ZHAO LONG AND ANOTHER v. BERPU TECHNOLOGY CO LTD AND ANOTHER

HCA 1156/2021

[2023] HKCFI 1795

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1156 OF 2021

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D E C I S I O N

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A.  INTRODUCTION

1.  This was the adjourned hearing of the Defendants’ summons dated 4 May 2023 seeking leave to file and serve a Rebutter (“Rebutter Summons”). At the instigation of Master Phoebe Man, the matter was referred to me as the Listing Judge with proposals from the parties as to the way forward on 2 matters:

(1)  whether the pleadings from Surrejoinder onwards could be amalgamated into the Statement of Claim, Defence and Reply (“Amalgamation Proposal”); and

(2)  whether this case should be assigned to a trial judge at an early stage (“Assignment Proposal”).

2.  The Plaintiffs remained neutral on the Rebutter Summons, leaving the Defendants to justify to the Court the need for a rebutter.

3.  On the Amalgamation Proposal, while the Defendants were open to it, the Plaintiffs did not prefer it. The parties agreed not to adopt it in the end.

4.  On the Assignment Proposal, while the Plaintiffs suggested assigning this action to a trial judge immediately and to file a joint list of issues to assist the court, the Defendants considered it to be premature. As part of their reasons to show that it was premature, the Defendants indicated a possible need to seek further and better particulars from the Plaintiffs.

5.  Having read counsel’s written submissions, the pleadings and the list of issues prepared by Mr Pao SC (counsel for the Plaintiffs), I proposed that the pleadings be amalgamated, that the question of assignment be deferred, and that the case be docketed to a Master.

6.  That proposal received support of counsel and I made the following directions:

(1)  Within 28 days, the Defendants shall file and serve a set of request for further and better particulars on the existing set of pleadings, if so advised.

(2)  Within 28 days thereafter, the Plaintiffs shall file and serve a set of Fresh Statement of Claim, consolidating the Plaintiffs’ case in the existing set of pleadings and include the Plaintiffs’ answers to the request for further and better particulars as the Plaintiffs may be advised.

(3)  Within 28 days thereafter, the Defendants shall file and serve a set of Fresh Defence consolidating the Defendants’ case in the existing pleadings and the draft Rebutter.

(4)  Within 28 days thereafter the Plaintiffs shall file and serve a set of Fresh Reply consolidating the Plaintiffs’ case and their reply to the draft Rebutter.

(5)  These directions on filing and serving of fresh pleadings are without prejudice to:

(a)  the parties’ inclusion of new pleas in the fresh set of pleadings in view of any discovery, draft Rebutter or any new developments since the existing pleadings were first filed;

(b)  the parties’ pursuit or abandonment of any issue at the trial; and

(c)  the parties’ submission on burden of proof of particular issues at the trial.

(6)  The above directions are given so that the parties shall limit themselves to 3 sets of pleadings for the trial, ie the Fresh Statement of Claim, Fresh Defence and Fresh Reply only.

(7)  The case shall be docketed to a Master.

(8)  Any question of assignment to a Judge is deferred until after the fresh pleadings have been filed.

(9)  Costs of today (including costs of the Rebutter Summons) shall be in the cause with certificate for Mr Pao SC and Mr Chau.

7.  Given the aforesaid directions, there was no need to grant leave to file a Rebutter.

8.  These are my reasons.

B.  BACKGROUND FACTS

9.  The facts are taken from the helpful summary of Mr Chau, counsel for the Defendants.

10.  Five sets of pleadings have been filed to date, from Statement of Claim to Amended Surrejoinder. The longest ones did not exceed 19 pages. If leave was given to file the Rebutter, a Surrebutter would be inevitable, since the Plaintiffs should have the last word.

11.  By the Statement of Claim originally filed on 19 October 2021, the Plaintiffs claimed that the Defendants were knowing recipients of certain shares in 3 PRC companies (“PRC Shares”), based on findings in favour of the Plaintiff’s ownership made by a BVI Court in its judgment handed down on 20 July 2021 (“BVI Judgment”).

12.  By the Defence originally filed on 25 January 2022, the Defendants claimed that the BVI Judgment was trumped by an earlier competing judgment given by the Intermediate People’s Court of Linyi City of Shandong Province on 3 April 2020 (“Linyi Judgment”). The Linyi Judgment has been enforced by enforcement proceedings, culminating in a reconciliation agreement sanctioned by that Court (“Linyi Settlement”), pursuant to which transfers of the PRC Shares from P2 to the Defendants have been executed (“Share Transfer Agreements”).

13.  By the Reply originally filed on 10 May 2023, the Plaintiffs for the first time, relied on a judgment handed down by the BVI Court on 17 March 2022 (“BVI Ancillary Judgment”), pertaining to the Defendants’ knowing receipt of the PRC Shares, and other findings in the BVI Judgment relating to the BVI Court’s non-recognition of the Linyi Judgment for being a collusive judgment.

14.  By consent, leave was granted to the Defendants to file the Rejoinder which pleaded the irrelevance of the BVI Court’s non-recognition of the Linyi Judgment to the issue of whether the Hong Kong Court would give recognition to the Linyi Judgment in the present action, and that the Linyi Judgment was not collusive.

15.  Likewise, by consent, leave was granted to the Plaintiffs to file the Surrejoinder, wherein the Plaintiffs, for the first time, put forth their entire factual case on the ownership of the PRC Shares beyond the findings in the BVI Judgment and BVI Ancillary Judgment. The Plaintiffs also, for the first time, referred to specific articles of PRC law allegedly affecting the Linyi Settlement and Share Transfer Agreements.

16.  The Defendants seek to file and serve a Rebutter. At the call over hearing of the Rebutter Summons before Master A Ho on 4 May 2023, the Plaintiffs indicated that they might be able to consent to the filing of the Rebutter after they have had the opportunity to consider the draft. For the first time, Master Ho proposed that the parties should consider amalgamating their pleadings.

17.  By correspondence, the Plaintiffs indicated that they had no objection to the Rebutter Summons.

18.  The Rebutter Summons next appeared before Master Phoebe Man on 11 May 2023. Once again, the learned Master adjourned the hearing of the Rebutter Summons. She invited the parties to consider the Amalgamation Proposal, to write to the Listing Judge to docket the case and to pave the way forward regarding pleadings.

C.  AMALGAMATION PROPOSAL

19.  It is most undesirable to ask a judge to adjudicate a case on 7 sets of pleadings from only 2 camps of protagonists. At the trial (if not already at the pre-trial review), counsel would need to prepare a set of facts in narrative form that summarises fairly the undisputed facts and each party’s case, together with an agreed list of issues.

20.  From the submissions on both sides before me, the facts have been very succinctly summarized by Mr Pao SC and Mr Chau, which made the whole case comprehensible in one glance. Further, since the Defendants declined to agree upon a list of issues, Mr Pao SC prepared one himself to assist the Court. This list enabled the court to quickly grasp the material issues in dispute. (I note in passing that it was not the intention of the Plaintiffs to bind the parties to that list and I did not have such intention as well.)

21.  In my view, if it was possible for counsel to summarise the case so ably now, why wait till the pre-trial review or the opening submissions at the trial? Accordingly, I considered it appropriate to give the directions to amalgamate the pleadings into 3 sets, and 3 sets only, comprising the Fresh Statement of Claim, Fresh Defence and Fresh Reply. Hence I gave the directions in §§6(2)-(4) and (6) above.

22.  Similarly, as the Defendants have indicated that they might seek further and better particulars of the Plaintiffs’s case, it is better for them to do it now so that any particulars that should be given could be included in the Plaintiffs’ fresh pleadings. Accordingly, I gave the direction in §6(1) above.

23.  Understandably, upon redrafting of the pleadings, the parties may have to include material facts which they may not rely on, eg the Plaintiffs may have to plead in the Fresh Statement of Claim that the Linyi Judgment was delivered but it was a collusive judgment before referring to the BVI Judgment. I therefore included §6(5) above to preserve each party’s position.

24.  The amount involved in this case may be huge. There had been various pieces of litigation pertaining to the subject shares. However, it is far too long for a case to remain in the pleadings stage for 2 years. It should move ahead expeditiously and hence I have laid down the timetable for sorting out the pleadings. I also commend Master Ho and Master Phoebe Man for using their case management powers even in the pleadings stage on their own volition.

D.  ASSIGNMENT PROPOSAL

25.  I deferred deciding on the Assignment Proposal until after the fresh pleadings shall be filed. By then, the complexity of issues and procedural needs will become clearer to enable a decision on whether to assign a judge and which judge to assign to be made. Meanwhile, it is appropriate to have the matter docketed to a Master so that he/she can grasp the case background and the broad issues for efficient case management and disposal of interlocutory matters. These measures will neither fetter the listing officer’s discretion on listing nor prolong the parties’ waiting time for a matter to be listed before the assigned judge. I therefore gave the directions in §§6(7) and (8) above.

26.  As this was a case management matter, the appropriate order should be in the costs in the cause. I therefore made the order in §6(9) above.

27.  I thank counsel for their assistance and sensible stance in taking the case forward.