DLA PIPER HONG KONG (a firm) v. TSOI CHIK SANG LAWRENCE

HCA 446/2023

[2025] HKCFI 2721

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 446 OF 2023

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D E C I S I O N

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INTRODUCTION

1.  This is the Defendant (“D”)’s appeal against the decision made by Master Jocelyn Leung (“the Master”)  on 27 March 2025, by which the Master allowed the Plaintiff (“P”)’s application under Order 14 for summary judgment (P’s O14 Application”)  and for an order striking out D’s counterclaim (“P’s Striking-out Application”).  It is trite that an appeal from a master’s decision to a judge in chambers is a de novo hearing.  Subject to the restriction in Order 58 rule 1(5), the hearing before me is an actual rehearing as if the application came before me for the first time.[1] Accordingly, I would deal with D’s appeal by considering P’s O14 Application and P’s Striking-out Application afresh, as if the same came before me for the first time.

2.  In this hearing, D also made an application (“D’s Leave Application”)  for leave to amend his Defence and Counterclaim (“D&C”)  in the manner as shown in a Draft Amended Defence and Counterclaim (“AD&C”)  placed before the Court.  At the beginning of the hearing, D offered an undertaking that a summons for leave to amend the D&C in the manner as shown in the AD&C (with the AD&C verified by a statement of truth signed by D personally annexed thereto)  would be filed and served within 7 days.  Upon this undertaking, I proceeded to hear D’s Leave Application, together with D’s appeal at the same time.  I told the parties that I would consider the proposed amendments in the AD&C on de bene esse basis.

3.  In the hearing before me, P is represented by Mr Thomas Wong, and D is represented by Mr Kwok Kam Kwan.

The parties’ respective cases

4.  P’s case is as follows:

(1)  On 29 March 2016, P, D, and Fonduet Industrial Limited (“Fonduet”), a company of which D was director, entered into an engagement letter for P to represent D and Fonduet in enforcement proceedings in respect of a judgment obtained by D in HCA 4341/2003 (“1^st Engagement Letter”).  As defined in §1 of the letter, “you” in the letter means D and Fonduet.  As per §2 of the letter, the scope of services as agreed between the parties is as follows:

“[P] will advise and represent you in relation to the enforcement proceedings that you intend to bring against Mr Cheng Hung Kit in respect of the judgment you obtained against Mr Cheung Hung Kit in HCA No 4341 of 2003 on 30 March 2004. This includes representing you in court hearings, answering any related or incidental queries as well as having conferences with you as necessary, general care and conduct and all incidental or related matters thereto.”

(2)  In the 1^st Engagement Letter, immediately above D’s signature, it is stated:

“Agreed and accepted for myself and on behalf of [Fonduet]. ……”

(3)  On 13 April 2017, P, D (in his personal capacity and in his capacity as the Administrator of the Estate of Choi Chong Ip), Fonduet, and Mr Choi Tsig Cheung (D’s brother)  (“Choi”)  entered into a further engagement letter (“2^nd Engagement Letter”, together with the 1^st Engagement Letter, “Engagement Letters”)  for P to represent D, Fonduet and Choi in an intended application to appoint receivers in respect of Hang Heung Cake Shop Company Limited (“HHCS”). As defined in §1 of the letter, “you” in the letter means Fonduet, D, D as the Administrator of the Estate of Choi Chong Ip, and Choi.  As per §2 of the letter, the scope of services as agreed between the parties is as follows:

“[P] will advise and represent you in relation to the intended Petition to be presented and also the intended application to appoint receivers in respect of [HHCS].”

(4)  In the 2^nd Engagement Letter, there are two signatures of D.  One signature is immediately above his name.  The other name is immediately above the description “[D] as the administrator of the Estate of Choi Chong Ip”.

(5)  Clause 4 of each of the Engagement Letters provided that:

“Subject to [P]’s professional obligations in this regard, [P] will assume that whoever provides [P] with instructions have authority to do so and that [P] can rely on any information provided by, engage in correspondence and discussions with and report to each and every such person. For this purpose, you specifically confirm to us that Mr Ian Yuanyuan Huang and Ms Pauline Su Wen Ang have authority to give instructions to [P] and that we can report to Mr Ian Yuanyuan Huang and Ms Pauline Su Wen Ang.”

(6)  Further, pursuant to Clause 4 of P’s Terms of Business (incorporated into each of the Engagement Letters), P was authorised to communicate with D “by email or through other electronic means”.

(7)  Services were rendered by P under the Engagement Letters, and 11 invoices (“the Invoices”)  were issued during the period from 16 June 2017 to 28 December 2017.  The Invoices were either passed by P to Ms Ang by hand during meetings in person, or sent to Ms Ang via her email addresses.

(8)  On 1 January 2018, a sum of HK$514,533 was paid to P in partial settlement of one invoice.

(9)  On 20 August 2018, Fonduet issued taxation proceedings in HCMP 1297/2018 in respect of the Invoices.  The Invoices were subsequently taxed by Master Tse.  A total amount of HK$6,824,951.91 (reduced from HK$6,993,260.24)  was allowed for the Invoices, excluding the costs of taxation and taxing fees.  On 20 July 2021, an allocatur certifying the allowed amount was issued.

(10)  Apart from the partial payment mentioned in the above, the Invoices remain unpaid.  P claims the amount of HK$6,310,418.91 (being the taxed amount of the Invoices less the partial payment)  (“the Outstanding Sum”)  plus interest against D, who is jointly and severally liable with Fonduet under the Engagement Letters.

5.  For the purpose of D’s appeal, I would set out D’s case as per the AD&C.  I have to say that some parts of the AD&C containing matters unrelated to P at all.  In my view, the points concerning P raised in the AD&C are as follows: 

(1)  D only signed the Engagement Letters in the capacity of a director of Fonduet.  D did not sign any of the Engagement Letters in any other capacity.

(2)  On or about 20 February 2017, Tardi Holdings Limited (“Tardai”, in which Wong Wai Leung (“Desmond”)  is and was a director at all material times)  and D entered into a Chinese Agreement (“the Agreement”).  The Agreement contained provisions about Tardi intending to cooperate with D to acquire the control and management of HHCS, Fonduet, and Hang Heung Hop Kee Investment Co Ltd (“HHHK”)  and to redeem the properties of HHHK at reasonable prices.

(3)  Tardi and Desmond would perform their promise as contained in Clause 6(i)  to (iv)  of the Agreement upon the satisfaction of a pre-condition that the shares of Fonduet be transferred to Tardi, and P be appointed as the legal representatives for Fonduet, HHCS and HHHK for carrying on or commencing the relevant litigations and handling related matters.

(4)  Tardi and Desmond were in total control in relation to introducing and arranging P as the solicitors for Fonduet, HHCS and HHHK.

(5)  In the Agreement, Tardi and Desmond represented and undertook to D that Tardi would be responsible and would pay for the legal costs and disbursements in relation to all litigations taken by HHCS and HHHK and Fonduet.  Relying upon the representation and undertaking made by Tardi and Desmond, D “signed the engagement letters (for himself and on behalf of Fonduet)  to appoint [P] as legal representatives in handling all these litigations”[2].

(6)  Before D signed the Engagement Letters, D emphasized to P, Tardi and Desmond that D did not have enough financial means to pay and would not pay the legal fees for the litigations.  Tardi, Desmond and P represented to D and assured D that Tardi and Desmond would pay the legal fees and D would not be personally liable for the fees.  Relying upon the representation and the assurance provided, D signed the Engagement Letters.

(7)  Before D signing the Engagement Letters, P did no duly interpret the contents of the Engagement Letters to D, and did not draw D’s attention to the part about D’s personal liability for the legal costs and disbursements payable by Fonduet, HHCS and HHHK for the litigations and related matters handled by P.

(8)  Each of the Engagement Letters is a champertous agreement and is illegal, and should not be enforced.

(a)  “Particulars of illegality” pleaded under AD&C, §13:

“The engagement letter was signed by [D] as director for Fonduet only. It would be illegal and against public policy to maintain that the engagement letter was signed by [D] in his personal capacity in that such an engagement was tantamount to one of champerty which was illegal and against public policy for [D], a non-party, to fund and maintain the litigations pursued by Fonduet.”

(b)  “Particulars of illegality and issues misled” pleaded in AD&C, §14(g):

“That the engagement letter signed by [D] for himself was in effect a champerty agreement to fund the litigation of Fonduet and was illegal and against public policy to be party to such an engagement.”

(9)  Some or all of the Invoices have not been delivered to D personally.

(10)  Tardi, Desmond and P were part of a conspiracy to defraud D, and P should be liable for misrepresentation and/or deceit.  On this basis, D seeks recission of the Engagement Letters and counterclaims for damages.  See AD&C, §24:

“[D] counterclaims against [P] together with Tardi and Desmond damages to be assessed for falsity and untruthfulness of the said representations and deceit and/or conspiracy to defraud pursuant to Section 3 of the Misrepresentation Ordinance or otherwise at law or in equity.”

(11)  This case should be consolidated with HCA 2061/2018, which concerns D’s various business disputes with Tardi and Desmond.

(12)  D is not bound by the Allocatur issued in HCMP 1297/2018, for D is not a party in that case and has not taken part in those proceedings.

P’s O14 Application

6.  The principles concerning an application for summary judgment have been summarized by DHCJ Kent Yee recently in United Overseas Bank Ltd v Total Enterprise Ltd[3], in which the learned judge said:

“23. The relevant principles for summary judgment are well-settled and the summary made by in DHCJ Lisa Wong SC (as she then was)  in Menfond Electronic Art & Computer Design Co Ltd v Wong Wang Tat Victor [2013] 2 HKC 259 at §61 is helpful:

(1)  It is for the defendant to show that there is an arguable defence or triable issue. In doing so, the defendant must condescend to particulars. The mere assertion in an affidavit of a given situation by the defendant does not, ipso facto, ground leave to defend.

(2)  The defendant must satisfy the court that his evidence is capable of being believed and that on the basis of such evidence, there is a fair or reasonable probability of the defendant having a real or bona fide defence.

(3)  The court does not isolate each factual issue and consider whether it is possible that the defendant’s story on that issue is credible. Rather, the court must look at the whole situation.

(4)  In assessing the credibility of the defendant’s factual case, while the court will not embark on a mini-trial on affidavit evidence, the court is not obliged to suspend its critical faculties and assume that the defendant’s evidence is accurate.

(5)  If having regard to inherent plausibility, inconsistency with contemporaneous documents and other compelling evidence, the defence is not credible, the court must say so. If the defendant’s defence is incredible in any material respect, it cannot be said that there is a fair or reasonable probability that the defendant has a real or bona fide defence.

24. It should be borne in mind that any alleged defence will not be taken at face value, but have its inherent probability considered and tested against the evidence, including contemporaneous documents, and whether there has been inconsistency in defence, or whether the defence is raised only recently despite an earlier opportunity to do so: see Time Rich 08 Limited v DBE (HK)  Limited [2018] HKCA 404 at §5.2 per Cheung JA.

25.  …… before looking at the defence, the plaintiff’s case must be scrutinised and if possibly genuine weaknesses are exposed in the plaintiff’s case, summary judgment should be refused: Wang Fang Fang v China Asia Group (HK)  Ltd [2022] HKCFI 2109 at §23 per Au-Yeung J (citing Yuen JA and Ribeiro JA (as Ribeiro PJ then was)).”

7.  In my view, P’s case is simple and straight forward.  Having examined P’s case pleaded in the Statement of Claim and P’s evidence in support of the O14 application, I am satisfied that P has raised a prima facie case for D to answer.

8.  Where a defendant has already filed a defence, in opposition to a summary judgment application, the defendant cannot rely on a case not pleaded in the defence.  This has been made clear by the Court of Appeal in Wang Shuai v Zhang Qiaohui[4]. In that case, Anthony Chan J (giving judgment of the Court of Appeal)  said:

“46. We agree with the Judge’s reasons for rejecting the Clause (C)  argument as set out in para 52 of the Decision :

‘52 First, in this action, the Defendant has never put forward a case that the Subject Warranties have not been breached as the Defendant’s obligation at completion is to “… deliver the Properties subject to the Tenancy Agreement” as stated in Clause (c):

(1)  Such a case has never been pleaded in the Defence filed by the Defendant herein. It is trite that where a defendant has already filed a Defence, it cannot, in opposition to a summary judgment application, rely on a case not pleaded in the Defence: see Hong Kong Topkey Limited v. Wintac (Hong Kong)  Limited [2023] HKCFI 1711, §§14-16, applying the decision of the Court of Appeal in Kaefer AG v. Winfield Marine Services Co Ltd [2022] HKCA 807, §§30-32.

……’”

9.  D has put forward the AD&C in draft.  As said in the above, I am prepared to adopt a benevolent approach by considering the matters pleaded in AD&C on de bene esse basis for the purpose of assessing whether D has raised any arguable defence to P’s claim.  However, in accordance with the principle affirmed by the Court of Appeal as set out in the above, even with this benevolent approach, matters not pleaded in the AD&C cannot be relied upon by D for the purpose of resisting P’s O14 application.

10.  In the hearing before me, Mr Kwok for D told me that for the purpose for resisting P’s O14 Application, he would rely upon only one point, ie the Invoices had never been delivered to D (“the alleged non-delivery point”).  The alleged non-delivery point as pleaded in §14(y)(4)  of the AD&C (originally §1(x)(4)  of the D&C)  is as follows:

“[P] only delivered [the Invoices] to Fonduet controlled by Tardi and Desmond but did not deliver [the Invoices] to [D].”

11.  In my view, the alleged non-delivery point is unarguable.

(1)  P has adduced evidence to show that all the Invoices had been delivered to Ms Ang.  I agree with Mr Wong for P that the scope of Clause 4 of each of the Engagement Letters is wide enough to make Ms Ang an authorised agent of D and it would be sufficient by delivering the Invoices to Ms Ang.[5]

(2)  I am also in agreement with Mr Wong that D’s admission that the Invoices had been delivered to Fonduet is fatal to the alleged non-delivery point.  The Engagement Letters are joint retainers under which D and Fonduet are jointly liable.  In the circumstances, P is entitled to bring an action against any jointly liable party so long as P has delivered its bills to one of them.[6] The allegation that Fonduet was not under D’s control when the Invoices were delivered to Fonduet, even if true, is neither here nor there.

12.  As the only point relied upon by D in resisting P’s O14 Application (ie the alleged non-delivery point)  is unarguable, P must be entitled to have summary judgment.

P’s Striking-our application

13.  It is trite that:

(1)  An allegation of fraud must be distinctly alleged, distinctly proved, and sufficiently particularized.[7]

(2)  A case based on conspiracy must contain the following elements[8]:

(a)  an agreement between two or more persons;

(b)  the means of carrying out the agreement, whether lawful or unlawful, must be set out;

(c)  the intention to injure the plaintiff, whether predominant (in the case of lawful means conspiracy)  or merely an intention to injure (in the case of an unlawful means conspiracy);

(d)  the acts that were carried out pursuant to the agreement and the stated intention; and

(e)  the damage caused to the plaintiff.

14.  In a striking-out application, the Court may strike out a claim if it is plain and obvious that the claimant’s case has no factual basis.[9]

15.  In my view, it is plain that D’s counterclaim is wholly unparticularized and unsubstantiated by any evidence.

(1)  As to alleged misrepresentation made by P to D that D would not be liable for the legal costs and disbursement under the Engagement Letters, the allegation is wholly unparticularised - who on behalf of P made the representation to D, when and how the representation was made.  All the essential particulars are absent in D’s case.  Further, there is no believable evidence from D in support of this allegation.

(2)  As to the alleged conspiracy, it is not known whether D is alleging “unlawful means conspiracy” or “lawful means conspiracy”.  In the former case, it is not known what the unlawful means are.  In the latter case, it is now known whether D is alleging that P had a predominant motive to injure.  There is also no plea and no evidence touching upon (a)  when the “conspiracy” was formed; (b)  the “overt acts” relied on by D; and (c)  what loss has D suffered.

(3)  As to the alleged deceit, it is not known (a)  what the representation was; (b)  when the representation was made; (c)  how the representation was made; (d)  why or how the representation was false; (e)  whether it is said that P knew about the falsity; and (f)  what loss D has suffered.

16.  D’s counterclaim ought to be struck out, for there is no reasonable cause of action pleaded in the counterclaim.  Further, I am of the view that the counterclaim is frivolous and/or vexatious.  I am also of the view that putting forward such a counterclaim is an abuse of the process of the Court.

D’s Leave Application

17.  Having considered the AD&C on de bene esse basis, for the reasons set out in the above, the matters pleaded therein do not constitute any arguable defence to P’s claim and could not salvage D’s counterclaim.  In other words, even if the amendments proposed in the AD&C are allowed, P would still be entitled to have summary judgment, and D’s counterclaim would still be struck out.  In the circumstances, there is no point to allow the proposed amendments.  I would dismiss D’s Leave Application.

Disposition

18.  I dismiss both D’s appeal and D’s Leave Application.

19.  Counsel have agreed that costs should follow the event.  The only difference between the parties is whether indemnity costs should be ordered.  The principles concerning indemnity costs are trite.[10] Merely pursuing a weak case would not justify indemnity costs.  However, to run a case that one knows, or ought to know, is doomed to fail on the facts and on the law, is conduct that is so unreasonable as to justify indemnity costs.  In my view, it is plain and obvious that D’s appeal (even with the proposed amendments in the AD&C)  is devoid of any merits and should never been brought.  It is a case that D knows or ought to know is doomed to fail.  Further, I am of the view that the counterclaim raised by D is an abuse of the process of this Court.  In the circumstances, indemnity costs are justified.  I order that costs of D’s appeal and D’s Leave Application be paid by D to P forthwith on an indemnity basis, and those costs be summarily assessed on paper.  There be leave to P to lodge and serve a bill of costs (limited to 3 pages)  within 7 days, and leave to D to lodge and serve a list of objections (limited to 3 pages)  within 7 days thereafter. 

20.  Lastly, it remains for me to thank both counsel for the assistance rendered to the Court.