Lam Man Lai And Another v Oj Vc Ltd And Others

Judgment Date25 September 2020
Neutral Citation[2020] HKCFI 2495
Judgement NumberHCA985/2019
Subject MatterCivil Action
CourtCourt of First Instance (Hong Kong)

HCA 985/2019

[2020] HKCFI 2495




ACTION NO. 985 OF 2019


LAM MAN LAI 1st Plaintiff
HUI PO WOON 2nd Plaintiff


OJ VC LIMITED 1st Defendant
HUI HA LAM 3rd Defendant


4th Defendant


Before: Hon Coleman J in Chambers (Open to Public)
Date of Written Submissions: 8, 14 and 17 September 2020
Date of Decision: 25 September 2020




A. Introduction

1. By my Decision dated 3 June 2020 [2020] HKCFI 975 (“Decision”), I made various orders on an application brought by the plaintiffs’ summons dated 8 October 2019, by which the 1st and 2nd plaintiffs (“Madam Hui” and “Mr Lam” respectively, together “plaintiffs”) sought various declarations and other relief against the 1st and 2nd defendants (“OJVC” and “Mr Wong” respectively) under RHC Order 19 rule 7, in light of their default of filing any defence. Though the claim had been served on the 3rd defendant (“Mr Hui”), the action had previously been resolved as against Mr Hui by consent, and he took no part in the argument leading to the Decision.

2. As is clear from the Decision, however, there was still some argument between the plaintiffs and OJVC and Mr Wong, who had previously indicated that no defence had been filed by them because they were willing to compromise and to settle with the plaintiffs on a good faith basis. As a result, and on the exchange of the written submissions, the only question left to the court was as to the nature or scope of the relief which should be granted to the plaintiffs. I granted default judgment in the terms of §38 of my Decision.

3. Because the claims had already been dismissed against Mr Hui, and judgment had been given against OJVC and Mr Wong, that appeared to bring the action to an end.

4. But now, by summons dated 2 July 2020, the intended 4th defendant (“Company”) – of which Mr Hui is the sole shareholder and director – wishes to be joined as a party for the purpose of setting aside the default judgment, alternatively to permit it to appeal from the default judgment (which appeal has been launched and even set down). Mr Hui is the deponent whose evidence has been filed for the Company. Insofar as it is necessary, Mr Hui also seeks to be re-joined as a party. Mr Hui is one of the applicants seeking to set aside the Decision, and he is one of the appellants in the appeal.

5. I am now asked to disentangle this procedural entanglement.

6. I directed that the matter would be determined on the papers, and submissions have been filed by Counsel Mr Michael Lok and Mr Jonathan Lee on behalf of Mr Hui and the Company (together), and by Counsel Mr Kam Cheung for the plaintiffs. OJVC and Mr Wong have in the meantime ceased to be legally represented, and have taken no part in the current applications, despite being parties to it and being given the opportunity to file submissions.

B. Procedural Chronology

7. It is necessary to see and consider the current application against a proper history of the disputes between the parties, and the procedural chronology.

8. The proceedings were commenced by writ of summons dated 5 June 2019. On the writ was a specially endorsed Statement of Claim (“SOC”).

9. However, there had been a letter before action dated 26 March 2019 addressed to OJVC and Mr Wong, in which the thrust of the claim was made clear. The letter referred to a Deed of Grant of Share Warrant dated 28 January 2013 (“Deed”) under which the Company granted to OJVC certain warrants giving the right to subscribe for shares in the Company within a prescribed exercise period. The letter then referred to a written trust agreement dated 26 June 2014 (“Declaration of Trust”) under which OJVC and Mr Wong agreed with the plaintiffs that OJVC would hold a certain proportion of the warrant shares on trust for the plaintiffs, in line with the financial contribution made for them. Therefore, by the payments they made, the plaintiffs were to have become beneficial owners of those shares, or the property into which they might be traced including shares of SEMK International Holdings Ltd (“SEMK International”) and ENS International Enterprises Limited (“ENS”), as a result of an unauthorised sale by OJVC to Mr Hui. But OJVC have never transferred any proportion of the shares to the plaintiffs.

10. As well as identifying the Declaration of Trust as the basis of the claim, the letter before action was precise in the relief claimed, and was also copied to the Company, SEMK Enterprises Ltd, SEMK International and ENS. There is no doubt the letter came to the attention of Mr Hui. Therefore, Mr Hui and the Company would have known that the plaintiffs threatened to pursue their alleged rights under the Declaration of Trust against OJVC should OJVC not meet the demand made.

11. In the absence of any prior settlement, proceedings were subsequently commenced. On the SOC, the plaintiffs claimed against OJVC for breach of the Declaration of Trust, in that OJVC sold certain shares to Mr Hui without the plaintiffs’ instructions. Those shares are the two parcels (together, “Trust Shares”) of 18,000 shares and 6,000 shares in SEMK Products (Holdings) Limited, ie the Company. The plaintiffs claimed against Mr Wong for dishonest assistance of OJVC’s breach of trust. The plaintiffs also claimed against Mr Hui on the basis that he had constructive notice of their beneficial interest in the Trust Shares, and sought declarations that Mr Hui is liable as constructive trustee and an order for delivery up of the Trust shares to Mr Lam.

12. The plaintiffs claimed various types of relief on a “further or alternatively” basis, being:

(1) tracing and a claim for equitable title against OJVC

(a) Mr Lam claimed: (i) 843.75 shares in SEMK International, and (ii) 750 shares (being 1.5%) in ENS International (SEMK International and ENS together, “Two Companies”);

(b) Madam Hui claimed: (i) 281.25 shares in SEMK International, and (ii) 250 shares (being 0.5%) in ENS;

(2) an account by OJVC and Mr Wong;

(3) restitution by OJVC to Mr Lam of HK$2,160,000 and to Madam Hui of HK$720,000;

(4) equitable compensation by OJVC and Mr Wong;

(5) delivery up by Mr Hui of the Trust Shares.

13. By summons dated 16 July 2019, OJVC and Mr Wong sought an extension of time for filing their Defence and Counterclaim (if any). On 18 July 2019, Master Kot made an unless order permitting them until 4pm on 15 August 2019 to file their Defence and Counterclaim (if any), failing which they would be debarred from doing so and the plaintiffs would be at liberty to apply for judgment to be entered. No Defence having been filed, the plaintiffs issued the summons seeking judgment in default on 8 October 2019.

14. But, in the meantime, matters were resolved as between the plaintiffs and Mr Hui. By Notice dated 5 August 2019, the plaintiffs accepted the sanctioned payment into court made by Mr Hui on 8 July 2019, in the sum of $1, and in settlement of the whole of their claim against Mr Hui. On 27 September 2019, I made an order by consent that the plaintiffs’ costs of their claims against Mr Hui in the proceedings up to 5 August 2019 be paid by him to be summarily assessed on paper. This was in response to the suggestion made by solicitors for Mr Hui, who proposed that way of dealing with the costs together with the dismissal of the proceedings against Mr Hui. The assessed costs of HK$60,000 were paid by Mr Hui on 29 October 2019, under cover of a letter which again proposed a consent summons dealing with the dismissal of proceedings against Mr Hui.

15. Since that time, the heading of the action on various court documents has tended to show the claim against Mr Hui as having been “dismissed” or “discontinued”. For example, the plaintiffs’ application for default judgment referred to “discontinued”.

16. That matter first came before me on 8 November 2019. On that occasion, I was informed that OJVC and Mr Wong had made an open offer by their solicitors’ letter dated 6 November 2019 (“Open Offer”), so that it ought not to be necessary nor appropriate to grant any form of order sought by the Summons. As that letter was only shortly before the hearing, I was asked to and I agreed to adjourn the matter for a few days to permit further discussions between the parties.

17. The skeleton argument filed by then Counsel appearing for OJVC and Mr Wong also indicated that Mr Wong had a claim against Mr Wong for no less than HK$21 million in a separate matter, and that OJVC and Mr Wong were desirous that a global settlement be reached. That was part of the practical basis upon which I was invited to adjourn the summons, to permit the parties to engage in settlement negotiation.

18. When the matter came back before me on 28 November 2019, no resolution had yet been reached and there remained apparently unanswered queries between the parties. I therefore directed OJVC and Mr Wong to respond to the plaintiffs’ solicitors’ letter dated 21 November 2019 within 14 days, and further adjourned the matter to a hearing on 21 January 2020.

19. That hearing was later vacated by consent and re-fixed for 10 March 2020. Nevertheless, that date fell within the General Adjournment of Proceedings and so the matter was later directed to be dealt with on written submissions.

20. As stated above, Mr Hui was not involved in the application. The default judgment summons was not addressed to or served on him, and he made no submissions. Of course, in light of the fact that he...

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1 cases
  • Semk Products (Holdings) Ltd v Oj Vc Ltd
    • Hong Kong
    • Court of First Instance (Hong Kong)
    • 25 November 2020
    ...and Mr Jonathan T H Lee, instructed by Wilkinson & Grist, for the Applicant The Respondent, was not represented and did not appear [1] [2020] HKCFI 2495. ...

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