LEE TAK (OR TUCK) YAN AND OTHERS v. THE PRUDENTIAL ENTERPRISE LIMITED AND OTHERS

HCA4225/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4225 OF 2001

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DECISION

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1.  There are two matters before the court.  They are:

(1)	The plaintiffs’ application for directions on their application for leave to discontinue the claim against the 6th defendant and for a determination of the question of costs between the plaintiffs and the 6th defendant, following the compromise of the plaintiffs’ claim against the 1st to 5th defendants.
(2)	The 6th defendant’s application under Order 24 rule 7 of Rules of the High Court for specific discovery of the global settlement agreement involving the plaintiffs and the other defendants.

Background

2.  These proceedings were commenced by the plaintiffs, as shareholders of the 1^st defendant (“PEL”), against the 2^ndto 5^th defendants who were directors of PEL.  On 10 June 2002, the 6^th defendant, who was PEL’s accountant, was added as a defendant. 

3.  The plaintiff’s complaint in these proceedings relates to the allotment of 1,357 shares in PEL to the 2^nd and 3^rd defendants in 1995, which the plaintiffs say was at gross or substantial undervalue.  The plaintiffs claim that the undervalue was the result of a conspiracy between the 2^nd to 5^th defendants as directors and the 6^th defendant as accountant of PEL.  In particular, the plaintiffs say that the 6^th defendant had given a dishonest valuation of the value of the PEL shares.  Using the 6^th defendant’s valuation, the 2^nd to 5^th defendants made misrepresentations to the shareholders regarding the fair and proper value of the PEL shares, and further procured resolutions to be passed at the EGM enabling the allotment to be made.

4.  The plaintiffs’ claim as pleaded is for:

(1) as against the 2^nd to 6^th defendants, damages for conspiracy;

(2) as against the 2^nd to 5^th defendants, damages for breach of fiduciary duty and of duty of care as directors and/or for deceit;

(3) as against the 2^nd and 3^rd defendants, damages in lieu of rescission of the allotment of shares in PEL; and

(4) as against the 6^th defendant, damages for negligence.

5.  On 19 August 2003, this action was set down for a three weeks’ trial to commence after the conclusions of the trials in HCCW 594 of 1999 and HCA 1240 of 2001, which are related actions.  The former is a petition brought by the plaintiffs for the winding-up of PEL.  The latter is a derivative action against the directors of PEL in relation to other alleged misconduct.  The trial of the petition commenced in November 2003.

6.  In the course of the trial of the petition, the plaintiffs and the 2^nd to 5^th defendants herein reached a global settlement agreement over this action and the two actions mentioned above and also other litigations.  On 6 February 2004, as a result of the global settlement agreement, the plaintiffs issued in these proceedings a summons applying for, inter alia, (1) a dismissal of their claim against the 1^st to 5^th defendants, and (2) leave to discontinue their claim against the 6^th defendant save as to their claim for costs against the 6^th defendant.

7.  Prior to making the application, the plaintiffs’ solicitors had by letter dated 19 January 2004 indicated to the solicitors of the 6^th defendant as follows:

“Upon the execution of the formal Settlement Agreement which, … we will be discontinuing all three sets of proceedings against all parties save for Mr Patrick Lee and your clients.

We will shortly be informing Mr Patrick Lee that, upon the happening of the events referred to in the preceding paragraph, we propose to discontinue all three sets of proceedings against him with no order as to costs.

We propose that the same terms be adopted for settling our outstanding claim as against your clients in HCA 4225/01, viz. that, upon the happening of the events referred to two paragraphs above, the action be discontinued against your clients with no order as to costs.

Please let us know … whether the above terms are acceptable to your clients, failing which, we will proceed against your clients for the costs of HCA 4225/01 under the principles laid down by the Court of Appeal in Ta Tung China & Arts Ltd v. Fontana Restaurant Ltd [1999] 1 HKLRD 404.

We emphasis that we are not, at this stage, proposing to seek costs against your clients, but if your clients are not amenable to an outcome whereby both sides drop hands with no order as to costs identical to the position adopted by all the other parties, we will, proceed against your clients for costs in the manner aforesaid … ” 

Mr Patrick Lee is the 3^rd defendant and he was at the time acting in person.  The three sets of proceedings mentioned in the letter are those referred to in paragraph 5 above.

8.  The plaintiffs’ proposal did not find favour with the 6^th defendant, which led to the plaintiff’s summons dated 6 February 2004.  At the hearing of the summons on 10 February 2004, an order was made dismissing the plaintiffs’ claim against the 1^st to 5^th defendants and dealing with the costs between them and the 1^st Third Party.  The plaintiffs’ application for leave to discontinue the claim against the 6^th defendant and the question of costs between them were adjourned for argument.  The Order also provides that the plaintiffs and the 6^th defendant should attempt to agree on the appropriate directions for that purpose and failing an agreement, a date is to be fixed for hearing of directions.

9.  Despite exchange of correspondence between the respective solicitors, the plaintiffs and the 6^th defendant have not been able to agree on the appropriate directions.  The matter was therefore restored for hearing on the appropriate directions.

10.  On 5 October 2004, the 6^th defendant issued a summons applying for specific discovery of the global settlement agreement on the basis that it is relevant to the dispute over costs between the plaintiffs and the 6^th defendant.

Directions on determination of costs entitlement

11.  The plaintiffs’ position is that as a result of the global settlement they reached with the 2^nd to 5^th defendants, they no longer need to pursue their claim for damages against the 6^th defendant.  They therefore seek to discontinue their claim against the 6^th defendant, save the claim for costs.  The plaintiffs ask that there be a trial on the claim on costs and seek directions for the trial in terms of the draft order they had prepared.

12.   The 6^th defendant while does not oppose to discontinuance, seeks costs of the action against the plaintiffs.  They oppose holding a trial to determine the costs entitlement.  The 6^th defendant takes the view that the matter falls to be governed by the principles applicable to discontinuance of action under Order 21 rule 3 of Rules of the High Court, and that the general principle is for a plaintiff to pay costs to the defendant if the action is discontinued.  The 6^th defendant asks that directions be given for filing and service of affidavits on the circumstances leading to the discontinuance of the action and on matters which the plaintiffs say justify displacing the general principle governing costs.

The preliminary point

13.  At the hearing on directions, the 6^th defendant further raised a preliminary point as to the plaintiffs’ entitlement to continue the action against the 6^th defendant.  It is said that, with the dismissal of the claim against PEL, these proceedings, being in the nature of a derivative action, can no longer proceed and fall to be dismissed forthwith.  Additionally, it is said that the plaintiffs, except the 6^th plaintiff, had subsequent to the making of the global settlement agreement, ceased to be shareholders of PEL such that the action can no longer be maintained at their instance.  The 6^th defendant also says that it is possible that the 6^th plaintiff may stand in similar situation as the other plaintiffs.   It is in connection with this issue that the 6^th defendant applies for specific discovery, to which I shall return later.  In the 6^th defendant’s submission, the plaintiffs’ action ought to be dismissed.

14.  It is convenient to deal with the preliminary point raised by the 6^th defendant before dealing with the mode for determining the parties’ costs entitlement.

15.  On the first limb of the argument, it is to be noted that although the plaintiffs’ claim against the 2^nd to 6^th defendants for damages in breach of directors’ duties and in conspiracy is derivative in nature, their claim against the 6^th defendant for damages in negligence is not.  The dismissal of PEL from the action does not necessarily mean that the claim against the 6^th defendant cannot be maintained.

16.  Further, the plaintiffs’ claim of damages against the 6^th defendant is not reflective of the loss to PEL, but is parallel to the company’s loss.  The crux of the plaintiffs’ claim is that the allotment at undervalue had resulted in the 2^nd defendant getting more shares than he would be entitled to.  Consequently, PEL suffered loss in the form of underpayment.  At the same time, the plaintiffs as individuals also suffered loss in that the allotted shares had enabled the 2^nd defendant to acquire a controlling majority in PEL and in turn to practise oppression and other wrongs on the plaintiffs: see paragraph 50(1) and (2) of the Re-Amended Statement of Claim.  As the plaintiffs’ loss and PEL’s loss do not overlap, it is possible for the plaintiffs to join their personal claim with the derivative claim in this action: see Prudential Assurance Co Ltd v. Newman Industries Ltd (No.2) [1981] Ch 257, 303-4, 328 per Vinelott J, Johnson v. Gore Wood & Co [2002] 2 AC 1 and Palmer’s Company Law, paras.8.810 & 8.810.1.

17.  As to the second limb of the preliminary point, given that the plaintiffs are no longer pursuing their claim for damages against the 6^th defendant, the fact that they, except the 6^th plaintiffs, are no longer registered as shareholders of PEL, is irrelevant.   Their claim for costs is not dependent upon their being shareholders of PEL.

The mode for determining costs entitlement

18.  Returning to the core issue of what is the mode for determining the costs entitlement of the parties, in Ta Tung China & Arts Ltd v. Fontana Restaurant Ltd, op cit. at 407B-D, Mortimer VP pointed out that:

“… there are two possible ways in which a party can have the matter of costs determined if the liability issues in the action have become academic. First, he may apply for leave to discontinue the action and ask for the costs to be determined.  In those circumstances, although it would not be impossible for the plaintiff to ask for an order for the payment of the costs by the party against whom he is discontinuing, it undoubtedly would be most usual.  For my part, I have never come across such a case.

The second way in which this issue can be resolved is for the parties to go to trial and to have the costs dealt with after trial.  Of course, the issues on such a trial would be extremely limited.”

19.  In the same case (at 407G-H), Godfrey JA also said that:

“Where a plaintiff seeks to recover costs against a defendant in an action in which the substantive issues have been determined in one way or another before the trial, the only way which the plaintiff can recover his costs (if the defendant refuses to pay him) is to bring the action to trial for the purpose of doing so.”

20.  These principles were applied in Re Super Deluxe International Limited (unreported) HCCW 186 of 2001.  In that case, the parties had reached settlement agreement on the winding-up petition.  As a result, they made a joint application to dismiss the petition, save in respect of the relief for the costs of the proceedings.  On the question of the costs of the petition, the parties accepted that even though the other prayers for relief have become unnecessary for adjudication, it is still necessary for the petitioner to bring the proceedings for hearing for the purpose of obtaining costs: at para. 6.   In acceding to the respondents’ application to receive evidence and to rule on the petitioner’s entitlement to the reliefs sought for the purpose of ruling on the costs liability, Kwan J held that it is up to the parties to put forward such evidence as is helpful to their case for the purpose of seeking adjudication on nay matter, and if the evidence put forward were such that the court would need to resolve factual disputes with the benefit of cross-examination, then that exercise would have to be undertaken: at para.12.  

21.  The 6^th defendant submits that whether to adopt the first or second of the two courses referred to in Mortimer VP’s judgment in Fontana RestaurantLtd case depends on the circumstances of the case in question.  It is said that the first course is appropriate if the court is able to form a view on the merits of the action or application without the matter proceeding to any form of trial, and in other circumstances, the second course may be appropriate.  I agree that generally speaking, the choice between the two courses depends on the facts and circumstances of the case.   In the present case, it is not really disputed that a critical factor in deciding who should be paid the costs of the action, will be the plaintiffs’ entitlement in bringing the claim against the 6^th defendant and their entitlement to the reliefs sought against the 6^th defendant.  Admittedly, this involves disputes both as to facts and also expert opinions, which plainly cannot be resolved on affidavits.  A trial to determine the plaintiffs’ entitlements to the reliefs sought for the purpose of ruling on the costs liability is therefore appropriate.

22.  The main thrust of the 6^th defendant’s argument in opposing a trial on costs is that the plaintiff had opted and applied for the discontinuation of the action, which is inconsistent with an insistence on trial.  In my view, a distinction has to be drawn between discontinuing the whole action and a discontinuance of the claim save in relation to the claim for costs, which is what the plaintiffs are seeking.

23.  In Ch’ng Poh v. Cheng, Yeung & Co [1998] 2HKLRD 571,the plaintiff issued an originating summon seeking an injunction restraining the defendants from acting as solicitors for another party in an action against the plaintiff on the ground that they had acted for the plaintiff earlier in related matters.  On the same date as the originating summons was issued, the other party withdrew its instruction to the defendants.  The originating summons had therefore become academic, but there were unresolved question of costs.  The judge who heard the originating summons held that it was wrong to entertain the summons just for costs.  He therefore dismissed the summons.  In allowing the appeal, Nazareth VP (at 576H) held that while “discontinuance may be proper procedure and practice in some cases”, there is “nothing that would have precluded the judge from refusing the injunction sought by the summons while nevertheless dealing with the matter of costs upon a notional or actual determination of the issues raised by the summons”.   It is also said that “[n]otwithstanding that the questions in proceedings may become academic, the costs incurred may suffice to sustain the proceedings at any rate for the purpose of having those costs determined”: at 577B.

24.  The case therefore shows that it is permissible for the plaintiffs to abandon or discontinue their claim for damages against the 6^th defendant while proceeding to trial on their claim for costs.   The taking out of the application to discontinue their claim, save for the claim for costs, will not prevent the plaintiffs from proceeding to trial for the purpose of determining the costs liability.  Even if, as the 6^th defendant contends, it was procedurally wrong for the plaintiffs to have applied to discontinue their claim, it is open to the court to refuse the application and direct for a trial on the costs liability.   

25.  In short, I take the view that there should be a trial on the plaintiffs’ claim for costs against the 6^th defendant.  Directions along the line of the terms set out in the draft order are appropriate.  As the discussions between the parties hitherto were focusing on the mode for determining the costs liability and not on the directions for the trial on costs, I will invite the parties to give further thoughts on the witnesses to be called and the estimated duration of the trial.  The detailed orders are set out at the concluding part of this Decision.

The specific discovery application

26.  The main dispute over the 6^th defendant’s application for specific discovery is the relevance of the global settlement agreement.  The 6^th defendant says that the agreement is relevant to whether the plaintiffs’ claim against the 6^th defendant has become academic, in which case it is said that the 6^th defendant is, as a general rule, entitled to his costs.  Given the discussions in the preceding section and conclusion that there should be a trial on the costs liability, it is not necessary to deal further with this argument.

27.  The 6^th defendant says that the global settlement agreement is also relevant to the costs issue between the plaintiffs and them in that:

(1)	The plaintiffs’ claim in conspiracy against the 2nd to 6th defendants is a claim against joint tortfeasors.  Accordingly, the release of the 2nd to 5th defendants will also release the 6th defendant.
(2)	The plaintiffs’ claim against the 6th defendant in negligence is in respect of the same damage as the claim in conspiracy, such that the 6th defendant is sued as several tortfeasor with the other defendants.  In such a case, if  the plaintiffs’ claim has been satisfied by the 2nd to 5th defendants, being some of the several tortfeasors, then the plaintiff’s negligence claim against the 6th defendant cannot be sustained.
(3)	If the claims in conspiracy and in negligence is unmaintainable, the plaintiffs’ action stands to be dismissed and the action cannot proceed to trial.
(4)	The terms of the global settlement agreement may result in the plaintiffs being paid their costs of this action or be indemnified by the 2nd defendant.   The terms may also be such that the plaintiffs are pursuing the 6th defendant at the expense and/or for the benefit of the 2nd defendant, in which case questions of maintenance and/or champerty may arise.

28.  On points (1) to (3), they are irrelevant in that the plaintiffs are no longer pursuing their claim for damages against the defendant.  It is also irrelevant that the plaintiffs may not be able to maintain their action now.  The important question for the determination of costs is whether the plaintiffs’ claim against the 6^th defendant was maintainable at the time it was brought.  As to point (4), it is speculative and there is nothing to support the assumption made by the 6^th defendant.  On the contrary, the Order of 10 February 2004 provides that there is no order as to costs between the plaintiffs and the 1^st, 2^nd and 4^th defendants.   There is also no question of champerty and/or maintenance since the 2^nd defendant is also a shareholder of PEL.

29.  In my view, the 6^th defendant has not demonstrated that the global settlement agreement is relevant to any dispute or cause before the court.   Additionally, the plaintiffs had indicated that they are under obligations of confidence in respect of the settlement agreement.  I accept the 6^th defendant had not made out a case justifying compelling the plaintiffs to breach their obligation of confidence.  In the circumstances, the 6^th defendant’s summons for discovery falls to be dismissed.  

Conclusion

30.  For the above reasons, I make the following orders:

(1)	The action is to be listed for trial of the plaintiffs’ claim for costs against the 6th defendant.
(2)	Within 14 days from the handing down of this Decision, the plaintiffs and the 6th defendant do file and serve a list of witnesses and experts to be called at the trial.
(3)	For the purpose of estimating the length of the trial, the plaintiffs and the 6th defendant do within 7 days thereafter, file and serve an estimate of the time required for the opening and closing submissions and the examinations of each of the witnesses and experts to be called.
(4)	No later than 28 days before the commencement of trial, the plaintiffs and the 6th defendant to file an agreed list of issues; failing agreement, the plaintiffs and the 6th defendant are to exchange and file their respective lists of issues no later than 21 days before commencement of the trial.
(5)	No later than  14 days before commencement of the trial, the plaintiffs to lodge with the court and serve on the 6th defendant the written opening and to indicate what part of counsel’s opening in HCCW594 of 1999 is to be incorporated as the opening in this action.
(6)	T here be liberty to apply for further directions on the trial.
(7)	The 6th defendant’s summons dated 5 October 2004 is dismissed.
(8)	There is an order nisi that:
(a)	The costs of the application for directions on the determination of costs be the plaintiffs’ costs in the trial on costs.
(b)	The plaintiffs’ costs of the summons for specific discovery be paid by the 6th defendant in any event.

Mr Daniel Fung SC and Mr William Wong instructed by Messrs Liu Choi & Chan for the plaintiffs.

Mr Mark Strachan instructed by Messrs Richards Butler for the 6^th defendant.

HCCW594/1999, HCA1240/2001
and HCA4225/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO.594 OF 1999

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(HEARD TOGETHER)

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D E C I S I O N

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1. On 31 October 2003, the 6th defendant in HCA No.4225 of 2001 ("D6") issued a summons applying for further extensions of time for the exchange of witness statements and expert reports. At about the same time, D6 also through its solicitors indicated to the other parties in these three sets of proceedings that it had decided not to take part in the trial of the Petition in HCCW No.594 of 1999, and would require witnesses to be recalled at the trial of HCA No.4225 of 2001, which is to be heard after the conclusions of the trials of the Petition and of HCA No.1240 of 2001. This is a hearing for further directions on the conduct of these proceedings.

2. For my part, the starting point is to preserve the trial date that was fixed a long while ago. It is also my starting point to preserve the integrity of court directions and orders, even though they relate only to matters of conduct of the case, as opposed to matters of determination of substantive issues. Unless there are cogent and very good reasons, the direction for sequential trial and the date of 17 November 2003 for the commencement of the first trial should be taken as immovable milestones in case management terms. Other things therefore, would have to be worked around those immovable milestones.

3. Against these observations, I wish to make a couple of responses to the submissions made, which I hope would help to focus all parties' minds in the further conduct of these three sets of proceedings. Before that, I must point out that any case management or directions will only be of value and serve useful purposes if they are met with parties' willingness and readiness to co-operate with a view to bringing the litigation to a speedy, efficient and expeditious resolution.

4. Firstly, on the question of recalling witnesses at the subsequent trials, this is, of course, a possibility that cannot be ruled out by an order for sequential trials. But that does not mean that witnesses are to be recalled irrespective of need. It is important to note that when the order for sequential trial was given in August 2003, we were proceeding on the basis of a clear indication from the D6 that they would participate fully in the trial of the Petition. It is also necessary to point out that whilst there is a possibility of witnesses being recalled, that possibility is not to be taken as an opportunity for any unnecessary or tactical manoeuvres. In my view, the savings of time and costs remain a primary objective of an order for sequential trial.

5. The second matter I wish to respond to is the submissions regarding when the judgment on the Petition would be handed down. It appears from submissions I heard in these two afternoons that counsel considered this to have significant impact on the case management of these three sets of proceedings, at least with regard to the Blue Pool Road action in HCA No.4225 of 2001.

6. Sequential trials means each trial would be adjudicated on the basis of the issues pleaded in that case and the evidence adduced in that case. The court always endeavours to render a judgment expeditiously, but whether the judgment on the Petition is to be handed down before, during or after the third trial, meaning the Blue Pool Road action trial, the judgment on the Petition can only be an adjudication of the dispute and issues in the winding-up proceedings.

7. As to the concern on the uncertainty of when that judgment is available, the so-called uncertainty has always been there. The Decision of 19 August 2003 is not premised upon judgment on the Petition being delivered before or during or after the commencement of the Blue Pool Road trial.

8. The third matter that I wish to comment upon is the participation of the D6 in the trial of the Petition. Leave has been given to the D6 as well as the 2nd third party in HCA No.4225 of 2001 to participate in the trial of the petition. Whether that is to be taken up and to what extent is, of course, entirely a matter for those parties. The court cannot compel them to take any part at the trial of the Petition. However, any decision whether to take part or not to take part, if it should ever result in unnecessary increase in costs and length of the subsequent trial, then the court may review those and bear them in mind, and may well visit the unnecessary steps with costs consequences. And it is for the parties to bear these matters in mind when they decide to take whatever course.

9. With these remarks, I turn to deal with the application for extension of time by D6. As I understand it, three matters has been put forward as recent developments necessitating a third enlargement of time for the exchange of witness statements and the expert report. The first matter is about when judgment on the Petition will be handed down, which I have already dealt with. The second matter is the decision not to participate in the trial of the Petition. That I have also dealt with.

10. The third, and what seems to me to be a crucial point, is this. It is said that the advice of Mr Strachan QC with regard to the expert report and the lay witness evidence have led to a need for more time for their preparations. For my part, I have no reason to doubt what counsel presented to the court and I am quite prepared to accept that more preparations and, in turn, more time is required as a result of counsel's advice. But that, in my view, is not a recent development that cannot have been avoided. Quite the contrary, the course of events since August 2001, and in particular, the stance and position taken by D6 on various directions hearings and on what directions to be given for the preparations of the trials, suggest that this development is a result of late preparations or perhaps late instructions, as counsel has suggested.

11. In my Decision of 19 August 2003, I did say that the D6 could not be said to be guilty of delaying the progress of the preparations of the trial on the basis of the materials then before the court. It was after that Decision that this court has the benefit of being told about the actual progress of D6's preparation with regard to obtaining witness statements and expert reports. I also recalled commenting in that Decision that it was unlikely that D6 would be ready to face a full trial on 17 November 2003. Although the submission I had received on that occasion on behalf of D6 is that it matters not whether there be a sequential or combined trial, the order for sequential trial was made as I took the view that sequential trials would alleviate the pressure D6 would come under as opposed to being ready for a full trial in November 2003.

12. Notwithstanding what I have said, I do recognize that the court does not exist to punish the parties. To the extent that D6 now says it is not ready and genuinely require more time, the court would, without affecting the immovable milestones that I have identified, make provisions for that. D6 has offered to serve the draft witness statements and expert reports by 10 November and to have the final versions of those ready by 18 December. I am prepared to accept this two-stage approach, rather than to shut out D6's completely, notwithstanding I had said on the last occasion that 7 November 2003 was meant to be the final extension. I believe there is really no objection to the drafts coming in on 10 November 2003. What may have caused problems is when the final versions of the expert reports and the witness statements should be made available. In my view, if they were deferred to 18 December 2003, it would cause problems to the trial of the Petition.

13. It is suggested to have all the expert evidence heard in one go and towards the end of the trial. There may be some attractions in that, but this would have the undesirable feature of the factual evidence being led on behalf of the respondents before the petitioners' case is closed. That is an unusual approach and should only be adopted if it is appropriate. I have some reservations as to whether this is an appropriate case to do so. At any rate, both leading counsel for the petitioners and leading counsel for the 1st respondent do not see this as an appropriate course.

14. It is said that D6's expert requires the time up to 18 December to have the final versions ready. I tend to think, however, that people can work faster if they are placed under time constraints. I also bear in mind that this state of play is a matter that could have been avoided if the preparations had been gone in with a degree of intensity appropriate to the complexity of the case at an earlier stage. I would say that there should be a four weeks period after the drafts were served to have the final versions ready. That effectively, means the final witness statements and expert reports should be ready by 8 December 2003.

15. I note Mr Fung's point that the petitioner's team would like to see the drafts before they finalize the Opening. As I have said, I am prepared to accommodate these matters. I would have the date of service of the petitioners' Opening deferred to 12 November 2003. At the risk of contradicting my base line that the trial date is an immovable milestone, I would defer the first day of the trial from 17 to 19 November 2003, just to give the respondents a bit more time to study the Opening before the trial starts. A short delay of two days is something that we can cope with.

16. On the question of the costs of this hearing, it is best answered by asking why do we have to assemble for these two afternoons. One of the reasons is, of course, D6's summons for time. The other is the indication from D6 with regard to its difficulties in meeting the initial timetable and its reservations about taking an active role in the trial of the Petition. I note, of course, that realistic proposals have been put forward today by Mr Strachan QC on behalf of D6. I would have thought that had these proposals come about earlier, we might not need the hearing or certainly not a hearing of this duration.

17. On D6's summons, there's no reason why the plaintiffs should not get the costs against the D6 in any event. That, in fact, is the proposal in the summons itself. Otherwise, as to the costs of yesterday afternoon commencing 3 p.m. onwards and of this afternoon, if one analyses why we have to be here and what effectively are we doing during these two sessions, then the only conclusions must be for all the other parties to have their costs being met by D6 in any event. Hence I order that the costs of the hearings on the afternoons of 3 and 4 November 2003 be to the plaintiffs, the 2nd to 5th defendants, and the 2nd third party in HCA No.4225 of 2001 against D6 in any event.

Representation:

Mr Daniel Fung, SC, Mr Patrick Fung, SC and Mr William Wong, instructed by Messrs Liu, Choi & Chan, for the Petitioners in HCCW594/1999, the Plaintiffs in HCA1240/2001 and HCA4225/2001

Mr Benjamin Yu, SC and Mr Russell Coleman, instructed by Messrs Jones Day, for the 1st, 6th and 7th Respondents in HCCW594/1999, the 2nd, 6th, and 7th Defendants in HCA1240/2001, and the 2nd, 3rd and 5th Defendants in HCA4225/2001

Messrs Herbert Smith, for the 2nd Respondent in HCCW594/1999, the 1st Defendant in HCA1240/2001 and HCA4225/2001, not appearing

The 3rd Respondent in HCCW594/1999 and the 3rd Defendant in HCA1240/2001, appeared in person

Mr Ronny F.H. Wong, SC, instructed by Messrs Deacons, for the 4th Respondent in HCCW594/1999 and the 4th Defendant in HCA1240/2001 and HCA4225/2001

Official Receiver, not appearing

Mr Mark Strachan, QC and Mr Anthony Chan, SC, instructed by

Messrs Richards Butler, for the 6th Defendant in HCA4225/2001

Mr M. George of Messrs Wilkinson & Grist, for the 3rd Third Party in HCA4225/2001

HCA4225/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.4225 OF 2001

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D E C I S I O N

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1. By summons filed on 14 October 2003, the 6th defendant applied to set aside the Order dated 10 June 2002 joining it to these proceedings, and for an order that it be removed from these proceedings on the ground that the limitation period for the plaintiffs' cause of action against it had expired when the plaintiffs applied for joinder.

2. The summons was initially returnable on 30 September 2003, when by consent, it was adjourned for argument. Although it was then fixed for argument on 3 November 2003, there was no time to reach the summons on that day and it was further adjourned to today. By then the plaintiffs and the 6th defendant has agreed that "the date upon which the plaintiffs commenced proceedings against the 6th defendant is deemed to be 12 June 2002 for all purposes in connection with the Limitation Ordinance".

3. On that basis, it was agreed between the plaintiffs and the 6th defendant that there was no need to proceed further with the summons. The outstanding issue to be resolved is the costs of the application. Both the plaintiffs and the 6th defendant seek costs against the other side.

4. Following the approach suggested by Mr Chan SC for the 6th defendant, the starting point is that costs should follow event. What is of essence then is to establish what is the event in question.

5. Apparently by the summons, the 6th defendant is seeking to have it removed from these proceedings through the setting aside of the order for joinder made in June 2002. At the same time, it is acknowledged that the plaintiffs could have issued fresh proceeding against the 6th defendant and consolidate it with the present case. Accordingly, it is said that the underlining purpose is to invite the plaintiffs to consider issuing fresh action and for the fresh action to be consolidated with the present action. Ultimately the purpose is to preserve the 6th defendant's position on the limitation issue.

6. It is submitted that the 6th defendant had prior to issuing the summons, endeavoured to resolve the matter amicably. It is pointed out that the 6th defendant's solicitors had by letter of 3 October 2003, suggested to adopt 17 October 2003 as the notional commencement date of the plaintiffs' fresh action against the 6th defendant so that for limitation purposes, that would be the date on which time is deemed to have stopped running. What has been achieved by the parties' agreement is that for limitation purposes, 12 June 2002 would be taken to be the relevant date. With the agreement, the joinder order remains intact and the 6th defendant continues to be a party in these proceedings.

7. What then does the 6th defendant achieve out of the application? It is said what is obtained is a clarification that it will not be deprived of a limitation defence notwithstanding the joinder order and the effect of section 35 of the Limitation Ordinance. In testing this proposition, the immediate question that springs to one's mind is : Is the 6th defendant prevented from running the limitation defence at the trial if the plaintiffs were to fail on the deliberate concealment point? I would have thought that the answer was "No" because the issue of deliberate concealment, which is a material element of the plaintiffs' claim against the 6th defendant, is a point to be determined at the trial : Hong Kong Civil Procedure 2002, Vol. 2, paragraph G1/26/4, which is quite apart from the effect of section 35 of the Limitation Ordinance. I note too that the Reply of the plaintiffs never pleads that by virtue of section 35, the limitation defence is no longer open to the 6th defendant.

8. Be that as it may, I am prepared to assume that the 6th defendant for prudence or cautions sake would wish to secure a clarification with regard to its position under section 35 of the Limitation Ordinance. But the question remains whether it is necessary for the 6th defendant to issue the summons and make the present application? As I understand it, the 6th defendant's argument is that there had been a lack of response from the plaintiffs' solicitors to the letter dated 3 October 2003. But if one were to read that letter it is very difficult to understand what it is aiming at, particularly what the plaintiffs were asked to confirm by paragraph 7. On a reasonable comprehension, I am not persuaded that it conveys the 6th defendant's intention, namely, to secure a clarification that section 35 of the Limitation Ordinance will not operate as a bar to its limitation defence. There is also the point that the date proposed under paragraph 7 of the letter was 17 October 2003 which is not the presently agreed date of 12 June 2002.

9. Secondly, the wordings of the summons are misleading because it suggests that the joinder order should be set aside for the reason that the limitation period had expired by the time the joinder application was made. But effectively what the 6th defendant is saying is that the joinder order should not have been made because it would confer a procedural advantage on the plaintiffs by reason of section 35 of the Limitation Ordinance. The focus and the essence of the intended application are not reflected by the wordings of the summons.

10. On that basis, it would seem to me that although the plaintiffs' solicitors had not responded to the letter of 3 October 2003 in the way the 6th defendant had wanted, the blame does not lie at the door of the plaintiffs. It is unfortunate that the letter was not set out in clear and succinct terms and did not convey what the 6th defendant's objective. The wordings of the summons do not ease the problem.

11. For these reasons, there is no reason why the plaintiffs should be put to the burden of paying the costs of the 6th defendant for this application. On the contrary, the costs could have been saved had the position or the request of the 6th defendant been made clearly either in correspondence or by its summons. In the circumstances, the plaintiffs ought to be entitled to the costs of this application, including the costs today.

12. The order I make on the summons is that there be no order on the summons save that the costs of the application be to the plaintiffs against the 6th defendant in any event.

Representation:

Mr Daniel Fung, SC, Mr Patrick Fung, SC & Mr William Wong,instructed by Messrs Liu, Choi & Chan, for the Plaintiffs

Mr Anthony Chan, SC, instructed by Messrs Richards Butler,for the 6th Defendant

HCCW 594/1999

HCA1240/2001

ACTION NO.1240 OF 2001

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BETWEEN

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D E C I S I O N

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1. There are before the court three summonses (“the three Summonses”) issued by the 1^st, 6^th and 7^th respondents in HCCW594/1999 (“the Winding‑Up Petition”), the 2^nd, 6^th and 7^th defendants in HCA1240/2001 (“the Interstitial Action”) and the 2^nd and 5^th defendants in HCA4225/2001 (“the BPR Action”), each applying for an order under Order 4, rule 9, Rules of the High Court that the three actions be tried together or one after another.  The summonses were previously adjourned at the request of the 6^th defendant in the BPR Action, Andrew Ma & Company.  The summonses are heard together with the pre-trial review of the Winding-Up Petition, the trial of which has been scheduled to commence on 17 November 2003 and to last for 60 days.

Order 4, rule 9 application

2. The Prudential Enterprise, Limited (“the Company”), who is a nominal party in the three actions, takes no position on the application.  The represented parties in the three actions agree in principle to an Order 4, rule 9 order, but disagree as to whether the three actions should be tried together or sequentially. 

3. For the applying parties, they ask for all the actions to be tried together.  Mr Samathur Lee, who is the 4^th respondent in the Winding‑Up Petition and the 4^th defendants in the other two actions, takes the same position.  The petitioners and plaintiffs in the three actions, on the other hand, ask that the actions be tried one after another.  Specifically, they ask that the Interstitial Action be tried after the conclusion of the Winding‑Up Petition, to be followed upon its conclusion, by the BPR Action, with gaps of three and two weeks in between.

4. Andrew Ma & Company is neutral on whether the actions should be tried together or sequentially.  It has however expressed reservations as to whether it can prepare in time for a full trial in November this year.  In its solicitors’ letter dated 5 August 2003 to the solicitors for the represented parties, it was indicated that it would amend its defence and that it was also considering an application on the ground that it was improperly joined to the BPR Action.  It also pointed out that discovery and exchange of witness statements and expert reports in the BPR Action have yet to be done.  The letter suggested adjourning the application to after 10 September to await the return of leading counsel to Hong Kong.

5. The 3^rd third party in the BPR Action, SH Leung & Co., agrees that the application should be adjourned to mid-September to enable the parties to have some agreement as to the further conduct of the proceedings.  Its solicitors also indicated in correspondence that it was considering making a striking out application.

6. The unrepresented parties in the three actions have not indicated their views on the application.

7. It is not in dispute that an order under Order 4, rule 9 is desirable.  Clearly, there is substantial overlapping of issues between the Winding‑Up Petition and the Interstitial Action, and between the Winding-Up Petition and the BPR Action, and to a lesser extent between the two writ actions.  Although the parties are not exactly the same, the 8^th to 10^th defendants in the Interstitial Action, who are not involved in the other two actions, had not entered appearances.  Andrew Ma & Company and SH Leung & Co. are the only parties who are involved in only one of the three actions.  Given the substantial overlapping of issues and parties, it is desirable that the disputes in the three actions be resolved on one occasion and by the same judge.  But as to whether the three actions should be tried together or one after another, the matter has to be approached from the perspective of case management rather than principles of law.

8. In making case management decisions, the court is primarily concerned with savings of time and costs, and also with the avoidance of unnecessary delay, undue complexity and overloading of issues.  In the present context, the main merit of having the three actions tried together is that the common witnesses will be saved the inconvenience of having to testify on more than one occasion and to repeat some of their evidence.  This is of particular significance to some of the petitioners and plaintiffs who are resident abroad and also to some of the respondents and defendants, who are busy businessmen and professionals.  The same will apply to some of the common experts.

9. That said, however, I am not confident that trying the three actions together necessarily achieve a great deal of savings in time and costs.  Although there is substantial overlapping of issues between the actions, the breadth and depth of the evidence of the common witnesses, both factual and expert, do vary.  Take, for example, the Blue Pool Road settlement and the subsequent allotment of shares in the Company, while they are common issues in the Winding‑Up Petition and the BPR Action, the latter has a wider dimension in that there are also issue of conspiracy and claim of negligence involving Andrew Ma & Company.  A combined trial will mean that these extended issues will also need to be covered when the witnesses testify.

10. On the other hand, the inconvenience of having witnesses repeating their evidence in different trials can be minimized through the adoption or admission in the subsequent trials of their evidence given on the earlier occasion.

11. In my view, a combined trial of the three actions suffers from two drawbacks.  Firstly, it has the distinct and real risk of losing part or all of the currently reserved trial dates.  Both Andrew Ma & Company and SH Leung & Co. have expressed reservations about their being ready for trial in November 2003.  Independent of their reservations, the objective fact is that, apart from service of pleadings, the other pre-trial interlocutory steps in the BPR Action have not been undertaken.  Even with regard to pleadings, Andrew Ma & Company is contemplating amendment of its defence.  It is rather unlikely that the pre-trial preparations can be accomplished in the three months leading to mid-November.  The improbability increases when the summer vacation and availability of counsel and expert are taken into account.  It must not be assumed that because most of the parties in the BPR Action are already involved in the Winding‑Up Petition, discovery and the exchange of witness statements and expert reports can be done very expeditiously.  One must give due acknowledgement to the fact that Andrew Ma & Company and SH Leung & Co. have no involvement in the Winding‑Up Petition, which has been underway since 1999.  The allegations they face in the BPR Action are serious ones and their professional reputation is at stake.  They will need the time normally afforded to parties in civil litigation to get their discovery, witness statements and expert reports done.  In addition, in order that they can meaningfully and fully participate in a combined trial, they will have to familiarize themselves with the discovery and evidence in at least the Winding-Up Petition.  The amount of catching-up work is considerable.

12. Mr Wong, SC, refers to the fact that a similar application had been made in October 2002 such that Andrew Ma & Company and SH Leung & Co. had been forewarned.  It may well be that the present application comes as no surprise to them.  But the reality remains that the BPR Action has some mileage to make before it is ready for trial.  On the basis of the materials before the court, it cannot be said that Andrew Ma & Company and SH Leung & Co. have been guilty of delaying the progress in getting the case ready for trial.

13. Mr Yu, SC, appears to suggest that if by November, Andrew Ma & Company and SH Leung & Co. are indeed not ready for trial, then the court may accommodate them by some structuring of the trial and of the sequence of witnesses.  I am not sure whether this is indeed feasible and, even if feasible, whether it is a fair and appropriate course to take.  If a case is not ready for trial or if the parties to it, through no fault of their own, are not fully prepared for trial, it will not be right for the court to press ahead with the trial, hoping that the case or the parties will in due course become ready.  Certainly this is not the right approach with regard to the BPR Action, given the gravity of the allegations and the complexity of the issues.

14. The risk of losing the November 2003 trial dates is a matter not to be taken lightly.  The Winding‑Up Petition was started four years ago.  The Company is an active ongoing concern.  Considerable amount of assets are involved.  At least one of the petitioners, Mr T.Y. Lee, is in his advanced age and does not enjoy good health.  The Petition should be resolved as soon as possible.  If the commencement of the trial has to be deferred, it will cause great inconvenience to the court diary and other hearings may have to be vacated.  Worse still, the trial may have to go part heard.  In the worst‑case scenario, the trial may have to be re‑fixed.  Given the length of the trial and the busy court diary, this will result in another year’s delay, if not more.

15. Secondly, the issues and evidence, both factual and expert, in the Winding‑Up Petition are both complex and voluminous.  The trial bundles are expected to be no less than 50 in number.  The complexity will be intensified with a combined trial of the three actions.  This is particularly so with regard to the conspiracy and negligence claims in the BPR Action and the defence of the defendants.  Additionally, there are multiple parties, some of whom are unrepresented, with differing degree of familiarity with the facts and issues involved.  A combined trial is, in the circumstances, difficult to manage and is not conducive to effective resolution of disputes.

16. Having regard to the aforesaid matters, I am of the view that the appropriate course is for the trials of the three actions to take place one after another with directions that will minimize the repetition of evidence.  To this end, there will be directions that the evidence in the Winding‑Up Petition, insofar as it is relevant, to stand as evidence in the Interstitial Action.  Similarly, the evidence in the Winding‑Up Action and the Interstitial Action, which is to be tried after the Winding‑Up Petition, insofar as it is relevant, will stand as evidence in the BPR Action.

17. Mr Wong, SC, submits that the evidence in the BPR Action should also stand as evidence in the Winding‑Up Petition and the Interstitial Action.  He argues that, without such directions, his client will be prevented from advancing his defence in the BPR Action in the other actions.  In my view, the directions Mr Wong, SC, proposes effectively means a combined trial, which is contrary to an order that the trials of the three actions should be heard one after another, albeit close in time and on one occasion.  The prejudice he identifies is unreal.  If his client’s defence in the BPR Action is relevant to and has been raised or pleaded in the Winding‑Up Petition and/or the Interstitial Action, there is nothing to prevent his client from putting it forward in the Winding‑Up Petition and/or the Interstitial Action.  But if it is irrelevant and/or has not been raised or pleaded, then irrespective of the directions on evidence, the defence cannot be put forward in the other actions.

18. I will further grant leave to Andrew Ma & Company and SH Leung & Co. to take part in the trial of the Winding‑Up Petition, if they so wish.  Mr Harrington says that the prejudice Andrew Ma & Co. suffers from having to face a full trial in November 2003 will not be lessened by an order for sequential trials with leave for it to take part in the trials of the other two actions.  I cannot agree.  Evidently, the amount of preparations required for meeting a full trial and that for taking part in related proceedings is different.  Secondly, though leave to participate in the other trials is granted, it is up to Andrew Ma & Company to decide whether to take part and, if so, whether actively.

19. As to whether there should be gaps between the three trials, I take the view there should be short breaks of say, a week or so, between the trials for the purpose of consolidations and preparations.  Further to preserve flexibility, it is more appropriate to give an indicative period of trial dates instead of fixed dates for the second and third trials.  A period of eight weeks from the scheduled conclusion date of the trial of the Winding‑Up Petition is therefore reserved for the trials of the two writ actions.

Orders on the three summonses

20. Accordingly, I make the following orders on the three summonses :

(1)              The trial of HCA1240/2001 to commence after the conclusion of the trial of HCCW592/1999 with the estimated length of trial being two weeks.

(2)              The trial of HCA4225/2001 to commence after the conclusion of the trial of HCA1240/2001 with the estimated length of trial being three weeks.

(3)              A period of eight weeks immediately after the scheduled conclusion date of the trial of HCCW594/1999 be reserved for the trials of HCA1240/2001 and HCA4225/2001.

(4)              The evidence in the trial of HCCW594/1999, insofar as it is relevant to the issues in HCA1240/2001 and HCA4225/2001, do stand as evidence in the trials thereof.

(5)              The evidence in the trial of HCA1240/2001, insofar as it is relevant to the issues in HCA4225/2001, do stand as evidence in the trial thereof.

(6)              Leave to the 6^th defendant and the 3^rd third party in HCA4225/2001 to take part, if so advised, in the trials of HCCW594/1999 and HCA1240/2001.

(7)              There is an order nisi that the costs of the three summonses, including half of the hearing time on 8 August 2003, be in the cause of the respective proceedings.

Directions on trial of the Winding‑Up Petition

21. With regard to the directions to be made for the trial of the Winding‑Up Petition, I must point out that the parties already have four years to plan and prepare their case and evidence.  There had also been many applications and contested hearings on discovery and evidence.  I consider that, given the multiplicity of parties and issues involved, the court has to insist on strict observance of the procedural rules and court directions so as to ensure that the trial does not get out of hand.  Unless consented to by the opponents, new affidavits and expert reports cannot be introduced for the trial without prior leave of the court.  Additionally, leave will not be granted for further factual or expert evidence in the absence of very cogent reasons for it not to be introduced earlier.

22. As for the logistics of the trial such as the layouts of the trial bundles and the number of bundles to be kept in court, the legal representatives of the parties, with their experience and in the spirit of co‑operation, ought to be able to agree on them.  I do not consider it necessary to make any direction in this regard.

23. The directions I make for the trial in the Winding‑Up Petition are as follows :

(1)              The time for filing expert reports under paragraph 1 of the Order made on 31 October 2002 is extended to 4 September 2003.

(2)              Leave to the parties to file and exchange, if so advised, supplemental expert reports in reply to expert reports served on 31 July 200 and to be served on 4 September 2003.

(3)              The 1^st respondent is to serve on the petitioners his draft final affidavit.

(4)              If the petitioners do not give notice of objection within 14 days of being served with the 1^st respondent’s draft final affidavit,

(a)              the 1^st respondent will have leave to file his said final affidavit and to rely on it at the trial; and

(b)             the petitioners will have leave to file and serve by 30 September 2003 their affidavit(s) in reply.

(5)              The affidavits filed in support of and in opposition to the Petition and its amendments do stand as evidence in chief of the deponents at the trial, unless otherwise directed at the trial.

(6)              The deponents of the affidavits do attend trial for cross‑examinations, failing which his affidavits will not be admitted as evidence of the trial.

(7)              The petitioners do have leave to adduce in evidence the 1^st, 2^nd and 3^rd affidavits of Lee Chai Cheong without calling him to attend trial for cross-examination, the said deponent having died on 29 February 2000.

(8)              The petitioners and the respondents do before 10 September 2003 exchange a list of factual and expert witnesses to be called by them at the trial, and a list of the affidavits filed in the interlocutory applications, or the parts thereof, that they intend to adopt as evidence of the trial.

(9)              The petitioners do before 15 September 2003 lodge with the court and serve on the parties the pleadings, affidavits and exhibits bundles for the trial.

(10)         The petitioners do before 30 September 2003 lodge with the court and serve on the parties the rest of the trial bundles.

(11)         An agreed list of issues is to be lodged with the court by 15 October 2003.  Failing agreement, the parties are to lodge with the court their respective lists of issues by 15 October 2003.

(12)         The petitioners do lodge with the court and serve on the parties their opening submissions by 7 November 2003.

(13)         Live Notes be arranged for the trial with the costs involved to be shared by the parties in such proportions to be agreed between them.

(14)    There is an order nisi that the costs of the pre‑trial review, including half of the hearing time on 8 August 2003, be in the cause of the petition.

24. As for the summons issued by the 1^st respondent on 5 August 2003 under Orders 33, 35 and 39 of Rules of the High Court, as requested by the 1^st respondent, it will be adjourned for argument on an early date to be fixed with half a day reserved, and with the costs of the summons reserved.

Directions for the Interstitial Action

25. As for the Interstitial Action, I make the following directions :

(1)              The time for the exchange of witness statements under paragraph 2 of the Order dated 6 March 2003 be extended to 22 August 2003.

(2)             The witness statements do stand as evidence‑in‑chief at the trial, unless otherwise directed.

(3)              The plaintiffs do lodge with the court and serve on the defendants the trial bundles that are additional to the trial bundles for HCCW594/1999, no later than seven days before the commencement of the trial.

(4)              The plaintiffs do lodge with the court and serve on the parties their opening submissions no later than three clear days before the commencement of the trial.

(5)              Live Notes be arranged for the trial with the costs involved to be shared by the parties in such proportions to be agreed between them.

(6)              There be liberty to apply for further directions.

Directions for the BPR Action

26. Additionally, there are the following orders and directions for the further conduct of the case :

(1)              The parties in the main action (save the 1^st defendant) do exchange their lists of documents by 29 August 2003.  Inspection of documents to take place within seven days thereafter.

(2)              The time for the exchange of lists of documents between the 2^nd, 3^rd and 5^th defendants and the 3^rd third party under paragraph 13 of the Order dated 16 December 2002 is extended to 29 August 2003.

(3)              The parties in the main action and in the third party proceedings do exchange their witness statements by 3 October 2003.

(4)              Leave to the parties in the main action and in the third party proceedings to exchange expert reports on valuation of PEL shares by 24 October 2003.

(5)              Leave to the parties in the main action and in the third party proceedings to exchange, if so advised, supplemental expert reports in reply to expert reports exchanged under paragraph (4) above.

(6)              The witness statements do stand as evidence‑in‑chief at the trial, unless otherwise directed.

(7)              The plaintiffs do lodge with the court and serve on the defendants the trial bundles that are additional to the trial bundles for HCCW594/1999 and HCA1240/2001, no later than seven days before the commencement of the trial.

(8)              The plaintiffs do lodge with the court and serve on the parties their opening submissions no later than three clear days before the commencement of the trial.

(9)              Live Notes be arranged for the trial with the costs involved to be shared by the parties in such proportions to be agreed between them.

(10)         There be liberty to apply for further directions.

HCA4225/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4225 OF 2001

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D E C I S I O N

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1. There are before the court three applications for further and better particulars of the Amended Statement of Claim ("ASOC"). They are made by the 2nd, 3rd and 5th defendants, the 4th defendant and the 6th defendant respectively. I shall deal with them in turn.

The 2nd, 3rd and 5th defendants' Requests

(1) Request 2 : paragraph 1 of ASOC

A reading of paragraph 1 of the ASOC and of the ASOC as a whole will show that the term "The Group" is no more than an abbreviation or as Mr Mok, counsel for the plaintiffs says, a convenient reference. The request is therefore unnecessary. It is disallowed.

(2) Requests 3.1.2 and 3.1.3 : paragraph 5 of ASOC

The 2nd to 5th defendants will appreciate from other litigations involving them and the plaintiffs that the grouping of the shareholders or shareholding, as set out in paragraph 5 of the ASOC, is for ease of reference. It is not pleading the setting up or existence of formal groups or classes of shareholders or shareholding. The two requests are unnecessary. They are disallowed.

(3) Requests 4.2 and 4.3 : paragraph 7 of ASOC

Request 4.2 is not necessary and is covered by Request 4.1. As to Request 4.3, the answer to it is apparent from paragraph 7 of the ASOC itself. Paragraph 7 has identified the children of the 2nd defendant who were and/or are directors and also set out the periods when they began or were directors. Request 4.3 is unnecessary. Both requests are disallowed.

(4) Requests 10 and 11 : paragraph 14 of ASOC

The management of the carpark situated as Nos.5 and 7 Blue Pool Road has no relevance to the issues to be determined in this action. The particulars sought under Request 10 are irrelevant. As for Request 11, paragraph 14 of the ASOC has pleaded that the carpark was unlet and remained vacant since November 1989. The cause and circumstances for Greenhill not receiving rental income are therefore apparent. Requests 11.1.1 and 11.1.2 are unnecessary. In view of the subsequent plea in the ASOC of the litigation between MWLS and Greenhill, Requests 11.1.3 and 11.1.4 are relevant and are allowed.

(5) Request 13.2 : paragraph 17 of ASOC

The effect of paragraph 17 of the ASOC is that the wealth and resources milked are the major assets beneficially owned by the extended Lee family or family companies that had been injected into PEL. These major assets are also set out. Request 13.2 is therefore not necessary and disallowed.

(6) Requests 14.2, 14.3 and 14.5 : paragraph 18 of ASOC

Requests 14.2 and 14.3 do not arise from paragraph 18 of the ASOC which clearly states the Grand Design to be "his", meaning ST Lee's Grand Design. Similarly, Request 14.5 pleads the intention of ST Lee in connection with the Grand Design. Request 14.5 is unnecessary, especially having regard to Request 14.4, which the plaintiffs have agreed to provide. These requests are disallowed.

(7) Requests 15, 16 and 17 : paragraph 19 of ASOC

The first part of paragraph 19 of the ASOC is pleading the perception or assessment of ST Lee as to the chances of acquiring Nos.5 and 7 Blue Pool Road. Request 15.1 does not arise from this part of the pleading. Similarly, Requests 15.2 and 16 do not arise out of it since what is pleaded is the perception and assessment of the situation. Request 15 and 16 are disallowed.

As to Request 17, Request 17.3 is a proper request and is allowed. Even though the 2nd and 5th defendants had pleaded extensively with regard to the proceedings identified in paragraphs 19(1) to (4), 20(1), (2) and 21 of the ASOC, for the purpose of properly identifying the issues between the parties, Request 17.3 should be answered. Requests 17.8 and 17.9 are also proper requests and are allowed. They are relevant and material particulars of the confrontational strategy alleged. The remaining requests under Request 17 are in my view either irrelevant, unnecessary or do not arise from the pleading. There is no necessary correlation between the entitlement of PEL to retain dividends and/or to refuse registration of transfer of shares and the confrontational strategy alleged in paragraph 19 of the ASOC. There is also no averment that PEL was compelled by the Court to pay dividends or to register the transfer of shares. Requests 17.1, 17.2, 17.4 to 17.7, 17.10 to 17.13 are disallowed.

(8) Requests 18 and 19 : paragraph 20 of ASOC

For the reasons given in disallowing Requests 17.4 to 17.7, these Requests are also disallowed for being irrelevant and unnecessary.

(9) Requests 20.1, 20.6 to 20.9 : paragraph 21 of ASOC

Request 20.1 is a proper request and is allowed. As to Requests 20.6 to 20.9, for similar reasons given in disallowing Requests 17.4 to 17.7, these Requests are irrelevant and unnecessary. They are disallowed.

(10) Request 21 : paragraph 22 of ASOC

This is a proper request for clarification. It is allowed.

(11) Requests 24.2 and 24.3 : paragraph 25 of ASOC

Paragraph 25, especially when read in the context of the letter of Messrs Masons pleaded in paragraph 24, plainly avers that Greenhill did not want to receive shares and would only receive cash for the sale of No.7 of Blue Pool Road. It is not pleaded that it could not choose to take shares. Requests 24.2 and 24.3 do not arise from the pleading and are disallowed.

(12) Request 26 : paragraph 14 of ASOC

Request 26.1 to the extent that it asks whether the conspiracy was alleged to be pursuant to some agreement is a proper one is allowed. It follows that Request 26.2 is also allowed. The sub-requests under Request 26.1, i.,e. 26.1.1 to 26.1.5, they are inappropriate in the context of a conspiratorial agreement. They are disallowed.

(13) Requests 31.1.2 and 32.2 to 32.4 : paragraph 42(3) of ASOC

Given that Request 17.8 and 17.9 have been allowed, Request 31.1.2 should no longer be necessary. It is disallowed.

As to Request 32, Request 32.2 is a proper request and is allowed. The other requests , being Requests 32.3 and 32.4 are unnecessary and do not properly arise from the pleading. They are disallowed.

(14) Requests 33.3 and 34 : paragraph 42(4) of ASOC

Request 33.3 is misconceived. Paragraph 42(4) of the ASOC does not plead any force or coercion. Likewise, Request 34 does not arise out of paragraph 42(4), which pleads that under the Global Settlement, the CC Lee Branch and TY Lee were paid in cash only. These requests are disallowed.

(15) Requests 36.2 and 36.3 : paragraph 42(5) of ASOC

These Requests do not arise out of paragraph 42(5) of the ASOC, which does not plead any agreement or arrangement to vote the shares as a block. The requests are disallowed.

(16)Request 53 : paragraph 43(3) of ASOC

Paragraph 43(3) of the ASOC is pleading the consequences of adopting the Chosen Method of valuation and not on the method of valuation that should be adopted. Request 53 is inappropriate and is disallowed.

(17)Requests 55.5 and 55.6 : paragraph 43(5) of ASOC

These requests do not arise out of paragraph 43(5) of the ASOC. They are disallowed.

(18)Request 60.2 : paragraph 43(9) of ASOC

At the hearing, Mr Coleman clarifies that the request is confined to assumption relating to dividend payment. On that basis, I will allow it.

(19)Requests 61.1 to 61.3 : paragraph 43(10) of ASOC

The plaintiffs have agreed to provide the particulars to Request 61.4. That should be sufficient particular for this plea. Requests 61.1 to 61.3 are disallowed.

(20)Request 66.4 : paragraph 43(14) of ASOC

This request is both unnecessary and borders on asking for arguments. It is disallowed.

(21)Request 69.3 : paragraph 44(4) of ASOC

This request relates to the details of the increase in the UK property portfolio and the calculations for it. The plaintiffs have indicated that they are unable to provide the details sought at this stage but will provide them by way of expert report later. This, in my view, is acceptable. No order will be made on this request.

(22)Request 70 : paragraph 44(6) of ASOC

This request is unnecessary as the particulars sought are apparent form paragraphs 44(1) to (5). Paragraph 44(6) is merely a conclusion drawn upon paragraphs 44(1) to (5). The request is disallowed.

To conclude on the 2nd, 3rd and 5th defendants' summons, particulars will be ordered for Requests 11.1.3, 11.1.4, 17.3, 17.8, 17.9, 20.1, 21, 26.1, 26.2 (confined to the opening part), 32.2 and 60.2 (confined to in connection with dividend payment).

The 4th defendant's Requests

(1)Request 6 : paragraph 13 of ASOC

The shareholding of the C.C. Lee Branch in Greenhill is irrelevant to the issues to be determined herein. This request, being irrelevant, is disallowed.

(2) Request 13(a) : paragraph 17 of ASOC

This is a proper request and is allowed.

(3)Requests 16 to 17, 19(a) and (b) and 21(a) : paragraphs 19, 22 and 23 of ASOC

These requests all relate to dates which are irrelevant to the issues to be determined. They are disallowed.

(4)Request 20 : paragraph 22 of ASOC

The request is not necessary as the particulars sought have already been pleaded in paragraph 7 of the ASOC. It is disallowed.

(5) Requests 25(a) and (b) : paragraph 25 of ASOC

Paragraph 25 of the ASOC pleads the knowledge of the directors of PEL with regard to Greenhill's desire to receive cash for the sale of No.7 Blue Pool Road. Requests 25(a) and (b) do not arise out of the pleading and are disallowed.

(6) Request 26 : paragraph 26 of ASOC

The request is irrelevant since the matters pleaded, which relate to the 2nd defendant, has been admitted by the 2nd defendant. It is disallowed.

(7) Request 28 : paragraph 26(2) of ASOC

The question of the alias of Lee Cheong Yee is irrelevant to the issues to be determined in this action. It is disallowed.

(8) Requests 30, 31 and 32 : paragraph 33 of ASOC

The negotiations on the sale of Blue Pool Road are irrelevant to the issues in this action. Request 30 is disallowed. What is pleaded in paragraph 33 of the ASOC is that the prices for acquiring the Blue Pool Road properties were agreed. The eventual agreements are pleaded in paragraphs 35 and 36 of ASOC. Requests 31 and 32 are unnecessary and also irrelevant to the issues to be determined in this action. They are disallowed.

(9) Request 34 : paragraph 39 of ASOC

The plaintiffs' complaint herein is not the sales of the Blue Pool Road properties nor the terms of the settlement relating to them. There is also no complaint against the allotment of shares to the 2nd and 3rd defendants per se. The nub of the plaintiffs' case is that the shares allotted to them, by way of distribution in MWLS of the sale proceeds of No.5 Blue Pool Road, are at an undervalue. Seen in this light, Request 34 is both unnecessary and irrelevant. It is disallowed.

(10) Request 60 : paragraph 42(13) of ASOC

The date as requested for is irrelevant to the issues herein. It is disallowed.

(11) Request 62 : paragraph 43(3) of ASOC

For the reasons given in connection with Request 53 of the 2nd and 5th defendants' Requests, this request is disallowed.

(12) Request 63 : paragraph 43(4) of ASOC

This request does not arise out of the pleading. In any event, this request is unnecessary given that the plaintiffs will be providing particulars to Request 54 of the 2nd and 5th defendants. This request is disallowed.

(13) Request 79 : paragraph 47 of ASOC

Paragraph 47 of the ASOC expressly pleads that the 4th defendant, since his appointment to the Board on 30 March 1995, owed the fiduciary duties set out therein. Request 79 is unnecessary and is disallowed.

(14) Requests 80 to 83 : paragraphs 47(2) and 47(3) of ASOC

These paragraphs in the ASOC plead the legal principles as to the duties of directors. They are general statements of the law. The requests are inappropriate and disallowed.

(15) Request 84 : paragraph 48 of ASOC

The formulation of paragraph 48 is in a commonly adopted form. There is no ambiguity. The request is disallowed.

(16) Request 86 : paragraph 48(1) of ASOC

Paragraph 48 of the ASOC is pleading the breach of duties on the part of the 2nd to 5th defendants. The particulars supporting the plea of misrepresentation in paragraph 48(1) of the ASOC had previously been set out under paragraphs 28 to 32, 41(13) and (14) of the same. Request 86 is therefore unnecessary and is disallowed.

(17) Request 91 : paragraph 50 of ASOC

For the purpose of greater clarity, this request is allowed.

(18) Request 92 : paragraph 50 of ASOC

This request seeks the quantum of loss. The plaintiffs contend that this is a matter for expert report. Even though the loss and damage is pleaded as special damage, it is permissible for the plaintiffs to set out the heads of loss or damage without attaching a figure to it leaving it for assessment by the court at the trial. No order is made on this request.

In summary, on the 4th defendant's summons, particulars will be ordered under Requests 13(a) and 91.

The 6th defendant's Requests

(1) Requests 36 and 37 : paragraphs 43(3) and (4) of ASOC

With the plaintiffs agreeing to provide particulars along the line requested by the 2nd, 3rd and 5th defendants under Requests 52 and 54 of the latters' Request, these are not pursued.

(2) Request 41 : paragraph 43(7) of ASOC

This request is similar to Request 58 of the 2nd, 3rd and 5th defendants and Request 66 of the 4th defendant, which the plaintiffs have agreed to supply. That being the case, this request should be allowed.

(3) Request 54 : paragraph 48(1) of ASOC

This request is in almost identical term to Request 86 of the 4th defendant. For reasons given in connection with the latter, this request is disallowed.

(4) Request 55 : paragraph 48(2) of ASOC

This request is in similar term to Request 87 of the 4th defendant which the plaintiffs have agreed to provide. In the circumstances, this request is allowed.

(5) Requests 61 and 62 : paragraph 50 of ASOC

These requests are identical to Requests 61 and 62 of the 4th defendant's Request. For the reasons given in connection with the latter, Request 61 is allowed, but Request 62 is disallowed.

Hence on the 6th defendant's summons, Particulars will be ordered under Requests 41, 55 and 61.

Representation:

Mr Johnny Mok, instructed by Messrs Liu, Choi & Chan, for the Plaintiffs

Mr Russell Coleman and Miss Grace Chow instructed by Messrs Jones Day, for the 2nd, 3rd and 5th Defendants

Mr Mark Bradley, of Messrs Deacons, for the 4th Defendant

Mr David Harrington, of Messrs Richards Butler, for the 6th Defendant