YIELD SAIL LTD v. LAND MASTER SURVEYORS LTD

DCCJ 579/2023

[2025] HKDC 876

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 579 OF 2023

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DECISION

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INTRODUCTION

1.  On 21 May 2024, Master Matthew Ho granted summary judgment in favour of the Defendant against the Plaintiff in respect of part of the Defendant’s counterclaim for the sum of $494,000. By its Notice of Appeal dated 4 June 2024, the Plaintiff sought to set aside the Master’s Order, dismiss the Defendant’s O.14 summons, or alternatively for unconditional or condition leave to defend the counterclaim (“the Appeal”).

2.  On 20 January 2025, the Plaintiff took out two summonses. In the first summons, the Plaintiff sought leave to amend the Writ of Summons and Statement of Claim (“the Amendment Summons”). In the second, the Plaintiff sought leave to rely on two additional affirmations in support of the Appeal (“the New Evidence Summons”).

3.  On 20 May 2025, I heard both summonses as well as the Appeal. I allowed the Amendment Summons and dismissed the New Evidence Summons. I reserved my decision on the Appeal.

4.  I now give my reasons for my decisions on the two summonses, and my decision on the Appeal.

THE AMENDMENT SUMMONS

5.  Ms Sat, counsel for the Plaintiff, drew my attention to the following guiding principles on the Court’s exercise of discretion to allow or refuse an amendment of pleadings as set out in CCMD Overseas Ltd v Sinom Investments Ltd [2023] HKCFI 2912 at §§19-22:

(1)  All such amendments should be made as are necessary to enable the real questions in controversy between the parties to be decided;

(2)  Amendments should not be refused solely because they have been made necessary by the honest fault or mistake of the party applying for leave to make them: it is not the function of the court to punish parties for mistakes which they have made in the conduct of their cases by deciding otherwise than in accordance with their rights;

(3)  However blameworthy (short of bad faith) may have been a party’s failure to plead the subject matter of a proposed amendment earlier, and however late the application for leave to make such amendment may have been, the application should, in general, be allowed, providing that allowing it will not prejudice the other party;

(4)  There is no injustice to the other party if he can be compensated by appropriate orders as to costs;

(5)  The court must also take into account the underlying objectives of the rules of court to decide how its discretion should be exercised;

(6)  Leave to amend is refused where “it can be demonstrated that the new claim based on the proposed amendment is bound to fail”;

(7)  For the purpose of determining whether leave should be granted to amend a pleading, the proposed pleas should be taken as proven.

6.  Ms Sat submitted that the proposed amendments primarily aim to clarify the Plaintiff’s case regarding the Agreement (as will be defined below), particularly the terms and scope of the Defendant’s obligations under the Agreement and/or the conditions for the Defendant’s remuneration, and the Defendant’s breach or repudiatory breach of the same. She submitted that the amendments will clarify the circumstances in which the Consultancy Fee Agreement (as will be defined below) was made, particularly against the context and terms of the Agreement entered into orally by the parties and/or their common understanding, and the representations made by Martin Chan (“Martin”), the Defendant’s representative, regarding the document.

7.  Ms Ha, counsel for the Defendant, opposed to the application and submitted that the Plaintiff’s case, in the amended form, is unarguable, and hence it would neither be cost-effective, expeditious or in the interests of justice to allow the amendments. Ms Ha was not submitting that the Plaintiff’s “amended case” is bad in law, but only that the case is bound to fail on facts.

8.  Despite Ms Ha’s skilful submissions, I am not persuaded that the proposed amendments should not be allowed. For the purpose of determining whether I should allow the amendment, the proposed pleas should be taken as proven. I do not think I should consider whether the pleas could be successfully proven by evidence, or more exactly the current state of evidence. On the assumption that the proposed pleas are proven, I fail to see how they are bound to fail.

9.  Ms Ha also argued that the Defendant will suffer prejudice if the amendments are allowed, in two ways. The first is that the Defendant will have to incur costs in preparing an Amended Defence and Counterclaim. The second is that had there been an amendment, the Defendant may have had different considerations in its O.14 application.

10.  I am unable to accept these submissions. For the first point, the Defendant can be compensated by a costs order in its favour. For the second, as Ms Ha fairly accepted, the Court is entitled to consider the Plaintiff’s defence even in a draft form anyway.

11.  Further, the part of the counterclaim in respect of which the Defendant sought summary judgment is not the entire dispute between the parties. The Plaintiff has a claim for damages against the Defendant, and the Defendant also has another part of the counterclaim for damages against the Plaintiff. There is no reason why the Plaintiff should not be allowed to state clearly what its case is in its pleading at least in respect of those matters.

12.  For the above reasons, I made an order in terms of the Amendment Summons and gave consequential directions on filing of amended pleadings. As to costs, after hearing submissions from the parties, I ordered the costs of the Amendment Summons be paid by the Plaintiff to the Defendant with certificate for counsel summarily assessed at $25,000 to be payable forthwith, and the costs occasioned by the amendments be paid by the Plaintiff to the Defendant to be taxed if not agreed.

THE NEW EVIDENCE SUMMONS

13.  The Plaintiff sought leave to rely on the Affirmation of Lam Chi Mun (“Lam”) dated 20 January 2025 and the Affirmation of Mak Ming Chuen (“Tim”) dated 20 January 2025 in the Appeal.

14.  O.58 r.1(4) of the Rules of District Court provides that no further evidence (other than evidence as to matters which have occurred after the date on which the judgment, order or decision was given or made) may be received on the hearing of an appeal under this rule except on special grounds.

15.  The matters in the two affirmations are not matters which have occurred after the date of the summary judgment. In such circumstances, the conditions laid down in Ladd v Marshall [1954] 1 WLR 1489 ought to be satisfied before the evidence is admissible. They are: (i) the evidence could not have been obtained with reasonable diligence for use at the hearing below; (ii) it would or might, if believed, have an important influence on the result of the case, though it need not be decisive; and (iii) it is apparently credible though it need not be incontrovertible.

16.  In support of the application, the Plaintiff filed the 3^rd Affirmation of Law Shuk Yi (“Fifi”) dated 20 January 2025. Fifi sought to explain why the two affirmations were made only after the summary judgment had been given.

17.  Having considered Fifi’s 3^rd Affirmation as well as the parties’ submissions, I find that the first condition has not been satisfied.

18.  In respect of Lam’s Affirmation, the only explanation put forward by the Plaintiff is that Lam was not heavily involved in the events leading up to these proceedings, and therefore he was not initially asked to give evidence for the Plaintiff. Hence, it was merely a decision of the Plaintiff not to ask Lam to give evidence for the hearing before the Master. Obviously, Lam’s evidence could have been obtained earlier with reasonable diligence.

19.  As regards the delay in adducing Tim’s Affirmation, the explanation was that Tim had received serious and continued threats from Martin, and for that reason, had withdrawn from the subject project since December 2023 and had refused to become involved in these proceedings. Fifi continued to explain that after the summary judgment had been granted against the Plaintiff, she could finally convince Tim to give evidence for the Plaintiff.

20.  I am equally not satisfied that Tim’s evidence could not have been obtained for use at the hearing before the Master with reasonable diligence, for the following reasons:

(1)  Fifi did not give particulars of when and how she invited Tim to give evidence prior to the hearing. She only briefly stated that Tim “had refused to become involved”. The Plaintiff has not presented sufficient evidence to show that reasonable diligence had been made.

(2)  According to Fifi, Tim only withdrew from the project in December 2023. However, the Defendant’s O.14 summons was taken out on 27 October 2023 and the affirmation in support was filed on the same day. The Plaintiff had more than two months to prepare Tim’s evidence before his alleged withdrawal.

(3)  Even assuming Tim was unwilling to give evidence, quite a lot of matters in Tim’s Affirmation could have been mentioned in Fifi’s affirmation in opposition to the O.14 summons. These matters include: the basis upon which the Profit Anticipation Reports were prepared, which “was understood between [Tim], Fifi and Martin” (§9); the K11 meeting where the Agreement was made “through Fifi and/or [Tim]” (§§10-15); the alleged representations on the installation of EV Chargers, which Tim said involved Fifi (§§16-18); the voice-message in the “WhatsApp group chat including Fifi” (§18); the reason of signing the Consultancy Fee Agreement (§§26-27); and the matters relating to the Plaintiff’s discovery that EV Chargers could not be installed in the subject property (§28).

21.  As the first condition is not satisfied, the New Evidence Summons should be dismissed. After hearing the parties’ submissions, I ordered the Plaintiff to pay the Defendant the costs of the summons with certificate for counsel, summarily assessed at $25,000 to be payable forthwith.

22.  The parties then proceeded to make submissions on the Appeal based on my above rulings.

THE APPEAL

The Parties’ Cases

23.  This case concerns a dispute arising from the acquisition of certain car park spaces and motor cycle parking spaces at Global Trade Square, 21 Wong Chuk Hang Road, Hong Kong (“the Property”).

24.  As this is an appeal against the Master’s decision to grant summary judgment in respect of the Defendant’s counterclaim, I shall summarise the Defendant’s case on counterclaim first.

25.  It is the Defendant’s case that:

(1)  Fifi orally instructed Martin to assist in the acquisition of the Property on an express oral agreement that payment would be made to the Defendant in the amount of 1% of the purchase price upon the successful acquisition of the Property;

(2)  Martin thus conducted research and analysis on the appropriate market price of the Property and advised the Plaintiff of the same;

(3)  On 27 May 2022, the Plaintiff’s tender offer was accepted by the vendor and the completion date was on 23 November 2022;

(4)  On 23 July 2022, Fifi on behalf of the Plaintiff signed an agreement in Chinese (“Consultancy Fee Agreement”), which provides that:

“Re: [the Property]

本 公 司 [the Plaintiff] (B.R. NO. 73533446) 透過 貴公司洽談購入上述物業，本公司同意支付[the Defendant]最終成交價之百分之一 (1%)【即是港幣$492,000元】作為購入上述物業之顧問服務費，並同意將此服務費於全部成交當日或之前支付。”

(5)  The purchase of the Property was completed on 23 November 2022. Hence, the Plaintiff became liable to pay the Defendant the consultancy fee of $492,000 under the Consultancy Fee Agreement. However, despite repeated demands, the Plaintiff still failed to pay the said sum.

26.  The Plaintiff’s defence to the Defendant’s counterclaim, as seen from the Amended Statement of Claim and the draft Reply and Defence to Counterclaim, with some clarification made by Ms Sat during the hearing, can be summarised as follows:

(1)  In around April 2022, the Plaintiff entered into preliminary discussions with and engaged the Defendant for project advice, valuation and consultancy services on property investments, including the Property.

(2)  On 21 May 2022, there was a meeting at a cafe in K11 Art Mall between Fifi, Tim and Martin. There, in order to induce the Plaintiff to purchase the Property and/or to enter into the Agreement (to be defined below), Marin made a representation that charging devices could be installed at 80% of the car parking spaces of the Property (i.e. around 17 out of 20 car parking spaces)[1].

(3)  On the same occasion, the parties entered into an oral agreement (“the Agreement”) with the following terms[2]:

(a)  The Defendant (through Martin) would be responsible for the project from start to finish, including inter alia (i) coordinating with the vendor and assisting the Plaintiff with negotiating and carrying out the purchase of the Property; (ii) arranging for and managing/carrying out the installation of charging piles, including liaising with the owners’ corporation, suppliers and/or such other relevant companies or contractors for carrying out such installation; and (iii) arranging for the onwards sale of the Property, including arranging a sales plan and liaising with real estate agents.

(b)  The Defendant was to successfully bring about the Plaintiff’s acquisition of the Property, and to successfully install the charging piles at the Property. Further, the Defendant would ensure that the Plaintiff’s acquisition of the Property is and remains profitable, e.g. by ensuring that the installation of the charging piles is permissible, and that steps would be taken to ensure or carry out the installation of the same.

(c)  With regards to the onwards sale of the Property, the Defendant would take the lead, whilst Tim would provide what assistance he could be aligning real estate agencies and buyers.

(d)  Upon completion of the entire project from start to finish as outlined above, the Defendant would be entitled to 10% of the Plaintiff’s profits in the project.

(e)  It is an implied term that the Defendant would carry out its duties and obligations in good faith and/or would exercise due care, skill and diligence in doing so.

(4)  The Consultancy Fee Agreement did not purport to reflect the terms of the Agreement. The Consultancy Fee Agreement would not be binding on the parties and/or supersede the Agreement, but was merely a piece of “evidence” required to be submitted by Martin to the Defendant for its internal and administrative purpose, to show that the Defendant was engaged by the Plaintiff pursuant to the Agreement. As the parties did not know how much the Plaintiff would profit from the project, to make things simple, a figure of 1% of the purchase price would be stipulated in the document for the time being. The parties would prepare and sign a further document setting out the full and detailed terms of the Agreement in writing.

(5)  The Defendant had acted in breach and/or repudiatory breach of the terms of the Agreement by (i) failing to take steps ensure or carry out the installation of EV charging devices at the car parking spaces at the Property before the completion date and/or failing to have charging piles installed at the Property at all; and/or (ii) failing to inform the Plaintiff in a timely manner that EV charging devices could not be installed at the Property.

(6)  As a result of the Defendant’s breach, the Plaintiff suffered loss and damage, in the form of loss of profits and loss of interest on the mortgage to finance the purchase. And as the Defendant was in breach of the Agreement, the Defendant is not entitled to the sum of $492,000 under the Consultancy Fee Agreement.

27.  As I see it, the essence of the Plaintiff’s defence is that the Plaintiff has never agreed to pay 1% of the purchase price to the Defendant under the Consultancy Fee Agreement as alleged by the Defendant, and that document was not meant to be binding but was a piece of paper prepared for the Defendant’s internal and administrative purpose. Instead, the Plaintiff says, the true agreement between the parties was the Agreement, whereby the Plaintiff agreed to pay 10% of the profits of the project upon the Defendant’s performance of the Agreement, but the Defendant has breached such contract and hence is not entitled to any relief at all.

Legal Principles

28.  An appeal from a Master to a Judge in chambers is dealt with by way of a re-hearing. I should treat the summons as though it came before me for the first time: Hong Kong Civil Procedure 2025, §58/1/2.

29.  Ms Sat reminded me of the well-known principles on O.14 applications, which have recently been set out by Au-Yeung J in the Wu Yuan Hong v China Zenith Chemical Group Ltd [2025] 1 HKLRD 1191 at §22:

(1)  An O.14 application proceeds on the case as pleaded, and it is those facts which have to be verified on affidavit;

(2)  The defendant bears the burden of satisfying the Court that (1) he has a real or bona fide defence (i.e. that there are triable issues), or that (2) there ought for some other reason to be a trial of the plaintiff’s claim;

(3)  That does not mean that the Court will focus solely on what the defendant says in its defence. When assessing the strength of the application, the Court will also consider the basic premise of the plaintiff’s claim and its inherent strength or weakness;

(4)  A complete defence need not be shown. The defence set up need only show that there is a triable issue or that for some other reason there ought to be a trial; and leave to defend ought to be given unless there is “clearly no defence in law” and “no possibility of a real defence” on the question of fact;

(5)  The Court will not embark upon a mini-trial of the action on paper. Leave to defend will be granted unless the defence raised “is so incredible” or “so contradicted by contemporaneous documents or circumstances” that it becomes clear that the defence “is a sham”;

(6)  The test is not whether the defendant’s assertions are to be believed, rather it is whether those assertions are believable, i.e. capable of being believed. If so, the defendant “must have leave to defend”;

(7)  Whether the defendant’s assertions are believable is a question that should be answered not by taking those assertions in isolation but rather by taking them in the context of so much of the background as either undisputed or beyond reasonable dispute.

Discussion

30.  On the basis of the evidence before me, I find that the Plaintiff’s defence to the Defendant’s counterclaim for $492,000 is unbelievable and the Plaintiff has failed to raise any issue which should go to trial. I find that the Plaintiff’s defence is full of inconsistencies and tainted with inherent improbabilities. There is also no credible evidence which supports the defence, while there is evidence which contradicts it. Overall speaking, the Plaintiff’s defence is overwhelmingly unconvincing and incapable of belief.

31.  First, a remarkable feature of the Plaintiff’s defence is its ever-changing version of facts from the Statement of Claim, the Reply and Defence to Counterclaim, Fifi’s affirmation in opposition, to the Amended Statement of Claim. The change of factual case is so significant that I had to ask Ms Sat for clarification during the hearing of what actually the Plaintiff’s case is.

32.  In the Statement of Claim:

(1)  The Plaintiff expressly pleads the terms of the Consultancy Fee Agreement.

(2)  The Plaintiff further does not plead the Agreement that the Defendant should be remunerated of 10% of profits arising from the project instead.

(3)  As regards the allegation of false representation, it is pleaded that Martin made those representations to Fifi and Tim in a restaurant of K11 on 29 May 2022, which induced the Plaintiff to purchase the Property.

33.  In the Reply and Defence to Counterclaim which was settled by counsel (not Ms Sat):

(1)  In response to paragraph 41.4 of the Defence that the alleged representation made on 29 May 2022 could not have induced the Plaintiff to purchase the Property because the Plaintiff’s tender offer had already been accepted and the tender award was granted to the Plaintiff on 27 May 2022, the Plaintiff then pleads that the date of the meeting at K11 restaurant should be 21 May 2022 instead. At the same time, the Plaintiff pleads that the representation relating to the charging devices to be installed in the car parking spaces was made during at least one of the phone calls between Martin and Fifi.

(2)  The Plaintiff once again affirmed the Consultancy Fee Agreement.

(3)  As to the Defendant’s allegation that under another agreement (defined as “Project Management Oral Agreement” in the Defence) in which the Defendant agreed to provide services including marketing to prospective investors for the raising of funds for the purchase of the Property before the completion date and making arrangements for the sale of the Property to further purchasers, and the Plaintiff was further obliged to pay 10% of profits of the project[3], the Plaintiff denied it. Rather, the Plaintiff asserted that the Plaintiff and Martin once explored the possibility for the Defendant to arrange the sale of the Property in exchange for a bonus sum, but that was was still in negotiation stage and never materialized into an agreement.

34.  In Fifi’s affirmation in opposition, which is the only affirmation evidence adduced by the Plaintiff to oppose this O.14 application:

(1)  Despite Martin’s alleged representations were mentioned, there was no mention about the meeting at K11 restaurant as pleaded in the Statement of Claim, nor the telephone calls as pleaded in the Reply and Defence to Counterclaim.

(2)  Fifi affirmed the validity of the Consultancy Fee Agreement. In paragraph 14, she even explained her reasons for entering into the same.

(3)  In paragraphs 15 and 16, she emphasised that the 1% remuneration was only payable on the date of completion, and the reason of such was that it was part and parcel of the consultancy services for Martin to ensure the acquisition of the Property was profitable until completion and that EV charging devices arrangement was permissible and steps would be taken before completion to ensure the installation of such.

35.  These were the materials before the Master, who found that the Plaintiff did not have a credible defence. Then in the Amended Statement of Claim, which apparently was prepared in an attempt to assist the Plaintiff in the Appeal, the Plaintiff’s case changed significantly:

(1)  For the very first time, the Plaintiff pleaded the oral Agreement, in particular that the remuneration agreed to be paid to the Defendant was 10% of the profits of the project upon the Defendant’s performance of certain obligations. This is in direct conflict with what it has been pleaded in the Reply, as summarised in paragraph 33(3) above.

(2)  For the very first time, the Plaintiff alleged that the Consultancy Fee Agreement is not a binding contract, because Martin told Fifi that the document was prepared merely for the Defendant’s internal and administrative purpose, to show that the Defendant was engaged by the Plaintiff pursuant to the Agreement. As to the remuneration of 1%, it was put there merely to “make things simple”, as the parties did not know how much the Plaintiff would profit from the project. This is in direct conflict with what the Plaintiff previously pleaded in the Statement of Claim and Reply and Fifi’s affirmation in opposition.

36.  I find that the above inconsistencies show the lack of credibility in the Plaintiff’s defence. On the one hand, it was once alleged that the Consultancy Fee Agreement was valid but the Defendant was in breach of it. On the other hand, it is now alleged that it was indeed a sham and is not binding. If the nature of the Consultancy Fee Agreement was really what the Defendant now alleges, I fail to see why Fifi would have repeatedly omitted mentioning it in the earlier two pleadings both verified by a statement of truth signed by herself, and her own affirmation in opposition. This new defence is clearly an afterthought, after summary judgment was entered against the Plaintiff.

37.  Second, the Plaintiff’s assertion with regards the Consultancy Fee Agreement is not supported by any affirmation evidence. As outlined above, Fifi’s affirmation in opposition indeed gave another story, that the Plaintiff agreed to pay 1% remuneration but upon completion only as the Defendant had to fulfil certain obligations too.

38.  Third, the Plaintiff’s assertion regarding the Consultancy Fee Agreement is in direct conflict with the document itself. In the document, Fifi signed to acknowledge that the Plaintiff agreed to pay the 1% remuneration for the Defendant’s consultancy service in negotiating to purchase the Property（“洽談購入上述物業”）. There was nothing else which the Defendant had to do in order to receive the 1% remuneration.

39.  In Combined Rich Co Ltd v Sim Kok Keng and Others (CACV159/1997, 27/11/1997), also in the context of an O.14 application, Godfrey JA said at paragraph 15:

“it will normally be impossible, or at least difficult, for them to deny its contractual character. In the absence of fraud, or no doubt misrepresentation, the law is that a party signing such a document is bound to its terms.”

40.  Where it concerns a commercial transaction, “the onus of proving that there was no such intention ‘is on the party who asserts that no legal effect is intended, and the onus is a heavy one’”: Chitty on Contracts (35^th Ed) at §4-208.

41.  I agree with Ms Ha’s submission that the Plaintiff has failed to discharge such burden.

42.  Fourth, the Plaintiff’s assertion is inherently improbable. If the document was only meant to be some internal document of the Defendant to show that the Defendant was engaged by the Plaintiff (which itself is already quite doubtful), the document did not have to provide for the remuneration of 1% of purchase price (with an exact amount of $492,000) and the payment due date being the completion date in the document. A simple appointment letter could serve the purpose. More importantly, there is nothing to stop the Plaintiff to specify in the document the true remuneration (ie 10% of the profits of the project). The alleged explanation that the 1% figure was put to “make things simple” in this commercial transaction is utterly unbelievable.

43.  Fifth, there is no documentary evidence which may support the Plaintiff’s case on the denial of the binding nature of the Consultancy Fee Agreement. Its case is a bare assertion. On the other hand, the following conduct of the Plaintiff is inconsistent with the Plaintiff’s case:

(1)  On 29 December 2022, Martin sent the Defendant’s invoice for the sum of $492,000 to Fifi through Whatsapp, Fifi did not deny the Plaintiff’s liability to pay.

(2)  Thereafter in January and February 2023, Martin chased for the fee through Whatsapp on a few occasions. Fifi did not dispute the validity of the Consultancy Fee Agreement.

(3)  On 9 February 2023, the Defendant issued a demand letter to the Plaintiff demanding for the payment under the Consultancy Fee Agreement. The Plaintiff did not respond.

(4)  The above matters were set out in the Defendant’s affirmation in support, but Fifi did not make any responses in her affirmation in opposition.

(5)  Fifi also repeatedly affirmed the validity of the Consultancy Fee Agreement in the Statement of Claim dated 15 February 2023, Reply and Defence to Counterclaim dated 24 July 2023, and her affirmation in opposition dated 6 March 2024.

Conclusion

44.  The Plaintiff has failed to put forward any arguable defence to the Defendant’s counterclaim for $492,000 or any issue which ought to be tried. The Defendant should be entitled to judgment.

45.  I therefore uphold the Master’s decision and dismiss the Plaintiff’s appeal.

46.  I make an order nisi that the costs of the appeal be paid by the Plaintiff to the Defendant, with certificate for counsel, to be summarily assessed.

47.  I direct the Defendant to lodge and serve a statement of costs within 7 days from the date of this Decision. The Plaintiff shall lodge and serve its statement of objection (if any) within 7 days thereafter. I shall make the assessment of costs on paper.

48.  Lastly, I thank Ms Sat and Ms Ha, who ably represented their lay clients, for their helpful submissions.