TUNG FAI v. WEI DONG

HCA 1062/2013

[2018] HKCFI 1807

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1062 OF 2013

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HCA 1063/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1063 OF 2013

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HCA 1066/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1066 OF 2013

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(Heard together)

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J U D G M E N T

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1.  There has been some unexpected development of this case. The claims in HCA 1062 and 1063/2013 have been dismissed because of the lack of witnesses. The remaining issue before me is whether Mr Tung Fai can succeed in his claim in HCA 1660/2013 (“this Action”).

2.  The nature of his claim has been set out in the Statement of Claim in this Action.  I do not want to repeat the same here.

3.  The Plaintiff in this Action, Mr Tung Fai (“Mr Tung”), is the only witness in this trial.

4.  Having carefully considered his evidence, I accept that Mr Tung has discharged the burden of establishing his claim in this Action.

5.  At the trial, Mr Tung provides a clear account of his dealings with the Defendant, Mr Wei Dong (“Mr Wei”).  He tells the court how he had assisted Mr Wei to list his food and restaurant businesses in the Stock Exchange in Hong Kong.  According to the written Cooperation Agreement made in June 2003 (“the Written Agreement”), Mr Wei’s company agreed to give 15% of the shares in the listed company to Mr Tung if the listing was successful.  In the case that the listing was unsuccessful, Mr Tung would have to bear all the costs associated with the unsuccessful listing of the company.

6.  Later, in order to attract other reputable investors to join the listed company, Mr Tung and Mr Wei agreed to cancel the Written Agreement and substituted it with the oral agreement which is the subject matter of this Action (“the Oral Agreement”).  Instead of getting the 15% shares, Mr Tung would get a sum of HK$150 million in return.  Mr Wei also promised to give him an additional sum of HK$50 million if he was to stay in the listed company for a period of 5 years.

7.  Mr Tung has been subjected to vigorous cross-examination by Ms Lee, counsel for Mr Wei for, about a day.  He provides straightforward answers to the questions and he has not evaded any questions put to him by Ms Lee.  His evidence has remained unshaken after cross-examination, and I accept that he is telling the truth.

8.  As I understand it, the main grounds put forward by Ms Lee to challenge Mr Tung’s evidence are as follows:

(i)   The reasons given by Mr Tung for the cancellation of the Written Agreement and the making of the Oral Agreement are incredible.

(ii)   The timing for the making of the Oral Agreement is unusual.

(iii)   It does not make commercial sense for the parties to have made the Oral Agreement.

(iv)   It is strange that Mr Tung, being an experienced businessman, had not disclosed the Oral Agreement in the listing prospectus issued by Fu Ji Holdings which was the listed company.

(v)   It does not make commercial sense for Mr Wei to have agreed to give an additional sum of HK$50 million for Mr Tung to stay in Fu Ji Holdings for a period of 5 years.

(vi)   It is strange that Mr Wei and Mr Tung had not reduced the Oral Agreement in writing.

(vii)   It is doubtful whether Mr Tung had played a crucial role in the listing process.

(viii)   Mr Tung has failed to produce any documentary evidence to prove the amount of pre-listing expenses incurred by him.

(ix)   It is strange that Fu Ji Holdings later reimbursed Mr Tung of the pre-listing expenses.

(x)   It is strange that Mr Tung had not included the alleged part payments under the Oral Agreement in his tax return.

(xi)   It is odd that there were no receipts for the alleged part payments under the Oral Agreement.

(xii)   It is strange that throughout the years, Mr Tung had not issued demand letters or pressed Mr Wei for the payment of the balance due under the Oral Agreement.

9.  Despite the vigorous cross-examination, Mr Tung provides credible explanations for all these queries raised by Ms Lee. 

10.  In my judgment, whether certain thing is reasonable has to be judged against the background of the case and the relationship between the individuals concerned.  It is clear that there was a high degree of trust between Mr Wei and Mr Tung at the material time, and so the lack of written confirmation for the Oral Agreement, written receipts for the part payments, and written records of the pre-existing expenses are quite understandable.  It also explains why Mr Tung had not actively pressed Mr Wei for the payment of the balance of the sum due under the Oral Agreement.

11.  Further, the listing of Fu Ji Holdings had brought about a great fortune for Mr Wei.  Instead of getting the shares or the shares options which were awarded to some other persons like the executive director, the benefit obtained by Mr Tung would be the sum stated in the Oral Agreement.  It does make commercial sense. 

12.  In fact, no one disputes the existence of the Written Agreement.  Under that arrangement, Mr Wei was prepared to give Mr Tung 15% of the shares of the listed company as a reward for his contribution to the listing process.  It would be very hard for me to accept that Mr Tung would have agreed to cancel the Written Agreement without some definite promise by Mr Wei to pay him something equivalent in return.

13.  At the trial, Mr Tung has also provided credible explanations as to why Mr Wei and he had to substitute the Written Agreement with the Oral Agreement.  He also genuinely believes that it was not necessary to disclose the Oral Agreement in the listing prospectus or to include the part payments under the Oral Agreement in his tax return.  I accept his evidence as the truth.

14.  There is an issue as to the reimbursement of the pre-listing expenses.  According to Mr Tung, it was the term of the Oral Agreement that he had to be responsible for the pre-listing expenses, and yet he got the reimbursement from Fu Ji Holdings.

15.  I do not accept that this factor would undermine the credibility of Mr Tung’s case.  According to Mr Tung, the parties were mainly concerned whether the listing would be successful or not.  In this regard, Mr Wei would have to rely on the expertise and connection of Mr Tung.  If the listing was successful, Mr Tung would get his 15% shares under the Written Agreement or later the sum of $150 million under the Oral Agreement.  The parties had not talked about the reimbursement of pre-listing expenses.

16.  According to the Defence filed by Mr Wei in this Action, if the Oral Agreement were to exist, Mr Tung was in breach of the terms of the Oral Agreement in not paying the pre-listing expenses.  However, it is clear that Mr Tung was not in breach of such term.  The fact that he obtained reimbursement from the listed company does not mean that he was in breach of the Oral Agreement in failing to pay for the pre-listing expenses.  If Mr Wei claims that Mr Tung had obtained benefit through unjust enrichment and as a result the reimbursement should be deducted from Mr Tung’s claim, Mr Wei had to plead the same in his Defence.

17.  Since I accept the evidence of Mr Tung, I also find that he had performed all his obligations under the Oral Agreement.  Mr Tung played a key role in the listing of Fu Ji Holdings.  There is no basis for Ms Lee to argue that Mr Tung was not involved in the whole process of the listing application, or that he did not pay all the costs of the listing application.

18.  In the present case, Mr Wei has not adduced any evidence to rebut Mr Tung’s case.  Unless the court is to reject Mr Tung’s evidence, it would be extremely difficult for Mr Wei to challenge Mr Tung’s claim in this Action.  In my judgment, the challenge put forward by Ms Lee cannot undermine the credibility of Mr Tung’s evidence and so I have no reservation in giving judgment in favour of Mr Tung.

19.  Mr Wei has also raised the limitation defence. However, section 23(3) of the Limitation Ordinance (Cap 347) provides:

“Where any right of action has accrued to recover any debt …, and the person liable or accountable therefore acknowledges the claim or makes any payment in respect thereof, the right shall be deemed to have accrued on and not before the date of the acknowledgment or the last payment. …”

20.  As I accept that the payments made at various times by Mr Wei’s camp were part payments under the Oral Agreement, the limitation period did not start to run until the last payment date in October 2008. 

21.  As the writ in this Action was issued in 2013, which was much earlier than the expiry of the limitation period in October 2014, the limitation defence cannot possibly succeed.  Further, there is no time bar for the claim in relation to the payment of $50 million.  The cause of action did not start to run from 17 December 2008, which was 5 years after Mr Tung remained in the management of Fu Ji Holdings.

22.  Mr Tong SC, counsel for Mr Tung, has urged me to draw adverse inference against Mr Wei for failing to call any witnesses in support of his case.  Since I accept Mr Tung to be a credible witness, it is not necessary for me to consider the “adverse inference” argument”.  In any event, Mr Wei’s wife, Madam Yao, was present in court in the first week of the trial. Without knowing the full background as to why she could not come back to Hong Kong to give evidence in the second week of the trial, it would be unsafe for the court to draw any adverse inference against Mr Wei’s camp simply because of the lack of supporting witnesses.

23.  Mr Tong has also urged me to refer the matter to the Director of Public Prosecutions for investigation of a suspected case of uttering false documents in support of the video link application which was made at the commencement of the trial.  Mr Wei’s solicitor produced some evidence with a view to show that Mr Wei had a recent operation in the Mainland and as a result he could not come to Hong Kong to testify.  In response to such application, Mr Tung was able to produce some evidence to show that the documents produced by Mr Wei are false.  Mr Wei then applied to withdraw the video link application without filing further documents or evidence.

24.  Without an opportunity to canvass the issue, the court cannot form a preliminary view about the falsity of the documents.  There is nothing to prevent Mr Tung to make a report to the police about the alleged falsity of documents, but I do not see it fit for the court to make a formal referral to the Director of Public Prosecutions for investigation without forming a preliminary view about:  (i) the falsity of the documents; and (ii) who should be responsible for uttering these documents.  However, I agree that, if Mr Tung were to make a report to the police, the matter deserves serious investigation.

25.  In respect of the costs associated with the video link application, there is no issue that Mr Wei’s camp would have to pay for the costs of the application.  As Mr Wei’s camp knew full well that Mr Tung would ask for the costs to be paid on an indemnity basis and they did not file any evidence in reply, I agree that the court can rely on the rebuttal evidence filed by Mr Tung which raises a serious issue about the authenticity of Mr Wei’s documents.  Hence, the court should order Mr Wei’s camp to pay for the costs on an indemnity basis.  I therefore so order.

Reasons for dismissing the striking out application

26.  At the commencement of the trial, I dismissed Mr Tung’s application to strike out certain parts of the pleadings of Mr Wei’s camp.  Apart from the issue of costs, this decision is now academic in view of the latest development of the case.  However, I feel obliged to give brief reasons for dismissing the striking out application.

27.  The effect of the proposed striking out application is that Mr Wei’s camp would be estopped from challenging the existence of the Oral Agreement, as the judge in the BVI proceedings found that the Oral Agreement existed after listening to the evidence of all the relevant witnesses including Mr Wei and Mr Tung.

28.  Mr Tung’s wife (Madam Kwok) and Mr Wei’s wife (Madam Yao) were involved in a hotel project which was operated under the name of the BVI company.  Madam Yao made an application in the BVI court to wind up the BVI company on the ground of unfair prejudice.  After a trial of 26 days, the judge in the BVI proceedings made an order to wind up the BVI company. However, despite the allegation of Mr Wei’s camp, the judge found that Mr Wei and Mr Tung did make the Oral Agreement which is the subject matter of this Action. Mr Tung therefore contends that relitigation of the issue already determined in the BVI proceedings constitutes an abuse of process.

29.  The parties in the present proceedings and the BVI proceedings are not the same.  Unless it amounts to abuse of process, Mr Wei should not be prevented from asking this court to rule on the existence of the Oral Agreement.

30.  In my judgment, the facts of the present case are far from establishing such abuse of process.

31.  First, though the judge in the BVI proceedings had been asked by counsel for Madam Yao to determine the existence of the Oral Agreement in the context of that particular case, the existence of the Oral Agreement was never a central or fundamental question in the BVI proceedings which formed the basis of the BVI judgment.  Further, counsel for Madam Yao had made it clear to the judge and the relevant parties that matters relating to the Oral Agreement between Mr Tung and Mr Wei would be determined by the Hong Kong court in the present proceedings.  In such case, no one was under any misapprehension and it was clear to all the parties that the matter would have to be adjudicated by the Hong Kong court afresh in the present proceedings, in which the court has to rule on the existence of the Oral Agreement and other related matters including, for examples, the terms of the Oral Agreement and whether the parties had performed all the obligations under the Oral Agreement.

32.  Second, it is too late now for Mr Tung to make the complaint based on abuse of process.  As observed by Ma CJ in Ko Hon Yue v Chiu Pik Yuk (2012) 15 HKCFAR 72, the parties, in similar circumstances, had fully prepared for the trial.  If Mr Tung genuinely believes in the abuse of process argument, one would expect him to make an application earlier for the present trial to be fixed only after the delivery of the judgment in the BVI proceedings.  Though I accept Mr Tung to be a truthful witness in this trial, Mr Tung is an opportunist in making the striking out application after the judge made a favourable finding of fact in his favour.  It is certainly not unfair to him if the court is to adjudicate the matter again in this Action. In fact, if the BVI court were to make a finding against him on such issue, neither can Mr Wei’s camp is able to rely on such finding against him in this Action.

33.  Thirdly, the judge in the BVI court had not dealt with all the issues in this Action.  There are other outstanding issues, such as (i) what was the nature of the various payments made by Mr Wei’s camp to Mr Tung throughout the year; (ii) whether Mr Tung had performed his obligations under the Oral Agreement; and (iii) whether Mr Tung is entitled to receive the payment of $50 million under the Oral Agreement.

34.  In determining these outstanding issues, the court would have to consider the oral Testimony of Mr Wei, Madam Yao and Mr Tung.  The credibility of these witnesses would be an important issue in the trial.  If the court were to find that Mr Tung is not a credible witness, then whether the Oral Agreement existed would become a serious issue.  If the court were to find Mr Tung to be an untruthful witness, it would certainly be unfair to Mr Wei that he would be barred from challenging the existence of the Oral Agreement which is the central and fundamental issue for the claim in the Hong Kong proceedings.

35.  For these reasons, I dismissed the striking out application.  Obviously, the decision was made before the latest development of the case.  By that time, the court proceeded on the basis that there would still be a full trial of all the related actions.  The striking out application is now academic, because there are no available witnesses to support the case of Mr Wei’s camp and I accept Mr Tung to be a truthful witness after listening to his evidence.  Despite the final outcome of the case, there is no merit in the striking out application which was made at the commencement of the trial.

36.  I now listen to the parties’ submissions on the final wording of the order and the costs of the striking out application.

HCA 1062/2013 &
HCA 1660/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1062 OF 2013

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HCA 1660/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1660 OF 2013

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DECISIONON COSTS

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Background

1.  On 20 April 2016, I handed down decision (“Decision”) in HCA1062/2013 in which Million Decade Limited (“Million Decade”) sued Tung Fai (or Dong Hui, “Tung”) (“MD Action”) and in HCA1660/2013 in which Tung sued Wei Dong (“Wei”) (“Tung Action”). These two actions were related to HCA1063/2013 in which Top Ample Limited sued Tung. For convenience, I adopt the abbreviations in the Decision.

2.  The Decision was in respect of 2 appeals: (a) the WS Appeal filed on 29 September 2015 by Million Decade in the MD Action against the Registrar’s WS Order dated 15 September 2015 inter alia dismissing Million Decade’s WS Amended Summons filed on 26 May 2015 for leave to file/serve the Weis’ 3^rd witness statements with 50% costs of the hearing to Tung, and (b) the FBP Appeal filed on 17 November 2015 by Wei in the Tung Action against the Registrar’s FBP Order dated 13 November 2015 dismissing inter alia Wei’s FBP Summons filed on 7 July 2015 for an order that Tung do file/serve FBP of the SoC with costs to Tung.

3.  In fact, apart from the FBP Appeal, Wei’s appeal in the Tung Action filed on 17 November 2015 (“TA Appeal”) also included (at least initially) an appeal against the Registrar’s order dated 13 November 2015 allowing Wei’s Interrogatories Summons filed on 20 July 2015 for an order that Wei’s interrogatories dated 6 July 2015 be withdrawn with costs to Tung (“Interrogatories Order”) (“Interrogatories Appeal”).

4.  The Registrar summarily assessed the combined costs payable to Tung under the FBP Order and the Interrogatories Order (ie the Assessed Costs) in the sum of $125,430.

5.  By the time of the Appeal Hearing, Wei no longer pursued the Interrogatories Appeal.

6.  As explained in paragraphs 5-6 of the Decision, Million Decade’s summons for leave to file/serve the Weis’ 3^rd witness statements had metamorphosed from the original summons filed on 26 May 2015 annexing original drafts of the Weis’ 3^rd witness statements to the WS Amended Summons annexing the Weis’ revised draft 3^rd witness statements. Since lodging the WS Appeal, Million Decade made further revisions to the Weis’ draft 3^rd witness statements (ie Weis’ Latest WS Drafts), and by summons filed on 12 November 2015 (“WS Amendment Summons”) Million Decade applied to for leave to amend the WS Appeal to seek an alternative order for leave to file/serve the Weis’ Latest WS Drafts, which leave was granted by this court at the Appeal Hearing with costs of and occasioned by such summons to be paid to Tung in any event.

7.  By the Decision, I granted the following order in the MD Action:

(a) the WS Amended Appeal be dismissed; and

(b) there be a costs order nisi that Million Decade shall pay costs of the WS Amended Appeal to Tung to be taxed if not agreed with certificate for two counsel.

8.  By the Decision, I granted the following order in the Tung Action:

(a) the FBP Appeal be allowed to the extent that Tung shall file/serve the FBP as per the 1^st Request for FBP in the Request filed on 29 June 2015 within 14 days from the date of the order;

(b) there be a costs order nisi that:

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

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

(iii) if (i)-(ii) above shall become absolute upon expiry of 14 days from the date of the order, the Registrar shall upon receipt of the Wei Notice referred to in (iv) below apportion the Assessed Costs of $125,430 between the FBP Assessed Costs and the Interrogatories Assessed Costs such that the Interrogatories Assessed Costs do stand and the FBP Assessed Costs shall be subject to (ii) above;

(iv) if (i)-(ii) above shall become absolute upon expiry of 14 days from the date of the order, Wei shall within 7 days thereafter give the Wei Notice to the Registrar (with copy to Tung) to (1) confirm (i)-(ii) above have become absolute, and (2) draw the Registrar’s attention to the Apportionment Direction in (iii) above; and

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

9.  On 5 May 2016, Tung filed a summons in the MD Action for variation of the costs order nisi made under the Decision (“MD Costs Summons”) to the effect that:

(a)   Million Decade shall pay Tung 60% of the costs of the WS Amended Appeal and the WS Amendment Summons in the MD Action and the TA Appeal (ie the FBP and Interrogatories Appeals) in the Tung Action to be summarily assessed with certificate for two counsel;

(b)   Tung do lodge and serve his Statement of Costs within 7 days from the date of the order to be made; and

(c)   Million Decade do lodge and serve its List of Objections (if any) within 7 days thereafter.

Tung also sought time extension (if necessary) for such application, and asked for costs of the application to be provided for and be summarily assessed.

10.  On 5 May 2016, Tung filed a summons in the Tung Action for variation of the costs order nisi made under the Decision (“Tung Costs Summons”) to the effect that:

(a)   Wei shall pay to Tung 10% of the costs of TA Appeal  (ie the FBP and Interrogatories Appeals) in the Tung Action and the WS Amended Appeal and WS Amendment Summons in the MD Action to be summarily assessed with certificate for two counsel;

(b)   Tung do lodge and serve his Statement of Costs within 7 days from the date of the order to be made;

(c)   Wei do lodge and serve his List of Objections (if any) within 7 days thereafter.

Tung also sought time extension (if necessary) for such application and asked for costs of the application to be provided for and be summarily assessed.

11.  On 17 May 2016, I granted inter alia the following directions:

(a)   the MD and Tung Costs Summonses be dealt with by way of paper disposal;

(b)   the letter from Tung’s solicitors to this court dated 4 May 2016 do stand as Tung’s written submissions in support of such summonses;

(c)   for the MD Action, Million Decade do lodge and serve written submissions not exceeding 2 pages in response (if any) on or before 27 May 2016, and Tung do lodge and serve written submissions not exceeding 1 page in reply (if any) within 7 days thereafter; and

(d)   for the Tung Action, Wei do lodge and serve written submissions not exceeding 2 pages in response (if any) on or before 27 May 2016, and Tung do lodge and serve written submissions not exceeding 1 page in reply (if any) within 7 days thereafter.

12.  Million Decade and Wei lodged the written submissions of their counsel Mr Yu in opposition on 27 May 2016. Tung lodged the written submissions of his solicitors in reply on 3 June 2016.

13.  In principle, Tung did not dispute that there be no order as to costs in respect of the FBP Summons and FBP Appeal. However, Tung claimed (a) he was entitled to some costs in respect of Wei’s abandoned Interrogatories Appeal in the Tung Action, (b) the costs of the WS Amended Appeal, FBP Appeal and Interrogatories Appeal should be apportioned in the ratios of 60%, 30% and 10% respectively, (c) the costs of the WS Amended Appeal and Interrogatories Appeal (ie 60% and 10% respectively of the overall costs of the overall appeals) should be summarily assessed, and (d) the Apportionment Direction in paragraph 8(b)(iii)-(iv) above shall remain undisturbed.

Costs of the Interrogatories Appeal

14.  Tung’s solicitors rightly reminded this court that the TA Appeal filed by Wei on 17 November 2015 in the Tung Action covered both the FBP Appeal and Interrogatories Appeal.

15.  Tung claimed it was only on 10 March 2016 (ie 3 clear days before the Appeal Hearing) that Wei formally and openly abandoned the Interrogatories Appeal by way of the written submissions by Wei’s senior counsel Mr Lam SC, but by then much advisory and preparatory work relating to the Interrogatories Appeal had already been done by Tung’s side (including but not limited to the preparation of draft skeleton submissions opposing the Interrogatories Appeal), hence associated costs had been wasted as a result of Wei’s late abandonment of the Interrogatories Appeal. Tung therefore argued he should be allowed some costs in respect of the abandoned Interrogatories Appeal.

16.  Mr Yu urged this court not to make any order for apportionment of costs for briefing counsel and for solicitors’ attendance at the Appeal Hearing in respect of the Interrogatories Appeal because:

(a)   by a without prejudice save as to costs letter dated 1 March 2016 (ie about 2 weeks before the Appeal Hearing) (“W/P Letter”), Million Decade’s and Wei’s solicitors proposed inter alia that the Interrogatories Appeal be withdrawn with costs up to 29 February 2016 to Tung;

(b)   although the W/P Letter foreshadowed Wei’s abandonment of the Interrogatories Appeal, Tung did not seek clarification as to whether Wei was pursuing the Interrogatories Appeal or make any counter-offer with a view to saving time and costs for preparing the Interrogatories Appeal;

(c)   although Tung accepted that the Interrogatories Appeal was not argued at the Appeal Hearing and time/effort spent on such appeal were relatively moderate, such submission ignored the fact that counsel would have to be briefed to argue the WS Amended Appeal, WS Amendment Summons and FBP Appeal in any event, and there was no indication as to how counsel’s brief fees would have been different (if at all) had the Interrogatories Appeal been abandoned earlier; and

(d)   it was relevant that parties should be encouraged to settle their disputes and make sensible concessions, and Wei made a sensible concession that saved a substantial amount of costs and the court’s time.

17.  The starting point is that costs of the Interrogatories Appeal were not limited to the costs of briefing counsel for the Appeal Hearing. Tung started to incur costs once the Interrogatories Appeal was served on him. If there were any costs incurred in relation to the Interrogatories Appeal (eg perusal and consideration of the TA Appeal insofar as it related to the Interrogatories Appeal, advice to client and taking client’s instructions on such appeal, etc), prima facie they should follow event, ie Wei should pay such costs to Tung.

18.  Even according to the W/P Letter, Wei offered to pay costs of the Interrogatories Appeal up to 29 February 2016. The relevant question is whether Wei should be liable for the costs of the Interrogatories Appeal on and after 1 March 2016. Wei put forward the W/P Letter as basis for not apportioning any costs for the Interrogatories Appeal after 29 February 2016. I am not persuaded this provided a sufficient answer.

19.  First, as Tung’s solicitors submitted, by 1 March 2016 it was just 2 weeks before the Appeal Hearing and brief fees for Tung’s counsel had been agreed with briefs delivered to counsel. They further explained that since Tung had not engaged senior counsel at the hearings below, it was reasonable for him to engage senior counsel in advance to ensure that senior counsel had ample opportunity to familiarise himself with the case and to prepare for the Appeal Hearing. In my view, it was not an unreasonable stance for Tung to adopt. Indeed, one would naturally expect Tung to have already committed on engaging senior counsel 2 weeks before the Appeal Hearing given the time required to get up to speed on the case and to prepare written submissions.

20.  Secondly, the W/P Letter referred to the WS Appeal, WS Amendment Summons, and the TA Appeal, and stated that “we, on behalf of our clients, hereby propose the following Orders” “[in] relation to the [WS Appeal] and the [WS Amendment Summons] (and the [WS Amended Appeal] annexed thereto)” in terms as set out in items 1.1-1.2 therein, and “[in] relation to the [TA Appeal]” in terms as set out in items 2.1- 2.2 therein. The last paragraph in the W/P Letter went on to say as follows:

“Please confirm in writing by 12:00 noon on Friday, 4^th March 2016 whether your client consents to the Orders proposed above. If yes, we shall send you the appropriate Consent Summonses for your signing on behalf of your client. If no, we shall, if thought fit, produce this letter to the Court as and when the question of costs arises.”

21.  Tung’s solicitors suggested that a fair reading of the W/P Letter gave the impression that Million Decade and Wei simply used the offered abandonment of the Interrogatories Appeal as leverage to induce Tung to fully concede on the WS Appeal (which eventually did not succeed) and FBP Appeal (which eventually was not entirely successful), which approach was a far cry from an outright concession on the Interrogatories Appeal. Tung argued it was disingenuous for Wei to now submit that the abandonment of the Interrogatories Appeal was foreshadowed in the W/P Letter, especially when there was nothing to prevent Wei from making such outright abandonment earlier on. 

22.  In my view, although the WS Appeal and WS Amendment Summons in the MD Action and the TA Appeal (ie the FBP and Interrogatories Appeals) in the Tung Action were heard together, they were separate appeals/application in two separate actions, and hence a fair reading of the W/P Letter would require focus on Wei’s proposal in respect of the “2^nd Notice of Appeal” (ie the TA Appeal), which proposal was set out in items 2.1-2.2 in the W/P Letter. I find that a fair reading of such proposal together with the last paragraph of the W/P Letter was that Wei’s proposal for abandoning the Interrogatories Appeal and for allowing the FBP Appeal with costs to Wei was a bundled proposal for overall disposal of the “2^nd Notice of Appeal” in the Tung Action.

23.  I accept that usually one would expect some engagement in further negotiation,[1] but was Tung’s failure to negotiate in the present case so unreasonable as to result in penalty on costs against him? It must be remembered that the Interrogatories Appeal was Wei’s appeal against the Interrogatories Order, and by 29 February 2016 Tung’s solicitors had delivered briefs to counsel that covered the Interrogatories Appeal. As far as Tung was concerned, almost all (if not indeed all) disbursements in respect of counsel’s fees in respect of the Interrogatories Appeal had been incurred. But in relation to solicitors’ costs, given the open abandonment of the Interrogatories Appeal on 10 March 2016, Tung in any event could not have claimed for costs of solicitors’ attendance at the Appeal Hearing in respect of such appeal since such appeal was no longer extant before this court at such hearing. In my view, the lack of further negotiation by Tung in response to the W/P Letter was not so unreasonable as to justify penalising Tung in costs for the Interrogatories Appeal when no practical savings could have been achieved. 

24.  There was also no merit in Mr Yu’s suggestion that counsel’s brief fees should not be apportioned for the purpose of the Interrogatories Appeal because there was no indication how such brief fees would have been different (if at all) had the Interrogatories Appeal been abandoned earlier. The reality was that the Interrogatories Appeal was not abandoned earlier, and Tung should not be penalised for not being able to say what would have happened in a hypothetical position. In fact, counsel were briefed for various appeals/application including the Interrogatories Appeal, and apportionment would have been a necessary exercise in any assessment/taxation of costs in respect of the Interrogatories Appeal. Such exercise would not be unfamiliar to any taxing master.

25.  In the circumstances, I hold that Tung is entitled to costs of the Interrogatories Appeal.

Apportionment of costs

26.  Tung urged for a broad brush apportionment of costs in respect of the WS Amended Appeal, FBP Appeal and Interrogatories Appeal (including costs of the Appeal Hearing) since this court presided over the Appeal Hearing and would be familiar with the relevant documents and submissions. Even if this court were not minded to grant summary assessment of costs, Tung considered an indication as to the apportionment of costs of all appeals would certainly be helpful in reducing the time and costs to be incurred over the taxation of costs.

27.  Tung went on to say that since the WS Amended Appeal (which involved going through a number of tedious and long-winded witness statements) occupied most time and effort, and the Interrogatories Appeal (which was eventually abandoned and not argued at the Appeal Hearing) required relatively moderate time and effort, an appropriate apportionment of costs amongst the WS Amended Appeal, FBP Appeal and Interrogatories Appeal should be 60%, 30% and 10% respectively.

28.  However, the starting point is that the MD and Tung Actions were separate legal actions involving different parties. The MD and Tung Actions had not been consolidated into one single legal action. Their only interaction for the purpose of the Appeal Hearing was that the WS Amended Appeal and WS Amendment Summons in the MD Action and the FBP Appeal in the Tung Action were heard together at the same hearing. Nevertheless, they remained separate applications in separate actions.

29.  In considering the MD and Tung Costs Summonses, given that the MD and Tung Actions were separate actions involving different parties, it is difficult to understand why (as proposed in the MD and Tung Costs Summonses):

(a)   Million Decade should pay Tung 60% of inter alia the costs of the TA Appeal  in the Tung Action with certificate for two counsel; and

(b)   Wei should pay to Tung 10% of inter alia the costs of the WS Amended Appeal and WS Amendment Summons in the MD Action with certificate for two counsel.

After all, Million Decade was a non-party to the Tung Action, and Wei was a non-party to the MD Action. No cogent grounds had been put forward to justify why such non-parties should be liable to costs in terms as formulated in the MD and Tung Costs Summonses.

30.  I agree with Mr Yu that it is in principle incorrect to lump together the costs of the WS Amended Appeal, WS Amendment Summons and Interrogatories Appeal. It must be remembered that such costs were not limited to counsel’s brief fees and solicitor’s attendance for the Appeal Hearing, but cover overall costs of those appeals/application. Mr Yu also rightly reminded that this court has granted a final costs order in respect of the WS Amendment Summons.

31.  However, it is useful for this court seized with the WS Amended and TA Appeals to apportion counsel’s brief fees and costs of solicitors’ attendance at the Appeal Hearing. Insofar as counsel’s brief fees were concerned, I find that in all the circumstances the appropriate and reasonable apportionment amongst the WS Amended Appeal, WS Amendment Summons, FBP Appeal and Interrogatories Appeal would be 55%, 5%, 30% and 10% respectively. Insofar as solicitors’ attendance at the Appeal Hearing, I find that in all the circumstances the appropriate and reasonable apportionment amongst the WS Amended Appeal, WS Amendment Summons and FBP Appeal to be 60%, 5%, 35% respectively. I bear in mind that the Interrogatories Appeal did not feature in relation to solicitors’ attendance at the Appeal Hearing.

32.  In coming to the above apportionments, I have taken into account the overlap in background matters for the WS Amended and FBP Appeals. However, for the purpose of the WS Amended Appeal at the Appeal Hearing, both Mr Lam SC for Million Decade and Mr Tong SC for Tung had laboriously gone through the Weis’ Latest WS Drafts in some detail with cross-references to the Weis’ 1^st and 2^nd witness statements, and at times Mr Tong SC referred to earlier drafts of the Weis’ 3^rd witness statements in order to make his points. I am not persuaded this detailed wide-ranging exercise was necessary for the FBP Appeal which was more narrowly focused. Although Million Decade only relied on the Weis’ Latest WS Drafts for the purpose of the WS Amended Appeal, it did not preclude Mr Tong SC from making references to the earlier drafts in order to establish his contentions in opposing such appeal, which he eventually succeeded. In all the circumstances, more time was spent on the WS Amended Appeal than on the other appeals/application.

Summary assessment or taxation of costs

33.  Tung submitted that much time/costs as well as the court’s resources could be saved if the costs of the WS Amended Appeal could be summarily assessed in lieu of full taxation. Since the WS Amended Appeal, FBP Appeal and Interrogatories Appeal (subsequently abandoned) were all heard together, if the costs of the WS Amended Appeal were to be taxed, it was likely that all the works concerning the other appeals would be brought out and taken into account by the taxing master when taxing the costs of the WS Amended Appeal, which would be inefficient in terms of time and costs, especially when there was no order as to costs in respect of the FBP Appeal.

34.  Mr Yu submitted that summary assessment was not appropriate because (a) the costs of the WS Amendment Summons would have to be taxed if not agreed in any event so it would be undesirable to have 1 set of related costs taxed after trial and another set of related costs summarily assessed forthwith, and (b) it was likely that counsel’s brief fees would be significant given the involvement of senior counsel and relatively senior junior counsel so Million Decade and Wei should be given a fuller opportunity to be heard on quantum in the course of taxation.

35.  Whilst this court has taken the opportunity to make apportionment in respect of counsel’s brief fees and cost of solicitors’ attendance at the Appeal Hearing, there would be a host of other costs items in relation to the WS Amended Appeal and Interrogatories Appeal which are presently unknown but which might be intertwined between them and also with the FBP Appeal. Related works and apportionment of costs in relation to those works would be inevitable whether the relevant costs were taxed or assessed.  But given the need for this exercise, it is more suitable for taxation rather than summary assessment. However, I see the force in Tung’s submissions that taxation could proceed forthwith as these interlocutory matters would not turn on the ultimate merits of the case at trial. Further, Million Decade’s concern over the interaction between costs of the WS Amendment Summons (which were to be taxed in any event) and costs of the WS Amended and FBP Appeals (which I am now persuaded should be taxed forthwith) had been largely overcome by the aforesaid apportionments which would aid the taxing master in assessing quantum in the course of taxation. In any event, costs of the WS Amendment Summons would be minor compared with the other costs.

Conclusion

36.  In the circumstances, in respect of the Tung Costs Summons, I grant the following costs order absolute:

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

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

(c)   Wei do pay Tung costs of the Interrogatories Appeal (including all costs reserved if any) to be taxed forthwith if not agreed with certificate for two counsel;

(d)   the Registrar shall upon receipt of the Wei Notice referred to in (e) below apportion the Assessed Costs of $125,430 between the FBP Assessed Costs and the Interrogatories Assessed Costs such that the Interrogatories Assessed Costs do stand and the FBP Assessed Costs shall be subject to (b) above (ie the Apportionment Direction);

(e)   Wei shall within 7 days from the date hereof write to the Registrar (with copy to Tung) to draw the Registrar’s attention to the Apportionment Direction in (d) above;

(f)   to assist the taxing master, counsel’s brief fees for the Appeal Hearing are apportioned as to 30% and 10% for the FBP Appeal and Interrogatories Appeal respectively; and

(g)   to assist the taxing master, cost of solicitors’ attendance for the Appeal Hearing are apportioned as to 35% for the FBP Appeal.

37.  In the circumstances, in respect of the MD Costs Summons, I grant the following costs order absolute:

(a)   Million Decade shall pay costs of the WS Amended Appeal to Tung (including all costs reserved if any) to be taxed forthwith if not agreed with certificate for two counsel;

(b)   to assist the taxing master, counsel’s brief fees for the Appeal Hearing are apportioned as to 55% and 5% for the WS Amended Appeal and WS Amendment Summons respectively; and

(c)   to assist the taxing master, cost of solicitors’ attendance for the Appeal Hearing are apportioned as to 60% and 5% for the WS Amended Appeal and WS Amendment Summons respectively.

38.  As for costs of the Tung and MD Costs Summonses, neither Million Decade and Wei on the one hand nor Tung on the other hand succeeded entirely on their respective contentions. I consider the appropriate costs order to be no order as to costs in respect of both summonses.

HCA 1062/2013 &

HCA 1660/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1062 OF 2013

________________________

________________________

HCA 1660/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1660 OF 2013

________________________

________________________

_______________

DECISION

_______________

I. INTRODUCTION

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

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

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

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

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

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

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

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

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

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

II. BACKGROUND OF THE ACTIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

III. FBP APPEAL

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

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

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

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

……

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

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

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

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

(a) 1^st Request

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(b)  2^nd and 3^rd Requests

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

IV. WS AMENDED APPEAL

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(a)  Section B1

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

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

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

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

(b)  Section B2

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

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

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

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

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

(c)  Section B3

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

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

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

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

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

(d)  Section B4

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

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

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

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

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

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

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

(e)  Section B5

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

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

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

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

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

(f)  Section B6

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

(g)  Section C

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

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

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

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

(h)  Summary

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

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

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

HCA 1062/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1062 OF 2013

________________________

AND

HCA 1063/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1063 OF 2013

________________________

AND

HCA 1660/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1660 OF 2013

________________________

________________________

_____________

DECISION
_____________

THE APPLICATIONS

1. This is the hearing of the applications by way of:

(1) Wei Dong’s Summons that Tung Fai do file and serve the further and better particulars of the Statement of Claim in HCA1660/2013; and

(2) Tung Fai’s Summons for withdrawal of the interrogatories dated 6 July 2015 in HCA1660/2013.

2. These applications are contested and the parties are legally represented.[1]

THE FACTUAL BACKGROUND

3. I had set out the brief factual background in my previous Decision, which was delivered on 15 September 2015. Here I wish to focus the relevant facts on the applications below.

4. HCA 1062/2013 and HCA 1063/2013 are two actions taken out by Wei Dong through the companies under his control, viz: Million Decade Ltd (“Million Decade”) and Top Ample Ltd (“Top Ample”) against Tung Fai for repayments of the respective loans of $25,400,000 and $9,600,000 allegedly made by the companies to him.  Tung Fai is the plaintiff in HCA 1660/2013 claiming against Wei Dong for HK$51,101,323.30 (plus interest) pursuant to an oral agreement as set out below.

5. The disputes between Wei Dong and Tung Fai arose from their agreement in Chinese “境外上市合作協議” dated 7 June 2003 [2] （”the Cooperation Agreement”）whereby Tung Fai agreed to assist Wei Dong to have Fu Ji Food and Catering Services Holdings Ltd. (“Fu Ji”) listed in the Stock Exchange of Hong Kong.  Under the Cooperation Agreement, Tung Fai would, if Fu Ji was successfully listed in the Hong Kong Stock Exchange, obtain certain percentage of the shareholdings of Fu Ji subject to the conditions stated therein.

6. The Cooperation Agreement was not signed because in around June 2004, Tung Fai advised Wei Dong that “it would give rise to serious problems in relation to the proposed listing of Fu Ji under the laws and regulations of Hong Kong and therefore had to be cancelled. Accordingly, the Cooperation Agreement was cancelled by mutual agreement…”[3]

7. Fu Ji was successfully listed in the Hong Kong Stock Exchange and Wei Dong admits that Tung Fai had assisted in the listing of Fu Ji. [4]

8. The above facts were not in dispute.  What follow are issues of dispute between Wai Dong and Tung Fai.

9. Tung Fai says that in place of the Cooperation Agreement, there had been an oral agreement (“the Oral Agreement”) between him and Wei Dong that in consideration of the works to be done by him, Wei Dong would pay him $150 million for successful listing of Fu Ji and would further award him $50 million if he continued to work at Fu Ji after its successful listing for five years.

10. Tung Fai says that he had performed the terms of the Oral Agreement and is therefore entitled to $200 million from Wei Dong whereas Wei Dong denies that he had entered into the Oral Agreement as alleged, or any other agreement on like terms with Tung Fai.[5]  However, the pleadings have been amended to say that Tung did not perform his obligations under the Alleged Oral Agreement.  He failed to participate in the whole process of the listing application and did not pay all the costs of the listing. In the further alternative, Wei Dong pleaded that Tung Fai did not stay in management for 5 years after listing as Fu Ji went into voluntary liquidation and provisional liquidators were appointed in October 2009.[6]

11. Wei Dong admits that Tung Fai had advised and assisted on the listing of Fu Ji, which was ultimately successful in December 2004, and that he was an executive director for a period of not less than 5 years[7]and that Million Decade had paid him the amount of$38,688,676.70 during the period between 2005 to 2008 as ex gratia payment.  The claims in HCA 1062 and 1063 of 2013 are for the amounts of $25,400,000 and $9,600,000 respectively paid by Million Decade and Top Ample, both controlled by Wei Dong as loans to Tung Fai.

12. Tung Fai admitted receipt of the amounts claimed, but he disclaims liability of repayment because the moneys were paid in satisfaction of the agreed sums totally $200 million under the Oral Agreement.[8]

13. Tung Fai also says that another sum of $80 million was paid by Wei Dong into a joint venture company controlled by his wife and Wei Dong’s wife for a hotel project in China.  Taking all the monies received into account, Tung Fai therefore claims against Wei Dong the balance of HK$51,101,323.30 (plus interest) in HCA 1660/2013.

14. The above are the factual bases for the applications.

FURTHER AND BETTER PARTICULARS

The relevant legal principles

15. This application is made under Order 18 rule 12 of the Rules of the High Court (RHC), the relevant provisions of which are:

“12. Particulars of pleading (O. 18, r. 12)

(1) Subject to paragraph (2), every pleading must contain the necessary particulars of any claim, defence or other matter pleaded including, without prejudice to the generality of the foregoing-

(a) particulars of any breach of trust, wilful default on which the party pleading relies;

……

(c) where a claim for damages is made against a party pleading, particulars of any facts on which the party relies in mitigation of, or otherwise in relation to, the amount of damages. (L.N. 404 of 1991)

(3) The Court may order a party to serve on any other party particulars of any claim, defence or other matter stated in his pleading, or in any affidavit of his ordered to stand as a pleading, or a statement of the nature of the case on which he relies, and the order may be made on such terms as the Court thinks just.

(3B) No order shall be made under paragraph (3) unless the Court is of the opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs. (L.N. 152 of 2008)”

16. Wei Dong relies upon the legal principles set out in Well Joint Trading v Chiu, (unrep., HCA1768/2011, 9 July 2012), §§14-17: 

a.  The requirement to give particulars reflects the overriding principle that the litigation between the parties should be conducted fairly, openly and without surprises.

b.  Pleadings should enable the other side to know with what evidence they ought to prepare for trial.

c.   Care must be taken to plead issues clearly, and not draft pleadings either vaguely or ambiguously perhaps in the hope that the other side might not readily or easily understand a party’s real case.

d.  It is for the party applying for the order to satisfy the Court that the order is necessary either for disposing fairly of the cause or matter, or for saving costs. It is not enough for him merely to show that the particulars requested are relevant.

Tung Fai has no dispute about the above principles.

17. Tung Fai relies upon the legal principles in Aktieselskabet Dansk Skibsfinansiering v Wheelock Marden & Co Ltd & Ors [1994] 2 HKC 264 Bokhary JA (as he then was) said at 269E-270E that the purpose of pleadings are:

a. To inform the other side of the nature of the case that they have to meet as distinguished from the mode in which that case is to be proved;

b. To prevent the other side from being taken by surprise at the trial;

c. To enable the other side to know with what evidence they ought to be prepared and to prepare for trial;

d. To limit the generality of the pleadings, the claim and the evidence;

e. To limit and define the issues to be tried, and as to which discovery is required;

f. To tie the hands of the party so that he cannot without leave go into any matters not included (although if opponent omits to ask for particulars, evidence may be given which supports any material allegation in the pleadings).

18. Pleadings should be as brief as the nature of the case will admit. (per Lord Denman CJ in Williams v Wilcox [1838] 8 A&E 314 at 331; Shun Lin Weaving Factory Ltd v Eva Siu Cheung Yee Wah & Another [1980] 1 HKC 605 at 613).

19. As long as the pleadings do convey the nature of the party’s case and state the material facts, they should not attract applications for further and better particulars to clarify pleadings even though some details that are likely to come forth in discovery or witness statements are not disclosed.  McPhilemy v Times Newspapers Ltd & Ors [1999] 3 All ER 775

20. “…excessive particulars can achieve directly the opposite result from that which is intended.  They can obscure the issues rather than providing clarification.  In addition, after disclosure and the exchange of witness statements, pleadings frequently become of only historic interest. ……the case is overburdened with particulars and simpler and shorter statements of case would have been sufficient.  Unless there is some obvious purpose to be served by fighting over the precise terms of a pleading, contests over their terms are to be discouraged….” Lord Woolf’s remarks at p.793 of McPhilemy.

21. In assessing whether it is “necessary” to order the provision of further and better particulars, one must bear in mind the fundamental functions of pleadings, as stated by Ma CJHC (as he then was) in Wing Hang Bank Ltd v Crystal Jet International& Others [2005] 2 HKLRD 795 at 799:

“…(2) In a trial, particularly where evidence is given by witnesses, it becomes extremely important that each side knows exactly what are the live issues.”

22. Requests for further and better particulars should not be made for the purpose of cross-examining the other side.  If the case pleaded by the other side is clear, then it is not for the receiving end to demand for F&BP simply in the hope that it would expose some weaknesses of such a pleaded case: see Qihoo 360 Technology Co Ltd v Fu Sheng (unreported, HCA 1637/2011, 30 April 2013) at §13 per Master H. Au-Yeung.

The particulars requested under paragraph 13

23. These particulars, as submitted by Wei Dong, relate to the alternative pleaded defence, viz. Tung Fai has not fully performed the terms of the Oral Agreement and he wants the particulars of Tung Fai’s performance.

24. Wei Dong submits that as his alternative case is based on Tung Fai’s failure to fully perform the Alleged Oral Agreement, it entitles him to succeed in his defence in HCA1660/2013 even if the existence of the Alleged Oral Agreement is proved.Wei Dong expressly denies that Tung Fai had performed his obligations under the Alleged Oral Agreement. Tung Fai submits that Wei Dong’s defences are bare denials.

25. Paragraph 13 of the Statement of Claim in HCA1660/2013 pleads that Tung Fai had fully performed his obligations under the Cooperation and/or the Oral Agreement, in particular, for the purpose of the Listing Application, he:

“(a) Successfully effected a re-organisation of the Listing Entity’s corporate structure;

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

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

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

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

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

(g) Assisted intermediaries in the training of the management of the Listed Entity;

(h) Introduced investors as strategic shareholders of the Listed Entity;

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

(j) Organised and facilitated the work of all intermediaries and professional advisers mentioned above during the process of the Listing Application.”[9]

26. Tung Fai opposes these requests.  He says that the current requests ask for more “particulars” about the particulars already pleaded in §13(a) to (j) of the Statement of Claim.  The particulars include:

a.  The exact identities of the intermediaries and advisors engaged: e.g. 1.2(1), 1.3(1), 1.4(1), 1.5(1), 1.6(1), 1.7(1), 1.8(1)

b.  The exact timing of the work undertaken: e.g. 1.1(2), 1.2(2), 1.3(2), 1.4(2), 1.5(2), 1.6(2), 1.7(2), 1.10(2)

c.   The exact description and scope of the work undertaken: e.g. 1.1(1), 1.1(3), 1.2(3), 1.3(3), 1.4(3), 1.5(3), 1.6(3), 1.7(3), 1.8(2), 1.9(2). 1.10(1)

d.  The exact dates, amount, payor and payee of the payments: e.g. 1.2(4), 1.3(4), 1.4(4), 1.5(4), 1.6(4), 1.7(4), 1.8(3), 1.9(1), 1.9(3)[10]

27. There is no restriction on making particulars upon particulars given if those given are not clear enough or insufficient.  The courts are hearing similar applications from time to time. The fundamental principle is that evidence should not be pleaded in the pleadings, only the necessary particulars of the claim should be pleaded. See O.18, rule 12(1) above.

28. Before discussing the arguments between the parties, it will be useful to look at the Amended Defence, in particular, §9, which disputes paragraph 13 of the Statement of Claim.  I shall set out the full terms of this paragraph below:

(1) The first sentence of paragraph 13 is denied.  The Defendant avers that the Cooperation Agreement had been cancelled and the Alleged Oral Agreement did not and does not exist at all.

(2) Save that the Plaintiff has advised and assisted on the listing of Fu Ji Holdings, the second sentence of Paragraph 13 (including Sub-Paragraphs (a) to (i) is not admitted.

(3) The Defendant further avers that even if, which is denied, the Alleged Oral Agreement existed, it is denied that the Plaintiff had performed his alleged obligations under the Alleged Oral Agreement in that:

a. the Plaintiff did not participate and was not involved in the “the whole process” of the Listing Application in breach of his alleged obligation pleaded in Paragraph 12(c), as a significant part of the process of the Listing Application was handled by the Sponsor, CAF Securities, and the team of professionals without the participation and/or involvement of the Plaintiff and

b. the Plaintiff did not pay all the costs of the Listing Application in breach of the obligation pleaded in Paragraph 12(d), as a significant part of the costs of the Listing Application were paid by the Fu Ji Group and not by the Plaintiff.”

29. Paragraph 12(c) of the Statement of Claim pleads “The plaintiff shall participate and be involved in the whole process of the Listing Application.”

30. Paragraph 12(d) of the Statement of Claim pleads “The plaintiff shall be responsible for paying all the costs of the Listing Application, …”

31. Whether the requests for further and better particulars should be entertained has to be ultimately determined by reference to the basic principles as set out in the authorities above, in particular, Ping Kai Engineering Co Ltd v Hong Kong Teakwood Works Ltd (unreported, HCCT 2/2001, Ma J (as he then was) 6 February 2002) “17. The function of particulars is to inform an opponent of the case he has to meet at trial: see Hong Kong Civil Procedures 2002 at paragraph 18/12/1.  Thus, the provision of full and proper particulars not only enables the parties and the Court properly to prepare for trial, it also serves the important function of encouraging settlement.  Settlements rarely occur without each side knowing the full and precise extent of the case made against him.”

32. Wei Dong submits that the purpose of asking for the particulars is to allow him to prepare his case against Tung Fai in his defence in HCA 1660/2013, such as if Tung Fai says that he had engaged auditors and accountants or legal advisors or the investment banks, he must be able to verify with those named identities in order to test Tung Fai’s evidence at trial.  Otherwise, if Tung Fai claims in the course of cross-examination for the first time that he had engaged certain professionals or intermediaries who are not identified in the pleadings, it will be too late by then for Wei Dong to carry out investigations or seek discovery to verify whether Tung Fai is telling the truth.  It is clearly necessary to have particulars of these matters now.[11]

33. Tung Fai certainly has the burden of proof of the facts as stated in his Statement of Claim, in particular, those facts as pleaded in paragraphs 12 and 13, subject to cross-examination by counsel acting for Wei Dong at the trial.

34. However, I have referred to Tung Fai’s witness statement, in which he said that he had caused his company Sky Achieve Limited to pay the expenses and as the events took place more 10 years ago, he did not keep documentary records; he had stood as the guarantor for the tenancy of an office of the company for the listing of Fu Ji and he had introduced “法資里昂証卷旗下投資基金公司” to Fu Ji.

35. Paragraph 13 of the Statement of Claim sets out the particulars of the works done under the Oral Agreement. Tung Fai now complains that what Wei Dong is asking are the evidence in support of the particulars.  I tend to agree with Tung Fai’s argument.

36. The purpose of the particularized pleadings is to inform the other party the nature of one’s case so that the other is in a position to prepare his case.  Aktieselskabet Dansk Skibsfinansiering v Wheelock Marden & Co Ltd & Ors.

37. The fact remains that Wei Dong has amended his Defence upon the existing Statement of Claim.  He is putting Tung Fai to proof of his case.  The fact also remains that Fu Ji had been successfully listed in Hong Kong Stock Exchange. Wei Dong had admitted that Tung Fai had rendered assistance for the listing of Fu Ji and Million Decade had paid him the amount of $38,688,676.70 during the period between 2005 to 2008 as ex gratia payment.  Wei Dong is in control of Million Decade and the payments were made for Tung Fai’s performance.

38. The particulars under paragraph 13 of the Statement of Claim were set out in support of the performance of the terms of the Oral Agreement as pleaded in paragraph 12 of the Statement of Claim.  Tung Fai is not obliged to plead the evidence for proof of the particulars in the pleadings.  Shun Lin Weaving Factory Ltd.

39. Wei Dong’s concern that some professionals may be called at the trial is, in my view, too remote and even unreal.  Tung Fai has served the witness statements and if he is to summon someone not mentioned in the witness statements, he has to obtain leave from the court.  If he is to subpoena a witness to give evidence at trial, he has to apply for it and Wei Dong can raise objections to such applications.

40. I also agree that such requests for particulars amounts to cross-examination of Tung Fai on the particulars, which is prohibited as held in Well Joint Trading.

Paragraph 20

41. The particulars in relation to paragraph 20 (c) and (d) of the Statement of Claim in HCA 1660/2013 refer to the injection of $80 million to the joint venture company for the hotel project in China.

42. Wei Dong submits: “it is true that some of these matters have been covered in evidence: see 1st Tung WS, §31(8)-(10) [C/53] where Tung claims that there was an oral agreement on the matters in §59 above in around April and May 2005…. It is necessary to bind Tung to his pleaded case.  The alleged agreement that HK$80 million be treated as partial payment or set-off, as presently pleaded, is undated. While Tung seems to suggest in his witness statement that this agreement was made in April/May 2005, when cornered at trial he may rely on other dates or other oral agreements on the matter with impunity unless he is bound to a definite case on his pleadings. [12]”

43. Obviously, the purpose of asking for particulars of this paragraph is to either establish Wei Dong’s case that the Oral Agreement is non-existent or to destroy Tung Fai’s case alleging otherwise.[13]

44. Wei Dong’s argument in his application for the 3^rd supplemental witness statements had been dealt with and it would not be appropriate for me to re-discuss the arguments here. Suffice it to say, the Decision was based upon the fact that first, Wei Dong and Yao Juan said that their 3^rd supplemental witness statements are substantially the same as their previous witness statements, such facts having been set out in the previous witness statements as this issue was in the original pleadings; and second, the parties had expressed their views that this issue was irrelevant to the actions.  See paragraphs 17 & 21 of the previous Decision.  It would be quite clear that if the 3^rd supplemental witness statements are substantially the same as the previous ones and they are irrelevant to the actions, Wei Dong had simply failed to demonstrate that the 3^rd supplemental witness statements were necessary for fair disposal of the matter or for saving costs.  Quite the contrary.

45. The consideration for the present application is different from that for the application for the supplemental witness statements that I had previously dealt with.

46. Here, Tung Fai had pleaded that he had taken into account of the payment of $80 million by Wei Dong into the joint venture company for the hotel project jointly held by their respective wives.  Therefore he claims the balance of about $51 million.  The question is: given the situation as stated above, should further and better particulars be ordered by this Court?

47. Tung Fai submits that there is no point in seeking further and better particulars on a point which (i) is not in issue between the parties, and (ii) does not affect the outcome of these actions.  For the purpose of pleadings, i.e. identifying the issues to be tried, it is clearly not necessary for Wei to make those requests.  Such requests are also not necessary for the fair disposal of the actions. [14]

48. I agree with Tung Fai. In HCA 1660/2013, Tung Fai relies upon this $80 million set-off to reach his claim of about $51 million. Wei Dong’s primary case is that the Oral Agreement is non-existent.  He will only rely upon this issue after the court has found that the Oral Agreement did exist, in which event, it cannot be envisaged that he would dispute the $80 million set-off.  Those particulars are not for a fair trial or saving costs.  The requests for paragraph 20 are dismissed.

INTERROGATORIES

49. I shall now come to the application in relation to interrogatories withdrawal.

50. The relevant legal principles in relation to interrogatory are not in dispute.

51. The jurisdiction for interrogatories is provided under Order 26 r.1 RHC:

1. Discovery by interrogatories (O. 26, r. 1)

(1) A party to any cause or matter may in accordance with the following provisions of this Order serve on any other party interrogatories relating to any matter in question between the applicant and that other party in the cause or matter which are necessary either-

(a) for disposing fairly of the cause or matter; or

(b) for saving costs.

(3) A proposed interrogatory which does not relate to such a matter as is mentioned in paragraph (1) may not be administered notwithstanding that it might be admissible in oral cross-examination of a witness.

52. In Lee Nui Foon v Ocean Park Corp. (No.2) [1995] 2 HKC 395 the court dealt with the admissibility of interrogatory.  This authority confirms the legal principlesthat the interrogatories must relate to a matter in question between the parties.  The court further held that the court retained an overriding discretion as to whether or not to allow them to be administered even if they were relevant.

53. In the Decision of Kao Lee & Yip (a firm) v Donald Koo Hoi Yan & Others (unreported, HCA8847/1993, 23 April 2002), Ma J (as he then was), the law of interrogatory has taken a further development where the learned judge held that to order interrogatory once admissibility was demonstrated was wrong, emphasizing the importance of necessity.

54. Tung Fai’s application for Wei Dong’s interrogatories to be withdrawn can be disposed of quite short, bearing in mind of the important legal principles as enunciated in the authorities above.

55. The first interrogatory is on the circumstances under which Tung Fai came to the view relating to the operational and compliance issues and the Cooperation Agreement.  This issue is clearly not relevant to the issues in dispute in HCA1660/2013 because this is a common issue between the parties.  Tung Fai told Wei Dong that the Cooperation Agreement would give rise to serious problems in relation to the proposed listing of Fu Ji and it was mutually agreed to be cancelled.[15] The answers to the questions would not be necessary for the trial as this is not an issue in dispute. This interrogatory has to be withdrawn.

56. The second interrogatory asked Tung Fai the question whether he had received reimbursement of the alleged payments for the fees of auditors and accountants, PRC legal advisers, investment bankers public relations firms, property valuers and surveyors and the overheads of the Listed Entity.  Wei Dong submits that such information will throw light on whether the Oral Agreement did exist because if reimbursements had been made prior to the listing of Fu Ji, Tung Fai would have no reason to claim that the Oral Agreement existed because he had not paid the expenses.

57. This interrogatory has to be withdrawn for the reasons that if Wei Dong had the knowledge, as reimbursement must be from him or his company, he would have to adduce such evidence himself and it would be wasting time and costs for him to raise those questions.  Second, I tend to agree with Tung Fai that whether reimbursements would vitiate the Oral Agreement is uncertain.  The answers would not assist the court for a fair trial or saving costs.

58. The third interrogatory is the nature of the two sums of $80 million each injected to Crown Treasure as capital for its subsidiaries whether they are credited in the management or unaudited accounts of Crown Treasure and the audited accounts of Crown Treasure or otherwise. This question is objectionable because: first, this is not an issue in dispute in this action and Wei Dong had raised no objection as to the treatment of the money injected into Crown Treasure; second, there is no evidence that Tung Fai has control of Crown Treasure to supply the information requested and thus is oppressive; third, the answers to the question would not be for a fair trial or saving costs, quite the contrary is true. Wei Dong submits that Tung Fai could procure the information from his wife, who is in joint control of the company with Wei Dong’s wife.  It begs the question why should not Wei Dong obtain such information from his own wife?  Although in Tung Fai’s witness statement, it was stated that Mrs. Wei would not take part in the operation of the hotel project, she is, nevertheless the director of the company from which she has the power to obtain the accounts.[16]  It must be withdrawn.

59. The fourth interrogatory asks Tung Fai as to how the sum of HK$16 million paid by Mr. Wei Ming to Strong Nation was treated.

60. Again, there is simply no evidence to show that Tung Fai has control of Strong Nation or its holding company.  This request is therefore oppressive.  It has no relevance to this action as no pleadings have been set for the factual background for this issue.  It has to be withdrawn.

61. The fifth interrogatory relates to why Tung Fai took the view that it was not necessary for him to report his rewards under the Oral Agreement to the Inland Revenue Department.

62. As far as I can see from the pleadings in this action, Tung Fai has not pleaded this issue in his pleadings whereas Wei Dong has raised this issue in his defence in this action. Wei Dong is not permitted to raise the question, which was raised by himself, to obtain an answer from Tung Fai.  This issue may be pursued in the cross-examination at trial. But to apply for interrogatory under O.26 RHC, one has to comply with the requirements under this Order, ie. the issue must be related to any matter in question between the parties.  The phrase “any matter in question” may have a wider scope than any issues in the pleadings.  However, one must not see it as having a free hand in administering interrogatories in civil litigation as Ma J. (as he then was) in Kao Lee & Yip (a firm) v Donald Koo Hoi Yan & Others (unreported, HCA8847/1993, 23 April 2002) had set out the guidelines for its operation.  He said at paragraph 7 of his Decision as follows:

‘Before dealing with the interrogatories themselves, I should first set out the applicable principles governing applications of this kind :

(1) The general principle is that interrogatories are admissible where they go to support the applicant’s case or destroy the opponent’s : see Hong Kong Civil Procedure 2002 at paragraph 26/4/7.  The width of this general principle is similar to the Peruvian Guano principles governing discovery of documents.

(2) However, this only goes to the question of admissibility.  Whether a court will in its discretion allow interrogatories is entirely a different matter.  Too often in the past, there has been a tendency to order interrogatories once admissibility is demonstrated.  This is wrong.

(3) In the exercise of its discretion, the court must bear in mind that interrogatories will be ordered only where they are necessary either for disposing fairly of the cause or matter, or for saving costs : cf RHC, Order 26, rule 1(1); Hong Kong Civil Procedure 2002 at paragraph 26/4/11.  This is the key consideration going to the exercise of discretion. (4)  The particular factors that a court will take into account in deciding whether or not to exercise its discretion are well known : see Lee Nui Foon v Ocean Park Corporation (No.2) [1995] 2 HKC 395; Hong Kong Civil Procedure 2002 at paragraphs 26/4/5 to 26/4/34.  It is not necessary for me to repeat these principles at length.

(5) I would, however, draw special attention to the case of Det Danske Hedeselskabet v KDM International plc [1994] 2 Lloyds 534.  There, Colman J referred to various considerations (or “yardsticks” as he termed them) for the court to bear in mind when considering the question of interrogatories: see page 537 (col.1).  I set out one of these considerations in full :

“Fifthly, requests for information ascertainable by cross examination at the trial are inappropriate unless the party questioning can establish that it is essential for the proper preparation of his case that such information is made available to him before trial, in the sense that if the matter is left until cross examination at the trial that party will, or probably will be irremediably prejudiced in his conduct of the trial or the trial may be unduly interrupted or otherwise disorangised by the late emergence of the information.”

(6) The administering of interrogatories is not for the purpose of enabling a party to indulge in some sort of deposition taking exercise or to enable him to have a “dry run” in cross examination against the other side prior to trial.  As I have already said, the key consideration is the factor of necessity referred to the RHC, Order 26, rule 1(1).’”

63. For the reasons above, the 5^th interrogatory has to be withdrawn. So I order.

64. Tung Fai’s summons for Wei Dong to withdraw the interrogatories succeeds.

COSTS AND ORDER

65. As to costs of the applications, they should follow the event. The costs are assessed under O.62, r.9A RHC to be $125,430 to be paid by Wei Dong within 14 days from the date hereof.

66. I shall now make an order in terms as follows:

a. Wei Dong’s summons for particulars is dismissed;

b. Tung Fai’s summons is allowed; and

c. The costs are as per paragraph 65 above.

CASE MANAGEMENT CONFERENCE

(1) All interlocutory applications shall be taken out within 28 days from the date hereof;

(2) The parties shall set down the hearing of the appeal, if any, within 14 days from the date hereof;

(3) The matter is adjourned to 11:30 am on 11 May 2016 for the 4^th Case Management Conference for HCA 1062/2013 and HCA 1063/2013 and the 3^rd Case Management Conference for HCA 1660/2013.

(4) Costs of this Case Management Conference (30 minutes) be in the cause.

HCA 1062/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1062 OF 2013

_________________________

AND

HCA 1660/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1660 OF 2013

_________________________

_________________________

_____________

D E C I S I O N

_____________

THE APPLICATIONS

1.  Million Decade Ltd (“Million Decade”) is the plaintiff and Tung Fai is the defendant in HCA 1062/2013.  Tung Fai is the plaintiff and Wei Dong is the defendant in HCA 1660/2013.  Wei Dong is the shareholder and director of Million Decade.  These two actions have been ordered to be tried together with HCA 1063/2013.

2.  There are four applications by Million Decade and Wei Dong by way of:

(1) Summons for leave to file and serve the 3^rd witness statements of Wei Dong and Yao Juan in HCA 1062/2013;

(2) Amended Summons for leave to file and serve the 1^st witness statement of Wei Yao in HCA 1062/2013;

(3) Summons for leave to amend the Defence in HCA 1660/2013; and

(4) Summons for amendment to the 3^rd witness statements of Wei Dong and Yao Juan.  This summons is not disputed.

3.  The first three applications are contested and the parties are legally represented.[1]

THE FACTUAL BACKGROUND

4.  Mr. J. Hui, counsel for Tung Fai has set out the brief factual background in his written submissions, which I shall adopt as follows:

a. These actions concern three inter-related contractual disputes between Wei Dong and Tung Fai and their respective affiliates.  HCA 1062/2013 and 1063/2013 are simple debt claims for HK$25,400,000 and HK$9,600,000 against Tung Fai by Million Decade and Top Ample Ltd (“Top Ample”), companies owned by Wei Dong and Yao Juan (Wei Dong’s wife) respectively.  HCA 1660/2013 is a claim for payment of a total sum of HK$51,101,323.30 (plus interest) by Tung Fai against Wei Dong under an Oral Agreement, which is the main subject of dispute between Million Decade, Top Ample represented by Wei Dong and Tung Fai.

b. Wei Dong (on behalf of his company) and Tung Fai entered into a written agreement on 7 June 2003 to cooperate on the Listing Application (the “Cooperation Agreement”);

c. In late 2003, the parties were of the view that there could be compliance and operational issues, and therefore cancelled the Cooperation Agreement, replacing it with (the “Oral Agreement”) which, being disputed by Million Decade and Wei Dong and is the main issue of dispute in these actions, allegedly contained the following salient terms:

(i) Tung Fai would act as the intermediary for the Listing Application and pay for all costs in relation to it;

(ii) Tung Fai would underwrite the costs related to the Listing Application, if in the end it was not successful; and

(iii) However, if the Listing Application was successful and Fu Ji Food and Catering Services Holdings Ltd. (“Fu Ji”) became listed, Wei Dong would pay Tung Fai HK$150,000,000, and a further HK$50,000,000 after five years from the listing date if Tung Fai remained in the management of Fu Ji and provided services such as asset re-organization, and merger and acquisition for that duration;

d. Tung Fai says that he has fulfilled his obligations under the Oral Agreement (again disputed by Wei Dong).  However, there is no dispute that the Listing Application was successful and Fu Ji was listed on 17 December 2004, and Tung Fai remained as an executive director of Fu Ji until 1 May 2010.

e. Wei Dong (through his and Yao Juan’s affiliates including Yao Juan, Million Decade and Top Ample Ltd., the plaintiff in HCA 1063/2013) paid Tung Fai amounts of money between October 2005 and October 2008.  The last two payments were HK$25,400,000 paid by Million Decade to Tung Fai on 30 September 2008, and HK$9,600,000 by Top Ample to Tung Fai on 3 October 2008, which correspond to the amounts Wei Dong is pursuing in HCA 1062/2013 and 1063/2013.

f. Tung Fai says that the total amounts paid by Wei Dong pursuant to the Oral Agreement so far amount to HK$148,898,676.70.  Therefore, he claims Wei Dong for the balance of HK$51,101,323.30 under the Oral Agreement.

THE ISSUE IN DISPUTE

5.  Million Decade and Wei Dong strongly deny the existence of the Oral Agreement mentioned above. However, they agree that Tung Fai had advised and assisted on the listing of Fu Ji[2]; Tung Fai had remained in the management of Fu Ji after its listing and provided services such as asset reorganization, merger and acquisition, demerger and financing to Fu Ji[3] and that they had paid Tung Fai the amount of $38,688,676.70 during the period between 2005 to 2008[4] as ex gratia payment, for which they have made no claim against Tung Fai in the actions herein.  The claims in HCA 1062 and 1063 of 2013 are for the amounts of $25,400,000 and $9,600,000 respectively alleged paid by Million Decade and Top Ample, an affiliate of Wei Dong as loans to Tung Fai.[5]

6.  Having perusing the pleadings, it is quite apparent that the main disputes will be over whether there had been an Oral Agreement as alleged by Tung Fai for his defence of the claims in HCA 1062 and HCA 1063 of 2013 and his claim in HCA 1660 of 2013, which will be the fact to be found by the trial judge at the end of the trial.  For such fact finding exercise, details of the facts will be hotly contested.

7.  The actions have been ordered to be tried together before the same judge as they involve common issues of fact.  However, it should be noted that Tung Fai had not raised his claim in HCA 1660/2013 as counterclaim in the two actions against him by Million Decade and Top Ample although he admitted having received the sums of $25,400,000 and $9,600,000 from Million Decade and Top Ample in his Amended Defence at paragraph 18, though in the same pleading Tung Fai had also pleaded that Wei Dong made the payments through the companies.  He has taken out HCA 1660/2013 to claim against Wei Dong personally.

8.  Million Decade says that the Oral Agreement was an afterthought contrived by Tung Fai for opposing the claims in HCA 1062 and HCA 1063 of 2013 respectively[6]

THE RELEVANT LEGAL PRINCIPLES

9.  The discussion below will mainly focus on the supplemental and further witness statements, it will be convenient to set out the relevant legal principles for this issue:

a. The Court of Appeal had held “…In general, subject to the questions of admissibility and relevance, each party in the proceedings is at liberty to call whatever evidence he or she considers necessary provided that procedural requirements are complied with.” Chan Cheung Ming Jacky v Siu Sin Manformerly known as Siu Kit Ling[2014] 5 HKLRD 89 §28;

b. “Although there is no express provision to this effect, the court has power, if it thinks fit to do so, to direct that a further written statement of a witness be served supplementary to that already served.  The better practice is that the evidence dealing with or contradicting any statements made by witnesses of the opposite party should be given orally rather than be dealt with by way of a supplementary statement…A supplemental witness statement may be allowed to be served to give the witness of a party the chance to fill in gaps in his own statement or to answer the statement of the opposite party.  The court may also consider that justice in a case requires that a witness be allowed to file and serve a supplemental witness statement in order to correct an error not of his own…”  See 38/2A/10 of HKCP 2015 Vol.1;

c. “Where an indulgence is sought from the Court (for leave to file and serve supplemental witness statement), it would be a rare case indeed that this would be given, even on terms as to costs, without a satisfactory explanation being given to justify the grant of the indulgence.”  Chan Wing Cheung, Allan v Ho Shiu Yee, Susana (unreported, CACV393/2004, 10 January 2005 at §9(4).

d. When considering the contents of the supplemental witness statement, the Court should take into account the nature of the disputes between the parties.  Tang Chung Wah v Jonathan Russell Leongand others (unrep., HCA 1691/2011, 15 April 2014), at §19.

e. If the supplemental statement is of little probative value, the relevance to the matters in issue in the action is tangential, or simply repeats what has already been stated in the first witness statement or parts of the supplemental statements, or seeks to anticipate the argument of the plaintiff and to deal with it, it would be an unwarranted distraction from the real issues to allow the supplemental statements to go in and to require the plaintiff to deal with them.  See §§11-13 of Liu Wai Keung v Liu Wai Man now known as Liu Hiu Nam Vikki (unrep., HCA 1106/2011, G. Lam J., 22 March 2013) In this case, the application for leave to file and serve the supplemental witness statements was made four weeks before trial.  Therefore the issue of delay was at play.

f. The Court shall seek to give effect to the underlying objectives of the RHC when exercises any of its powers and interprets any of the rules or a practice direction.  O.1A, r.2(1)

g. The application is very much a matter for case management where the court has to exercise its judicial discretion.  In the exercise of judicial discretion, the court has to bear in mind whether the exercise is just and fair in all the circumstances as advocated in the case of Wing Mou Construction Co Ltd v Cosmic Insurance Corporation Ltd & Mansion Holdings Ltd (unrep. HCCT 40/2001, Ma J. as he then was, 20 June 2002) in which the learned judge discussed whether the Court should exercise its discretion to make an order allowing the third party to be joined as a defendant in the action.  At paragraph 15 of the Reasoned Decision, the learned judge discussed the way a court should exercise its discretion and he said:

“(5) The exercise of the court’s discretion in any given case depends on a number of factors. Of course, the court must first identify exactly the ambit of the order sought before considering what are the relevant factors going towards the exercise of discretion. No exhaustive list of factors can be enumerated but I would suggest the following will regularly feature: the individual prejudice to the parties in the event an order is or is not made, the stage that the action has reached when the application is made, any delay in making the application and any delay that may be caused should an order be made. What weight the court will give to any particular factor will depend on the precise form of the order or orders sought.

(6) Ultimately, the discretion is exercised bearing in mind the object of the two sub rules I have earlier set out and, as with any exercise of discretion by the court, orders should only be made where necessary, just and convenient.” (emphasis added)

DISCUSSION

The legal argument

10.  Tung Fai refers to the Decision of Allington Investments Corporationand othersv First Pacific Bancshares Holdings Limitedand others [1995] 2 HKC 567 to say that usually no more than one supplemental statement from a witness is necessary.  Million Decade has rightly submitted that this decision should be read together with O.38, r.2A(7A), which was enacted in 2008 where the court will not allow a party to adduce evidence at trial outside the witness statements without good reason.  This is not to say that a party should be allowed to serve rounds of witness statements, making the evidence in a piecemeal manner.  Nor will it affect the general principles that there should not be repetition of the evidence or giving evidence which is not admissible, such as opinion by a witness on facts only; see Hong Kong Civil Procedure 2015, Vol 1, §38/2A/6; or giving evidence in anticipation of arguments at trial, which is not relevant to the issue in dispute, see Zebra Industries(Orogenesis Nova) Ltd.v Wah Tong PaperProducts Group Ltd.(unreported, HCMP 436/2013, G Lam J 12 February 2015, at §§12-14)

The practice for supplemental witness statements

11.  Tung Fai complains that Million Decade has not filed any affidavit to explain the reasons for justifying the grant of the court’s indulgence.  Obviously, this is absent for this application, contrary to the decision in Chan Wing Cheung, Allan.  In making applications such as this, the court will expect the applicant to set out at least the following reasons in support of the application:

a. the stage of the proceedings;

b. what are the new evidence in the supplemental witness statement and why they are relevant to the issues in dispute;

c. the reason why they were not included in the original witness statement in the first place;

d. if the new evidence is to respond to the other party’s witness statement, state which part of the witness statement and explain why it is necessary to respond to it by way of supplemental witness statement instead of by cross-examination of the witness; and

e. the prejudice that will cause to the applicant if the application is refused and the prejudice that will cause to the other party if the application is allowed.

12.  Those reasons above will ensure that the applicant has properly considered the grounds in support of the application, assist the other party to decide whether such application should be resisted; and above all, to assist the court to identify the issues in the application, saving time for the preparation and the hearing.

Application of the legal principles to the facts

13.  Tung Fai complains that the proposed witness statements are highly repetitive, and none of them covers any new topics or pertain to new issues pertinent to the trial.[7]  Mr. Hui goes further today that the proposed supplemental witness statements are irrelevant or with no or very low probative value or are arguments which are not admissible as evidence in chief.

14.  As decided in Tang Chung Wah, the court should take on board the nature of the disputes between the parties in exercising its discretion as to whether the supplemental witness statements should be allowed.

15.  From the factual background in paragraphs 4 and 5 above, it is clear that the main issue of dispute is whether there had been an Oral Agreement in place of the Cooperation Agreement.  This issue is known to the parties at the pleading stage and they had prepared their respective witness statements, in which they set out the factual background in support of their cases.  It is obvious that Tung Fai had pleaded the Oral Agreement in his Defence in HCA 1062 and HCA 1063 of 2013 and also in his Statement of Claim in HCA 1660 of 2013.  The burden is on him to prove it.

16.  Wei Dong, on the other hand, alleged that the Oral Agreement was an afterthought contrived by Tung Fai for opposing the claims in HCA 1062 and HCA 1063 of 2013 respectively[8].

17.  Wei Dong admits that the 3^rd Witness Statements of his and Yao Juan’s are substantially the same, except that his 3^rd Witness Statement is slightly more detailed in §12 and §23(3) and has additional paragraphs at §§19-21, 24(2), 25A, 26A.  The two statements also deal with different clerical errors appearing in their previous statements[9] and they deal with the allegations raised in the 2^nd Witness Statement of Tung Fai.  I shall consider the purposes of the additional paragraphs in the proposed 3^rd witness statement of Wei Dong, the same also applies to Yao Juan’s proposed 3^rd witness statement.

18.  First, whether Wei Dong is contactable should not be the main issue of dispute.  It only deals with Wei Dong’s allegation that the Oral Agreement was an afterthought contrived by Tung Fai.  The details of the addresses as set out in the 3^rd witness statement will not be conclusive on this issue.  Yet, there is no other evidence to contradict those details.  The better course is to test the evidence by way of cross-examination at trial.  The fact that Tung Fai said that Wei Dong was not contactable does not alter the fact that if he were to take out legal proceedings, he could have applied for substituted service of the legal proceedings on Wei Dong.

19.  Second, whether Yao Juan had met with Tung Fai to discuss the debts and the Xiamen hotel project was mentioned in the previous witness statements.  This issue does not deal with whether there had been an Oral Agreement in place of the Cooperation Agreement although it may touch on the credibility of the evidence.

20.  Third, the extent of Tung Fai’s contributions to Fu Ji and the circumstances in which the alleged Oral Agreement was made by additional materials that (a) Wei Dong would not be willing to be bound personally and it is normal for management personnel of listed companies to be rewarded on an ex gratia or discretionary basis; (b) after Tung Fai introduced investors from CLSA, Wei Dong had conducted the main negotiations with CLSA and (c) Tung Fai did not work full time in Fu Ji and occupied an advisory role. In my view, (a) is Wei Dong’s opinion, not admissible in evidence; (b) & (c) are irrelevant to whether there was an Oral Agreement.  Wei Dong had already admitted that Tung Fai had rendered assistance to the listing of the Fu Ji and that he was awarded by way of ex gratia payments.

21.  Fourth, the circumstances regarding the Xiamen hotel project are, in my view, irrelevant to whether there had been an Oral Agreement as Wei Dong says that it shows the relationship between Wei Dong and Tung Fai couples only[10]. Wei Dong and Tung Fai had agreed in their respective witness statements that this issue is not relevant to the actions.  Senior counsel submits that this issue is relevant because there is a dispute over whether $80 million were paid for the project.  However, this issue is only relevant after the finding of the fact that the Oral Agreement existed, not its formation.  It may affect the credibility of the evidence of the witnesses at trial at best.

22.  Fifth, the circumstances of Fu Ji’s liquidation are even more remote to the issue of whether there was an Oral Agreement.

23.  Wei Dong’s Senior Counsel take the view that “it matters not that the new evidence does not directly support the existence or non-existence of the Alleged Oral Agreement, as long as it throws doubt on the other side’s case, as submitted above.  Supplemental witness statements have routinely been allowed where a party seeks to take issue with the evidence of his opponent and “might arguably make one party’s case more credible or probable as compared to the other party’s case”: Excel CourageHoldings Limited and othersv Wong Sin Laiand others, HCCL 34/2013 (unrep, 15 December 2014) per G Lam J at §§20-21.”

24.  The facts of Excel Courage are complicated.  Suffice it to say, the supplemental witness statement of the 1^st defendant goes to the main issues of dispute whereas those issues above are no more than tangential to the main issue of the existence of the Oral Agreement.  Judge G. Lam, the same judge in Liu Wai Keung did not support the supplemental witness statement of evidence of such tangential value.

25.  I accept that leave has not been given to the plaintiffs to set down for trial and that TungFai has not been able to show prejudice if the proposed third witness statements are allowed to be served.  However, since there have already been substantive evidence covering the main issues as raised by Wei Dong above, the third witness statements will not add much substance to the other witness statements.  The refusal of leave to admit the proposed 3^rd witness statements will not prejudice Wei Dong’s case in the actions.  But the inclusion of such materials offends the principles of admissibility of evidence and will add costs and time to the proceedings unnecessarily.  I shall therefore exercise my discretion to disallow the proposed third witness statements of Wei Dong and Yao Juan.

26.  In relation to the witness statement of Wai Yao, I consider that it should be allowed to be served as this is the corroborative evidence of the relationship between the two families, which Wei Dong has been adopting in support of his case in his witness statements already.  There will not be prejudice to Tung Fai if Wai Yao’s witness statement is admitted in evidence.

THE SUMMONS FOR AMENDMENT OF DEFENCE

27.  The objections to the proposed amendments to the Defence in HCA 1660/2013 are that they are unnecessary because they are contrary to the evidence[11], are semantic trivialities and forensic legal arguments [12].

28.  It is quite clear that the proposed Amended Defence pleaded alternative defence that if the alleged Oral Agreement existed.  It is simply unfair to debar the defendant from pleading an alternative defence in the pleadings, particularly when the matter has not even been given leave to set down for trial.

29.  The law on amendment is quite clear.  Leave should be given to the defendant to make the proposed amendments.  The defendant’s application is allowed.

COSTS AND ORDER

30.  On the question of costs, having considered the submissions, the costs should be as follows:

a. Costs for HCA 1062 of 2013, the costs of this application, including the costs reserved and the costs for this hearing be apportioned to be 50% to be paid by Million Decade to Tung Fai; and

b. Costs of and occasioned by the application for amendment to the Defence in HCA 1660 of 2013 should be to Tung Fai, but the costs for the hearing today be to Wei Dong, apportioned to be 10% to be paid by Tung Fai  to Wei Dong;

c. The above are with counsel’s certificates for the hearing today;

d. The above costs are to be set off and to be taxed if not agreed in any event.

31.  This court shall now make an order in terms as follows:

a. The plaintiff’s summonses in HCA 1062 of 2013 for the third witness statements be dismissed and the witness statement of Wei Yao be allowed;

b. The defendant’s summons for amendment of the Defence in HCA 1660/2013 be allowed;

c. The costs are as per paragraph 30 above,

d. The defendant in HCA 1062 of 2013 be at liberty to serve supplemental witness statement in response to Wei Yao’s witness statement within 28 days from the date hereof;

e. The plaintiff in HCA 1660/2013 be at liberty to file and serve an Amended Reply within 28 days from the date hereof; and

f. The Case Management Conference on 14 October 2015 be vacated and to be heard on 13 November 2015 immediately after the disposal of the interlocutory applications.