LI KWAN HO v. TSOI KA YIN

HCA 1535/2021

[2025] HKCFI 4518

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1535 OF 2021

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J U D G M E N T[1]

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A.  Overview

1.  The disputes in this action arose from an aborted listing project.

2.  Relying on the terms of a deed dated 23 December 2019 (the “Deed”) and a supplemental deed dated 2 April 2020 (the “Supplemental Deed”), it is the Plaintiff’s case that the Defendant is liable to pay Worldex Resources Ltd (“Worldex Resources”) or himself an aggregate sum of HK$26,338,568.24, which were the expenses incurred as a result of the aborted listing project.

3.  It is the Defendant’s case that:-

(1)  She entered into the Deed and Supplemental Deed under the economic duress exerted by the Plaintiff;

(2)  At the meetings that took place on 19 and 25 November 2020, the Plaintiff’s wife, namely Ms Kate Tsang[2], acting on behalf of the Plaintiff agreed that the Deed and Supplemental Deed be revoked and/or cancelled; and

(3)  As a matter of construction, the terms of the Deed and Supplemental Deed only require her to pay the costs and expenses that were incurred after the Deed was executed.

B.  Material Background

4.  The following facts are not in dispute.

5.  The Plaintiff was at all material times prior to July 2021 married to Ms Kate Tsang.

6.  The Defendant was at all material times married to Mr Chan King Man (“Mr Sunny Chan”).

7.  In around 2014, the Plaintiff and Ms Kate Tsang on one hand and the Defendant and Mr Sunny Chan, on the other hand, came to know each other. They collaborated with each other and carried on a business of distributing beauty and cosmetic products under Worldex (HK) Ltd (“Worldex HK”).

8.  The Plaintiff and the Defendant respectively held 50% shareholding in Worldex HK. They have been the only directors of Worldex HK.

9.  Broadly speaking, whilst the Plaintiff was responsible for matters relating to sales and merchandising, the Defendant and Mr Sunny Chan were responsible for matters relating to finance and administration. Mr Sunny Chan claimed that he played a pivotal role in (i) procuring overseas suppliers to do business with Worldex HK and (ii) maintaining good relationships with these suppliers.

10.  Due to the parties’ hard work and dedication, the operation of Worldex HK was successful. In the financial year ended 31 March 2018, Worldex HK generated gross profit of HK$36,422,570.

11.  In the circumstances, in 2017, some investors, including Mr Alan Ong, approached Mr Sunny Chan to discuss the possibility of listing the shares of Worldex HK on the Growth Enterprise Market Board of the Hong Kong Stock Exchange Limited.

12.  Mr Sunny Chan and the Defendant were keen on the possibility of listing. However, in light of the expenses incurred, the Plaintiff was hesitant, though he eventually agreed that the listing project be pursued.

13.  In view of the listing project, in the second half of 2018, the shareholding in Worldex HK was restructured. The new corporate project is set out graphically in Annexure 1[3]. In short, after the restructuring, the shareholding[4] in Worldex HK has been held by the Plaintiff and the Defendant via Worldex Resources Ltd (BVI) (“Worldex Resources”), Worldex Group Ltd (Cayman), and Skynet Strategy Ltd (BVI).

14.  At the time, it was envisaged that the shares of Worldex Group Ltd would be listed on the Growth Enterprise Market Board of the Hong Kong Stock Exchange Limited.

15.  The investor that supported the intended listing application was First Glory International Ltd (“First Glory”) (which was controlled by Mr Alan Ong).

16.  In this connection:-

(1)  On 8 October 2018, First Glory, the Plaintiff, the Defendant, and Worldex Resources signed a facility letter (the “1^st Facility Letter”). In short, First Glory agreed to provide an interest-free facility of HK$17 million for the purpose of defraying the expenses in relation to the listing exercise. If the listing exercise becomes successful, a consultancy fee should be paid to the investor. However, if the listing exercise becomes unsuccessful, Worldex Resources should repay the investor by issuing new shares representing 1% of its issued share capital, and the indebtedness should not be repaid in cash unless the parties agree otherwise[5].

(2)  On 22 October 2019, First Glory, the Defendant, and Worldex Resources signed a further facility letter (the “2^nd Facility Letter”). Similar to the mechanism under the 1^st Facility Letter, under the 2^nd Facility Letter, First Glory agreed to provide an interest-free facility of HK$1.3 million. If the listing exercise becomes unsuccessful, Worldex Resources should repay the investor by issuing new shares representing 1% of its issued share capital, and the indebtedness should not be repaid in cash unless the parties agree otherwise[6].

17.  As evidenced by the WhatsApp messages (the details of which will be elaborated below), as of mid-2019, there was concern as to whether the listing project would derail in light of the unfavourable circumstances (including social unrest). In this connection, the Plaintiff expressed concern as to the expenses incurred should the listing project continue.

18.  On 23 December 2019, the Plaintiff, the Defendant, and Worldex Resources entered into the Deed, which set out various obligations on the part of the parties in the event that the listing project/IPO is not completed before a contractual deadline. The bulk of these obligations are not directly relevant to the claims in these proceedings. For present purposes, it suffices to say clause 3.10 of the Deed provides that:-

“If any Person, including but not limited to those set out in Schedule 3 hereto, requests or demands any Group Member(s) to make any payments of whatsoever nature arising from, in connection with or as a result of the IPO, including but not limited to all liabilities, actions, suits, proceedings, claims, costs and expenses whatsoever which may be taken or made against or incurred or become payable by [the Plaintiff] or any Group Member(s) in connection with the IPO, [the Defendant]shall pay to [the Plaintiff] or [Worldex Resources] (as directed by [the Plaintiff]) the aggregate amount of such payments.”

19.  On 2 April 2020, the Plaintiff, the Defendant and Worldex Resources entered into the Supplemental Deed. Clause 3.10 of the Supplemental Deed (which replaced clause 3.10 of the Deed) reads as follows:-

“If any Person, including but not limited to those set out in Schedule 3 hereto, requests or demands any Group Member(s) and/or [the Plaintiff] to make any payments of whatsoever nature (including but not limited to repayment of loan, interests and/or advisory fees) arising from, in connection with or as a result of the IPO, including but not limited to all liabilities, actions, suits, proceedings, claims, costs and expenses whatsoever which may be taken or made against or incurred or become payable by [the Plaintiff] and/or any Group Member(s) in connection with the IPO, [the Defendant] shall pay to [the Plaintiff] and/or [Worldex Resources] (as directed by [the Plaintiff]) the aggregate amount of such payments.”

20.  In light of the unfavourable circumstances and the dim prospect of success, in January 2021, the Plaintiff and the Defendant agreed that the listing project be aborted.

C.  The Respective Case of the Parties

C1.  The Plaintiff’s Case

21.  The Plaintiff’s claims against the Defendant are straightforward.

22.  As evidenced by the contemporaneous invoices and fee notes:-

(1)  Worldex Resources and its subsidiaries (including Worldex HK)[7] incurred expenses of HK$26,338,568[8] in relation to the listing project (or the “IPO”); and

(2)  There were demands, and requests for payments, and claims in respect thereof.

23.  Accordingly, pursuant to Clause 3.10 of the Supplemental Deed, the Defendant should pay HK$26,338,568 to Worldex Resources or the Plaintiff.

C2.  The Defendant’s Case

24.  The Defendant admitted that she signed the Deed and the Supplemental Deed. As will be elaborated below, whilst the Deed and Supplemental Deed were prepared by the solicitors engaged by Worldex Resources, the contents had been reviewed by the solicitors representing the Defendant and Mr Sunny Chan.

25.  However, the Defendant asserted that she entered into the Deed and the Supplemental Deed as a result of the economic duress exerted by the Plaintiff. In particular, the Defendant alleged that on various occasions from November to December 2019, the Plaintiff threatened Mr Sunny Chan that if the Defendant refused to, inter alios, indemnify the listing expenses, he would resign from his roles in the companies involved in the listing project and solicit all staff in Worldex HK’s sales and purchases team to leave their employment. Since the listing project had been ongoing for a period of over 1.5 years and the Plaintiff played a crucial role in Worldex HK’s operation, the Defendant considered that she had no alternative but to succumb to the threat made by the Plaintiff.

26.  The Defendant further asserted that at (i) a meeting that took place in a restaurant in Elements on 19 November 2020 and (ii) a meeting that took place in a café in Tai Wai on 25 November 2020, she and Mr Sunny Chan on the one hand and on the other hand Ms Kate Tsang acting on the Plaintiff’s behalf verbally agreed that (i) the Deed and the Supplemental Deed be revoked and/or cancelled; and (ii) the listing project be aborted.

27.  In the premises, the Defendant counterclaimed for (i) a declaration that the Deed and the Supplemental Deed are not enforceable; and (ii) an order that the Deed and the Supplemental Deed be set aside.

28.  In the alternative, assuming that the Deed and the Supplemental Deed are valid, the Defendant contended that as a matter of construction, clause 3.10 of the Supplemental Deed does not require her to pay the expenses that had been incurred and/or defrayed before the Deed was executed on 23 December 2019. The Defendant pointed out that as of 23 December 2019, Worldex Resources and its subsidiaries/associated companies had already defrayed listing expenses in the amount of HK$17,061,392.32[9], and the expenses were paid with monies advanced by First Glory pursuant to the 1^st and 2^nd Facilities Letters. Thus, the Defendant should not be liable to pay the said sum of HK$17,061,392.32 as she should only be liable for any outstanding sum, which Worldex Resources or its subsidiaries/associated companies were liable to pay.

D.  Legal Principles on Assessing Credibility

29.  In Lee Fu Wing v Yan Paul Po Ting [2009] 5 HKLRD 513 at 534, DHCJ Au (as Au JA then was) set out the well-established approach to assessing credibility. In the course of assessing the credibility of a party’s case, the court shall consider the following matters:

(1)  whether the party’s case is inherently plausible or implausible;

(2)  whether the party’s case is, in a material way, contradicted by other evidence (documentary or otherwise) which is undisputed or indisputable;

(3)  where it is shown that a witness has been discredited over one or more matters to which he has given evidence using the above tests, this is relevant to the assessment of his overall credibility; and

(4)  the demeanour of the witnesses.

30.  In the context of adjudicating a dispute in relation to an alleged oral agreement or understanding, in Joint and Several Trustees of the property of Yeung Wing Sing v Yeung Wing Sing & Anor [2021] HKCFI 2018 at para 26, Recorder Yvonne Cheng SC (as Cheng J then was) pointed out that:

(1)  contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility;

(2)  in deciding whether to accept a witness’s account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events;

(3)  care should be taken in regard to the consistency of the witness’s evidence with undisputed or indisputable evidence, and the internal consistency of the witness's evidence;

(4)  care should be taken in drawing conclusions about truthfulness and reliability solely or mainly from the appearance of a witness or from the assessment of a witness’s character; and

(5)  witnesses’ credibility should be tested by reference to the objective facts proved independently of their testimony, and regard should be had to their motives and to the overall probabilities.

E.  No Economic Duress

E1.  Legal Principles

31.  The legal principles on economic duress are well-established.

32.  It has been suggested that “[t]he ingredients of actionable duress are that there must be pressure, (a) whose practical effect is that there is compulsion on, or a lack of practical choice for, the victim, (b) which is illegitimate, and (c) which is a significant cause inducing the claimant to enter into the contract.”: see Zebra Industries (Orogenesis Nova) Ltd v Wah Tong Paper Products Group Ltd [2016] 1 HKC 213 at para 81 (per G Lam J (as G Lam JA then was); DSDN Subsea Ltd v Petroleum Geo-services ASA [2000] BLR 530 (per Dyson J); Carillion Construction Ltd v Felix (UK) Ltd (2000) 74 Con LR 144 at para 24 (per Dyson J); Universe Tankships Inc of Monrovia v International Transport Workers’ Federation (“The Universe Sentinel”) [1982] 2 All ER 67 at 88, [1983] 1 AC 366 at 400; and Dimskal Shipping Co SA v International Transport Workers’ Federation, The Evia Luck [1991] 4 All ER 871 at 878, [1992] 2 AC 152 at 165.

33.  In Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corporation Ltd [2007] 3 HKLRD 439 at paras 154 to 155 (which was applied in Zebra Industries (supra) at para 83), Stock JA stated:

“154. The key to proving economic duress is proof of the illegitimacy of the suggested pressure. Much commercial activity necessarily involves pressure, often considerable and sometimes overwhelming, exercised by parties who find themselves in powerful bargaining positions. But that of itself is not illegitimate. It was suggested by McHugh JA, as he then was, in Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40, 46 that:

‘Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct. But the categories are not closed. Even overwhelming pressure, not amounting to unconscionable or unlawful conduct, however, would not necessarily constitute economic duress.’

155. The reference there to ‘unconscionable conduct’ itself needs explanation. It has been explained in the Australian courts by reference to a special disadvantage suffered by the weaker party of which the stronger party takes advantage and is discussed in Australia & New Zealand Banking Group v Karam and Others (2005) 64 NSWLR 149 at paragraphs [46] and [66]. In Commercial Bank of Australia Ltd v Amadio [1982-1983] 151 CLR 447, 462 Mason J, as he then was, explained the significance of the adjective ‘special’ in the phrase ‘special disadvantage’:

‘I qualify the word ‘disadvantage’ by the adjective ‘special’ in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasise that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party.’ ”

34.  In Kolmar Group AG v Traxpo Enterprises Pvt Ltd [2011] 1 All ER (Comm) 46 at para 92 (which was applied in Zebra Industries (supra) at para 84), Christopher Clarke J stated:-

“(i) Economic pressure can amount to duress, provided it may be characterised as illegitimate and has constituted a ‘but for’ cause inducing the claimant to enter into the relevant contract or to make a payment. See Mance J in S.L. Huyton S.A. v Peter Cremer GmbH & Co [1999] 1 Lloyd’s Rep 620.

(ii) A threat to break a contract will generally be regarded as illegitimate, particularly where the defendant must know that it would be in breach of contract if the threat were implemented.

(iii) It is relevant to consider whether the claimant had a ‘real choice’ or ‘realistic alternative’ and could, if it had wished, equally well have resisted the pressure and, for example, pursued practical and effective legal redress. If there was no reasonable alternative, that may be very strong evidence in support of a conclusion that the victim of the duress was in fact influenced by the threat.

(iv) The presence, or absence, of protest, may be of some relevance when considering whether the threat had coercive effect. But, even the total absence of protest does not mean that the payment was voluntary.”

E2.  Deliberation

35.  Having considered the inherent probabilities, the apparent logic of events, the contemporaneous documents, the parties’ objective conduct, the evidence of the witnesses and the parties’ submissions, I reject the Defendant’s suggestion that (i) the Plaintiff had made threat to her regarding the affairs of Worldex Resources, Worldex HK and/or their associated companies; and (ii) the Defendant entered into the Deed and the Supplemental Deed as a result of the alleged threat made by the Plaintiff.

36.  I made the said findings for the following reasons.

37.  First of all, the contemporaneous audio messages exchanged between the parties via WhatsApp show that the arrangement under clause 3.10 of the Deed/Supplemental Deed was proposed by Mr Sunny Chan on his own volition, and the purpose was to address the Plaintiff’s concern about the adverse financial impact on Worldex Resources/Worldex HK (as well as himself) in the event that the listing project becomes unsuccessful. In this connection:-

(1)  Ms Sabrina Ho, together with Mr Lawrence Luk and Mr Jiang Zixin, (for the Plaintiff) helpfully referred me to the contemporaneous records in respect of the following voice mails from Mr Sunny Chan:-

(a)  In his voice mails to the Plaintiff on 17 January 2019 at 9:25pm and 9:27pm[10], Mr Sunny Chan indicated he appreciated that the Plaintiff was afraid of the listing project/IPO (我知你好驚，因為你唔識。). In order to allay the Plaintiff’s worries, Mr Sunny Chan assured the Plaintiff that if the listing project/IPO failed, he and the Defendant would take full responsibilities, and the Plaintiff was asked to engage a lawyer to prepare a legal document (咁有乜就我輸啦，好冇啊，我頂晒，你唔好擔心…”) (“上市，啲人話上唔到，輸咪我輸囉，我簽晒，有乜我孭晒。你搵你律師同我簽，好冇啊，我同Connie[11]佢簽晒，唔好擔心，真係唔好擔心再擔心真係好攰…).

(b)  In his voice mails to the Plaintiff on 3 July 2019 at 12:14pm[12], Mr Sunny Chan reiterated his proposal that a legal document be prepared to reflect the parties’ consensus that if the listing project/IPO failed, he and the Defendant would shoulder up all financial responsibility, and the Plaintiff would not suffer any loss at all (我同你喺律師樓簽份文件，簽一份文件，簽一份文件，關於Worldex所有有關，未來如果上唔到市要賠嘅錢，我賠晒，好冇啊。你一毫子都唔使賠，就針對呢一件事，即係唔好唔好再拗啦，你唔好話你要賠，唔X使你賠，你搵你嘅律師寫份文件，關於整個過程，同任何人有乜瓜葛，要陪賠我賠晒，搞掂好冇，大家唔好再拗。).

(c)  In his voice mail to the Plaintiff on 3 July 2019 at 12:37pm[13], Mr Sunny Chan said that he would personally underwrite or be responsible for everything from the beginning till the end. (由頭到尾我包晒就包底，我私人包)

(d)  In his voice mails to the Plaintiff on 3 July 2019 at 1:51pm[14], Mr Sunny Chan further urged the Plaintiff to engage his own lawyer to prepare the legal document. Again, Mr Sunny Chan reiterated that he and the Defendant would bear all the loss and expenses if the listing project/IPO failed. Mr Sunny Chan also stated that he and the Defendant would take up all the risks and costs involved and that the Plaintiff would fully be protected (你搵你嘅律師，即係驚我搵個律師嚟又話我夾埋律師去呃你啦。咁你要搵你嘅律師，你嗰啲錢就我就我找數啦，就簽咗份合同就話同Sunny Chan Connie Tsoi嘅合作呢，如果後面喺上市過程中，有任何損失，就我Sunny Chan同Connie Tsoi 兩個，係獨力承擔晒李均皓[15]所付出嘅風險同埋代價。我諗你，你你你喺呢個地球搵合作夥伴呢，都冇一個Sunny Chan 咁豪氣，同埋可以咁樣去做一個擔保…).

(e)  In his voice mail to the Plaintiff on 3 July 2019 at 4:08pm[16], Mr Sunny Chan said to the Plaintiff that he would pay everything and that if the listing project fails, he and the Defendant would be responsible for all the losses and consequences. (由我俾啦濕碎，全部由我俾…如果唔成功呢，所有嘅嘅損失呢各方面嘅賠償呢，就由Connie Tsoi 同 Sunny Chan 兩公婆去承擔晒，咁我諗成件事就簡單化啦…)

(2)  In my view, the aforesaid voicemails are compelling contemporaneous evidence that flatly contradicts the Defendant’s case. The contemporaneous records do not show that the Defendant entered into the Deed/Supplemental Deed as a result of the threat made by the Plaintiff.

(3)  Instead, the aforesaid voicemails (the contents of which are self-explanatory) show that:-

(a)  As of 2019, the Plaintiff was doubtful about the viability of the listing project/IPO and concerned about the adverse financial impact.

(b)  With a view to allaying the Plaintiff’s worries and procuring his cooperation, Mr Sunny Chan, on his own volition, indicated in the event that the listing project/IPO failed, (i) he and the Defendant would bear all the loss and expenses incurred and take up all the risks and costs involved, and (ii) the Plaintiff would be fully protected and his interests would not be prejudiced.

(c)  Mr Sunny Chan even repeatedly requested the Plaintiff to engage lawyers for the purposes of preparing a legal document to reflect the parties’ consensus.

(4)  It was in these circumstances that lawyers were subsequently engaged to prepare clause 3.10 of the Deed and clause 3.10 of the Supplemental Deed.

38.  Second, whilst the Plaintiff’s case is corroborated by the aforesaid voicemails, the Defendant failed to put forward any contemporaneous records (such as text messages, voice mails, and/or emails) showing the Plaintiff had threatened her and/or Mr Sunny Chan. In this connection:-

(1)  The contemporaneous messages relied on by the Defendant (such as Mr Sunny Chan’s messages on 6 December 2019[17], 16 December 2019[18], and 19 December 2019[19]) only showed that Mr Sunny Chan and the Plaintiff had a quarrel with each other back in December 2019.

(2)  The message on 6 December 2019[20] shows that Mr Sunny Chan indicated that he was prepared to end the parties’ collaboration and wind up the companies if the Plaintiff puts a halt to the listing project/IPO or leaves the companies with the team. However, this message does not show that the Plaintiff threatened to leave the companies with his team.

(3)  In my view, the reality was such that Mr Sunny Chan knew that the Plaintiff was in a position to leave the companies with his team or put a halt to the listing project/IPO, and this was why he “pre-emptively” threatened the Plaintiff that he would seek to wind up the companies.

(4)  Had the Plaintiff made the threat in question as alleged, the Defendant and/or Mr Sunny Chan would have protested, complained, and expressed their displeasure about the Plaintiff’s illegitimate conduct.

(5)  In this connection, having heard the way in which Mr Sunny Chan responded to the questions asked of him, I have no doubt that he is a vocal person who does not bother to hide his emotion and displeasure. This is evidenced by the aforesaid contemporaneous WhatsApp messages wherein he fervently argued with the Plaintiff and threatened to wind-up the companies. In my view, had the Plaintiff threatened him illegitimately as alleged, Mr Sunny Chan would have vigorously protested and indicated his displeasure about the Plaintiff’s wrongdoings. However, not an iota of the contemporaneous communication records show that he did so. The contemporaneous communication records do not support the Defendant’s case, and they tend to show that the Plaintiff did not make the illegitimate threat at all.

39.  Third, it is important not to lose sight of the fact that the Defendant was at all material times legally represented. In this connection:-

(1)  The contemporaneous records show that as early as 19 December 2019, Worldex HK’s solicitors, namely Messrs Wong & Tang (“WT”), were involved in preparing the Deed. Meanwhile, Messrs Winnie Leung & Co (“WLC”), were engaged to represent Mr Sunny Chan and the Defendant.

(2)  As evidenced by the contemporaneous emails exchanged between WT and WLC on 19 and 20 December 2019[21], WLC had reviewed and edited the contents of the draft Deed[22]. Likewise, WT’s contemporaneous emails dated 30 March 2020[23] and 1 April 2020[24] show that a copy of the draft Supplemental Deed was provided to WLC for their review, and WLC had made some cosmetic changes to the contents.

(3)  As evidenced by his WhatsApp messages to Ms Kate Tsang on 18 December 2019 at 9:29am[25], 18 December 2019 at 9:33am[26], 19 December 2019 at 9:26am[27], and 19 December 2019 at 12:25pm[28], Mr Sunny Chan was eager to finalize the contents of the Deed as soon as possible, and he instructed WLC to avoid making substantial amendments to the Deed.

(4)  Eventually, the Defendant signed the Deed and the Supplemental Deed in the presence of her solicitor, namely Ms Kwok Po Tai (who is also known as Charlotte Kwok) of WLC, on 23 December 2019[29] and 2 April 2020[30].

(5)  The present case does not involve a scenario where a party was stuck in a disadvantaged position. Whilst Mr Sunny Chan and the Defendant were seasoned businesspersons, they had the benefit of being advised and represented by solicitors.

(6)  Had the Defendant felt that she was illegitimately pressurized to enter into the transactions in question, she would have voiced out her concern to her solicitors, who were in a position to advance and/or protect her interest. There was no reason why the Defendant’s solicitors did not raise any complaint and/or objection at all material times before the present dispute arose.

(7)  In this connection, when the Defendant and Mr Sunny Chan were cross-examined by Ms Ho, they both said that Ms Charlotte Kwok of WLC was duly informed of the alleged economic duress exerted by the Plaintiff. However, according to the Defendant, Ms Charlotte Kwok simply left it to the Defendant to decide whether to execute the Deed and the Supplemental Deed. According to Mr Sunny Chan, Ms Charlotte Kwok advised that the contents of the Deed were not acceptable and that the Defendant should not sign the document.

(8)  Putting aside the aforesaid inconsistency, the Defendant and Mr Sunny Chan’s assertions were unconvincing and incredible. Had the Defendant and/or Mr Sunny Chan informed Ms Charlotte Kwok that they were threatened by the Plaintiff, it was likely that Ms Charlotte Kwok would have (i) advised the Defendant to protest and (ii) sought to put on record that the Defendant entered into the Deed and Supplemental Deed under economic duress. This was an effective way to preserve the position of the Defendant and to protect her interests. It is hard to imagine that Ms Charlotte Kwok would take no step to protect the Defendant at all.

(9)  Based on the Defendant and Mr Sunny Chan’s assertions, Ms Charlotte Kwok was an important witness. She could testify as to the alleged illegitimate pressure that the Defendant faced at the material times. For reasons best known to the Defendant and/or Mr Sunny Chan, they did not seek to adduce any evidence from Ms Charlotte Kwok; nor did they seek to produce Ms Charlotte Kwok’s contemporaneous attendance notes. In this connection, the Defendant merely said that she was not aware of the significance of Ms Charlotte Kwok’s role and that she had not yet fully paid up all the legal fees charged by WLC. These explanations had no substance and were unconvincing.

(10)  In my view, the court should draw adverse inference against the Defendant: see South China Securities Ltd v Lam Kwen Yuen [2012] 5 HKLRD 524 at para 7 (per DHCJ Lisa Wong SC, as Lisa Wong J then was); and Tullet & Tokyo International Securities v. APC Securities Co. Ltd [2001] 2 HKLRD 356, at 365B-J (per Le Pichon JA). I am of the view that had Ms Charlotte Kwok testified, she would have exposed the unfavourable facts that the Defendant voluntarily accepted the transactions under the Deed and Supplemental Deed and that neither the Defendant nor Mr Sunny Chan had complained to them that the Plaintiff exerted economic duress on them. This was the reason why the Defendant and/or Mr Sunny Chan chose not to adduce evidence from her and not to produce her contemporaneous attendance notes as evidence.

40.  Fourth, in his oral evidence, Mr Sunny Chan kept emphasizing that the terms of the Deed/Supplemental Deed were very unfavourable to the Defendant, and no reasonable person would have voluntarily accepted the same. However, as evidenced by the contemporaneous audio messages exchanged with the Plaintiff, it was apparent that in light of the potential financial advantages that he envisaged, Mr Sunny Chan was excited about the listing project, and he wanted the Plaintiff (who had 50% interests in Worldex Resources and its subsidiary companies) to fully cooperate. This was the reason why Mr Sunny Chan proposed the terms in question, which eventually became part of the Deed/Supplemental Deed. In my view, Mr Sunny Chan and/or the Defendant knowingly took up the risks under the Deed/Supplemental Deed. I am not of the view that the terms of the Deed/Supplemental Deed were commercially inexplicable.

41.  Fifth, I am of the view that the assertions contained in (i) the defence and counterclaim and (ii) the Defendant and Mr Sunny Chan’s witness statements are vague and hollow. The Defendant was only able to come up with a bare assertion that was uncorroborated by any concrete evidence. When the Defendant and Mr Sunny Chan gave oral evidence, they raised new allegations that were not mentioned in their witness statements. For instance, whilst the Defendant alleged she overheard the Plaintiff’s threat when Mr Sunny Chan had telephone conversations with him, Mr Sunny Chan alleged that the Plaintiff did threaten that he would expel the IPO team. There was no reason why these allegations (which were material) were not mentioned in the Defendant and Mr Sunny Chan’s witness statements, and no credible explanation was offered. In my view, the Defendant and Mr Sunny Chan’s complaint is simply unconvincing and incredible.

42.  For all the above reasons, I find that:-

(1)  The Plaintiff did not make any threat to Mr Sunny Chan and/or the Defendant. In particular, he did not threaten Mr Sunny Chan and/or the Defendant that if the Defendant refused to provide an indemnity, he would resign from his roles in the companies involved in the listing project/IPO and/or solicit the staff in Worldex HK to leave employment.

(2)  The Defendant voluntarily signed the Deed and the Supplemental Deed.

(3)  In light of the Plaintiff’s worries about the financial consequences that arose if the listing project/IPO failed, Mr Sunny Chan had promised and assured the Plaintiff that:-

(a)  the Defendant would bear all the loss and expenses incurred and take up all the risks and costs involved; and

(b)  the Plaintiff would be fully protected and his interests would not be prejudiced.

(4)  The Defendant did not disagree with the promise and assurance that Mr Sunny Chan made to the Plaintiff.

(5)  In the circumstances, the Defendant knowingly and willingly accepted the terms under clause 3.10 of the Deed and clause 3.10 of the Supplemental Deed.

43.  In the premises, I reject the Defendant’s defence based on economic duress.

F.  The Deed and Supplemental Deed have not been Revoked or Cancelled

44.  I now address the Defendant’s assertion that the Deed and Supplemental Deed were revoked and/or cancelled as a result of her alleged agreement with Ms Kate Tsang at the meetings on 19 and 25 November 2020.

45.  For the following reasons, I reject the Defendant’s assertion.

46.  First of all:-

(1)  Ms Sabrina Ho (for the Plaintiff) pointed out that there is not a shred of contemporaneous document or record showing that the parties agreed that the Deed and Supplemental Deed be revoked and/or cancelled.

(2)  Ms Ho then referred me to Yu Man Fung Alice v Chiau Sing Chi Stephen [2020] HKCFI 2923 at para 19. There, Coleman J stated:-

19. … Anyone with business experience will understand the value of a written record. Therefore, the absence of any written record may- depending on the circumstances- tend to suggest that no contract was in fact concluded.”

(3)  In the same vein, in Blue v Ashley [2017] EWHC 1928 (Comm) at para 65, Leggatt J stated:-

“It is rare in modern commercial litigation to encounter a claim, particularly a claim for millions of pounds, based on an agreement which is not only said to have been made purely by word of mouth but of which there is no contemporaneous documentary record of any kind. In the twenty-first century the prevalence of emails, text messages and other forms of electronic communication is such that most agreements or discussions which are of legal significance, even if not embodied in writing, leave some form of electronic footprint.”

(4)  Like most modern businesspersons in the 21^st century, the Plaintiff, Ms Kate Tsang, Mr Sunny Chan, and the Defendant extensively communicated with each other via WhatsApp. There is no question that the Defendant and Mr Sunny Chan were seasoned businesspersons. For reasons best known to themselves, they did not seek to record the alleged agreement that was reached at the meetings on 19 and 25 November 2020. Moreover, it is telling that the existence of the alleged agreement (or consensus) is not evidenced or reflected by any “form of electronic footprint”.

(5)  However, when the Defendant and Mr Sunny Chan testified, they said that in light of their trust towards the Plaintiff, they did not take steps to record the parties’ agreement to revoke and/or cancel the Deed/Supplemental Deed in writing. I do not accept these assertions. On the Defendant’s case, the Plaintiff repeatedly threatened her and Mr Sunny Chan illegitimately. I cannot see how the Defendant and Mr Sunny Chan could seriously suggest that they trusted the Plaintiff. Their assertions were simply self-contradictory.

(6)  In my view, the truth was that Ms Kate Tsang and the Defendant had not agreed that the Deed and the Supplemental Deed be revoked and/or cancelled. As such, the parties did not engage in any discussion in respect thereof at all. This explains why the alleged agreement or consensus is not evidenced or reflected by any “form of electronic footprint”.

47.  Second, I am unable to discern any sensible commercial reason why the Plaintiff and/or Ms Kate Tsang would have agreed that the Deed and the Supplemental Deed be revoked and/or cancelled. In this connection:-

(1)  As pointed out, the purpose of clause 3.10 of the Deed and clause 3.10 of the Supplemental Deed was to protect the Plaintiff’s commercial interest, and the same were inserted on Mr Sunny Chan’s volition. All along, the attitude of the Plaintiff was half-hearted, and he did not wish to bear the adverse consequence arising from the failure of the listing project/IPO. In the circumstances, I am not of the view that the Plaintiff and/or Ms Kate Tsang would have agreed to waive the protection under clause 3.10 when the listing project/IPO became a failure.

(2)  However, when the Defendant and Mr Sunny Chan testified, they suggested that the Plaintiff and/or Ms Kate Tsang agreed to cancel the Deed and the Supplemental Deed in order to get rid of the IPO team, such that they could take steps to harm Worldex HK by diverting its business. This suggestion was far-fetched, and I am unable to accept the same. First of all, the obligations under Deed/Supplemental Deed survived the failure of the listing project/IPO. Whilst the Plaintiff agreed that the listing project/IPO be aborted, it did not follow that the Plaintiff agreed that his entitlements under the Deed/Supplemental Deed be waived. It appears to me that the Defendant and Mr Sunny Chan simply sought to conflate the 2 matters. In any event, the IPO team simply focused on the listing project/IPO, and there is no suggestion that it would perform the function of supervising the Plaintiff to perform its fiduciary duties. Having considered the totality of the evidence, I am unable to agree with the Defendant and Mr Sunny Chan that the Plaintiff agreed to revoke and/or cancel the Deed/Supplemental Deed in order to pursue the alleged insidious agenda of diverting Worldex HK’s business. I disagree that there was a correlation between the 2 matters.

48.  Third:-

(1)  According to Ms Kate Tsang, as of 2020, her marriage with the Plaintiff had broken down irreversibly. In light of First Glory’s demand letter dated 12 August 2020 against Worldex Resources[31], she was concerned about the Plaintiff’s financial ability to pay maintenance. In the circumstances, Ms Kate Tsang met the Defendant and Mr Sunny Chan on 19 and 25 November 2020 to discuss the matter. In light of the purpose of the meetings, Ms Kate Tsang did not want the Plaintiff to find out that she met the Defendant and Mr Sunny Chan.

(2)  I accept Ms Kate Tsang’s evidence, which is borne out by the contemporaneous communication records. In her WhatsApp messages on 18 November 2020 at 3:35pm and 4:07pm[32], Ms Tsang expressly stated that she did not want the Plaintiff to see her (meeting the Defendant and Mr Sunny Chan) and that even if the meeting took place in Tai Wai, she was worried that someone would see her.

(3)  In the circumstances, the Plaintiff did not know, and could not have known, that Ms Kate Tsang would meet the Defendant and Mr Sunny Chan on 19 and 25 November 2020. As pointed out, Ms Kate Tsang sought to keep the Plaintiff in the dark, and she was only concerned about her own financial interest.

(4)  In the premises, Ms Kate Tsang did not have authority (whether actual or ostensible) to represent the Plaintiff on the occasions on 19 and 25 November 2020. Even if Ms Kate Tsang reached an agreement with the Defendant as alleged (which was not the case), the Plaintiff was not privy thereto at all.

49.  Fourth:-

(1)  Clause 12 of the Deed stipulates that “no variations of this Deed shall be effective unless made in writing and signed by all the Parties”.

(2)  As a matter of law, clause 12 of the Deed, being an “no oral modification clause”, is legally effective: see Chow Tai Fook Nominee Ltd v Diamond City Ltd & Anor [2021] HKCFI 3019 at para 48 (per Wilson Chan J); MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2018] 2 WLR 1603 at paras 10 to 16 (per Lord Sumption JSC).

(3)  In the premises, even if Ms Kate Tsang had authority to represent the Plaintiff and did orally agree with the Defendant that the Deed/Supplemental Deed be revoked and/or cancelled (which was not the case), such a verbal agreement is, as a matter of law, incapable of revoking or altering the Deed/Supplemental Deed.

(4)  Furthermore, as a matter of fact, in light of the existence of clause 12 of the Deed, I do not believe that the parties, who had access to solicitors, would seek to revoke or cancel the Deed/Supplemental Deed verbally. Had the parties intended to revoke or cancel the Deed/Supplemental Deed, they would have approached a solicitor to prepare a deed of revocation (or some other effective legal instrument). There was no good reason why this was not done.

50.  For all the above reasons, I find that:-

(1)  The Plaintiff had never agreed that the Deed or the Supplemental Deed be revoked or cancelled.

(2)  At the meetings on 19 and 25 November 2020, Ms Kate Tsang did not agree with the Defendant and/or Mr Sunny Chan that the Deed or the Supplemental Deed be revoked or cancelled.

(3)  In any event, Ms Kate Tsang did not have the authority to represent the Plaintiff at the meetings on 19 and 25 November 2020.

(4)  By virtue of clause 12 of the Deed, the Deed and the Supplemental Deed might only be revoked or cancelled by an instrument in writing. The parties had never executed such an instrument in writing.

G.  The Defendant’s Proposed Construction of Clause 3.10 of the Supplemental Deed

51.  I now address the Defendant’s contention concerning the interpretation of clause 3.10 of the Supplemental Deed. As I understand, the Defendant’s contention is as follows[33]:-

(1)  As a matter of contractual construction, clause 3.10 of the Supplemental Deed only requires her to pay the expenses that were incurred after the Deed was executed on 23 December 2019.

(2)  As of December 2019, Worldex Resources had already paid HK$17,061,392.32, and the funds originated from the facilities provided by First Glory pursuant to the 1^st and 2^nd Facilities Letters.

(3)  Accordingly, she is not under an obligation to pay HK$17,061,392.32 additionally.

52.  In Eminent Investments (Asia Pacific) Ltd v. DIO Corp (2020) 23 HKCFAR 487 at pars 42-45, Ribeiro PJ and Lord Collins NPJ stated:-

“42. The highest courts in Hong Kong and in England and Wales have returned often in recent years to the principles of the interpretation of contracts. Reported cases deal of course with the difficult cases and it is easy to overlook the fact that the overwhelming majority of contracts are interpreted and performed without difficulty in accordance with their terms.

43. It is a truism that the starting point is the ordinary and natural meaning of the words of the contract, and of course in the vast majority of cases that is the ending point also. s But, as Ma CJ pointed out in Fully Profit (Asia) Ltd v Secretary for Justice, in the more difficult cases it is not particularly helpful to refer to the “ordinary and natural meaning” of words because in such cases there can be much debate over exactly what is the ordinary or natural meaning of words; and in those cases the surer guide to interpretation is context.

44. In Wood v Capita Insurance Services Ltd, Lord Hodge JSC reviewed the many cases on interpretation and emphasised that interpretation was a unitary exercise. That is why, where there are conflicting interpretations, account should be taken of the natural and ordinary meaning of the provision in question, the purpose of the contract and of the provision, other relevant provisions, the facts and circumstances known or assumed by the parties at the time that the contract was executed, the quality of the drafting of the instrument, and commercial common sense.

45. The following points emerge from the judgment of Lord Hodge JSC:

(a) it does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each;

(b) the court must be alive to the possibility that one side may have agreed to something which with hindsight did not serve its interest, or that a provision may be a negotiated compromise or that the negotiators were not able to agree more precise terms;

(c) some agreements may be successfully interpreted principally by textual analysis, for example because of their sophistication and complexity and because they have been negotiated and prepared with the assistance of skilled professionals, whereas the correct interpretation of contracts which are marked by informality, brevity or the absence of skilled professional assistance may be achieved by a greater emphasis on the factual matrix;

(d) but negotiators of complex formal contracts may often not achieve a logical and coherent text because of, for example, the conflicting aims of the parties, failures of communication, differing drafting practices, or deadlines which require the parties to compromise in order to reach agreement; and

(e) commercial common sense and surrounding circumstances should not be used to undervalue the importance of the language of the provision which is to be construed, and the mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly for one of the parties, is not a reason for departing from the natural language.”’

53.  Applying the legal principles, I am not in a position to accept the Defendant’s contention.

54.  The starting point is the words in clause 3.10 of the Supplemental Deed (which are set out in paragraph 19 above)[34]:-

(1)  Clause 3.10 covers “all liabilities, claims…and expenses” in relation to the listing project/IPO. It does not seek to carve out (i) the expenses that had already been incurred as of the date of the Deed; or (ii) the expenses that were defrayed with funds originating from the facilities provided by First Glory.

(2)  Meanwhile, clause 3.10 expressly provides that if there are “requests or demands…to make any payments of whatsoever nature…in connection with or as a result of the IPO”, the Defendant shall be responsible, and these include “liabilities, claims,… and expenses … incurred or become payable” by the Plaintiff and/or any Group Member (the meanings of which include Worldex Resources and Worldex HK)[35].

(3)  It is important to note that (i) “liabilities…costs…and expenses...incurred” and (ii) “liabilities…costs…and expenses…[that] become payable” are dealt with disjunctively under clause 3.10.

(4)  It is thus clear that clause 3.10 subsumes and covers both (i) the liabilities, costs, and expenses that had been incurred as of the date of the Deed; as well as (ii) the liabilities, costs, and expenses that would become payable in the future after the Deed was signed.

(5)  Had the parties intended that the Defendant’s liabilities and obligations be subject to a temporal limitation, the drafter of the Deed/Supplemental Deed would have stated so expressly in clause 3.10. Likewise, had the parties intended to exclude the expenses that were paid with funds originating from the facilities provided by First Glory, the drafter of the Deed/Supplemental Deed would also have stated so expressly in clause 3.10. There was no reason why these were not done.

55.  In light of the way in which clause 3.10 of the Supplemental Deed was drafted, there is no room for the Defendant to contend that she is only liable for the costs and expenses that were incurred after the date of the Deed; nor is there any room to suggest that the expenses that were defrayed with the funds originated from the facilities provided by First Glory should be exempted. Not an iota of the words and provisions in the Deed and Supplemental Deed support the Defendant’s contention.

56.  In my view, the objective intention evinced by the words in clause 3.10 of the Supplemental Deed is clear. I do not see any ambiguity. There is no room to twist the words in clause 3.10.

57.  In any event, I should point out that the aforesaid interpretation is consistent with the circumstances in which the Deed and Supplemental Deed came into existence.

58.  In this connection:-

(1)  When Mr Sunny Chan gave oral evidence, he was unable to identify one single audio message and/or text message where it was indicated that he and/or the Defendant should only be responsible for the expenses to be incurred in the future and/or the expenses that went beyond the facilities provided by First Glory.

(2)  As pointed out in paragraphs 37 and 40 above, with a view to instilling confidence in the Plaintiff and procuring his cooperation, Mr Sunny Chan repeatedly assured the Plaintiff, inter alios, that (i) the Defendant would bear all the loss and expenses incurred; (ii) the Defendant would take up all the risks and costs involved; and (iii) the Plaintiff would be fully protected and his interests would not be prejudiced. As mentioned, Mr Chan did, in his voicemails to the Plaintiff, say that:-

(a)  “上市，啲人話上唔到，輸咪我輸囉，我簽晒，有乜我孭晒”;

(b)  “你搵律師同我簽，好冇啊，我同Connie[36]佢簽晒，唔好擔心”;

(c)  “關於Worldex所有有關，未來如果上唔到市要賠嘅錢，我賠晒，好冇啊。你一毫子都唔使賠，就針對呢一件事，即係唔好唔好再拗啦，你唔好話你要賠，唔X使你賠”;

(d)  “由頭到尾我包晒就包底，我私人包”;

(e)  “你嗰啲錢就我就我找數啦，就簽咗份合同就話同Sunny Chan Connie Tsoi嘅合作呢，如果後面喺上市過程中，有任何損失，就我Sunny Chan同Connie Tsoi 兩個，係獨力承擔晒李均皓[37]所付出嘅風險同埋代價。我諗你，你你你喺呢個地球搵合作夥伴呢，都冇一個Sunny Chan 咁豪氣，同埋可以咁樣去做一個擔保”;

(f)  “由我俾啦濕碎，全部由我俾…如果唔成功呢，所有嘅嘅損失呢各方面嘅賠償呢，就由Connie Tsoi 同 Sunny Chan 兩公婆去承擔晒”.

(3)  The interpretation of clause 3.10 of the Supplemental Deed set out in paragraphs 54 to 55 above is consistent with the assurance from Mr Chan. Under the said interpretation, the Plaintiff’s interests are fully safeguarded. All the risks and adverse consequences are borne by the Defendant. The Plaintiff does not need to take up any commercial risk, and there is no realistic possibility that his commercial interests will be prejudiced (unless the Defendant fails or is unwilling to perform her obligations under the Deed/Supplemental Deed).

59.  I do not lose sight of the fact that First Glory actually provided facilities for Worldex Resources to defray its listing expenses. As evidenced by its demand letters dated 12 August 2020 and 1 February 2021, First Glory appeared to take the stance that Worldex Resources was liable to repay HK$17 million. This was inconsistent with the Defendant’s case. Be that as it may, even on the Defendant’s case, Worldex Resources does need to make repayment to First Glory. As pointed out (see paragraph 16 above), under the terms of the 1^st and 2^nd Facilities Letters, Worldex Resources is liable to make repayment by issuing shares that represent 1% of its share capital in favour of First Glory. Obviously, this would have the effect of diluting the Plaintiff’s shareholding in Worldex Resources/Worldex Hong Kong. I accept that the effect would be limited. However, it is still the case that the Plaintiff’s commercial interest would somewhat be prejudiced.

60.  It is not open to this court to reopen the commercial bargain agreed by the parties and to question their commercial wisdom. After all, the role of the court is to ascertain and give effect to the contractual intention of the parties in an objective manner.

61.  For all the above reasons, I reject the proposed interpretation suggested by the Defendant. Having considered the meanings of the words in the Supplemental Deed and the circumstances in which the Deed and Supplemental Deed came into existence, I conclude that:-

(1)  Under clause 3.10 of the Supplemental Deed, the Defendant is responsible for the costs and expenses in relation to the listing project/IPO that (i) had been incurred as of the date of the Deed (ie 23 December 2019); and (ii) were incurred after the Deed was signed; and

(2)  The fact that the funds used for defraying the costs and expenses originated from First Glory pursuant to the 1^st and 2^nd Facilities Letters is not a reason for absolving the Defendant from liability.

H.  Other Allegations raised by the Defendant

62.  In her defence[38], the Defendant avers that in January 2020 and August 2021, the Plaintiff set up competing businesses under various companies. She further accuses the Plaintiff of diverting Worldex HK’s businesses and soliciting its employees. The first competing business was carried out under a company named New Worldex (HK) Ltd (and subsequently renamed Osmotic (HK) Limited), which was incorporated on 8 January 2020. The second competing business was carried out under a company named Boss Trade HK Ltd, which was incorporated on 10 August 2021.

63.  As admitted in the Defendant’s defence[39], the dispute relating to the competing business under New Worldex (HK) Ltd/ Osmotic (HK) Limited was settled pursuant to a deed of settlement dated 11 June 2021[40]. Under clause 18 of the said deed of settlement[41], the Defendant waived (and should procure Worldex HK and Worldex Resources to waive) the intended claims against the Plaintiff and Ms Kate Tsang.

64.  For reasons best known to herself, the Defendant does not pursue a counterclaim against the Plaintiff with regard to the competing businesses.

65.  In any event, even if the Defendant’s allegations against the Plaintiff were true, the causes of action in respect of the alleged wrongdoings on the part of the Plaintiff are vested in Worldex HK, and only Worldex HK may pursue these causes of action against the Plaintiff.

66.  I cannot see how the Defendant’s allegations can constitute a defence to the claims for indemnity based on clause 3.10 of the Supplemental Deed. The pleas in the Defendant’s defence do not provide an answer. Indeed, it was not pleaded that the alleged subsequent wrongdoings on the part of the Plaintiff constituted a reason for vitiating the Deed and/or the Supplemental Deed.

67.  In my view, the Defendant’s complaint regarding the alleged competing businesses set up by the Plaintiff is nothing more than a red herring.

I.  Order and Disposition

68.  For all the above reasons, I am not of the view that the Defendant has a valid defence to the claims based on clause 3.10 of the Supplemental Deed, and I do not see any reason why the contractual bargain between the parties should not be performed.

69.  On the evidence available to the court[42], I am satisfied that there were valid claims and/or demands against Worldex Resources and its subsidiaries (including Worldex HK) in the aggregate amount of HK$26,338,568.24[43] in connection with the listing project/IPO.

70.  Pursuant to clause 3.10 of the Supplemental Deed, the Defendant should be responsible for this aggregate sum.

71.  The next issue to decide is whether clause 3.10 of the Supplemental Deed requires the Defendant to pay the said aggregate sum of HK$26,338,568.24 to Worldex HK or the Plaintiff (or both of them).

72.  Ms Ho suggested whilst Worldex HK is entitled to receiving half of the amount of HK$26,338,568.24 (ie HK$13,169,284.12), the Plaintiff is entitled to receiving the remaining half (ie HK$13,169,284.12).

73.  For the following reasons, Ms Ho’s suggestion seems arbitrary, and I am unable to accept the same.

(1)  As pointed out by Ms Ho in her opening submissions, clause 3.10 of the Supplemental Deed is an indemnity provision. Indeed, it is the Plaintiff’s pleaded case that the Deed is a “deed of indemnity”[44].

(2)  In my view, the purpose of clause 3.10 is to require the Defendant to:-

(a)  indemnify Worldex Resources if itself and/or its subsidiaries (which are defined as “Group Members”)[45] are liable for the expenses incurred in connection with the listing project/IPO; and

(b)  indemnify the Plaintiff if he becomes liable for any expenses incurred in connection with the listing project/IPO.

(3)  In light of the way in which clause 3.10 was drafted, it appears to me that there is a dichotomy between (i) the expenses and liability incurred by the Group Members (ie Worldex Resources and/or its subsidiaries); and (ii) the expenses and liability incurred by the Plaintiff. Bearing in mind that the Plaintiff merely owns 50% of the shareholding in Worldex Resources, this dichotomy makes commercial sense.

(4)  For instance, if the Plaintiff incurs expenses in connection with the listing project/IPO, there is no logical reason why Worldex Resources should receive half of the indemnity which the Plaintiff is entitled to recover from the Defendant. This would be an unjustifiable windfall gain on the part of Worldex Resources. By the same token, if Worldex Resources and/or its subsidiaries incur expenses in connection with the listing project/IPO, there is no sound reason why the Plaintiff should receive half of the indemnity which Worldex Resources is entitled to recover from the Defendant.

(5)  Based on the facts averred in the statement of claim, the Plaintiff did not incur any expenses or personal liability as a result of the listing project/IPO.

(6)  As mentioned, the claims and/or demands in respect of the said aggregate sum of HK$26,338,568.24 were made against Worldex Resources and its subsidiaries (including Worldex HK).

(7)  As such, the Defendant should indemnify Worldex Resources (not the Plaintiff) in respect of the said aggregate sum of HK$26,338,568.24.

74.  Clause 3.10 provides that if the Defendant becomes liable to Worldex Resources for payments, she “shall pay to…[Worldex Resources] (as directed by [the Plaintiff]) the aggregate amount of such payments”.

75.  I am satisfied that if Worldex Resources and/or its subsidiaries incur expenses in relation to the listing project/IPO, the Plaintiff is contractually entitled to “direct” the Defendant to make payment in respect of such expenses to Worldex Resources. This mechanism makes perfect commercial sense. As the Defendant holds 50% shareholding in Worldex Resources and is 1 of its 2 directors[46], it is obvious that Worldex Resources would not be in a position to procure itself to take steps to recover the indemnity from the Defendant. This is why clause 3.10 empowers the Plaintiff to “direct” the Defendant to pay the indemnity to Worldex Resources in the event that the Defendant is liable.

76.  In the premises, I order the Defendant to pay HK$26,338,568.24 to Worldex Resources[47].

77.  I further order that there be interest at 1% above the prime rate on the said sum of HK$26,338,568.24 from the date of the writ in this action to the date of this judgment, and thereafter interest at judgment rate until payment in full.

78.  In light of the Defendant’s allegation regarding economic duress and revocation/cancellation, I am of the view that it would be necessary, just, and appropriate for the court to make a declaration that the Deed and Supplemental Deed remain valid and enforceable.

79.  I dismiss the counterclaims brought by the Defendant.

80.  There is no reason why costs should not follow the event.

81.  I make a costs order nisi that the costs of these proceedings, including all costs reserved, be paid by the Defendant to the Plaintiff to be taxed if not agreed (with certificate for 2 counsel). Any application to vary my costs order nisi should be made within 14 days.

82.  Lastly, I express my gratitude to Ms Sabrina Ho, Mr Lawrence Luk, and Mr Jiang Zixin for their very helpful assistance.

ANNEXURE 1