NG KWOK PIU PHILIP AND OTHERS v. TO PUI KUI AND OTHERS

HCA 51/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 51 OF 2007

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D E C I S I O N

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1. The background to these proceedings is outlined in my earlier Decision of 6 March 2014, which I will not repeat. The abbreviations used in my earlier Decision are adopted for this Decision. Since the hearing in February 2014, the parties appeared before me on 31 October 2014 at the pre-trial review. There was also the judgment of the Court of Appeal in HCA 523, handed down on 21 August 2014. The trial of the Actions is to commence on 26 January 2015, with 15 days fixed.

2. On 7 November 2014, the plaintiffs in HCA 51 (“Philip’s Group”) issued their summons for leave to amend their Amended Reply and Amended Defence to Counterclaim.  There are similar amendments made to the corresponding pleadings filed in the other Actions.  Save for minor amendments which are agreed to by the opposing camps, the application made by Philip’s Group for amendment is opposed by all the other parties. 

3. In gist, the amendments which are opposed seek to plead that the documents relied upon by Philip’s Group to evidence the restructuring of the different companies (HEL, HCL and HCIL) (“Restructuring Documents”), including shareholders resolutions, board resolutions, bought and sold notes and instruments of transfer, had been circulated amongst and signed by the relevant members of the Ng Family.  This is to be contrasted with the original pleadings in the Actions, that there had been resolutions passed at meetings which were attended by the Father, Philip, the Mother and Stephanie.

4. The difference can be illustrated by the proposed Re-Amended Reply in HCA 51.  Originally, paragragh 21 (1) and (2) of the Amended Reply reads:

“(1) On or about 1 May 1997, it was resolved in a meeting of directors attended by the Father, the 1^st Plaintiff, the 1^st Defendant and Ng Oi Che Stephanie that an extraordinary general meeting be convened (“the 1^st EGM”) for the proposed issue and allotment of 100 ordinary shares in the Company to the 2^nd Plaintiff (99 shares) and to the 3^rd Plaintiff (1 share);

(2) The notice of the 1^st EGM was issued to the then shareholders of the Company ...  on or about 1 May 1997.” (Emphasis added)

5. The original paragraph 22 of the Amended Reply reads:

“(1) On or about 6th May 1997, it was resolved in the meeting of directors of the Company attended by the Father, the 1^st Plaintiff, the 1^st Defendant and Ng Oi Che Stephanie that an extraordinary general meeting (“the 2^nd EGM) be convened to resolve the matters set out in Paragraph 8 (2) by way of special resolutions;

(2) On or about 6th May 1997, the 1^st Plaintiff acting on behalf of the Company’s board of directors issued the notice of the 2^nd EGM to be held on 7th May 1997 to all the then shareholders of the Company, namely those referred to in Paragraph 4 (1) and the 2^nd and 3^rd Plaintiffs;

...

(4) At the 2^nd EGM, the special resolutions were carried unanimously for the matters referred to in Paragraph 8 (2) (“the 2^nd EGM Resolutions”)”.  (Emphasis added)

6. The original paragraph 24 of the Amended Reply reads:

“On or about 8th May 1998, a directors’ meeting was held and attended by the Father, the 1^st Plaintiff, the 1^st Defendant and Ng Oi Che Stephanie.  The directors approved the transfer of the aforesaid 9,580 “5% deferred shares” to the 2^nd Plaintiff (the Board Resolution”)”.  (Emphasis added)

7. In contrast, the proposed Re-amended Reply refers to the restructuring of the relevant companies involved in the Actions being effected in 3 steps, and the proposed amendments read as follows:

“20B.     The 3 steps were effected through a number of documents (the “Restructuring Documents”) which were circulated amongst and signed by the relevant Ng Family members.

21.  The relevant Restructuring Documents for Step 1 include:

(1)  a board resolution signed by the Father, the 1^st Plaintiff, the 1^st Defendant and Ng Oi Che Stephanie resolving that an extraordinary general meeting be convened (“the 1^st EGM”) for the proposed issue and allotment of 100 ordinary shares in the Company to the 2^nd Plaintiff ...

(2)  a notice of the 1^st EGM, which was accompanied by a 2^nd page whereby all the then shareholders of the Company (namely those referred to in Paragraph 4 (1)) signed and agreed in writing to waive the notice requirement on or about 1 May 1997;

...

(4)  the 1^st EGM Resolutions, whereby it was resolved unanimously by way of ordinary resolution that 100 ordinary shares in the Company were to be issued and allotted to the 2^nd Plaintiff (99 shares) and to the 3^rd Plaintiff (1 share).  The 1^st EGM Resolution was signed by all the shareholders...

...

22.  The relevant Restructuring Documents for Step 2 include:

(1)  a board resolution (signed by the Father, the 1^st Plaintiff, the 1^st Defendant and Ng Oi Che Stephanie) resolving that an extraordinary general meeting (“the 2^nd EGM”) be convened to resolve the matters set out in Paragraph 8 (2) by way of special resolutions;

(2)  a notice of the 2^nd EGM which was accompanied by a 2^nd page whereby all the shareholders signed and agreed in writing to waive the notice requirement;

...

(4)  the 2^nd EGM Resolutions, whereby the special resolutions were carried unanimously for the matters referred to in paragraph 8 (2) (“the 2^nd EGM Resolutions”).  The 2^nd EGM Resolution was signed by all the shareholders...” (Emphasis added)

8. There is no doubt that the proposed amendments involve a change of the pleaded case of Philip’s Group, from one of meetings having been actually held which were physically attended by the relevant protagonists, to a case of the protagonists’ signature of the resolutions.

9. There is also no question that there has been inordinate delay in the application for the amendments.  As I emphasized in paragraph 16 of my Decision of 6 March 2014, the Actions had since September 2010 been consolidated and ordered to be tried one after the other, with HCA 523 as the lead action.  The Actions had throughout been prepared, conducted and progressed on that basis, and on the basis that there are common factual and legal issues to be determined.  It was only at the commencement of the trial in October 2012 that the parties agreed with the trial judge’s proposal to deal with HCA 523 only.  The disputes on the authenticity of the documents on which the signatures of Mother and the siblings not within Philip’s Group (for convenience referred to collectively as “Mother’s Group”), and on the genuineness of the transactions relating to the shares, had been identified from day one when the pleadings were first filed.

10. None of the excuses given by Philip for the delay in the application are good reasons.  Oversight and distraction by other proceedings cannot explain the delay. 

11. I would have dismissed the application for amendment without hesitation, on the ground of this inexcusable delay.  There is inevitable injustice and prejudice to any litigant, occasioned by last minute applications for amendment made at the eve of trial.  The preparations for trial will be disrupted by such a late application.  Considerations will have to be given to the effect of the proposed amendments, to consequential amendment of pleadings and the necessity of preparing new evidence to meet the amendments.  There is a risk of the trial dates being disrupted, or even postponed.  In this particular case, Mother is over 80 years old, and although it is still uncertain whether she will be called to give evidence at the trial in January 2015, whether further delay will have impact on her memory of events in 1997 is an issue, and in this case, any postponement of the trial dates may carry the additional risk of the trial not being heard or concluded during Mother’s lifetime. 

12. However, this application for amendment made by Philip’s Group is distinguishable from the other late interlocutory applications made in these proceedings after the trial of HCA 523 in October 2012.  Leading Counsel for Philip’s Group referred to the amendments as converging the issues for trial instead of diverging them.  It was highlighted that at the trial in October 2012, when the witnesses for Philip’s Group gave evidence, and as made clear in a late round of statements filed by Philip’s Group in September 2012, just before trial, Philip’s Group had accepted that the “meetings” referred to in the pleadings were in fact “paper meetings”.  Tony so stated in paragraph 76 of his supplemental statement of 18 September 2012, when he referred to the meetings in May 1997 as “where each of the directors and shareholders signed on the relevant minutes”.  Stephanie also stated in paragraph 51 of her supplemental statement of 18 September 2012 that: “all the minutes of directors and EGM, consent to short notices in the restructuring in May 1997, were just like all other minutes in the Ng family companies, circulated for signatures by directors and shareholders.  We did not actually sit down together to have a meeting face-to-face.”

13. Whilst it is true that the case of Philip’s Group is as defined by its pleadings, and the fact that the witnesses had already referred to paper meetings in September 2012 only highlights the delay in the application for amendment of the Group’s pleaded case, the reality is that the trial of HCA 523 in October 2012 proceeded on the basis of the documents having been allegedly signed by the family members, instead of there being meetings held and attended by the members who allegedly signed the minutes and documents.  It can also be fairly said that Mother’s Group cannot be surprised, in their preparations for the trial in January 2015, by the present amendments - in the light of the testimony given by the witnesses at the trial of HCA 523 in October 2012, as to these “paper meetings”.  They had been cross-examined on the manner in which the minutes had been prepared and signed, and when they were prepared and allegedly signed. 

14. I do not agree that the proposed amendments will cause such a fundamental change to the case of Mother’s Group, as Counsel sought to argue.  All along, the stance and evidence of Mother’s Group has been that they did not attend any physical meetings of any of the companies, and they did not sign any of the signatures appearing on any of the Restructuring Documents.

15. I accept that valid criticisms can be made as to the lack of particulars in the proposed Re-amended Reply, with regard to the “circulation” of the Restructuring Documents for signature by the relevant family members.  Counsel for Eleanor claims that evidence will have to be prepared to meet the new case of how the Restructuring Documents were allegedly circulated amongst the relevant family members for their signature, with consequential amendments to the pleadings.

16. It is of course borne in mind that the original pleadings were verified by statements of truth signed by members of Philip’s Group.  If there is evidence in due course of their making false statements, there will be legal consequences and penalties.  The late change in case will no doubt be the subject of cross-examination and submissions to be made at the trial on questions of the credibility of the witnesses.  Yet, I agree with the observation made by the Court in Liang Jun Xian v Tsui Hin Chi, unreported, HCA 2288/2007 (cited in para 41A/2/6 Hong Kong Civil Procedure), that statements of truth were not intended to stranglehold amendments to pleadings such that a party would not be allowed to amend, in that case, if the proposed amendment is inconsistent with the previous pleading.  The guiding principle whether amendments should be allowed is to ensure justice and fairness between the parties, in that the cases of the parties are properly pleaded, and the issues clearly defined when they come to trial.

17. The issues for determination at the trial in January 2015 are whether Mother and the relevant siblings in Mother’s Group did sign on the Restructuring Documents and any other documents disputed by them, or whether they are forged, the burden of proof in respect of which lies on those in Mother’s Group who make the assertion.  The issues will indeed be narrowed down at trial and for purposes of cross-examination, by virtue of the concessions and admissions made by Philip’s Group, that there were no physical meetings attended by all the relevant members of the family, and that the purported minutes only related to meetings on paper.  Costs and trial time should in principle be saved, although this cannot be guaranteed from the history of the Actions affecting this family.

18. I have to bear in mind that in giving effect to the underlying objectives of the Rules of the High Court, the primary aim in the exercise of the powers of the court is to secure the just resolution of disputes in accordance with the substantive rights of the parties.  A party should not be penalized by any omission or delay, to the extent that its substantive rights cannot be justly resolved by virtue only of its error, particularly when the other party can be compensated in costs. 

19. In all the circumstances of this case, I consider that the fairest order would be to allow Philip’s Group to make the proposed amendments, on strict terms and within a strict timetable before the commencement of trial on 26 January 2015, to avoid an adjournment.   Philip’s Group has no cause for complaint since these directions are occasioned purely by their inexcusable delay. 

20. The terms of my granting leave are:

(1) Philip’s Group do file and serve by 4 pm on 5 January 2015 further and better particulars of paragraph 20B of the Re-amended Reply and Re-amended Defence to Counterclaim in HCA 51, by stating: the exact documents which comprised the “Restructuring Documents” (as defined in paragraph 20B) which were circulated; by whom and to whom they were circulated; when and how each of them was circulated; when all the signatures were completed and made in respect of each of the Restructuring Documents; and how and to whom each of the circulated and completely signed documents was returned;

(2) the defendants in HCA 51 have leave to file and serve consequential amendments to their pleadings by 4 pm on 19 January 2015;

(3) the defendants in HCA 51 have leave to file and serve by 4 pm on 21 January 2015 statements of fact in answer only to the Re-amended Reply and Re-amended Defence to Counterclaim;

(4) Philip’s Group do file and serve an amended Combined Statement of Claim (for the consolidated Actions) by 4 pm on 5 January 2015, and Mother’s Group do file and serve an Amended Combined Defence by 4 pm on 19 January 2015;

(5) the costs of, occasioned by and thrown away by the application to amend the Amended Reply and Amended Defence to Counterclaim be paid by Philip’s Group on an indemnity basis forth with.

21. There will be corresponding directions in relation to the other related Actions and amendments to pleadings, including those which are not opposed.  The parties are directed to formulate and agree on these corresponding orders for the Court’s approval by 5 January 2015.