MILLION DECADE LTD v. TUNG FAI also known as DONG HUI

HCA 1062/2013 &

HCA 1660/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1062 OF 2013

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HCA 1660/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1660 OF 2013

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DECISION

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I. INTRODUCTION

1.  Wei Dong (“Wei”) claimed he and his wife Yao Juan (“Yao”) were co-owners of the “Fu Ji” business/group in Mainland China prior to the listing of Fu Ji Food and Catering Services Holdings Ltd (“Fu Ji Holdings”) on the main board of the Hong Kong Stock Exchange (“HKSE”) (“Fu Ji Listing”).[1] Wei Yao (“Wei Jr”) is the son of Wei and Yao (collectively, “Weis”). Million Decade Limited (“Million Decade”) and Top Ample Limited (“Top Ample”) were/are BVI companies. Yao was/is a director of Million Decade but she ceased to be so from September 2004 until she was re-appointed in April 2013. Wei was a director of Million Decade until April 2013, but all shares were/are in his name since September 2004. The Weis were/are directors of Top Ample, and Yao was/is its sole shareholder.For convenience, these parties/entities (except Wei Jr) are referred to as the “Wei Parties” in this Decision. Tung Fai (or Dong Hui, “Tung”) was inter alia a director of Fu Ji Holdings and an advisor for the Fu Ji Listing.

2.  There are currently three legal actions: Million Decade and Top Ample sued Tung in HCA1062/2013 and HCA1063/2013 respectively (“MD Action” and “TA Action”) (collectively, “Loan Actions”), and Tung sued Wei in HCA1660/2013 (“Tung Action”) (collectively, “Actions”).

3.  The hearing on 15 March 2016 before me (“Appeal Hearing”) concerned 2 appeals: (a) a Notice of Appeal filed on 29 September 2015 by Million Decade in the MD Action (“WS Appeal”) against the order of Registrar Lung (“Registrar”) dated 15 September 2015 inter alia dismissing its amended summons filed on 26 May 2015 (“WS Amended Summons”) for leave to file/serve the Weis’ 3^rd witness statements with 50% costs of the hearing to Tung (“WS Order”), and (b) a Notice of Appeal filed on 17 November 2015 by Wei in the Tung Action (“FBP Appeal”) against the order of the Registrar dated 13 November 2015 dismissing inter alia Wei’s summons filed on 7 July 2015 (“FBP Summons”) for an order that Tung do file/serve further and better particulars (“FBP”) of the Statement of Claim (“SoC”) with costs to Tung (“FBP Order”).

4.  The combined costs payable to Tung under the FBP Order and pursuant to the Registrar’s decision to allow Tung’s summons filed on 20 July 2015 in the Tung Action for an order that Wei’s interrogatories dated 6 July 2015 be withdrawn (“Interrogatories Summons”) were summarily assessed in the sum HK$125,430 (“Assessed Costs”). There was no appeal by Wei in respect of the Registrar’s decision on the Interrogatories Summons.

5.  I should say a brief word about the WS Appeal. Million Decade made the initial application for leave to file/serve the Weis’ 3^rd witness statements by summons filed on 26 May 2015. Mr Lam SC (and Mr Yu with him), counsel for the Wei Parties, accepted the original drafts annexed to such summons were “rather detailed”. Shortly before the hearing before the Registrar, Million Decade “trimmed down” those drafts. On 24 September 2015, the Registrar granted leave for Million Decade to amend such summons to seek an alternative order for leave to file/serve the Weis’ revised 3^rd witness statements (ie the WS Amended Summons). By the WS Order, the Registrar declined leave for Million Decade to file/serve the Weis’ 3^rd witness statements in the form of the original or revised drafts. Since lodging the WS Appeal, Million Decade made further revisions to the Weis’ draft 3^rd witness statements, and applied for leave to amend the WS Appeal to seek an alternative order for leave to file/serve the Weis’ 3^rd witness statements in the latest draft form (“Latest WS Drafts”). Mr Lam SC in his written submissions confirmed Million Decade would only seek an order for leave to file/serve the Latest WS Drafts and not the original and revised drafts that were before the Registrar.

6.  At the Appeal Hearing, Mr Lam SC assured this court Million Decade would not seek to disturb the cost order under the WS Order. On such basis, Mr Ronny Tong SC (and Mr Hui with him), counsel for Tung, with his usual pragmatism, did not oppose Million Decade’s application to amend the WS Appeal. Consequently, I granted such order, and the amended WS Appeal (“WS Amended Appeal”) proceeded on the basis that Million Decade sought leave to file/serve the Latest WS Drafts.

7.  Further, although the WS Amended Summons, WS Amended Appeal and Latest WS Drafts were in respect of the MD Action, the statement evidence in the MD Action was also relevant for the TA and Tung Actions because on 19 November 2014 Master Lai ordered that the Actions be tried together or one after the other as directed by the trial judge, and “the evidence in one action is admissible in the other actions”. Hence, when considering the WS Amended Appeal, regard must be had to all 3 Actions.

8.  It is trite that an appeal from the master to judge in chambers is dealt with by an actual rehearing of the application which led to the order under appeal, and the judge treats the matter as though it came before him for the first time. The judge will give the weight it deserves to the previous decision of the master; but he is in no way bound by it.[2] However, since the current focus was on the Latest WS Drafts that were not before the Registrar, it is unnecessary for me to revisit his reasoned decision at least for the WS Amended Appeal. As regards the FBP Appeal, given the fullness of the submissions before me and such appeal was by way of rehearing, there was also no need for me to turn to the Registrar’s reasoned decision save as necessary.

9.  The Registrar’s reasoned decisions and counsel’s skeleton submissions made detailed reference to the legal principles on supplemental witness statements and FBP. The relevant legal principles are trite, and the discussions in the cited authorities appear to reflect different facets of the legal principles as applicable to the particular circumstances of the cases under discussion. I do not discern any real disagreement between Mr Lam SC and Mr Tong SC on the general principles; rather, they differed on the application of those legal principles to the present circumstances. Therefore, instead of spending effort to reiterate the general principles, it is more useful to directly deal with the WS Amended Appeal and FBP Appeal, and discuss any relevant legal principles (if necessary) in that context.

10.  I start with a brief account of the factual background of and the disputed issues in the Actions as elicited from the pleadings to provide contextual colour for the WS Amended Appeal and FBP Appeal.

II.  BACKGROUND OF THE ACTIONS

11.  The Wei Parties claimed the Wei and Tung families were close friends and business associates, but Tung claimed he was introduced to Wei in 2003 and they became business partners. The Wei Parties further claimed Yao and Tung’s wife Kwok Kin Kwok (“Kwok”) were co-shareholders of a BVI company Crown Treasure Group Limited (“Crown Treasure”),which was the holding company of another BVI company Strong Nation International Limited (“Strong Nation”) and the ultimate holding company of a hotel project in Xiamen, Mainland China (“Hotel Project”). The Wei Parties asserted Yao invested RMB128,000,000 and HK$160,000,000 in the Hotel Project, but Tung claimed HK$80,000,000 out of the aforesaid sum of HK$160,000,000 was Kwok’s investment.

12.  Wei and Tung were involved in the Fu Ji Listing. In this regard, Wei (on behalf of Fu Ji Allied Group Co Ltd) and Tung entered into a cooperation agreement dated 7 June 2003 that provided inter alia Tung shall coordinate the work of the intermediaries for the Fu Ji Listing, be involved in the management of the listed entity (“ListCo”), bear all fees of the pre-IPO intermediaries, and be entitled to 15% of the ListCo’s shares (“Cooperation Agreement”).

13.  According to the Wei Parties, the Cooperation Agreement was cancelled in mid-2004 as Tung advised Wei that the Cooperation Agreement would give rise to serious problems in relation to the proposed Fu Ji Listing under Hong Kong laws and regulations. According to Tung, both Tung and Wei recognised there might be operational/compliance issues such that it might be difficult to carry out the Cooperation Agreement, so in late 2003 Tung and Wei orally agreed to cancel the Cooperation Agreement.

14.  Tung’s case was that after such cancellation he and Wei orally agreed to replace the Cooperation Agreement by a new oral agreement in respect of the Fu Ji Listing (“Oral Agreement”) that provided inter alia:

(a) Tung shall be responsible for all intermediary work in relation to the listing application;

(b) Tung shall participate and “be involved in the whole process of the Listing Application”;

(c) Tung shall be responsible for “paying all the costs of the Listing Application”, including all the costs of the ListCo applying for listing status at HKSE, and such costs included “the costs of all intermediary and professional advisors, and all the overheads and operational expenses of the [ListCo], e.g. office rental and employee salaries”;

(d) if the listing application shall be successful, Wei shall pay Tung a sum of HK$150,000,000 as consideration for such success and for cancellation of the Cooperation Agreement;

(e) if Tung remained in the management of the ListCo for not less than 5 years after its successful listing, and shall have provided services (such as asset reorganisation, merger and acquisition, demerger and financing) to the ListCo, Wei shall pay Tung an additional HK$50,000,000 as consideration for such service upon 5 years after the successful listing of the ListCo.

The Wei Parties denied the existence of the Oral Agreement or any further/ other agreement (oral or written) between Tung and Wei.

15.  Tung claimed he was entitled to total payment of HK$200,000,000 under the Oral Agreement as (a) he had fully performed his obligations thereunder and “paid for all the costs and expenses”, (b) Fu Ji Holdings became listed on HKSE’s main board on 17 December 2004, and (c) he had been executive director of Fu Ji Holdings for not less than 5 years until 1 May 2010 and had provided various services, including introduction of substantial financing to Fu Ji Holdings.

16.  The Wei Parties admitted Tung did advise/assist on the Fu Ji Listing, Fu Ji Holdings was successfully listed in December 2004, and Tung was an executive director of Fu Ji Holdings for a period of not less than 5 years. But they denied Tung was entitled to any payment of HK$200,000,000 because the Oral Agreement never existed; but alternatively if the Oral Agreement did exist (which the Wei Parties disagreed), Tung did not perform his obligations thereunder in that he failed to participate in the whole process of the listing application and did not pay all the costs of the Fu Ji Listing, and/or further alternatively, Tung did not stay in management for 5 years after the Fu Ji Listing as the performance of the Fu Ji group deteriorated and Fu Ji Holdings went into voluntary liquidation with provisional liquidators appointed in October 2009.  

17.  The Wei Parties claimed Tung was responsible for overall strategic planning and financial management of the Fu Ji group due to his position in the Fu Ji group and his role as executive director of Fu Ji Holdings, and if and insofar as Tung paid any expense on behalf of Fu Ji Holdings, Wei and/or Yao (which was not admitted), the same had been fully reimbursed to Tung.

18.  The Wei Parties claimed Million Decade and Top Ample advanced loans of HK$25,400,000 and HK$9,600,000 respectively to Tung, and eventually commenced the Loan Actions against Tung to recover such loans with interest. But Tung contended these sums were not loans to him, but part of a total sum of HK$148,898,676.70 paid to him between October 2005 and October 2008 by various parties on Wei’s behalf as part payments of the total sum of HK$200,000,000 that Wei owed Tung under the Oral Agreement, which resulted in a remaining outstanding balance of HK$51,101,323.30 being the subject matter of Tung’s claim against Wei in the Tung Action.

19.  According to Tung, out of the aforesaid total sum of HK$148,898,676.70 there was a sum of HK$80,000,000 paid by Wei’s elder brother Wei Ming (“Wei Brother”) to Strong Nation and treated as a part payment to Tung. Tung explained that (a) in about late 2005 to early 2006 Yao and Kwok each agreed to inject/advance HK$80,000,000 into Crown Treasure as capital for its subsidiaries, (b) it was agreed/understood among Wei, Tung, Yao and Kwok that the sum of HK$80,000,000 to be injected/advanced by Kwok would be paid by Tung, and Wei on Tung’s behalf would pay such sum to Strong Nation, which sum would be treated as funds and capital owned and injected/advanced to Crown Treasure by Kwok, (c) Wei agreed such payment would be set-off against or treated as part payment of the outstanding sum he owed Tung under the Oral Agreement, (d) in/about January/February 2006 Wei Brother injected/advanced a total sum of HK$160,000,000 to Strong Nation of which HK$80,000,000 was made on Yao’s behalf and HK$80,000,000 was made on Wei’s behalf as partial set-off against or part payment of the outstanding balance that Wei owed Tung under the Oral Agreement. Tung claimed Wei was in breach of the Oral Agreement in failing to repay the remaining balance of HK$51,101,323.30 after taking into account the part payments made by or on behalf of Wei in the total sum of HK$148,898,676.70.

20.  On such basis, Tung denied Million Decade and/or Top Ample granted any loans to him in the sums of HK$25,400,000 and HK$9,600,000, which sums (according to Tung) were paid on Wei’s behalf to Tung as part payments of the sum of HK$150,000,000 that Wei owed him under the Oral Agreement. Tung also relied on part payments under the Oral Agreement (at least those made after September 2007) in answer to Wei’s time bar defence in the Tung Action on the basis they postponed the accrual of Tung’s claim and served as acknowledgment of the Oral Agreement.

21.  On the other hand, the Wei Parties’ case was that the alleged part payments were in fact voluntary and ex gratia payments, reimbursement of expenses and/or loans (eg loans by Million Decade and Top Ample as explained in paragraph 18 above) to Tung, but such ex gratia payments ceased when Fu Ji Holdings went into voluntary liquidation. Further, the sum of HK$80,000,000 was not paid under the Oral Agreement, but was part of the HK$160,000,000 Wei Brother paid to Strong Nation as loan advanced on Yao’s behalf (see paragraph 11 above). Prior to that, Yao had injected RMB128,000,000 into the Hotel Project in/about December 2005, which sum was advanced by a PRC company owned/controlled by the Weis’ business associates, through arrangements by Wei on Yao’s behalf.

22.  Thus, the main disputes were whether the Wei Parties could prove the existence of the loan agreements between Tung on one hand and Million Decade and Top Ample on the other hand, and whether Tung could prove the existence of the Oral Agreement and the various part payments in the total sum of HK$148,898,676.70 pursuant to the Oral Agreement.

23.  There was some issue in senior counsel’s written submissions as to whether post-contractual conduct would be relevant/admissible evidence for corroborating or negating the existence of the Oral Agreement and/or for determining whether there was due performance of such Oral Agreement that would entitle Tung to his remedy. Mr Tong SC in his oral submissions helpfully clarified that for the purpose of the WS Amended Appeal and FBP Appeal post-contractual conduct would be regarded as admissible evidence, but Tung disputed the relevance and necessity of such matters for the FBP sought and/or for further statement evidence as per the Latest WS Drafts.

III.  FBP APPEAL

24.  There was no dispute that (a) pleadings should clearly elicit the issues to enable the other side to know what case he is going to meet and to marshal the required evidence to meet such case, (b) FBP are to facilitate this so as to eliminate surprise and achieve fair and open litigation between parties,[3] and (c) Order 18 rule 12(3B) of the Rules of the High Court (“RHC”) provides that FBP should not be ordered “unless the Court is of the opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs”. This highlights the emphasis on procedural economy, proportionality and cost-effectiveness in the post-CJR culture that encourages parties not to engage in interlocutory skirmishes over FBP unless there is a genuine need to clarify the opposite party’s case to ensure fairness and to avoid cost-wasting. It is inappropriate to make requests for FBP with a view to cross-examine the other side or to expose some weaknesses of the pleaded case of the other side.[4]

25.  Although not cited by either Mr Lam SC or Mr Tong SC, it may be useful to refer to the guidance that has fallen from the Court of Final Appeal in 2 recent cases on the purpose of pleadings, which also sheds some light on the purpose of FBP.

26.  In Sinoearn International Ltd v Hyundai-CCECC Joint Venture,[5] the Court of Final Appeal made observations on the running of 2 alternative unpleaded cases at trial without proper formulation by amended pleadings in respect of a contractual dispute over works involving dredging and removal of a large quantity of contaminated mud. One such unpleaded alternative case involved a contractual obligation to pay by reference to “the entire amount of contaminated mud that was dredged up from the CT9 project”. Ribeiro PJ held it was unacceptable for the plaintiff to run this unpleaded alternative case:

“30. …… A party must raise all the issues it wishes to raise to be dealt with at trial. Parties are not entitled to have issues recently thought up dealt with separately and piecemeal. The other party is entitled to know from a clear pleading what is the entire case he has to meet so that he can decide whether particulars should be sought; how he should plead in response; what discovery he is entitled to; what evidence he should adduce to meet it; and what points of law should be taken. Notions like “the entire quantity of mud dredged from the CT9 project” might be studded with arguable questions as to how such quantity is to be ascertained dependent on the evidence. If there was room for exceptions regarding bad weather or anything else, the scope and effect of such exceptions could not doubt throw up factual and legal questions.

……

34. Pleadings are not mere formalities. They impose a necessary discipline and are fundamental enabling every procedural facet of the adversarial system to operate fairly.”

27.  In Kwok Chin Wing v 21 Holdings Ltd, Ma CJ said as follows:[6]

“21. It should by now really be quite unnecessary to issue yet another reminder on the rationale behind pleadings. The basic objective is fairly and precisely to inform the other party or parties in the litigation of the stance of the pleading party (in other words, that party’s case) so that proper preparation is made possible, and to ensure that time and effort are not expended unnecessarily on other issues: Wing Hang Bank Ltd v Crystal Jet International Ltd. It is the pleadings that will define the issues in a trial and dictate the course of proceedings both before and at trial. Where witnesses are involved, it will be the pleaded issues that define the scope of the evidence, and not the other way round. In other words, it will not be acceptable for unpleaded issues to be raised out of the evidence which is to be or has been adduced. As the Court of Appeal remarked in Wing Hang Bank Ltd v Crystal Jet International Ltd:-

(2) In a trial, particularly where evidence is given by witnesses, it becomes extremely important that each side knows exactly what are the live issues. Where issues are sought to be introduced that have not been adequately or properly pleaded, amendments must be sought unless the consent of the other party or parties has been obtained. It will simply not do for unpleaded issues to be “slipped in” when evidence is being given in the hope that the other side is not sufficiently alert to object.”

(a) 1^st Request

28.  The FBP Summons had 3 requests. The 1^st request for FBP (“1^st Request”) concerned paragraph 13 of the SoC in the Tung Action:

“13. Pursuant to the Cooperation Agreement and/or the Oral Agreement, [Tung] fully performed his obligations thereunder. In particular for the purpose of the Listing Application, [Tung]:

(a) Successfully effected a re-organisation of the [ListCo’s] corporate structure;

(b) Engaged and paid for the fees of auditors and accountants in Hong Kong;

(c) Engaged and paid for the fees of Hong Kong and PRC legal advisers;

(d) Engaged and paid for the fees of investment bankers (including sponsors and underwriters necessary for the purpose of the Listing Application);

(e) Engaged and paid for the fees of public relations firm;

(f) Engaged and paid for the fees of property valuers and surveyors;

(g) Assisted intermediaries in the training of the management of the [ListCo];

(h) Introduced investors as strategic shareholders of the [ListCo];

(i) Paid for all the overheads of the [ListCo], including setting up an office in Hong Kong, and paying the rent, renovation, company secretary, accountants and other employees of the Hong Kong office; and

(j) Organized and facilitated the work of all the intermediaries and professional advisors mentioned above during the process of the Listing Application.”

29.  The 1^st Request had 10 sub-requests which the Registrar helpfully summarised into 4 categories: (a) the exact identities of the intermediaries/advisors engaged, (b) the exact timing of the work undertaken by these intermediaries/advisors, (c) the exact description/scope of work undertaken by these intermediaries/advisors and by Tung, and (d) the exact dates, amounts, payers and payees of the payments made to these intermediaries/advisors and in respect of other overhead payments.

30.  Mr Lam SC submitted paragraph 13 of the SoC was important to the “live” disputed issues of (a) whether Tung had fully performed the Oral Agreement, and (b) whether the nature/scope of Tung’s performance of the Oral Agreement would demonstrate the existence of such agreement itself. In respect of (a), Mr Lam SC further submitted this issue was relevant to both Tung’s case (because Tung alleged he was entitled to payment as he had fully performed the Oral Agreement) and Wei’s case (because Wei’s alternative defence was that even if the Oral Agreement did exist (which he disagreed) Tung had not fully performed such agreement and therefore was not entitled to the payment thereunder). Mr Lam SC argued that paragraph 13 of the SoC so was sadly lacking in material facts let alone particulars that Wei had little idea what was the alleged scope of Tung’s involvement in respect of the Oral Agreement and/or the alleged “full” performance by Tung such that the FBP sought under the 1^st Request was necessary to enable Wei to understand what case he had to meet.

31.  Mr Tong SC disagreed, and argued the 1^st Request was not “necessary” as the parties were clear about the “live issues”.[7] He further reminded that Lord Woolf in McPhilemy v Times Newspaper Ltd[8] remarked that excessive particulars could obscure rather than clarify issues, and “after disclosure and exchange of witness statements, pleadings frequently become only of historic interest” such that skirmishes over FBP should be discouraged unless some obvious purpose was to be served. Mr Tong SC noted that here the pleadings had been closed and the parties had made 2 rounds of witness statements. Wei had served interrogatories, and Tung had answered by affirmation. Mr Tong SC further submitted Wei’s pleadings in response to Tung’s plea in paragraph 13 of the SoC[9] showed he had no difficulty in understanding Tung’s case. It was also suggested that since all “live” disputed issues had been crystallised, it was pointless for Wei to make the 1^st Request (or indeed the 2^nd and 3^rd Requests canvassed below), which was no more than a disguised fishing exercise to search for potential witness/ evidence, and which should be and was rightly stopped by the Registrar.

32.  Turning to the particular sub-requests under the 1^st Request, Mr Tong SC contended Tung had pleaded the relevant contractual obligations under the Oral Agreement[10] and the steps taken in performance of such contractual obligations,[11] so the 1^st Request did not go to the material facts but to the evidence in support of the particulars that had been pleaded (which was not permitted). Mr Tong SC also added “Wei himself must have knowledge of the ‘particulars’ sought”, so the 1^st Request was not due to any genuine need for clarification as to the nature of Tung’s case but to cross-examine Tung and to expose the weakness of Tung’s case. Going further, Mr Tong SC pointed out Tung had already filed/served his own statement evidence (bolstered by the statement evidence of 顧宏 and 吳國才) that “the listing happened a long time ago, and no records were retained, they could not provide more detailed evidence in relation to this issue”, so no purpose would be served by ordering the FBP under the 1^st Request. In short, Mr Tong SC urged this court not to fall for Wei’s real but disguised complaint that there was not enough evidence from Tung to support his plea, which should properly be a matter of cross-examination and/or submission.

33.  In my view, notwithstanding Mr Tong SC’s persuasive skills, the 1^st Request was well-founded and properly raised for the following reasons.

34.  First, I see no conflict between what has fallen from the Court of Final Appeal (as discussed in paragraphs 26-27 above) and what Lord Woolf has observed (as discussed in paragraph 31 above) on pleadings and particulars. The former reiterates that opposing parties have to engage on the disputed issues for trial by proper pleading of the material facts and the supporting particulars of the respective claim and defence instead of slipping in such contentions at trial in the absence of pleadings, but the latter reminds that once a disputed issue has been properly raised by the pleadings the focus will turn to the documentary and statement evidence that supports or challenges such pleaded issue. It is in the latter context that Lord Woolf said that pleadings would be of historic interest and excessive particulars could obscure rather than clarify issues. But this, of course, begs the anterior question whether the disputed issue has been properly and adequately raised by the pleadings.

35.  Secondly, in the present circumstances, there were clearly “live” disputed issues on the pleadings as to the following:

(a) for the purpose of Tung’s claim,[12] what was the scope/extent of Tung’s participation and involvement in the “whole process” of the listing application of the Fu Ji Listing[13] and his payment of “all the costs” thereof;[14]

(b) for the purpose Wei’s alternative defence, [15] whether Tung had performed his contractual obligations under the Oral Agreement, ie whether or not Tung participated and was involved in the “whole process” [16] and/or paid “all the costs”[17] of the listing application in respect of the Fu Ji Listing.

In the circumstances, whether and how Tung performed the Oral Agreement were necessarily material issues, and consequently the extent and scope of Tung’s performance of the Oral Agreement were necessarily material facts.

36.  Thirdly, the only plea as to the extent/scope of Tung’s performance of the Oral Agreement was found in paragraphs 13-14 of the SoC, but there was no specificity to the 10 things which Tung averred he had done pursuant to his contractual obligations under the Oral Agreement in paragraph 13 of the SoC. They were nothing more than broad assertions without particularity. For example, it did not even say which public relations firms, auditors and accountants and/or property valuers and surveyors had been engaged and paid.

37.  Fourthly, even though it was suggested the importance of pleadings/particulars would pale as the case progressed, one was not any wiser about these matters after discovery of documents and exchange of statement evidence. As Tung admitted, there was paucity of discovered documents in relation to these matters. As for statement evidence, the only relevant part can be found in paragraphs 19(5) and 20-21 of Tung’s 1^st witness statement in the MD Action (“Tung 1^st WS”):[18]

(a) paragraph 19(5) referred to Min You Holdings Ltd as a strategic investor introduced by Tung;

(b) paragraph 20 was nothing more than a repetition of paragraph 13 of the SoC with no further detail or information;

(c) paragraph 21 states that “上述各項工作涉及的開支及部份中介機構的費用皆由[Tung]經天成有限公司(Sky Achieve Limited)(下稱「天成」)承擔及支付。由於已是10年前的事而[Tung]亦從沒有料到[Million Decade]會在多年後無故向[Tung]提出訴訟,[Tung]已沒有保留亦未能尋獲有關上市開支及[Tung]付款予天成的文件紀錄”, but such statement only explained how Tung made payments for costs/expenses and for “some” intermediaries’ fees via Sky Achieve Limited and why he no longer had records of payment of such costs/expenses and fees, and it did not explain at all who were such intermediaries and what Tung did in performance of the Oral Agreement (in contra-distinction as to how payment was effected) beyond the broad assertions in paragraph 13 of the SoC.

To put the matter simply, there was no evidence (whether by way of documents or witness statements) that went beyond the broad generality in paragraph 13 of the SoC to elicit Tung’s case so as to obviate the need for the FBP under the 1^st Request. Using the example in paragraph 36 above, Tung’s statement evidence did not even say (i) which public relations firms, auditors and accountants and/or property valuers and surveyors had been engaged and/or paid, (ii) the amounts that were paid to them and/or (iii) to whom did Sky Achieve Limited made the alleged payments. More significantly, Tung did not say whether or not he himself recalled the actual identities of the intermediaries/advisors who were engaged (in contra-distinction as to how payment was effected).

38.  Fifthly, even though Wei pleaded in the Amended Defence that (a) the application for the Fu Ji Listing was competently handled by the sponsor CAF Securities Co Ltd as well as by Messrs Lovells and Heller Ehrman, solicitors for the sponsor and Fu Ji Holdings, and (b) Tung had been fully reimbursed for any expenses that he had paid, it did not mean Wei had any better understanding of Tung’s case in contra-distinction to Wei’s own case.

39.  Sixthly, in light of the above, Wei was understandably at a loss in appreciating Tung’s case on the “live” disputed issues in paragraph 35 above in order to marshal relevant averments/evidence in response. Using the example referred to in paragraph 36 above,[19] Mr Lam SC made several pragmatic points:

(a) if Tung did not recall the names of those intermediaries/ advisors, Tung could say so in any answer to the 1^st Request, and the Wei Parties could marshal their evidence accordingly on the premise of their own case (eg to adduce documentary and/or statement evidence as regards the appointment of and payment to CAF Securities Co Ltd, Messrs Lovells and Messrs Heller Ehrman) without having to worry about meeting any specific case on the part of Tung;

(b) if Tung recalled the names of those intermediaries/advisors and stated so in his answer to the 1^st Request, and if Wei agreed (eg, say, they were X, Y and Z), then Wei could admit such fact and save trial time and costs;

(c) if Tung recalled such names and stated so in his answer to the 1^st Request (eg, say, Tung engaged and/or paid the intermediaries/ advisors being A, B and C) and if Wei disagreed, then Wei could specifically plead and also marshal the evidence to demonstrate A, B and C had not been engaged and/or paid in respect of the listing application, but rather other intermediaries/ advisors (eg, say, X, Y and Z) were engaged and/or paid, which evidence might include (i) statement evidence from the Wei Parties or even from the aforesaid intermediaries/advisors to confirm or deny their involvement and/or (ii) documentary evidence such as appointment letters, invoices/receipts for payments etc;

(d) if Tung only recalled such names in the witness box, then it would be too late for Wei to prepare his response in adducing countervailing statement and/or documentary evidence unless he could seek indulgence to adjourn the trial, which application and/or adjournment would only add to rather than save costs;

(e) in the absence of the FBP under the 1^st Request, there was little point for Wei to gather evidence from intermediaries/advisors whom he believed to be involved (as in (a) above) when it was unknown whether they were the ones Tung had in mind for the purpose of paragraph 13(a)-(j) of the SoC and when it might be an unnecessary exercise in costs if it eventually transpired that both Tung and Wei referred to the same intermediaries/advisors (as in (b) above).

In my view, such analysis also applied to the other sub-requests under the 1^st Request mutatis mutandis.

40.  It was immediately clear from the above analysis that what was being sought under the 1^st Request was not evidence but material particulars that would flesh out the broad generality of Tung’s pleadings in this respect to enable Wei to understand the case he had to meet and the evidence he had to prepare in response. The Registrar was plainly right in recognising that “particularised pleadings are to inform the other party the nature of one’s case so that the other is in a position to prepare his case”, but fell into error in concluding that the 1^st Request was a request for evidence on the particulars already given. As explained above, if proper appreciation of Tung’s case in paragraph 13 of the SoC were to be reserved until cross-examination, it would defeat the purpose of pleadings/particulars, and Wei would suffer forensic prejudice in the preparation of his defence. I am satisfied the FBP requested under the 1^st Request was necessary and should be allowed.

(b)  2^nd and 3^rd Requests

41.  The 2^nd request for FBP (“2^nd Request”) concerned paragraph 20(c) of the SoC, which averred that “[in] about late 2005 to early 2006, [Kwok] and [Yao] each agreed to inject or advance HK$80,000,000 to Crown Treasure as capital for its subsidiaries”. The 2^nd Request sought FBP as to (a) whether such agreement was made orally or in writing, (b) if made orally, whether it was made over the telephone or at a meeting, and if made at a meeting where it was held and who else was present, and (c) if made in writing, identify the correspondence/document that recorded/evidenced the same.

42.  The 3^rd Request for FBP (“3^rd Request”) concerned paragraph 20(d) of the SoC which averred that “[it] was also agreed and understood among [Tung], [Wei], [Kwok] and [Yao] that the said HK$80,000,000 to be injected and advanced by [Kwok] would be paid by [Tung] from the HK$80,000,000 to be paid by [Wei] to Strong Nation (on behalf of [Wei]) ……” The 3^rd Request sought similar FBP as under the 2^nd Request in respect of the aforesaid agreement/understanding.

43.  It would be convenient (as Mr Lam SC and Mr Tong SC did) to deal with the 2^nd and 3^rd Requests together. Essentially, these requests sought to ascertain whether the pleaded agreements/understanding were made orally or not. Mr Lam SC accepted some of these matters had been covered in Tung’s 1^st witness statement in the MD Action, but argued on the basis of Turquand and the Capital and Counties Bank v Fearon[20] that pleading agreements without stating whether they were made orally or in writing and without giving the dates when the agreements were made was insufficient. Mr Lam SC insisted that mere statement evidence on this was not good enough as it would be necessary to bind Tung to his pleaded case, and he tried to cast suspicion on Tung’s reluctance to accede to the 2^nd and 3^rd Requests when “there is no reason why such particulars could not have been given voluntarily and with ease without an order of the court”.

44.  Despite Mr Lam SC’s persuasion, I do not consider the 2^nd and 3^rd Requests to be necessary.  Taking Mr Lam SC’s last point first, I am unable to view Tung’s stance in the sinister light suggested by Mr Lam SC. After all, Mr Tong SC made clear Tung objected on principle, ie Wei was not entitled to the FBP sought under the 2^nd and 3^rd Requests, and in any event ease in answering requests for FBP is not a guiding criterion for ordering answers to be made.

45.  Further, civil procedure had made much progress since the days when the English Court of Appeal made their observations in Turquand and the Capital and Counties Bank. It is unnecessary to trace the 130 years of developments that have led to the current post-CJR maturity with its general emphasis on the underlying objectives of procedural economy, proportionality and cost-effectiveness, and specific emphasis in Order 18 rule 12(3B) of the RHC that requires the court to shut its face against any order for FBP unless they are “necessary either for disposing fairly of the cause or matter or for saving costs”. Such considerations have been bolstered by other civil procedure reforms that require both pleadings and witness statements to be verified by statement of truth, which serve to encourage accuracy and fullness in both averments and evidence, but still retain the Peruvian Guano criterion for discovery of documents. Hence, Lord Woolf, architect of the English Civil Procedure Rules, admonished against excessive particulars and urged litigants to take note of the overall litigation (including document disclosure and statement evidence) to determine the necessity (if any) of FBP.

46.  In my view, the FBP requested under the 2^nd and 3^rd Requests were not necessary as the existence, contracting parties and subject matters of such agreements/understanding had been specifically raised in the pleadings so there was no doubt about the agreements/understanding that Tung relied, and further details of such agreements/understanding (including their oral nature, relevant time period and involved persons) were specifically addressed in paragraphs 31(6)-(10) of the Tung 1^st WS, and in particular paragraph 31(8) that states as follows:

“[Tung]其後跟[Kwok]討論[Wei]的要求,最後[Tung]與[Kwok]約於2005年4至5月間與[Wei]及[Yao]之間口頭同意:(一)[Wei]可以用[Yao]名義入股參與投資[the Hotel Project]成為[Crown Treasure]50%股東;(二)[Wei]與[Yao]不會參與管理及營運[the Hotel Project];(三)[the Hotel Project]初期投入資金1億6,000萬港元, [Kwok]及[Yao]各出資8,000萬港元;及(四) [Wei]會安排支付該1億6,000萬港元，當中一半8,000萬港元是代[Yao]注資[the Hotel Project],餘下的一半8,000萬港元是用於牴銷或被視為由[Wei]根據該合作協議而支付[Tung]1億5,000萬港元回報的部份款額並直接將該8,000萬港元當作為[Kwok]就[the Hotel Project]的注資。”

In a nutshell, Tung explained he first discussed the idea of co-investing in the Hotel Project with Wei, and later “[Tung]與[Kwok]於2005年4至5月間與[Wei]及[Yao]口頭同意……” The agreement terms referred to in paragraph 31(8) of the Tung 1^st WS correlated to the averments in paragraphs 20(c)-(d) of the SoC in the Tung Action. In my view, there was no doubt the Wei Parties knew (a) what case they had to meet, (b) what evidence they should marshal to meet it, and (c) what points of law they should take. Irrespective whether or not the FBP envisaged in Turquand and the Capital and Counties Bank might be relevant/useful in some other case or context, the 2^nd and 3^rd Requests were plainly not necessary here.

47.  That being the case, Wei’s application for the 2^nd and 3^rd Requests boiled down to one point: notwithstanding his understanding/ appreciation of Tung’s case, he wanted Tung to reiterate it by FBP so as to “bind Tung to his pleaded case”. But here Tung had already pleaded his case on the alleged agreements/understanding, and the disputed issue was a limited one. Further, the SoC in the Tung Action and the Tung 1^st WS were verified by Tung’s own statements of truth, and in the MD Action the Registrar on 28 April 2014 ordered all witness statements as to fact (which were also admissible for the TA and Tung Actions) shall stand as evidence-in-chief unless otherwise directed by the trial judge. In all the circumstances, the FBP under the 2^nd and 3^rd Requests could not be said to be necessary under the post-CJR regime. Rather, as Lord Woolf said, they would only be of historic interest and would add to costs.

48.  Although I have come to the same conclusion as the Registrar on the 2^nd and 3^rd Requests, I have done so for the different reasons given above. The Registrar in his reasoned decision held that[21] the FBP under the 2^nd and 3^rd Requests were on a point which (a) was not in issue between the parties and (b) did not affect the outcome of the Actions on the basis that Wei’s defence contention in the Tung Action was that the Oral Agreement did not exist, but if the court found the Oral Agreement did exist, “it cannot be envisaged that [Wei] would dispute the $80 million set-off”.[22] But in my view, quite irrespective of the existence or otherwise of the Oral Agreement, it was Wei’s pleaded case that such sum of HK$80,000,000 was “part of the investments of [Yao] in the Hotel Project”, and on such pleaded case it would be difficult to see how Wei could use Yao’s investments as set-off for his own debt under the Oral Agreement (if proved). Whether the trial judge (after finding the Oral Agreement did exist) would accept such assertion by Wei would be another matter.

49.  In the circumstances, the FBP Appeal is allowed to the extent that Tung shall file/serve the FBP as per the 1^st Request within 14 days from the date hereof. As for costs, the appropriate costs order for the FBP Appeal would be no order as to costs since neither Tung nor Wei succeeded in all of their respective contentions. This should also be the appropriate costs order for costs below in respect of the FBP Summons. But since the Assessed Costs summarily assessed and awarded by the Registrar were the combined costs of the FBP and Interrogatories Summonses, I grant the following costs order nisi:

(a) there be no order as to costs in respect of the FBP Appeal;

(b) there be no order as to costs in respect of the FBP Summons;

(c) if (a)-(b) above shall become absolute upon expiry of 14 days from the date hereof, the Registrar shall upon receipt of the Wei Notice referred to in (d) below apportion the Assessed Costs of HK$125,430 between the FBP Summons and the Interrogatories Summons (“FBP Assessed Costs” and “Interrogatories Assessed Costs”) such that the Interrogatories Assessed Costs do stand and the FBP Assessed Costs shall be subject to (b) above (“Apportionment Direction”);

(d) if (a)-(b) above shall become absolute upon expiry of 14 days from the date hereof, Wei shall within 7 days thereafter write to the Registrar (with copy to Tung) to (i) confirm (a)-(b) above have become absolute, and (ii) draw the Registrar’s attention to the Apportionment Direction (“Wei Notice”);

(e) if any party applies for variation of the costs order nisi, the Wei Notice and/or Apportionment Direction shall be stayed until further order of this court.

IV.  WS AMENDED APPEAL

50.  In dealing with the WS Amended Appeal, I note the contents of the latest version of Yao’s draft 3^rd witness statement (“Yao Latest Draft”) were almost the same as the latest version of Wei’s draft 3^rd witness statement (“Wei Latest Draft”),[23] so both Mr Lam SC and Mr Tong SC concentrated on the Wei Latest Draft. They also agreed that the Yao Latest Draft would stand and fall together with the Wei Latest Draft, so I too shall focus on the Wei Latest Draft, and unless otherwise stated, the discussion below also applies mutatis mutandis to the Yao Latest Draft.

51.  To start, I note the Latest WS Drafts (if allowed) would have been a 3^rd fresh round of witness statements (“3^rd Round”):

(a) Million Decade filed Wei’s and Yao’s 1^st witness statements on 31 July 2014 (“Wei 1^st WS” and “Yao 1^st WS”), and Tung filed the Tung 1^st WS and the witness statements of 李志遠, 顧宏 and 吳國才 on the same day. These witness statements being the 1^st round of witness statements were exchanged pursuant to the order of the Registrar dated 28 April 2014 (“1^st Round”).

(b) Pursuant to the order of Master K Lo dated 17 November 2014 (made by consent), leave was granted for Million Decade to file/serve the Weis’ 2^nd witness statements, and for Tung to file/serve supplemental witness statement in response to the Weis’ 1^st and 2^nd witness statements. Consequently, for this 2^nd round of witness statements, Million Decade filed Wei’s 2^nd witness statement (“Wei 2^nd WS”) and Yao’s 2^nd witness statement (“Yao 2^nd WS”) on 22 November 2014, and Tung filed his 2^nd witness statement (“Tung 2^nd WS”) on 29 December 2014 (“2^nd Round”).

(c) On 12 March 2015, Million Decade applied by summons to file/ serve the witness statement of Wei Jr. On 15 September 2015, the Registrar by the WS Order dismissed Million Decade’s application for leave to file/serve the Weis’ 3^rd witness statements (whether as per the original or revised drafts), but allowed Million Decade to file/serve Wei Jr’s witness statement. Consequently, Million Decade filed Wei Jr’s witness statement on 25 September 2015 (“Wei Jr WS”). The WS Order also granted liberty for Tung to serve supplemental witness statement in response to the Wei Jr WS, but upon consideration Tung declined to do so.

52.  There has been some allusion to lateness/delay since the WS Amended Appeal concerned a 3^rd Round beyond the 1^st and 2^nd Rounds, and this exercised some discussion by the Registrar in his reasoned decision. However, such topic did not feature much in the submissions before me in the WS Amended Appeal. After all, the MD Action had not been set down, and there would be time enough to deal with the Weis’ 3^rd witness statements if allowed and/or if they required any response (although Mr Lam SC suggested Million Decade as plaintiff ought to have the last word in the normal course of events).

53.  But the fact that the WS Amended Summons and WS Amended Appeal concerned the 3^rd Round had significance in another respect. Mr Tong SC complained the repeated “trimming” that resulted in 3 different draft versions of the Weis’ 3^rd witness statements was abusive and/or objectionable since the Wei Parties were effectively trying to test the court’s “bottom-line” and asking the court to help it choose the best acceptable version. Mr Tong SC submitted such practice ought not to be condoned because it created a moving goalpost for Tung and did not serve the underlying objectives.

54.  Million Decade’s trial-and-error approach was, to say the least, regrettable. A litigant (particularly those who all along had the benefit of legal advice) is expected to make a properly considered application to the court, and such trial-and-error approach is nothing but an exercise in time and costs. Given that (a) this was the proposed 3^rd Round, (b) Million Decade introduced 3 different but progressively “trimmed down” draft versions of the Weis’ 3^rd witness statements, and (c) Mr Lam SC sought to uphold the entirety of the Latest WS Drafts, it is not only inappropriate but unfair to Tung for this court to consider any blue-pencilling of the Latest WS Drafts to facilitate the Wei Parties’ pursuit of the WS Amended Appeal. In any event, Mr Lam SC did not give any assurance that Wei and/or Yao (ie the intended makers of the 3^rd witness statements as per the Latest WS Drafts) would be willing to make/sign/verify any blue-pencilled 3^rd witness statements. Hence, I proceed to consider each of the Latest WS Drafts as a whole.

55.  Mr Tong SC suggested that since Million Decade was seeking indulgence from the court to file/serve the Latest WS Drafts, the Wei Parties ought to give a satisfactory explanation, failing which it would be a rare case for indulgence to be given.[24] Here, the reason put forward by the Wei Parties was their perceived need to “rebut” allegations made in the Tung 2^nd WS, and Mr Lam SC suggested this was the first time the Wei Parties “had an opportunity to respond to the new allegations made in [the Tung 2^nd WS]”, so the Latest WS Drafts were not in the form of narrative account of events, but a topic by topic and paragraph by paragraph response to the Tung 2^nd WS.

56.  It was also a permeating theme in the Wei Parties’ contentions in support of the WS Amended Appeal that:

(a) subject to issues of admissibility and relevance, the Wei Parties as litigants were at liberty to adduce whatever evidence they considered necessary provided the procedural requirements were complied with;[25]

(b) all relevant evidence (which must include supplemental witness statements) should be admitted to secure the just resolution of disputes unless there is compelling reason to the contrary (eg conscious flouting of orders/rules or deliberate manoeuvring) and/or unless the other party would suffer forensic prejudice as a result of any lateness;[26]

(c) “[in] the normal course of things, Million Decade, as the plaintiff in [the MD Action], should be given the last word and an opportunity to respond to [the Tung 2^nd WS]”.[27]

In a nutshell, the Wei Parties’ proposition was that so long as the contents of the Latest WS Drafts were admissible/relevant and there was no forensic prejudice to Tung due to lateness, they could decide what statement evidence to adduce as their “last word” to “rebut” the Tung 2^nd WS, and this could only be assured by the 3^rd Round since Order 38 rule 2A of the RHC restricts a witness from amplifying his witness statement unless there is good reason to do so or the amplification sought relates to a new matter arising since the service of his witness statement with the consequent result that “rebuttal of the points made in a witness statement filed by an opponent” may not be allowed.

57.  In my view, this approach misunderstood the purpose of supplemental witness statements, especially in the post-CJR regime:

(a) A party’s pleadings should plead/aver the material facts that support his case and rebut his opponent’s case. Pursuant to Order 18 rule 13 of the RHC, any traverse must be specific and not general. But a witness statement as to fact usually comes into existence after close of pleadings, ie when issues have been joined and disputes have been elicited, and is usually a narrative account of the witness’ knowledge of facts and matters that are pertinent to the “live” disputed issues.

(b) Order 38 rule 2A(1) of the RHC makes clear the exercise of the court’s powers in relation to statement evidence is for:

“the purpose of disposing fairly and expeditiously of the cause or matter before [the court], having regard to all the circumstances of the case, including (but not limited to) –

(a) the extent to which the facts are in dispute or have been admitted;

(b) the extent to which the issues of fact are defined in the pleadings;

(c) the extent to which information has been or is likely to be provided by [FBP], answers to interrogatories or otherwise.”

Consequently, witness statements should address the real issues rather than unnecessary issues, and concentrate both the parties and trial judge on the real matters in controversy between the parties.[28]

(c) Order 38 rule 2A(2) of the RHC provides that a party is not allowed to serve witness statements (other than those that the court has given leave) without leave. Although it remains the right/duty of each party to adduce evidence (statement or documentary) to support his case, this reflects the court’s case management control. As Mr Lam SC accepted, both the court and parties have to bear in mind Order 1A of the RHC to ensure any witness statement will serve the underlying objectives of inter alia proportionality, procedural economy, cost- effectiveness.

(d) The considerations in (b)-(c) above come into play more particularly for supplemental witness statements when the parties have already served at least 1 round of witness statements or more to address the disputed issues.

(e) Even though the court has power to grant leave for supplemental witness statements to be served, proper conduct of litigation does not mean having rounds of witness statements for point by point “rebuttal” of the opposing witnesses’ statements. After all, it is not the function of witness statements as to fact to argue a party’s case or to argue with opposing witness(es). I agree with the observations in Hong Kong Civil Procedure 2016 that:[29]

“The written statement of a witness should not seek to anticipate the evidence of a witness of the opposite party and to contradict it or otherwise to deal with it. It is not the function of the written statement of a witness to answer questions that may be put in cross-examination, but only to answer such questions as would be asked in his examination in chief. ……”

Indeed, G Lam J in Zebra Industries (Orogenesis Nova) Ltd v Wah Tong Paper Products Group Ltd said as follows:[30]

“12. Further, the supplemental statements, which were prepared together with the summons in July 2014, contain matters which have since been superseded and become irrelevant, ……

13. Much of what is in the supplemental witness statements is mere commentary on or argument relating to the defendant’s evidence, which has no place in a witness statement.

14. There are also other parts of the supplemental statements that are repetitive of what is already in the other material, needless quotations, simply abusive remarks about the defendant and its representatives, or otherwise passages that are of no relevance or consequence.”

(f) This explains why, as envisaged under Order 38 rule 2A(4)(c) of the RHC, the usual practice is for parties to exchange witness statements simultaneously rather than to let the claimant have the “last word”. Mr Lam SC submitted witness statements are exchanged to “avoid the unfairness which may arise from the possible tailoring of testimony on what the other side’s witnesses say in the first round”. But more fundamentally, in my view, it is not the function of witness statements to “rebut” points made in the statements of opposing witness(es) for the sake of having the “last word”.[31]

(g) I also agree with the observations by G Lam J in Liu Wai Keung v Liu Wai Man also known as Liu Hiu Nam Vikki[32] that if a supplemental witness statement is of little probative value, its relevance to the matters in issue in the action is tangential, it simply repeats what has already been stated in the 1^st witness statement, or it seeks to anticipate the argument of the opposing party and to deal with it, “it would be an unwarranted distraction from the real issues to allow the supplemental statements to go in and to require the [opposing party] to deal with it”.

(h) In the situations in (g) above, the party seeking to adduce the supplemental witness statement cannot be said to suffer real prejudice if it is not allowed, and hence any concern over constraints on amplification of witness statement at trial under Order 38 rule 2A(7) of the RHC is misplaced. But should it transpire that matters canvassed in the rejected supplemental witness statement become material by the time of trial due to developments in the litigation, there may perhaps be basis to persuade the court to grant leave to amplify the existing witness statement.

(i) That said, there are bound to be cases where supplemental witness statements are probative and necessary. The exercise of case management discretion is obviously case-specific, so the application of the aforesaid broad principles may not lead to the same result in every case. One can envisage supplemental statement evidence may be required if pleadings are amended after the 1^st round of witness statements to raise new issues or if there is a need to respond to freshly discovered documents after the 1^st round of witness statements. Such list is not and cannot be exhaustive.

58.  On the above note, I now turn to the Wei Latest Draft. In short, Mr Lam SC submitted the contents of the Wei Latest Draft were relevant and admissible, and in most parts such relevance and admissibility were self- explanatory. But Mr Tong SC complained (a) the bulk of the Wei Latest Draft was irrelevant to the key disputed issues,[33] and (b) the Wei Latest Draft was highly repetitive and did not cover any new matters that were relevant to the issues to be tried. Since the Wei Latest Draft was divided into various sections, I propose to deal those sections accordingly. For convenience, I shall refer to the Wei 1^st and 2^nd WS in the discussion below, but they also apply mutatis mutandis to the Yao 1^st and 2^nd WS since their contents were similar to the Wei 1^st and 2^nd WS.

(a)  Section B1

59.  First, section B1 of the Wei Latest Draft (“Section B1”) dealt with the Weis’ multiple contactable addresses. Mr Lam SC submitted that (a) such information went to the matter of whether the Oral Agreement was an afterthought contrived by Tung because Tung did not demand for payment under the Oral Agreement until after commencement of the Loan Actions even though the Weis had multiple contactable addresses, and (b) Section B1 was relevant/necessary as the “afterthought” point in (a) above had to rest on evidence, but so far only limited evidence had been adduced to dispute paragraph 10 of the Reply in the Tung Action that Tung had orally reminded/chased Wei for payment under the Oral Agreement.

60.  For the purpose of the WS Amended Appeal, Mr Tong SC did not dispute post-contractual conduct is admissible evidence (subject to the issue of relevance). But Mr Tong SC submitted (and I agree) the factual allegations in Section B1 that went to “afterthought” point was essentially a matter of credibility and at best tangential to the issue of the existence (or otherwise) of the Oral Agreement. Also, I do not think it could be said, as Mr Lam SC suggested, Wei’s previous witness statements only briefly asserted Tung had his contact details. As Mr Tong SC pointed out, the issue of whether the Weis were contactable and the issue of their contactable addresses had been dealt with in paragraphs 33-34 of the Wei 1^st WS.

61.  Mr Lam SC complained Tung subsequently shifted his position to impliedly accept he did not chase Wei for payment under the Oral Agreement since 2010 for the reason Wei had ceased to be contactable after the liquidation of Fu Ji Holdings.[34] Be that as it may, the Wei Parties had already responded to Tung’s position by stating in paragraphs 13-14 of the Wei 2^nd WS that the Weis did not abscond, that Tung knew their address(es) (eg “[Tung]一直都知道[Wei]湯臣別墅地址和上海的該地址”), and that Tung could have contacted them.

62.  Mr Lam SC went further to submit Section B1 was necessary to rebut the allegations raised in the Tung 2^nd WS which the Wei Parties did not have a chance to respond to before. But I note Tung in paragraphs 9-14 of the Tung 2^nd WS accepted he had the Weis’ address(es) but this “並不代表[Tung]就可以聯絡得上[the Weis]”, and despite having many addresses the Weis “並居無定所,令人難以直接聯絡及接觸”. In making such assertion Tung relied on the difficulty in serving process on the Weis for the Tung Action (which commenced in 2013) rather than on other modes of communication with the Weis.[35] In any event, Tung made clear “[Yao]的地址亦非[Tung]關注之事,因為[Tung]從來都是沒有意圖想要找到[Yao]”. In my view, given that the Weis did canvass the matter of their addresses and their contact (if any) with Tung in the 1^st and 2^nd Rounds, Tung confirmed he had the Weis’ addresses, Tung merely relied on the difficulty in serving process (rather than on other forms of contact), and Tung was unconcerned as to Yao’s address(es), I see no justification for what Mr Lam SC described as “strong rebuttal” in Section B1 by detailed particulars of all Weis’ addresses with cross-references to documents that disclosed such addresses on their face (which documents should speak for themselves). I am unable to see how Section B1 was required in light of the Weis’ previous witness statements and the issue at hand.

(b)  Section B2

63.  In Section B2 of the Wei Latest Draft (“Section B2”), Wei dealt with the meetings between the Weis and the Tungs to discuss the loans by Million Decade and Top Ample to Tung and the funding/cooperation for the Hotel Project that, according to Mr Lam SC, went to the Wei Parties’ allegations that Tung had been avoiding the Weis since 2010. Wei also gave details of the circumstances in which the Wei Parties had chased Tung for repayment, and in particular Wei stated (a) when Tung was chased for loan repayment he claimed he/Kwok wished to place their capital in the Hotel Project before they repaid the loans to Million Decade and Top Ample, and (b) Tung later tried to avoid Wei after the Weis demanded him to provide information/documents relating to the Hotel Project, which (according to Tung) ran into serious financial difficulties and required external financing to save such project.

64.  Mr Lam SC submitted that if the fact Tung chased for payment under the Oral Agreement would be probative of its existence, it must follow the fact the Wei Parties chased for repayment of loans by Million Decade and Top Ample to Tung would be equally probative as to the existence of such loans being the subject matter of the Loan Actions. It was suggested that Section B2 “supplement the evidence” in paragraphs 12-15 of the Wei 1^st WS that Million Decade and Top Ample granted loans to Tung for Tung to repay Ng Shiu Fan, and to “provide the context” for the Wei Parties’ demands for repayment. Mr Lam SC submitted these points were central to the Loan Actions, so the Wei Parties should be given an opportunity prior to trial to “amplify” their evidence by going into more detail than the Weis’ previous statements.

65.  But insofar as Section B2 dealt with the meetings in 2009 in Singapore and Shanghai between the Weis and the Tungs concerning the Hotel Project, Tung’s suggestion for the Tungs to invest RMB128,000,000 in the Hotel Project to replace Yao’s investment of RMB128,000,000, and Tung’s request to defer repayment of the loans by Million Decade and Top Ample until after the Tungs paid RMB128,000,000 to Yao, these matters had been addressed in paragraphs 16-18 and 30 of the Wei 1^st WS and paragraph 15 of the Wei 2^nd WS.  I see no justification for Wei to repeat these matters in a supplemental witness statement in a fresh 3^rd Round.

66.  Insofar Section B2 dealt with (a) what Mr Lam SC described as the breakdown of the relationship between the Weis and the Tungs as a result of unhappy discussions over the Hotel Project and (b) Tung avoiding the Weis since 2010, this too had been addressed in paragraphs 19 and 34(2) of the Wei 1^st WS. In my view, the fine details of fruitless discussions over the Hotel Project were, at best, of tangential/marginal interest even if it could be said demands for loan repayments and/or contact between Tung and the Weis since 2009/2010 might have some impact on the vitality of the loan agreements or the Oral Agreement (a matter on which Mr Tong SC had reservations). As Mr Tong SC reminded, these events in 2009/2010 were long after the loan agreements and/or Oral Agreement allegedly came into existence.

67.  I see no justification for Wei to tread on the same grounds as canvassed in his previous witness statements nor do I see how any further details would assist on the material issues. I will deal with footnote 1 of the Wei Latest Draft below.

(c)  Section B3

68.  Mr Lam SC submitted that section B3 of the Wei Latest Draft (“Section B3”) dealt with the closeness of the relationship between the Weis and Tungs, which was relevant to explain why the Weis (through Million Decade and Top Ample) were willing to lend a total sum of HK$35,000,000 to Tung even though such loans were unrelated to the Fu Ji Listing.[36] Mr Lam SC reminded that the Registrar allowed the Wei Jr WS which corroborated the evidence as to the relationship between the couples, and that such issue was raised in the pleadings.[37] Mr Lam SC submitted Wei’s Latest Draft served to “bolster the relationship between the Wei and Tung couples by referring to their involvement in the Hotel Project …… and, more directly, by confirming the correctness of the matters stated in [the Wei Jr WS] ……” Mr Lam SC suggested that since the Wei Jr WS had been admitted as evidence, it was difficult to see what reasonable objection might be made by Tung to Wei confirming what was said in the Wei Jr WS.

69.  Mr Tong SC complained the Wei Parties tried to capitalise on the fact the Registrar allowed the Wei Jr WS that covered the relationship between the Weis and the Tungs, but Tung’s stance was that the Wei Jr WS contained even more trivia concerning the relationship between the 2 families than the Weis’ previous witness statements and was even more tangential to the core issues at trial, so Tung did not even see the need to file any witness statement in reply. Mr Tong SC said the Wei Jr WS did not carry any binding effect on or assistance to the WS Amended Appeal.

70.  In my view, Section B3 is unnecessary. There was no need for Wei to repeat what had been stated in paragraphs 6-11 of the Wei 1^st WS and/or to confirm what had already been said in the Wei Jr WS. Paragraphs 5-11 and 29-30 of the Wei 1^st WS had gone into great detail over the alleged close relationship between the Weis and the Tungs, but apart from the 1^st sentence in paragraph 12(2) of the Wei Latest Draft which I will discuss below, I am unable to see how the 2^nd sentence in that sub-paragraph would add to what had already been set out in the Wei 1^st and 2^nd WS. As regards paragraph 13 of the Wei Latest Draft, even Mr Lam SC conceded its contents had been addressed/canvassed in the Weis’ previous witness statements.

71.  The above would be quite sufficient to demonstrate Section B1 should not be allowed. But Mr Tong SC went further to submit (and I agree) the side issue as to the relationship between the Weis and the Tungs had become largely irrelevant with developments in the Actions. Earlier on, Million Decade applied for summary judgment in the MD Action.[38] Yao’s affirmation in support alleged Tung called her directly for a loan, so Tung’s affirmation responded by saying Tung would not have circumvented Wei to call Yao because he was well-acquainted with Wei but not Yao. Mr Tong SC submitted this then prompted a full-blown reaction by the Wei Parties about the relationship between the Weis and the Tungs in the Weis’ 1^st and 2^nd witness statements and the Wei Jr WS, but “Yao later somewhat changed her evidence and said in [paragraphs 12-13 of the Yao 1^st WS] (see also [paragraphs 12-13 of the Wei 1^st WS]) that in fact, Tung called Wei first and asked for a loan, and Wei told Tung to call Yao”. Mr Tong SC submitted that given such “clarification” in evidence and Tung’s acknowledgment in his affirmation in opposition it would be more reasonable for him (if required but he did not so require because he denied the loans) to contact Wei first, the matter of the relationship between the Weis and the Tungs had become circumstantial and tangential at best.

72.  In my view, Section B3 clearly reflected the permeating theme in the Latest WS Drafts of feeling obliged to respond to the Tung 2^nd WS and to throw in the “last word” without clear thought as to whether the response was required at all. There was also force in Mr Tong SC’s submission that the Latest WS Drafts put forward by the Wei Parties appeared to descend into so much detail (but I would not use the word “trivia”) on non-core background matters that they tended obscure rather than elicit the core disputes, which would not have aided either party or the trial judge.

(d)  Section B4

73.  Section B4 of the Wei Latest Draft (“Section B4”) concerned the circumstances in which the Cooperation Agreement was cancelled and the Oral Agreement was made, and the extent of Tung’s contribution to Fu Ji Holdings. Mr Lam SC submitted these matters were relevant to the existence of the Oral Agreement and Wei’s alternative defence in the Tung Action that Tung had not fully performed the Oral Agreement even if it did exist, and were in response to paragraphs 15-28 of the Tung 2^nd WS that contained 6 pages of new facts/matters not previously alleged by Tung by which Tung sought to “play himself up in an attempt justify the substantial rewards under the [Oral Agreement]”.

74.  However, Mr Lam SC accepted some paragraphs in Section B4 contained “amplified evidence” that corroborated the Wei Parties’ case. Indeed, the matters set out in paragraphs 14-15 of the Wei Latest Draft had been canvassed/addressed in paragraphs 23(3)-(5) of the Wei 1^st WS and paragraphs 2.1-2.2 and 4.1 of the Wei 2^nd WS. Mr Lam SC submitted the new paragraphs elaborated a bit more about Wei’s knowledge at the time, but I note Wei had already said in the Wei 1^st and 2^nd WS that he had little experience in Hong Kong listing matters.

75.  In paragraph 16 of the Wei Latest Draft, Wei repeated what had been said in the Yao 1^st WS, and went on to “amplify” he never showed a copy of the Cooperation Agreement to Yao and never informed her of any oral agreement that replaced the Cooperation Agreement. I am unable to see the material relevance of these details when it was common ground that the Cooperation Agreement did exist, and when the circumstances leading to the cancellation of the Cooperation Agreement were a mere matter of background as there was no dispute the Cooperation Agreement was indeed cancelled. The Weis’ private communications over such matter had little consequence. As regards Wei’s claim in paragraph 16(3) of the Wei Latest Draft that he told Yao about his intention to make ex gratia payments to Tung if Fu Ji Holdings’ performance was good, this was already mentioned in paragraph 2.8 of  the Wei 2^nd WS. As regards paragraph 16(4)-(5) of the Wei Latest Draft that suggested Wei would not have made the Oral Agreement because (a) Yao’s agreement would have been required as the alleged promise would have affected their matrimonial assets under PRC law, and (b) he would have been unwilling to be personally bound by an agreement concerning Tung’s remuneration, these assertions were plainly either Wei’s opinion or his attempt to argue with the Tung 2^nd WS, which were matters for submission and legal argument, and had no place in a witness statement as to fact.

76.  As regards paragraph 17 of the Wei Latest Draft, Wei essentially stated that after Tung introduced the foreign investor 里昂證劵亞洲 it was Wei who conducted the main negotiations with 里昂證劵亞洲. But in fact Wei had mentioned this fact in paragraphs 4.5 and 10 of the Wei 2^nd WS. In any event, there was no dispute in the pleadings that Tung introduced financing for Fu Ji Holdings.[39] The necessity of paragraph 17 of the Wei Latest Draft was not understood.

77.  In paragraph 18(1) of the Wei Latest Draft, Wei gave reasons why the Weis were confident of the Fu Ji Listing, but those reasons had been canvassed in paragraphs 2.5, 4.5(1), 4.9(4)-(5) and 7 of the Wei 2^nd WS. As regards Wei’s assertion in paragraph 18(2) of the Wei Latest Draft that Tung did not pay “all” listing fees/expenses and that Tung did not work full-time at Fu Ji Holdings, those matters also had already been alluded to in paragraphs 4.8(5), 5, 7 and 12(7) of the Wei 2^nd WS. There was, quite simply, no need to repeat what had been said by Wei.

78.  In respect of paragraph 19 of the Wei Latest Draft, Wei claimed the Weis did not have access to relevant documents, but this was already evident from the paucity of the discovery exercise. The fact the Weis gave ex gratia payments to Tung from 2005 to 2008 was something that had been canvassed in paragraph 24 of the Wei 1^st WS and paragraph 2.8 of the Wei 2^nd WS. As regards Wei’s assertion that Tung should have reported such payments to the tax authority, it was plainly an argumentative matter for submissions and had no place in a witness statement as to fact. Further, I see no reason for Wei to repeat the enquiries/responses set out in solicitors’ correspondence, which must necessarily be part of the discovered documents. Paragraph 19(5) of the Wei Latest Draft (which expressed Wei’s opinion that it was unreasonable for Tung to be paid HK$50,000,000 for remaining in the management of Fu Ji Holdings for 5 years) had been covered in the Wei 1^st and 2^nd WS, eg paragraphs 4.8-4.9 of the Wei 2^nd WS.

79.  There was also a consistent theme in the Weis’ previous witness statements that the Weis followed Tung’s lead in financing advice/ arrangements, so paragraph 20 of the Wei Latest Draft did not add anything new. It was plain from the above that the proposed materials had already been canvassed in the Weis’ previous witness statements, and the “trimmed down” Wei Latest Draft was seriously repetitive and did not take matters further in respect of the core issues.

(e)  Section B5

80.  Section B5 of the Wei Latest Draft (“Section B5”) concerned the treatment of the payment of HK$160,000,000 by Wei Brother to Strong Nation for the Hotel Project. Mr Lam SC submitted the Hotel Project must form part of the relevant factual matrix as it reflected the close relationship between the parties. There was also dispute over whether or not part of the sum of HK$160,000,000 was treated as part payment under the Oral Agreement. Mr Lam SC claimed the value of Section B5 was demonstrated by the extent Tung canvassed the topic in paragraphs 31(2)-(11) of the Tung 1^st WS and paragraphs 29-35 of the Tung 2^nd WS.

81.  Mr Lam SC submitted Section B5 explained that contrary to Tung’s case the sums of RMB128,000,000 and HK$160,000,000 injected into the Hotel Project were paid solely by Yao as loans, so Wei denied the sum of HK$160,000,000 was treated as Crown Treasure’s share capital or capital reserves (股東儲備) with half of such sum attributable to each of the ultimate shareholders,[40] hence Section B5 was probative of the question whether or not the Oral Agreement did exist.

82.  Mr Tong SC explained that Tung’s plea concerning HK$80,000,000 out of HK$160,000,000 that Wei Brother paid to Strong Nation was not to prove the existence of the Oral Agreement, but to give credit to Wei by reducing the outstanding sum due to Tung under the Oral Agreement. But for the present purpose, I need not delve further into the issue of whether post-contractual conduct or part performance could in themselves prove the existence of an oral contract in light of the stance by Mr Tong SC as explained in paragraph 23 above.

83.  But Mr Tong SC was right in saying the matters raised in Section B5 had been covered in paragraphs 10-11 of the Wei 1^st WS. Indeed, the Wei 1^st WS already mentioned the Weis (through a PRC company) injected RMB128,000,000 into Strong Nation in 2005 and Wei Brother on behalf of Yao injected HK$160,000,000 into Strong Nation by way of a loan. It was plainly a pre-existing topic factually canvassed in the Weis’ 1^st and 2^nd witness statements. What Section B5 purported to do was to tread again on these matters and argue with the Tung 2^nd WS that the payment of HK$160,000,000 to Strong Nation was not injected as capital/shareholding. But Wei had already made clear such payment was Yao’s loan, and it was not the function of a witness statement to argue with an opposing witness. I agree with Mr Tong SC that such opinion/argument had no place in a witness statement as to fact.

84.  This was further illustrated by the reference in Section B5 to the sum of RMB128,000,000. Mr Lam SC agreed Tung had previously mentioned (and Wei admitted) a sum of RMB128,000,000 was paid into the Hotel Project as a loan by a PRC company related to the Wei Parties and that sum had been repaid, but the Wei Latest Draft went on to say that since Tung never suggested such sum was paid as share capital on behalf of the Weis and the Tungs in equal proportion it lent support to the Wei Parties’ case on the sum of HK$160,000,000 as explained above. In my view, since Wei had previously canvassed the “fact” of the loan of RMB128,000,000, there was simply no need to argue the Wei Parties’ case in the Wei Latest Draft. It was quite unnecessary to rake over old grounds already canvassed/addressed in previous witness statements, and reiterating the general relevance of such old grounds would not open the door to a fresh new 3^rd Round.

(f)  Section B6

85.  Section B6 of the Wei Latest Draft (“Section B6”) dealt with the assertions in paragraph 39 of the Tung 2^nd WS that the cause of Fu Ji Holdings’ liquidation was due to the Weis’ failure to properly manage the company and that they went into hiding afterwards. Mr Lam SC submitted Wei should be allowed to respond to such allegations given their relevance and disparaging nature. I agree with Mr Tong SC that Wei’s lengthy analysis on the possible reasons for Fu Ji Holdings’ liquidation and who was to be blamed for its financial failure was quite remote to the issue of whether there was an Oral Agreement. Further, Mr Lam SC’s convoluted explanation of their alleged relevance[41] spoke volumes as to their tangential or marginal relevance to the core disputes. Instead, the pertinent facts, eg the timing of Fu Ji Holding’s liquidation and the period during which Tung served as a director of Fu Ji Holdings, were never disputed. In any event, the reasons for the liquidation of Fu Ji Holdings and Tung’s avoidance of the Weis thereafter had been addressed in paragraph 13 of the Wei 2^nd WS, and Wei himself acknowledged in paragraph 13(1) of the Wei 2^nd WS that such topic was not relevant to the Actions. Although Wei sought to argue in Section B6 that Fu Ji Holdings’ liquidation was partly Tung’s fault, this too had been addressed in paragraph 13 of the Wei 2^nd WS.

(g)  Section C

86.  Footnote 1 that correlated to paragraph 25(5) of Section C of the Wei Latest Draft (“Section C”), the 1^st sentence in paragraph 12(2) that correlated to paragraph 25(1) of Section C, and paragraph 25 of Section C dealt with various corrections for clerical errors appearing in the Wei 1^st WS. Mr Lam SC submitted there was no reason to object to these “corrections”. In my view, as they were minor corrections, they could have been dealt with during Wei’s examination-in-chief at trial. Even if there was any concern that leave had to be sought for such purpose, the Wei Parties could have easily written to Tung’s solicitors to ascertain whether Tung would object to these “corrections” to be made during examination-in-chief, and the Wei Parties might have been on firmer ground to adduce a supplemental witness statement purely on these “corrections” if Tung was uncooperative. Otherwise it would have been an unnecessary exercise in costs to adduce a supplemental witness statement on minor “corrections”.

87.  As regards paragraph 26(1)-(3) of Section C that proposed 3 items of “corrections” and/or “clarifications” for the Wei 2^nd WS, I am unable to see their necessity and/or usefulness. Paragraph 26(1) of Section C noted the Wei’s 2^nd WS gave the word “unreasonable” as English translation for “不合理”, and proposed to add the words “unconscionable” and “unfair” as English translations for “不合情理” and “不公平” mentioned therein. Since the Wei 1^st WS was a Chinese statement by a Chinese national who gave an address in Shanghai, I am unable to see why it would be necessary to adding 2 English translations when the trial would eventually be conducted either in Chinese or in English with agreed/certified English translations.

88.  In paragraph 26(2) of Section C, Wei wanted to add a reference to Tung’s case that Tung had to be an executive director of Fu Ji Holdings for 5 years before he would be entitled to personal payment by Wei of HK$50,000,000 under the Oral Agreement. This is not a “correction”, and I am unable to discern any necessity for such reference when Tung’s case was plain and clear from Tung’s pleadings. There could not have been any misunderstanding as to Tung’s case.

89.  In paragraph 26(3) of Section C, Wei proposed to spell out the reason for the successful Fu Ji Listing in paragraph 4.9(4) of the Wei 2^nd WS, but those reasons had already been addressed in paragraphs 2.5, 4.9(5) and 7 of the Wei 2^nd WS. The proposed “clarification” was, in my view, repetitive and redundant.

(h)  Summary

90.  The above analysis showed it was not necessary to allow (and there was nothing unfair to disallow) the Latest WS Drafts for the Weis “to amplify their previous evidence and rebut the allegations made in [the Tung 2^nd WS]”. The Latest WS Drafts did not introduce any new case, and Mr Lam SC acknowledged the matters canvassed in the Latest WS Drafts were not contemporaneous evidence as to the existence or otherwise of the Oral Agreement. In my view, their contents did not have direct probative value by (a) reiterating pre-existing topics in previous witness statements to “rebut” or argue with Tung’s statement evidence, and (b) seeking to rely on repetitive/tangential matters to argue that the Wei Parties’ case was more credible/probable as compared to Tung’s case.[42] In my view, the Latest WS Drafts would not assist the court to fairly adjudicate the disputes, and it was highly probable they would obscure the real issues. Indeed, if the Latest WS Drafts were the “trimmed down” version of the original and revised drafts placed before the Registrar, it was unsurprising the Registrar dismissed the WS Amended Summons. But the Wei Parties’ efforts in “trimming down” the Weis’ draft 3^rd witness statements did not change the fundamental fact that they still retained features of repetition, opinion and argument that were inappropriate for supplemental witness statements as to fact.

91.  I agree with Mr Tong SC there should be an end to rounds of unnecessary witness statements that would only serve to burden the Actions. Mr Lam SC indicated if leave was granted for the Wei Parties to file/serve the Weis’ 3^rd witness statements as per the Latest WS Drafts, they would have no objection for Tung to file/serve witness statement in response. But unless the Wei Parties rid themselves of thinking it would be more advantageous to have the “last word” on paper or to elaborate on tangential/ repetitive issues or to run opinions/arguments in factual statements ahead of submissions at trial, there is no confidence that statement evidence would end with the 3^rd Round, and rather there is real risk of future application for further round of witness statements should Tung file/serve supplemental witness statement in reply to the Weis’ 3^rd witness statements (if allowed). Continued proliferation of unnecessary interlocutory applications and paper evidence would not be conducive to fair and efficient conduct of litigation under the post-CJR regime. In my view, the parties should focus their energies on dealing with the FBP allowed under the FBP Appeal and to bring the core issues of the case speedily towards trial.

92.  In the circumstances, I see no basis for granting leave for the Wei Parties to file/serve Wei’s and Yao’s 3^rd witness statements as per the Latest WS Drafts.  The WS Amended Appeal is dismissed. There is no reason why costs should not follow event, and I grant a costs order nisi that Million Decade shall pay costs of the WS Amended Appeal to Tung to be taxed if not agreed with certificate for two counsel. As agreed by the parties, the costs below in respect of the WS Amended Summons would not be disturbed.