to deal with these factors under broad headings.

145.  In a nutshell, D argued that relief should not be granted for the following reasons: (a) substantial delay without good explanation and intentional contumelious failure to comply, (b) breaches of other court orders and unacceptable litigation conduct by P that rendered it inimical to the administration of justice to grant relief, (c) effect of refusing relief would not be draconian and would not prevent P from having a fair trial such that the sanction was therefore proportionate and fair, and (d) prejudice of granting relief on D would be significant.

146.  Bona fide belief of compliance vs deliberate default  This related to the question of delay in seeking relief from sanction, and touched on the following factors in Order 2 rule 5(1) of the RHC:

(a)	the interests of the administration of justice;
(b)	whether the application for relief from sanction has been made promptly;
(c)	whether the failure to comply was intentional;
(d)	whether there was a good explanation for the failure to comply.

147.  Ms Tam SC submitted that (a) failure to promptly apply for relief is a particularly weighty factor against relief from sanction,[52] (b) intentional and contumelious disregard of a peremptory court order may be the most usual circumstance leading to refusal of relief,[53] and (c) a delay of 9 months (before taking into account any explanation) had been regarded as “serious and substantial”.[54] But each case turns on its own circumstances, so even though generally speaking the longer the delay the less willing the court will be to grant relief, in some cases the applicant may be able to satisfy the court that the delay, though substantial, had not had any practical effect on the course of the proceedings.[55]

148.  Ms Tam SC submitted that the unexplained delay that tainted the Amendment Summons similarly applied to the Relief Summons which was not filed in tandem with the Amendment Summons. I reiterate my discussion above on the issue of delay in relation to the Amendment Summons, and my conclusion that but for the Unless Order and the sanction thereunder, I am not persuaded the delay would lead the court to disallow the Amendment Summons.

149.  Mr Yan SC submitted that in the context of the relevant procedural history P had tried his best to comply with the Unless Order as demonstrated by his taking out the 27/11/14 and HKJC Summonses before the deadline imposed, and the 27/11/14 Summons included a number of applications apart from the application to enforce the Discovery Order and Varied Discovery Order. But that said, I have explained in Part VII(b) above why Mr Yan SC’s reading of the requirement in the Unless Order could not be supported, which mistaken understanding ought to have been dispelled by the Kwok2 Decision and CA Leave Judgment. In not filing the Relief Summons until April 2017 (ie 2 months after the CA Leave Judgment handed down in February 2017), there was clearly delay on the part of P. I have also explained in Part VII(b) above that after the Kwok2 Decision and CA Leave Judgment P could not have continued to maintain he had complied with the Unless Order.

150.  Ms Tam SC submitted that P’s recalcitrant stance and poor excuse for the delay demonstrated that breach of the Unless Order was intentional and contumelious as explained in Top One International (China) Property Group Co Ltd[56] since P obviously made no serious effort to comply with the Unless Order as far as the Amendment and Relief Summonses were concerned, and none of the circumstances contributing to the delay could be said to be outside his control.

151.  Having considered Ms Tam SC’s submissions and all the circumstances, whilst I accept there was no good reason for the delay, I am not convinced P’s conduct was intentional and/or contumelious. As explained in paragraphs 129-132 of Lee Sai Nam (No 2), whether the delay or default was caused by the defaulting party or the legal representative is a relevant factor to be considered not just for the application to extend time to issue application for relief from sanction, but also for the substantive application for relief from sanction if time extension is granted. There is, of course, the need to consider all the circumstances, and the court has discretion to refuse relief even if blame can be laid at the door of the legal representative.[57]

152.  Here, P’s counsel accepted it was their view not to plead the agency point earlier, and although the P 15^th Aff referred to decisions made to defer filing the Amendment and Relief Summonses, it was plain P acted under legal advice that the formulation of the proposed amendments on the agency issue (which naturally would be drafted/settled by P’s legal representatives) might be affected by the outcome of the 27/11/14 Summons and/or appeal against the Kwok1 Decision, which led to the Joint Letter that alluded to the Further Applications that would be made in due course. Whilst on cold analysis these matters did not excuse the delay, P’s legal representatives were obviously lulled into complacency by the joint nature of the Joint Letter with no complaint raised on the basis of the Unless Order, and they narrowly focused on matters of discovery/ evidence (ie the betting records and Model) that they became mired in a step-by-step approach and lost sight of the post-CJR need for proactive efficiency and global oversight to tie up various loose ends of the litigation concurrently. P had every reason to progress the case, and it was not a case in which P simply sat on his hands and did nothing. Whilst there was delay in relation to the Amendment and Relief Summonses, during the same period P actively and persistently pursued access to betting records and the Model via hearings and appeals which pursuits had been vindicated by the CA Judgment and partly by the Au-Yeung Decision. I agree that D’s delay must be taken into account in the weighing exercise, but it was not of such serious intentional and/or contumelious character as Ms Tam SC would have this court find.

153.  Litigation gamesmanship  Ms Tam SC submitted that how the parties conducted themselves in the litigation is a highly relevant factor in determining whether the due administration of justice is promoted by the relief sought, and the court will refuse indulgence to an uncooperative litigant who engaged in gamesmanship and failed to further the underlying objectives of the CJR.[58]

154.  Ms Tam SC referred to (a) P’s recalcitrant insistence on an unjustified reading of the Unless Order to suggest he had complied with the requirement thereunder, (b) P’s filing of supporting affirmation for the Time Summons out of time, (c) P’s attempt to include affirmation evidence for the 27/11/14 Summons for the appeal against the Registrar Decision after the evidence was closed which drew criticism in the Au-Yeung Decision, (d) P’s attempt to rely on late affirmation evidence for the substantive hearing of the 27/11/14 Summons that drew the ire of DHCJ Kwok SC in the Kwok1 Decision (see paragraph 54 above) and of the Court of Appeal in the CA Leave Judgment (see paragraph 59(b) above), (e) P’s delay in scheduling the hearing of the application for leave to appeal before DHCJ Kwok SC, (f) P’s attempt to include affirmations (some unsworn) of his experts filed without leave for the 27/11/14 Summons in the hearing bundle for the Hearing, and (g) P’s abusive litigation conduct in seeking to enforce the Varied Discovery Order with threat of committal for contempt which led to the grant of the Unless Order.

155.  In my view, D’s complaint in (g) above could not be supported and his other complaints about P’s litigation conduct above paled in significance when compared to D’s knowing, deliberate and flagrant breach of the Discovery Order and Varied Discovery Order as found by the Court of Appeal (see paragraph 61(c) above) in purportedly deleting/erasing the original Model (which was admittedly valuable Partnership property/asset) and delivering an encrypted copy thereof to P. D also thwarted P’s attempt to enforce the Discovery Order and Varied Discovery Order all the way to the Court of Appeal, and resisted the HKJC Summons even for his own betting records. I have no doubt D’s litigation conduct in failing to comply with the Discovery Order and Varied Discovery Order and in resisting the 27/11/14 and HKJC Summonses contributed significantly to prolonging/delaying progress of the present action.[59] D was plainly the proverbial person who lives a glass house and throws stones.

156.  It was said P’s litigation conduct would have a bearing on any argument by P that no trial date would be jeopardised if relief were granted because “tactical manoeuvrings” by a party bars reliance on the fact that there is no trial date.[60] But such argument had been exploded by the CA Judgment which showed it was D who engaged in flagrant and deliberate tactical manoeuvrings, and in light of the leave granted by the Court of Appeal to amend pleadings and to obtain expert evidence, it would be a while before the present action could be set down for trial in any event. I am not persuaded that granting relief from sanction would further delay the present action, and I reiterate the discussion in Parts VII (e)-(f) above.

157.  Prejudice to D The issue of prejudice to D caused by delay to apply for relief from sanction is also relevant to the following factors under Order 2 rule 5(1) of the RHC:

(a)	the effect which the failure to comply had on each party;
(b)	the effect which the granting of relief would have on each party.

158.  Ms Tam SC submitted that D would be prejudiced by the grant of relief from sanction in light of the extensive delay and further interlocutory steps that relief would entail which would be disproportionate to any benefit P could gain from the Relief Summons. I reiterate to the discussions in Parts VII (e)-(f) above, and find the merits of the Further Applications sufficiently strong that D had no real answer to them. Ms Tam SC submitted this court should not delve too deeply into the exercise of assessing the merits of the Further Applications,[61] but the discussion in Parts VII (e)-(f) above showed the merits were straightforward and strong, but it took some effort to explain why the dust raised by D did not detract from such merits.

159.  Consequences on P This issue concerned the question of the impact on P if extension of time to apply for relief from sanction is refused, and was also relevant to the following factors under Order 2 rule 5(1) of the RHC:

(a)	the interests of the administration of justice;
(b)	the effect which the failure to comply had on each party;
(c)	the effect which the granting of relief would have on each party.

160.  An important and relevant consideration for granting relief from sanction, in light of Order 1A rule 2 (in particular rule 2(2)) of the RHC, would be the vitality of the proposed amendment of pleadings and the relevance and probative value of Leung’s betting records though it is by no means the only consideration (see paragraph 66(a) above).

161.  As discussed above, the agency issue (ie whether D had acted in breach of the Agreement by placing private bets using the Model and/or its improved, modified and/or developed versions through agents/nominees) was a key/central aspect of the Main Issue, and I find it highly arguable that Leung’s betting records were relevant/probative evidence for the Main Issue. To deny relief from sanction would mean P would be prevented from raising a key/central aspect of the Main Issue and would be deprived of relevant/probative evidence for fair trial of P’s claim against D on the substantive merits.

162.  On this note, there could be no doubt that maintaining the sanction would have serious consequences for P despite Ms Tam SC’s efforts to downplay its effect. P would be handicapped in major way in presenting his full case on D’s breach of the Agreement, ie that he used the Model and its improved, modified and/or developed versions for his private betting not only via HKJC accounts in his own name but also via those in the names of his agents/nominees, and in adducing primary/expert evidence to prove such breach, ie expert analysis of Leung’s betting records to draw opinion/conclusion upon comparison with output from the Model and other available betting records. I am not persuaded there could be a fair trial with just resolution of the disputes between P and D if P was constrained from raising the agency issue and/or adducing relevant evidence thereto.

163.  Other considerations  Mr Yan SC submitted that the Unless Order was unusual in that (a) the sanction imposed by the Registrar covered all interlocutory applications even though the relevant hearing before the Registrar concerned time extension for enforcement of the Discovery Order and Varied Discovery Order and neither party asked for an unless order to cover all interlocutory applications, and (b) the Unless Order was only directed against P and not D who would be free to take out whatever interlocutory applications he so wished.

164.  Ms Tam SC accepted the proportionality of the sanction is a weighty factor in the weighing exercise to be carried out by the court in considering whether to grant relief.[62] But she submitted that in debarring further interlocutory applications by P, the Registrar did not impose the most stringent of sanctions such as to strike out a claim/defence, to debar all evidence at trial, or to debar defence to a serious allegation of fraud.

165.  In my view, the question here was whether the sanction imposed was out of line with the consequence of the breach, which was a relevant consideration in whether to grant relief from sanction.[63] As explained in Yeung Shu Lam Wilson trading as Wilson Yeung & Co v Chan Sui Ting & anor,[64] whilst the court should not condone non-compliance, neither should the court order an unjust sanction, which is not proportionate to a party’s fault, so even if there is non-compliance, the real question is what is a proper sanction.

166.  Ms Tam SC referred the Court of Appeal to the judgment of the Singapore Court of Appeal in Mitora Pte Ltd v Agritrade International (Pte) Ltd[65] (see paragraph 58 of the CA Judgment) in which “[the] court emphasised that the immediate purpose of an unless order is “not to punish misconduct but to secure a fair trial in accordance with the due process of law” (§45), and stated that the draconian sanction of striking out a litigant’s claim or defence in its entirety should not be the default consequence of an unless order as it would effectively deprive the litigant of its substantive rights on account of a procedural fault (§46)”. Although the sanction here was not one for striking out P’s claim, I agree with the sentiment expressed that there should be calibrated use of unless order to suit the default.

167.  At about the time the Registrar granted the Unless Order, P was intending to enforce the Discovery Order and Varied Discovery Order. The Registrar was understandably concerned that P should get on with the enforcement application, and this was reflected in the order made at the CMC on 21 May 2014 requiring P to take out such enforcement application within 14 days (see paragraph 29(a) above) and to seek counsel’s advice as to expert evidence in relation to the Model within 28 days (see paragraph 29(b) above). The Registrar was also understandably concerned that there should be effective progress of the present action, which resulted in his order requiring all interlocutory applications as might be advised to be taken out within 14 days (see paragraph 29(c) above). So whilst the first 2 orders were targeted at P to progress the enforcement application, the last order was directed at both P and D to take out all interlocutory applications that might be advised.

168.  There was some slippage such that P had to seek time extension to file the enforcement application (see paragraph 30 above), which resulted in the Unless Order. In light of the aforesaid genesis of the Unless Order, I agree with Mr Yan SC that an appropriate sanction would be to debar P from taking out applications to enforce the Discovery Order and Varied Discovery Order for which time extension was sought as opposed to debarring P alone but not D from taking out all interlocutory applications. Further, looking at the status of the present action as at August 2014, there was clear debate over the enforcement of the Discovery Order and Varied Discovery Order, and P was contemplating to adduce expert evidence in relation to the Model. In short, documentary and expert evidence was not yet closed, and it must have been expected that further interlocutory applications from either party (as would be ordinary in any civil litigation) might be required as and when such further evidence came to hand or came into being. In my view, the sanction was far too draconian and one-sided, and amounted to punishment that did not suit the crime.

169.  Ms Tam SC submitted that the Unless Order was made to ensure P got on with the present action and not bog it down with interlocutory skirmishes. But, in my view, the right course to ensure P got on with the action would be to guillotine any future enforcement application if the deadline was not met. Ms Tam SC submitted the CJR does not guarantee that any litigant can run a perfect case at trial and take out all possible interlocutory applications as may be advised, but it must not be forgotten that the primary aim was to ensure even-handed fairness/justice between the parties. Ms Tam SC also submitted P would not be unduly disadvantaged at trial should he be refused leave to progress with the Further Applications. I disagree and refer to the discussions in Parts VII (e)-(f) above.

170.  Summary  Bearing in mind that what the court must strive to do is to avoid injustice and to ensure just determination of disputes, and upon considering all the circumstances, the factors relevant to the exercise of the discretion to extend time for seeking relief from sanction, and also the factors for the application for relief, I am satisfied I should grant leave for P to apply for relief from sanction under the Unless Order out of time, and to grant relief from the sanction imposed. Much has happened since the making of the Unless Order, and the CA Judgment has put the present action in new light. It would not be just or appropriate in the present context to continue/maintain the sanction imposed.

VIII.  CONCLUSION

171.  In respect of the Relief Summons, I grant the following orders: (a) order in terms of paragraph 1 of the Relief Summons, (b) P be relieved from the sanction imposed in the Unless Order, (c) P be at liberty to proceed with the Amendment Summons, (d) P do within 14 days from the date of this order file and serve application for non-party discovery against HKJC for discovery of Leung’s betting records maintained with HKJC.

172.  P had filed/served the Amended SoC pursuant to the CA Judgment, so in respect of the Amendment Summons, I grant the following orders: (a) leave for P to re-amend the Amended SoC in the manner set out in red as per the draft Amended SoC annexed to the Amendment Summons save and except the proposed amendments in red in such draft shall be re-amendments in green, (b) P shall file and serve the Re-Amended SoC within 7 days from the date hereof, (c) leave for D to file and serve Re-Amended Defence and Counterclaim within 14 days thereafter.

173.  As for costs of the Relief and Amendment Summonses, there is no reason why D should not have costs of such summonses and costs of and occasioned by the amendment. The only question is whether P should be entitled to costs of the Hearing since he was successful in the argument on both summonses.[66] On the one hand I note the present applications involved seeking relief from sanction as a result of P’s breach of the Unless Order, but on the other hand D made wide-ranging objections which eventually failed to persuade the court. In the circumstances, I consider it would be fair for P to recover half of the costs of the argument.

174.  I therefore grant the following costs order nisi: (a) subject to (b) below, P shall pay D costs of the Relief Summons and costs of and occasioned by the application to amend in respect of the Amendment Summons, (b) D shall pay P half of the costs of the contested Hearing in respect of the Relief and Amendment Summonses, and (c) the costs in (a)-(b) above shall be inclusive of all costs reserved if any and shall be taxed forthwith if not agreed with certificate for two counsel.