LAU KWOK CHING also known as WAYNE LAU v. BEST JOINT INVESTMENTS LTD AND ANOTHER

HCA 2602/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2602 OF 2007

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BETWEEN

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D E C I S I O N

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Introduction

1.  Two applications fall for consideration:-

(a) the plaintiff’s application dated 25 February 2008 to set aside procedural steps taken herein by the solicitors of the 1^st defendant (“Best Joint”) by reason of the lack of authority to do so (“the authority summons”);

(b) the defendants’ application dated 28 November 2011 to strike out the statement of claim (“the striking out application”).

Background

2.  According to the plaintiff’s affirmation, the background leading to this action concerns the group of companies and business run by his brother (“Ron Lau”).

3.  There was earlier an action (HCA2608/2006) between Ron Lau and the 2^nd defendant (“CN Lau”).  In gist, CN Lau, as the plaintiff therein, sued a Kagani Ltd. (one of Ron Lau’s companies) for the delivery up of possession of a residential property and for relief arising from its occupation by Kagani.

4.  In short, that action (“A2608”) was resolved in CN Lau’s favour by the first instance court and the court of appeal (CACV417/2007).  The main defence put forth by Ron Lau in that action was that the documents regarding the purported sale and purchase of Best Joint’s shares to CN Lau were forgeries; hence, CN Lau was not in a position to bring the action in Best Joint’s name.  That defence was rejected by the courts as inherently implausible and/or unbelievable.

The Present Applications

5.  According to Best Joint, the relevance of A2608 and its subsequent appeal to this action is that:-

(1) the plaintiff herein (“Wayne Lau”) is suing in effect as the nominee of Ron Lau;

(2) Wayne Lau’s claim is based on the same allegation of forgery as that raised in A2608 (and which has been rejected by the courts there).

6.  The court of appeal has mentioned the point set out in para. 5(1) above in the judgment handed down on 23 August 2011:-

“… In some of these companies, [Ron Lau’s] brother [Wayne Lau] was appointed as a nominal director and was issued a small allotment of shares but did not take any active role” (para. 5 thereof).

7.  The gist of Best Joint’s argument in support of the dismissal of the authority summons and the making of a striking out order is:-

“… given the same subject matter has been conclusively decided by the CA, [the authority summons] is bound to fail. The same also applies to the whole of the present action, as it has already been admitted by [Wayne Lau] that ‘the dispute in the action in fact also formed the very subject matter of the present summons’ (see paragraph 11 of [Wayne Lau’s] submissions for 21 June 2011)” (para. 7, skeleton submissions).

8.  Wayne Lau seeks both applications to be adjourned because:-

(a) the striking out application was taken out late and he was taken by surprise;

(b) he should be given an opportunity to file evidence to oppose the striking out application;

(c) both applications require substantial argument;

(d) he was in Canada undergoing medical treatment.

9.  For the reasons set out below, I agree with Best Joint and disagree with Wayne Lau.

10.  First, it is reasonably clear from the affirmation filed by Wayne Lau that he accepts he has only been a nominee of Ron Lau as regards Ron Lau’s companies (including Best Joint before its shares were transferred to CN Lau).  Although Wayne Lau’s affirmation is not express or entirely clear on this point, its tenure is to such effect (see, for example, para. 8, 10 to 11, 15 and 21 to 27 thereof).

11.  Secondly, there has been cross-filing of affirmations by the Lau brothers in this action and in A2608 and a consistent account has been put forth in their affirmations.

12.  During the hearing, when specifically asked if Wayne Lau accepts he was only a nominee of Ron Lau, instructions were given to counsel to the effect it is not accepted.  The instructions are surprising (to put it mildly) because:-

(1) they are inconsistent with the matters set out in para. 10 and 11 above;

(2) Wayne Lau and Ron Lau have been represented by the same solicitors since 2007 (for A2608 and this action). Their solicitors have apparently detected no conflict of interest.

13.  I therefore reject the latest instructions to counsel.

14.  As regards the timing of the striking out application and the alleged surprise, similar to what happened in A2608, the authority summons and the striking out application are nothing more than different facets of the same point (see also para. 7 above).  In fact, no new factual evidence has been adduced by Best Joint (besides the more recent developments in A2608: see para. 4 above (which is undisputed)).

15.  In view of the conclusions reached above, there is no substance in the grounds set out in para. 8(b) to (d) above.

Conclusion

16.  Accordingly:-

(a) the application for adjournment is refused;

(b) there will be an order in terms of the striking out application;

(c) the authority summons is dismissed.

Costs Order Nisi

17.  There is no apparent reason to depart from the usual rule that costs should follow the event.  There will accordingly be a costs order nisi pursuant to Ord 42 r 5B(6) that the costs of the two applications be paid by Wayne Lau to the defendants (the costs of the adjournment application should be treated as part of those costs).

18.  I consider summary assessment of costs to be appropriate.  The above costs shall thus be so assessed.  For this purpose:-

(1) the receiving parties be at liberty to lodge with court and serve a statement of costs within 7 days from today;

(2) the paying party be at liberty to lodge with court and serve a statement of objections within 7 days thereafter.