UNIVERSE ARTISTE MANAGEMENT LTD v. KONG YI CHING ELANNE (FORMERLY KNOWN AS KWONG LING) AND ANOTHER

HCA 1225/2014

[2023] HKCFI 1125

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1225 OF 2014

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D E C I S I O N

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1.  In these proceedings, I handed down the judgment on liability (“the Judgment”) on 18 February 2022. After the handing down of the Judgment, the parties were unable to prepare an agreed order in accordance with the Judgment. The parties were also unable to submit any agreed direction concerning the assessment of damages to the court for my consideration. I therefore invited written submissions from the parties. After considering those submissions, I handed down a decision (“the Decision”) on 26 April 2022, in which I have specified the terms of the order (“the Order”) made in the Judgment. I have also given directions for the assessment of damages.

2.  Subsequently, the parties have filed pleadings for the assessment of damages. After perusing the same, I am of the view that the parties have raised some matters, which have to be determined first at the very beginning of the assessment exercise. In the hearing for directions on 7 December 2022, I directed that there be a substantive hearing for the determination of the following matters:

(1)  Whether any part of the Order dated 18 February 2022 and sealed on 21 June 2022 shall be amended under the slip rule;

(2)  Whether P is entitled to put forward a claim for damages in Part II of these proceedings which is different from the one put forward in the Amended Statement of Claim (including whether such a claim in Part II is time-barred); and

(3)  Whether D1 is entitled to claim any damages based upon personal injuries (“PI Claim”) in Part II of these proceedings (including whether such a claim in Part II is time-barred).

3.  This is the substantive hearing of the aforesaid issues. For ease of reference, unless otherwise indicated, abbreviations used in the Judgment are adopted in this decision.

4.  In this hearing, Ms Yu for the Defendants (“Ds”) has raised a further issue. Ms Yu says that §§165, 166 and 199 of the Judgment should be deleted under the slip rule or the inherent jurisdiction of the court. I have heard submissions on this matter and would determine the same in this decision.

5.  The parties have informed me that there is no appeal against the Judgment. In the circumstances, everything in Part II must be based upon the rulings made by me in the Judgment.

ISSUE 1 – PROPOSED AMENDMENTS TO THE ORDER (“1^ST AMENDMENT APPLICATION”)

6.  Notwithstanding the fact that the Order has been sealed, Ms Yu for the Ds has made an application that §5 of the Order should be amended in the following manner:

“Notwithstanding §1.2(d) of the Terms and Conditions of the Contract, the 1^st Defendant is entitled to have all the incomes from her music products during the term of the Contract after deducting all the relevant expenses therefrom as contained in the Statements, subject to the 1^st Defendant’s inspection of the same.”

7.  Ms Yu is seeking an order to amend the Order under the slip rule and/or inherent jurisdiction of the court.

8.  In Man Ping Nam v Man Fong Hang (No.2)[1], the Court of Final Appeal has explained the application of Order 20 rule 11 (i.e. the slip rule). In that case, Ribeiro PJ said:

“19. The “slip rule” powers exercisable under Order 20 r 11 are available to the Court. The rule provides:

“Clerical mistakes in judgments or orders, or errors arising therein from any accidental slip or omission, may at any time be corrected by the Court on motion or summons without an appeal.”

20. It is clear that the failure of the court’s original order to cover a particular matter as a result of an accidental omission of counsel or solicitors or the party is capable of being corrected under this rule …… The correction can be made by the Court “at any time”, so the fact that correction is sought after the appellants had the Order sealed is not an obstacle.

21. Where the “slip rule” applies to any order of this Court, the discretion it confers should be liberally approached to ensure that the Court’s decisions are properly given effect, particularly bearing in mind that there is no appeal from the Court’s decisions. On the other hand, it must also be borne in mind that persons affected by orders of the Court need to know with certainty and finality what such orders consist of.”

9.  In Chan Sze Wing v Congruence Chinese Medicines & Jine Guo Health Ltd and Anor^[2], Coleman J expressed a view that a sealed judgment can be amended under the inherent jurisdiction of the court “to give effect to the plain meaning of the Judgment”.

10.  In order to amend the Order, Ds have to show that there are clerical mistakes or errors in the Order, which should be corrected by the amendments proposed by Ds in order to give effect to the plain meaning of the Judgment.

11.  I made a ruling concerning D1’s income from her music products in §§183 and 184 of the Judgment:

“183. As to whether D1 should be entitled to have income from her sound recordings notwithstanding §1.2(d) of the Terms and Conditions, P in fact does not dispute that D1 could have income from her sound recordings. §1.2(d) of the Terms and Conditions, on the face of it, has the effect of excluding those incomes from D1’s gross income. However, counsel for P has made it clear that P has never contended that D1 is not entitled to have incomes from her sound recordings.

184. I should mention that based upon the evidence accepted by this court, D1 would be entitled to have all the incomes from her music products. See [107(15)] in the above. However, it has not been pleaded on what basis D1 would be entitled to have all those incomes. Further, no such basis is mentioned in the ALAI. However, counsel for P has agreed that if I am not with P on the 2006 Oral Agreement and the 2009 Oral Agreement pleaded in P’s case, P would accept that as to the incomes from D1’ music products received by P, ie “經理人於合約期內所發行含有藝人演藝事業之一切音像產品所得之一切收益” as stipulated in §1.2(d) of the Terms and Conditions, D1 should receive all these incomes after deducting all the relevant expenses. In view of this concession, I hold that D1 should be entitled to have all the incomes from her music products after deducting all the relevant expenses therefrom.”

12.  It is plain that the ruling made in the Judgment concerning D1’s income from her music products refers to the income from music products during the term of the Contract. The ruling is based upon P’s concession as recorded in §184 of the Judgment. With respect, there is no basis in support of the proposed deletion of the words “during the term of the Contract” in §5 of the Order.

13.  As to suggested replacement of the word “therefrom” by the words “as contained in the Statements, subject to the 1^st Defendant’s inspection of the same” in §5 of the Order, I would allow this suggested amendment.

14.  Ms Yu submits that P is trying to lodge new claims which have not been put forward by seizing on the ambiguity of the term “relevant expenses” in §5 of the Order. In order to clarify the true meaning of §5 of the Order, the suggested amendment is necessary.

15.  In order to understand the true meaning of the term “relevant expenses” §5 of the Order, I have to mention in what way P has opened its case at the beginning of the trial in Part I.

16.  §4A of the prayer of the Amended Statement of Claim dated 3 August 2017 (“§4A”) reads as follows:

“Repayment of the sum of HK$1,101,906.70 but setting off against it or giving credit for the said sum of HK$151,239.79 and such further income and earnings of [D1] as may be received by [P].”

17.  While Mr Lau for P was making his oral opening in the trial in Part I, there were exchanges between the court and counsel concerning §4A as follows:[3]

“COURT: And how about 4A?

MR LAU: 4A, my Lord, actually, that is the so-called -- we say that it is a debt, then that debt has already been -- the sum has already been reduced, because ever since the time of this amended -- since...

COURT: It seems that, according to the pleaded case, the 4A is a claim for a liquidated sum.

MR LAU: A liquidated sum. Yes, my Lord.

COURT: So assessment would not be necessary because the sum has been liquidated.

MR LAU: Yes. So, at the end of this trial, my Lord, if you find in favour of us in respect of this, you can make an order for payment of the sum due from the -- Ms Kwong to the plain -- due from the defendants to the plaintiff.

COURT: And that’s all.

MR LAU: That’s all, my Lord. My Lord, actually, now that we are at 4A, my Lord, as I tried to say, actually, I’ve already shown my learned friend that the sum of the indebtedness has already been reduced to something like $906,000. My Lord, there is -- the exact figure is 906,000 -- 7...

COURT: You mean...

MR LAU: 4A.

COURT: ...the 1.1 million after...

MR LAU: Giving credit for...

COURT: Giving credit for the $151,000?

MR LAU: Yes, and originally it should be 950-something, something. Then now my instruction is that the latest position as of the end of September this year, it has already been reduced to $906,478.26.

COURT: Well, well, I think, concerning paragraph 4A...

MR LAU: Yes.

COURT: ...perhaps counsel can try to agree on a figure.

MR LAU: Yes.

COURT: If, if I’m -- I allow paragraph 4A, then what should be the sum.

MR LAU: Yes, I think we can try to...

MS YU: My Lord, I’m afraid I don’t know if we can do so, because my learned friend has just shown me the newest statements, as it were, and again it’s just -- it just puts music income and record income, and, of course, my Lord would be aware that our case is that, even with the newest tranche of documents -- well, the tranche of documents received about music income we have received in 2019, we are still not in a position to understand and to know and to ascertain whether this is actually a complete account.

COURT: So, Ms Yu, your position is that the sum should be assessed...

MS YU: Yes, the sum be assessed.

COURT: ...in part 2 of the -- of these proceedings.

MS YU: Yes, yes, my Lord, unfortunately, we’ll have to do that.

MR LAU: My Lord, actually, my position at -- as I consider it to -- well, as of now, my position is that now -- since this is a running account, since at any point in time, there might -- we might receive on behalf of the defendants, especially the 1^st defendant, Ms Kwong, some income which may not be substantial, given the lapse of time, so we would respectfully submit that we have the starting point of this $1.1 million and we give credit...

COURT: Mr Lau -- sorry, Mr Lau, since there is a direction for split trial, I think I should focus on liability...

MR LAU: Yes, my Lord.

COURT: ...in these proceedings and if, at the end, I’m with you, I would give you judgment on liability as to the exact amount of the damages payable to the plaintiff I think the amount should be assessed in part 2 of these proceedings.

MR LAU: Yes, my Lord. We have a monetary judgment for an unliquidated sum. I wonder whether that issue...

COURT: There would be a judgment on liability...

MR LAU: Yes.

COURT: ...and, in accordance with the order made by the court in 2016...

MR LAU: Yes.

COURT: ...the issue of quantum would be assessed.

MR LAU: Including 4A, the sum actually owed by...

COURT: I think so, because Ms Yu say that she cannot agree to the figure.

MR LAU: Yes.

COURT: Then there should be an assessment exercise.

MR LAU: Yes, my Lord. My only suggestion is that in -- I think one of the reasons why this 4A was pleaded in such a way is that we have a starting point of $1.1 million. From time to time, it is -- it was implicit that maybe, as time went -- goes by, we received some sums from third parties on behalf of the defendant.

COURT: Now, Mr Lau...

MR LAU: If that...

COURT: ...unless the parties can agree on the figure, otherwise the court would need to do an assessment exercise.

MR LAU: Yes. Yes, my Lord.

COURT: And the assessment exercise would not -- should not take up time in this trial because there has already been a direction that there should be a split trial and only liability would be determined in this trial.

MR LAU: Yes, my Lord. So, my Lord, basically, I’m -- these are all the matters which I want to address you on in the opening. Unless there is other questions you want me to address you now on, then I think I’d better, well, leave it to my learned friend to open her defence and counterclaim.

COURT: Thank you, Mr Lau.” (Emphasis added)

18.  The figure in §4A, i.e. HK$1,101,906.70, is the sum due from D1 to P as shown in the Statement for April 2014. Viewed in context, the position adopted by P in Part I is that all the incomes from music products would be credited to D1, and the expenses which should be deducted would be those as shown in the Statements. In Part I, P has not put forward any case that apart from the expenses as shown in the Statements, D1 would need to bear any other expenses.

19.  In view of P’s opening and pleaded case in Part I of the trial, it is clear that “the relevant expenses” mentioned in §184 of the Judgment are the expenses as recorded in the Statements. In order to give effect to the plain meaning of the Judgment, I agree with Ms Yu and would adopt the amendment as set out in XXX above.

20.  I allow the 1^st Amendment Application to the limited extent as indicated in the above.

ISSUE 2 – PROPOSED AMENDMENTS TO THE JUDGMENT (“2^ND AMENDMENT APPLICATION”)

21.  Ms Yu submits that the following paragraphs of the Judgment (“the Subject Paragraphs”) should be deleted:

“165 …… As to whether all D1’s entitlements have been credited to D1, this would be a matter to be investigated in Part II of these proceedings. It would only be necessary to consider whether P is holding any sum on trust for D1, if it is found that P has not given D1 all her entitlements in accordance with the Contract.

166. If D1 has already obtained all of her entitlements under the Contract, whether P has given part of D1’s gross income to P’s associated companies is neither here nor there. The sums paid by P to P’s association companies would either be the Promotion and Production Costs which have to be borne by D1, or part of P’s commission in respect of which P is entitled to have under the Contract. D1 would have a legitimate complaint only if P has not given her all of her entitlements under the Contract. As said in the above, this should be an issue investigated in Part II of these proceedings.

……

199. If it is found that any net sum is due from P to D1 after conducting the aforesaid assessment, as to whether D1 may have a proprietary claim in respect of that sum, and whether D1 should be entitled to have compound interest on that sum, these would also be determined in Part II of these proceedings.”

22.  Ms Yu’ says that the Subject Paragraphs are proceeding on a basis other than that expounded by the court. She submits that:

(1)  As a result of the rejection of the 2009 Oral Agreement alleged by P[4], I have in effect accepted the plea made by Ds in §37(6BD) of the Amended Defence and Counterclaim and made a finding that P had misappropriated D1’s incomes from her music products. P’s defence to Ds’ complaint that not all of D1’s incomes from her music were given to her was the 2009 Oral Agreement, i.e. the parties had agreed that P would charge 20% and ULV would charge 20% of the gross amount of ‘records income’ and P would charge 20% of the gross amount of ‘music income’[5]. Upon the court’s rejection of the 2009 Oral Agreement, P’s defence to Ds’ claim that P had misappropriated D1’s income has failed.

(2)  Thus it is the court’s own finding that this set of funds were incomes of D1 which had not been paid to Ds, which was wrongfully retained by DL’s companies other than P. Yet the Subject Paragraphs proceed as if it was not yet determined whether P had misappropriated any of D1’s incomes.

(3)  In particular, §199 of the Judgment misses that this court has in effect ruled that P had misappropriated the funds belonging to D1. The question of set off and interest should be considered in the context of this court having found that P had misappropriated funds from D1’s income.

23.  With respect, I am unable to agree with Ms Yu. The Subject Paragraphs are part of my analysis and ruling made in the Judgment. If I have made any errors in the Subject Paragraphs, the errors should be rectified by lodging an appeal against the Judgment. In my view, the request for deletion of the Subject Paragraphs is not a request for correcting any clerical error in the Judgment, but is a proposal to change the substance of the Judgment. This request cannot be entertained under the slip rule or inherent jurisdiction of the court. Since the Order pursuant to the Judgment has been sealed, I have no jurisdiction to deal with this application. Even if I have the jurisdiction, I would exercise my discretion to decline to do so. It is not right to change the substance of a judgment after the order pursuant to the judgment has been sealed. As said before, substantial errors in the Judgment (if any) should be rectified by an appeal. However, Ds have chosen not to lodge any appeal against the Judgment. That being the case, the parties must be bound by everything said in the Judgment.

24.  Further and without prejudice to the aforesaid, it is not correct to say that in the Judgment, I have made any ruling concerning the misappropriation claim made by Ds. It is P’s case that taking everything into account (including the Promotion and Production Costs (which should be borne by D1), and D1’s incomes from her music products (which should be given to D1)), the total of the sums due from D1 to P is greater than the total of the sums due from P to D1. Whether P is correct on this point would be adjudicated in Part II of these proceedings. For the sake of discussion, if P’s point is eventually accepted by the court, that would have an impact on the misappropriation claim made by Ds. I say no more on this topic at the present stage.

25.  I dismiss the 2^nd Amendment Application.

ISSUE 3 – NEW CLAIMS BY P

26.  As said in the above, in Part I, P’s stance was that the net sum due from D1 to P would be the amount set out in §4A. In P’s opening in Part I, counsel for P submitted that that amount had been further reduced to HK$906,478.26.

27.  In the Points of Claim filed by P on 17 May 2022 for the purpose of Part II (“PPC”), P has retained §4A (which is §31 of PPC), but as an alternative claim only. As per the PPC, the primary claim is a claim for HK$1,719,552.32. P has also made a separate additional claim in §29 of the PPC.

28.  The primary claim pleaded in the PPC is materially different from the claim made in §4A and elaborated in P’s opening in Part I. The primary claim is a new claim. There is no reason to allow P to put forward a claim which is entirely new at this stage.

29.  Further, a substantial part of the primary claim is the alleged costs of human resources for the production of D1’s music products, the quantum of which being HK$1,026,129.93. P has not claimed for the costs of these human resources in Part I. In my view, these alleged costs of human resources are clearly P’s operational costs. I have held in the Judgment that these operational costs should be borne by P under the Contract. See §§126 to 129 of the Judgment.

30.  I disallow the primary claim made by P in PPC.

31.  The separate additional claim made by P in §29 of the PPC is as follows:

“29. Annex 1 of the 2008 Agreement was in Chinese and was entitled 私人擔保聲明契約 (Declaration of Deed of Personal Guarantee), which was signed, sealed, and delivered by [D1] (“Guarantee”) as pleaded in paragraph 7 of the Amended Statement of Claim filed on 3^rd August 2017 herein. [D1] is also liable for any breach and repudiation of the 2008 Agreement by [D2] by reason of the Guarantee.”

32.  There is no ruling in the Judgment that D2 has breached and repudiated the 2008 Agreement. There is no basis in support of the claim now made in §29 of the PPC. This claim is disallowed.

ISSUE 4 – PI CLAIM BY D1

33.  In Ds’ Answer to PPC and Ds’ Points of Claim (“DPC”) filed on 12 July 2022, in §§30 to 35 of the DPC, D1 has made a claim for damages based upon the PTSD suffered by her as a result of the Feb 2014 Incident. In my view, there can be no doubt that such a claim is a claim based upon personal injuries (“the PI Claim”). Mr Lau for P submits that the PI Claim is a new claim and should not be allowed in Part II.

34.  Plainly, the PI Claim is an entirely new claim put forward by D1 in Part II. It has not been pleaded in Part I. It is also not contained in the ALAI. The claim has also not been argued in Part I. It is true that PTSD is mentioned in §§96(5) and 188 of the Judgment. However, in §96(5), I am merely quoting the contents of Dr Chan’s Letter dated 20 September 2014. In §188, I am saying that as a result of the Feb 2014 Incident, D1 has a reasonable ground not to comply with Clause 9(a) of the Contract, and P is not entitled to exercise the Option. At nowhere in the Judgment, I have said that D1 is entitled to have damages by reason of the PTSD suffered by her as a result of the Feb 2014 Incident.

35.  It is plain and obvious that D1 should not be allowed to put forward the PI Claim for the first time in Part II.

(1)  The time limit for lodging a claim based upon personal injuries is 3 years.[6] D1, who has been legally represented at all times in these proceedings, has chosen not to include a claim for damages based upon personal injuries at the beginning of these proceedings or at any time during the statutory time limit. There is no reason why the statutory time limit should now be extended to facilitate D1 to put forward the PI Claim.

(2)  No medical report, and no statement of the special damages has been served together with D1’s Counterclaim at the beginning of these proceedings. The requirement in Order 18 rule 12(1A) has been ignored at all.

(3)  The protocol in PD18.1 has been completely ignored.

(4)  By now, more than 9 years have lapsed after the occurrence of the Feb 2014 Incident. It would be extremely difficult to assess the impact of the incident on D1’s health after such a long period of time has elapsed. To allow D1 to put forward the PI Claim now would be grossly unfair to P.

36.  Ms Yu refers me to §2 of P’s Proposed Directions for Part II dated 28 November 2022 (“P’s Proposed Directions”). Ms Yu submits that by putting forward the said paragraph, P has in fact allowed D1 to make the PI Claim in Part II of these proceedings. §2 of P’s Proposed Directions is as follows:

“2. [D1] to file and serve a Statement/Schedule of Damages for the assessment in accordance with [§2(2) of the Decision] within 42 days hereof.

Submission: As [D1]’s claim for the damages for the breach of the implied term of [the Contract] with [P] is based on the alleged diagnosis of [PTSD]. Subject to the issue whether [D1] did suffer such an affliction and even if so, the recoverability of any damages claimed by that [D1], it is submitted that [D1] should serve a pleading on quantum so as to particularise her claim.”

37.  P has expressly reserved the right to object to the recoverability of any damages based upon the PTSD suffered by D1 after the Feb 2014 Incident. In my view, this is wide enough to cover P’s objection to the PI Claim on the basis that such a claim is time-barred. P has not given up its right to object to the lateness of the PI Claim.

38.  For the reasons above, I disallow the PI Claim made by D1 in DPC.

DISPOSITION

39.  I make the order as set out in §§20, 25, 30, 32, and 38 above.

40.  I prefer to determine costs in these proceedings after concluding Part II. Accordingly, costs be reserved.