1 HCMP 1987/2018 Day 02 Tuesday, 5 December 2023 (10.08 am) MS LEUNG CHI YIN GILLIAN (on former oath) Cross-examination by MS LOK (continued) MS LOK: Yesterday, we talked about your appointment together with your brother and your mother as Harbour Front's directors in 2001. Do you remember that? A. Yes. Q. Before that appointment, the sole director of Harbour Front was your father, correct? A. Yes, I believe, yes. Q. It was no coincidence that that appointment was made in 2001, that was because your father was bankrupt, wasn't it? A. Yes. Q. That was the cause of the change of the constitution of the board? A. Yes. Q. May I refer you to bundle D3. For today, we have bundles, physical, ready. D3, tab 107, page 3099. This is Mdm Justice Kwan's judgment in 2004. At paragraph 57, her Ladyship recorded this: "On 1 March 2001, YT Leung was adjudged bankrupt on the petition of a judgment creditor, Healthy Wharf A Court Reporting Transcript by Epiq 2 HCMP 1987/2018 Day 02 Limited ... which is controlled by YK ... and SY Wong." This SY Wong was Mr Sam Wong, who was appointed as a director with YK Leung, that's correct? A. Yes. Q. "It is stated in the petitions herein that 'thereupon' YT 'resigned' as a director of Harbour Front, Money Facts and Fonfair." So this is not disputed, and you also refer to this in your witness statement, which I don't need to take you to it. Correct? A. Yes. Q. Right, so what did your father feel about the bankruptcy? A. Well, he was bankrupt. I mean, the feeling, I don't know what he -- how he feels. Q. Certainly, he was upset by it, wasn't he? A. He wasn't happy. Q. To him, it was obviously the doing of YK, wasn't it? A. YK was the petitioner. Healthy Wharf, and Sam, yes. Q. So in short, YK petitioned for the bankruptcy of YT? A. Yes. Q. When you were still in university, right, that year, 2001 you were 21, your father was bankrupt on the petition on your uncle. I take it that your feeling towards it would be negative too? A Court Reporting Transcript by Epiq 3 HCMP 1987/2018 Day 02 A. Honestly, not really. It was a combination of things at the time. There was a whole UDL restructuring and -- so it was just a part of what happened during that time. Q. Well, can you at least agree to this, that you weren't pleased by the bankruptcy? A. Well, I guess if you ask me, I would hope that it wouldn't -- that it didn't happen. Q. Right, and I presume similar feeling of negativity was shared by your mother and your father? A. It was a time of -- sort of a tough time, I suppose. Q. So the exclusion, what we phrase it now in all these proceedings, of Harbour Front from the two companies started in that very year, since 2001, when your father was out of the board because of his bankruptcy. Correct? A. In -- on -- in terms of Money Facts, yes. Q. And Fonfair -- A. Fonfair, still Fire Full Investment Limited. Q. But fire Full was out of the picture pretty soon after that -- A. A few years later, yes. Q. Right, so more or less the same. And you do feel very strongly that this exclusion was caused by sort of YK and it was wrong, didn't you? A. No, I mean, it happened. Let's just put it this way, it A Court Reporting Transcript by Epiq 4 HCMP 1987/2018 Day 02 happened just like at the time the whole business was going through a difficult financial crisis, so it's just one of those things that happened. Q. Well, can I take you to your witness statement and see how you expressed it in C1, tab 1, page 326 and page 237. Why don't we go directly to page 327, paragraph 29. A. Do you want me to keep this? Q. No. So, it is for the instructing solicitors. Unless I say otherwise, you can clear up the bundle after we use it. A. Okay. Q. Now, at paragraph 29, you said: "Since around March 2001 ..." A. Sorry, sorry, hold on. 29? Q. Yes, at page 327. A. Okay, yes. Q. You said: "Since around March 2001 when YT ... resigned as a director of Fonfair (after he was adjudged bankrupt), YK had dominated control over Fonfair." Do you see the word "dominated"? A. Yes. Q. At the 2006 AGM", et cetera, then you talk about exits of your father and Harbour Front coming back to A Court Reporting Transcript by Epiq 5 HCMP 1987/2018 Day 02 the board, which obviously did not succeed. My question to you is: you do think that this domination of YK of the board was wrongful? Or were you happy about it? A. Well, we are not happy that our interests were not represented. Q. Right. So you think that YK is the bad guy, don't you, because he has been dominating the board? A. I wouldn't use the word "bad guy". I guess up to the last -- the last petitions, we felt we were wrongfully excluded, that we should have -- Q. So YK did a wrong. A. That's what we said, we said, but turns out most of the judgment was -- Q. Right, and by no coincidence also in 2001, when you became a director of the companies, the companies started the litigation against YK, didn't it? A. I believe there were some litigations, yes. Q. Sorry -- A. Sorry, are you asking me exactly which litigations? Q. No, I'm just generally asking you to recall the overall framework of what happened -- A. Yes. Q. -- bankruptcy, your appointment and then the start of a flurry of litigation from that. A. Yes. A Court Reporting Transcript by Epiq 6 HCMP 1987/2018 Day 02 Q. In your witness statement at paragraph 30 at page 327, you recorded this: "On 16 August 2001, Harbour Front presented a winding-up petition under HCCW 880 ... in respect of Money Facts on just and equitable ground and YK ... [was] named as the 1st Respondent." Correct? A. Yes. Q. Then the next -- COURT: Where are you reading from? MS LOK: Paragraph 30 of her witness statement. COURT: What page? MS LOK: Page 327. Just put -- COURT: All right. I just have various documents. I was looking at the wrong one. MS LOK: I know, my Lord, there are too many documents in this trial. COURT: I have it, yes. MS LOK: To put all the dates in perspective, that is soon after your appointment, August, then you started the first petition, 880. Correct? A. Yes. Q. At page 328, paragraph 31 -- A. 328, yes. Yes. Q. -- that is 5 March 2002. A Court Reporting Transcript by Epiq 7 HCMP 1987/2018 Day 02 "... Harbour Front presented another winding-up petition under HCCW 246/2002 in respect of Fonfair on just and equitable grounds [which], among other things, Money Facts being named as the 1st respondent." So these two petitions were the ones eventually tried by Mdm Justice Kwan. Correct? A. Yes. Q. Which produced judgment about three years later, in 2004. A. Yes. Q. So would it be fair to say that the first three years of your very first appointment in Harbour Front was embedded in heavy, hostile litigation against YK in the Companies Court? A. Well, yes. When I was appointed, there was these litigations, together with all other things going on with Harbour Front, the UDL group and everything. So this was one of the -- this particular, yes, that was the first winding-up. Q. So would you agree that this hostility with YK is a legacy passed on to Harbour Front by your father? A. Well, I won't say "hostility", it's just -- it's just business, right? We felt we have a significant interest, two-third interest in this. We see -- we need find ways to be represented to safeguard our interests. A Court Reporting Transcript by Epiq 8 HCMP 1987/2018 Day 02 So it's just a matter of how to do it. And we were advised that this was the legal route to take. Q. If you don't like the word "hostility", would you agree that there was sufficient amount of conflict passed on to Harbour Front from your father such as to generate this hostile litigation for the first three years of your appointment? A. I do not agree. Litigations or arbitration, it happens in business world anyways; we do arbitrations almost -- you know, from time to time with our contracts, so it's just part of business. Q. So how would you describe that litigation? Friendly? A. Neutral, I would say. Q. Neutral litigation? A. I would say no one likes litigations, right, but in order to get -- to assert our rights and to safeguard our interests, if -- that's the route we have to take, the proper route. Q. Then can you at least agree to this: in the very beginning of your appointment, you already found sufficient conflict between Harbour Front and YK such that you have to go to the court to vindicate the perceived right of Harbour Front? A. Well, obviously there was a disagreement, right? We felt we should be properly, equally -- we should be A Court Reporting Transcript by Epiq 9 HCMP 1987/2018 Day 02 properly represented. YK disagreed to that, so that was the differences or conflict, if you want to put it. Q. So you accept there is at least conflict sufficient for you to go to court, or litigation? A. Well, the conflict or the differences were not resolved, you know, before we proceed to court then. That's what happened. Q. Yesterday, we had seen your letter dated 27 April 2015. Do you remember that? A. Yes. Q. Now we have to jump back a little bit in time, in fact, 11 years before that letter. We are talking about the litigation before Mdm Justice Kwan, the trial and leading to the judgment in 2004. Right? A. Yes. Q. Do you accept that even in that litigation, the round one, what we call, Harbour Front already said itself that there was loss of confidence between the shareholders? A. I think at the time we were saying we felt we were wrongly excluded. That's what -- I think that's the wording that was used, the -- yes, the mutual trust and confidence, or whatever words the lawyer use. Q. Ms Leung, I'm not meaning it to be a criticism, but just that if you can focus on my question, that will move A Court Reporting Transcript by Epiq 10 HCMP 1987/2018 Day 02 things on really quickly. A. Okay. Q. My question to you is: do you accept in that round one litigation, there was already the allegation by Harbour Front of loss of confidence among the shareholders? You can either agree, disagree or say you can't remember. A. As I said, we -- what was agreed as we can be equally or properly represented at the time we got -- layman term, we got kicked out and not properly represented, that's why there was this disagreement, and that led to court. That's all I can say. Q. How about that rightly or wrongly, Harbour Front thought that it ought to be having a seat on the board, and because it was not, Harbour Front thought there was a loss of confidence among the shareholders? A. We thought that he did not sort of abide to or follow what was agreed. So whatever you call that, it's a trust or confidence or, you know, whatever term that is. Q. Okay, so you are still not quite giving me the answer. How about we look at the judgment in bundle D3, tab 107, page 3122, paragraph 90. A. Sorry, paragraph 90. Q. "It is alleged by Harbour Front that apart from his wrongful exclusion from management, the two companies A Court Reporting Transcript by Epiq 11 HCMP 1987/2018 Day 02 should be wound up because ..." So this is additional to exclusion, you see? A. Mm. Q. "... because there was frustration of the purposes for which Money Facts was set up and there was lack of confidence due to the grave misconduct of YK Leung and others acting in concert with him." Do you see that? A. Yes. Q. So, back in 2001, where the first-round petitions were started, Harbour Front already alleged, due to all sorts of reasons, not only the exclusion, there was a loss of confidence between the shareholders. Do you accept that? A. Well, I accept that at the time we thought it was -- that it was not right that we were excluded. That's why we used -- Q. Can you please stop going to exclusion? You have said that many times. A. Yes. Q. I am talking about loss of confidence, and I'm sure you understand. A. Yes. Q. Having read paragraph 90, do you accept that in the 2001 round one litigation, Harbour Front already started A Court Reporting Transcript by Epiq 12 HCMP 1987/2018 Day 02 the allegation of loss of confidence between the shareholders? A. Yes. In that context, we thought we were wrongfully excluded, that's why we said that. Q. This is not correct -- COURT: Okay, okay, Ms Lok -- MS LOK: Yes. I have already read you that judgment. The loss of confidence was founded not on -- or at least not only on the exclusion but also other allegations including wrongful acts by YK. A. Okay, sorry, your question is? COURT: I think the short point is that at the time of the first litigation, your father obviously thought that -- well, he no longer had any confidence in his brother. That's what he told the court. A. Yes. COURT: Yes, okay. And you have no reason to think that was not correct? A. No -- yeah, we -- that's what we said. COURT: Okay. MS LOK: Great. Thank you, my Lord. If you go to paragraph 93, the short point again is that both Mdm Justice Kwan and Harbour Front were in agreement about the loss of confidence and trust between A Court Reporting Transcript by Epiq 13 HCMP 1987/2018 Day 02 the shareholders. The only difference was about who caused it. Do you agree? A. Sorry, am I reading 93? Q. Yes. A. So "The second purpose related", this part, right? Q. I am summarising the effect of paragraph 93. A. Okay, can I have a moment to just read first? Q. Yes. A. Thank you. Okay -- Q. So do you agree with me that -- A. Sorry, can you just summarise again? Q. Both Harbour Front and Mdm Justice Kwan -- A. Yes. Q. -- were in agreement in the sense that there was a loss of trust and confidence between the shareholders; the only difference was between who caused the loss of trust and confidence? A. Yes. COURT: Ms Lok, was the position that YK accepted there was a breakdown in trust and confidence as well? MS LOK: Well, in that trial, there was no need for YK to accept or otherwise, because the only issue was about who caused it. COURT: I know, yes, but is it fairly clear that he wasn't A Court Reporting Transcript by Epiq 14 HCMP 1987/2018 Day 02 disputing that allegation; the only dispute was who was responsible? MS LOK: From memory -- I'm just speaking off from memory, I believe that's the position, but in order not to mislead the court -- COURT: Yes, you'll have to go away and look at the page -- MS LOK: I need to go back and check. COURT: -- yes, but without seeing it, that would seem likely. MS LOK: Yes. COURT: So that being the case, the position in 2003, it would seem, for some years before that, was that the one thing everyone agreed on was that they didn't get on very well and they didn't trust each other. Yes. MS LOK: Yes, and the gist of the dispute was who caused it such that -- COURT: Who is to blame. MS LOK: And then, if Harbour Front was rightly excluded, then why YK remained on the board. COURT: Yes. MS LOK: That was the -- and that no cross-position was brought at the time. COURT: Yes. MS LOK: Ms Leung, the allegation of misconduct, if you go on to that judgment at paragraph 93, pretty much A Court Reporting Transcript by Epiq 15 HCMP 1987/2018 Day 02 summarised it. We don't need to go into those allegations. My Lord, I'm at page 3125 of the same bundle, part of Mdm Justice Kwan's judgment which summarised Harbour Front's allegation at the time of YK Leung's so-called misconduct, but all these were rejected by the court who thought that the misconduct was attributed to Harbour Front instead. Correct? A. Yes. Q. Now, if I am allowed to digress a little bit. If you move to paragraph 102 of the judgment, one allegation of misconduct made by Harbour Front at time was this: "The next allegation [I'm reading from 102, paragraph] relates to the loan made by YK Leung to finance Fonfair's litigation against Universal Dockyard ..." Pausing there, Universal Dockyard is your father's company, correct? A. Yes. It was the UDL Group. Q. Yes. "... and related companies. The complaint is that YK Leung had advanced money to Fonfair for this purpose at an interest rate of 12% per annum and that he had caused the resolution to be passed on 21 August 2002 to increase limit of the loan ... I cannot see how this A Court Reporting Transcript by Epiq 16 HCMP 1987/2018 Day 02 could be the subject of any legitimate complaint, taking into account the following ... (1) As in December 2001, Fonfair had a credit balance of HK$153.83 in its bank account. It had no income from the Yau Tong Property due to the persistent failure of Universal Dockyard to pay rent. The licensing agreement for the Yau Tong Property was only made in December 2002." Then the subsequent sub-paragraphs summarised how YK was trying to procure funding for Fonfair to sue Universal Dockyard but was met with the opposition from your father's side, and therefore, in the end, YK had to take money from his own pocket to fund Fonfair's litigation. Do you remember that? A. I was not part -- I was not witness to this, but -- the gist of it, I -- yes. Q. Well, it is not quite right, is it, Ms Leung, because in 2001 you were already a director at -- A. Yes. Q. Yes, so are you saying that did not know all this happening? A. No, I do know all this happening but not in details. Q. I see. Because at that time you were only 21 and still studying, wasn't that it right? A. Yes. A Court Reporting Transcript by Epiq 17 HCMP 1987/2018 Day 02 Q. And all these, I presume, will be handled by your father? A. By my mother. Q. Your mother? A. Yes. Q. And your father, correct? A. I think my father was no longer, but the team -- Q. Well, he was not a director but obviously he was in the background? A. Well, there was also the Fire Full, we do have other employees as well. Yes. Q. Right, do you agree that at least from this tiny corner of that judgment, it seems the normal incidents in Fonfair and Money Facts, to argue about things, about shareholder A suing shareholder B, how to fund the litigation, et cetera? A. Well, I mean, no doubt there were the litigations. We accept there was Mdm Justice Kwan's judgment. We accepted that. I guess that's all explained to how -- where we are today of accepting the -- you know, the reconciliation exercise of those breaches of whatever wrongdoings that was said at the time. Q. We are not in the reconciliation yet, but you do accept, with my description, that it is normal incidents of these two companies to argue over things every day? A Court Reporting Transcript by Epiq 18 HCMP 1987/2018 Day 02 A. Well, yeah, there were all these disagreements at the time. Q. Correct. Now, if we fast-forward for 16 years and go to 2017, 16 years later, that is the time when the second round of petitions was tried by my Lord. Do you remember that? A. Yes. Q. It was 13 years after the first trial before Mdm Justice Kwan. A. Yes. Q. Do you remember that before the 2017 trial in June, Harbour Front's solicitor, Tsang & Lee, wrote a letter to YK? A. Which letter? I mean, he -- we -- the -- our solicitor wrote a few letters, right? Can I go to that letter? Q. Okay, of course. Pausing here a bit, Tsang & Lee was a long-time solicitor of Harbour Front, correct? A. Yes. Q. Since when? A. 2000 -- around early 2000. I can't remember the exact years. Q. At the time when you were appointed in 2001, Tsang & Lee was already being used by Harbour Front as a solicitor? A. The lawyer is, but I think there was a time he was -- it was under -- I'm not sure when he changed the name of A Court Reporting Transcript by Epiq 19 HCMP 1987/2018 Day 02 the practice -- Q. I see. you are referring to Mr Tsang? A. Yes. Q. And he changed firm? A. Yes. Q. So Mr Tsang worked for your father and Harbour Front in the early 2000s -- A. Early 2000, I have known him since then -- Q. And throughout your appointment of Harbour Front, correct? A. Yes. Q. Would it be correct to say that Mr Tsang was deeply involved in the dispute between YK, YT and Harbour Front? A. He was involved. Q. And he would be familiar with the background and the arguments between the parties? A. I suppose he would know. Q. Now if we go to that very letter, bundle D8, tab 307, page 5632. A. 5632? Q. Correct. A. Okay, got it. Q. This is what the lawyers would commonly call a pre-trial letter. So this letter was sent in May. 16 May, and A Court Reporting Transcript by Epiq 20 HCMP 1987/2018 Day 02 that was about a month before the trial before my Lord. A. Yes. Q. You remember that? A. Yes. Q. That put things in context. A. Yes. Q. You see in the beginning of the letter, it says: "We refer to the Money Facts Proceedings and the Fonfair Proceedings, the trial of which is scheduled to commence on 5 June ..." A. Yes. Yes. Q. Then it stated: "Related disputes concerning Money Facts ... and Fonfair ... have been ongoing for more than 17 years since the beginning of 2000." First and foremost, Mr Tsang acknowledged that these people, these brothers in these companies have been quibbling over things for more than 17 years. Correct? Fair comment. A. Yes. Q. At page 5365, let's see who produced this letter. It was signed by you. Is it your signature? A. Yes. Q. You can see in the address column "copy to", it was also copied to the estate. A Court Reporting Transcript by Epiq 21 HCMP 1987/2018 Day 02 A. Yes. Q. Those people who were handling the estate were your other uncles? A. And aunts. Q. Uncle and aunts. A. Yes. Q. The other children of your late grandfather? A. Yes, that's correct. Q. So this letter is meant to be seen by not only YK but also the other children of your late grandfather? A. They would have seen this one, yes. Q. Now if we go back to page 5633. A. Okay. Q. At the bottom, the paragraph starting "accepting" -- have you found it? A. Yes. Q. "Accepting the prevailing and insurmountable differences between Harbour Front and Mr Leung Yuet Keung, and the total breakdown in mutual trust and confidence which was the central reason for the creation and existence for Money Facts, we believe that the only rational decision would be for Harbour Front and Mr Leung Yuet Keung to consent to part company ..." A. Yes. Q. This is true, is it not? A Court Reporting Transcript by Epiq 22 HCMP 1987/2018 Day 02 A. At the time, as I -- the background of these petitions, I think you will remember, is Harbour Front thought we have done -- or what needs to be done -- at the time, and we can -- or we have the right to be -- we should be in part of the sort of managing the company, but we were -- we say we were wrongfully excluded. COURT: Ms Leung, did you believe that at the time? What you wrote, your letter -- A. Yes. COURT: Did you believe it? A. There was a -- COURT: Did you believe what you wrote in that paragraph that Ms Lok has just read to you? A. Yes, because we -- COURT: No, I'm not interested in why. You believe that? You genuinely thought this is the position? A. Yeah, there was a breakdown of trust. MS LOK: Not breakdown; total breakdown. You believed that? A. Well, I believed there was a breakdown, not -- total breakdown -- Q. Not only did you genuinely believe it, this letter was sent on behalf of Harbour Front, so all the other directors of Harbour Front must genuinely hold the same belief. Do you agree? A. Well, yeah, it has to be sort of in line with our A Court Reporting Transcript by Epiq 23 HCMP 1987/2018 Day 02 petitions at the time, right? COURT: Let's just cut to the quick. A. Yeah. COURT: To the best of your recollection, the directors of Harbour Front believed what was written in the paragraph that Ms Lok has just taken you to? A. Yes. MS LOK: You kept using the expression "at the time". You said "at the time" yesterday, referring to the 2015 letter. A. Yes. Q. You said now, "At the time, in May 2017" you believed genuinely the complete -- there had been a complete breakdown of trust and confidence. Can you enlighten my Lord and myself, is there any change about that between May 2017 and now? A. Well, there was the judgment saying that we were not wrongfully excluded, then we had to do something about it, right? So it was sort of -- I wouldn't say it's a misunderstanding, but we were -- what we were thinking was not right. So we need to do something about it. Q. By that, you were referring to what you call the attempt to remedy part of misconduct? A. Yes. Q. That is the action taken by Harbour Front in 2017, A Court Reporting Transcript by Epiq 24 HCMP 1987/2018 Day 02 correct? 2018. A. 18. 18, yes. Q. We will look at that later. A. Okay. Q. But my question to you is targeted not at the payment of money, but the breakdown of trust and confidence. Do you see? A. Sorry, can you recap your question? COURT: You read my judgment. A. Yes. COURT: And having read my judgment, did you take any steps like writing a letter or sending an email or phoning your uncle and saying, "Having read this judgment" -- had you read Mdm Justice Kwan's judgment? A. Yes, a while ago. COURT: All right, so you read these two judgments. "I realise that we are wrong". Did you ever write to your uncle to apologise? A. Not in writing, no. COURT: Did you ever apologise to him? A. No. MS LOK: From 2017 to now, it is correct that Harbour Front and YK were still embedded in litigations? A. Yes, even today. Q. Even today, you are in court, isn't it? A Court Reporting Transcript by Epiq 25 HCMP 1987/2018 Day 02 A. Yes. Q. I suggest to you, Ms Leung, that there is a complete breakdown of trust and confidence between Harbour Front and YK since at least 2001, when the first round of petition was started in the company's board. Do you agree? A. In the legal terms or as in a real -- back then, we felt that it was -- sorry, I need to go back to -- I need to go back to put it in context, right? At the time, we felt this was not right, so we -- we -- that's why we say that's our breakdown of trust. Q. So the answer is yes, you agree? Since 2001 there was a total breakdown of trust and confidence before Harbour Front and YK -- for whatever reason. A. I think it was whenever we commence the winding-up petitions. Was it 2001 or -- Q. 2001, yes. So, yes? A. No, that was the -- yeah, in the context of we felt we were excluded and not properly represented, that YK was not following what was agreed. Q. Let's move on to the Littlewoods offer, and we can deal with it quickly if you focus on my question. A. Sure, yes. Q. Can you please turn to D5, tab 179, page 4012. COURT: There's not much on page 4412, it starts A Court Reporting Transcript by Epiq 26 HCMP 1987/2018 Day 02 "The project suggested to build 18 residential buildings", is that the right page? MS LOK: My Lord, I'm sorry, I missed -- COURT: Did you say D5, page 4412? MS LOK: Page 4012. I know, because the pagination is overlaid on the old ones. COURT: So this is Littlewoods' letter? MS LOK: Correct. COURT: If I recall correctly, Littlewoods -- did Littlewoods identify who they were acting for? MS LOK: Not really. COURT: No. Thank you. MS LOK: These tycoons like to keep things mysterious, but we do know that Littlewoods represented them. COURT: Right. MS LOK: You have the letter, Ms Leung? A. Sorry? Yes. Q. Do you recall this letter? A. Yes. Q. The letter itself is not too exciting; it is a pretty standard letter in conveyancing context when a potential buyer approached the land owner to say, "I'm interested in your land, I'm willing to offer this sum of money, would you like to talk -- or accept it, better still?" Do you agree? A Court Reporting Transcript by Epiq 27 HCMP 1987/2018 Day 02 A. Well, it's an offer, right? Q. Yes. A. So it's accept or not accept, right? Q. Correct. But the company can of course go back with counter-offer and say -- A. Yes. Q. -- "How about we negotiate", do you agree? A. Well, yes, I assume this was out of the blue offer. No, no, it's -- sorry, I don't try to -- sometimes it would be a verbal negotiation and then the letter, right? And then sometimes its just an out-of-the-blue letter waiting for response. Q. Correct, so it is the start of a, perhaps, process of negotiation, when you can talk to and fro and maybe come to a deal, correct? A. At the time we do not know. Because we were not -- we don't -- we were not informed whether there was already a discussion or just out of the blue, yeah. We just -- the first time I think it was attached to the AGM and then we just got this. Q. Yes, so eventually you did come to know about it -- A. Yes. Q. -- and can you again focus on my question. A. Sure. Q. This letter is the start of a process of negotiation A Court Reporting Transcript by Epiq 28 HCMP 1987/2018 Day 02 which may eventually lead to a deal, do you agree? A. Yeah, it could be. Q. Yesterday, your evidence in cross-examination was that according to Harbour Front's case, YT and YK are to have a say in the management of the company only when they are directors. Do you remember that? A. I think we're dealing with the land, right? Q. Yes, in dealing with the land of course. Yes? A. That's what I said, yes. Yes, when dealing with the lands. Q. If my Lord needs the reference, it's the Day 1 transcript, page 145:20 to page 146:17. In fact, to be fair to Ms Leung, I think I need to -- I had better remind her of what she said. Can we have the transcript shown on the screen. COURT: I think they're saying no. But you probably have a paper copy of it somewhere. I have. MS LOK: This is perfect. May I show the bundle to my Lord? COURT: Yes, okay, I believe you. MS LOK: It is Ms Ho's copy. A. Take this away or keep it? Q. Keep it. At page 145 of the transcript. Can you locate it? A. 145. Q. My Lord has a -- A Court Reporting Transcript by Epiq 29 HCMP 1987/2018 Day 02 A. Sorry, there's no 145. COURT: 145, I have it. A. There's only 81. This is the page number, right? COURT: What is the problem there? MS HO: Cannot find the page number. A. Oh, okay. MS LOK: At page 145:20, have you found the reference? A. Yes. Q. "Question: I am referring to your own witness statement at page 318 of bundle C1." A. Sorry, 145:20 starts with "when the other siblings are there", right? COURT: No. MS LOK: Why don't I just read it to you. I was asking you about page 318 of your witness statement, remember that? A. Yes. Q. The understanding or agreement. A. Yes. Q. Then my question to you was: "They [meaning YT and YK] don't have to be directors, according to you, is that right?" You said: "Answer: If they are not, then who would be directors? A Court Reporting Transcript by Epiq 30 HCMP 1987/2018 Day 02 Question: No, can you answer my question? From your understanding, for them [YT and YK] to make the joint decision" -- in respect of the land, of course -- "they don't even have to be directors?" Your answer at 146:6: "Answer: No, they have to be directors." This is your answer. Now, do you remember that? A. Yes. Q. Then I went on to say because now YT is no longer holding the shares and the shares went to Harbour Front, then your answer is that Harbour Front substitutes your father in that regard. A. Yes, Harbour Front or Harbour Front nominees to be the directors. Q. Okay. Moving on from that answer, at that time, in 2008, when we are looking back in the Littlewoods offer, at bundle D5, Harbour Front was not a director of Fonfair or Money Facts. Correct? A. Correct. Q. On Harbour Front's own case, at that time, in 2008, Harbour Front did not even yet attend to remedy the wrong, correct? A. Yes, correct. Q. It didn't do so until much later, in 2017? A. Yes, but there were already the -- two claims ongoing. A Court Reporting Transcript by Epiq 31 HCMP 1987/2018 Day 02 Q. Two claims? A. Yes. Q. You mean litigations? A. Yes, two litigations. Q. I'm not talking about litigations. A. No, no, I mean, it refers because you said we haven't been talking about anything. There were the two claims in relation to the breaches. Q. Oh, you're referring to the claims brought by YK -- A. Brought by Fonfair, Money Facts and I'm not sure YK is in it, but there were, like, different parties, there's 624, there was that claim, and then there was Fonfair, same -- same claim under the bankruptcy estate. Q. If I can help you, you're referring to a High Court action commenced by Fonfair in 2005 -- A. Yes. Q. -- against, among others, Harbour Front, your father -- A. Yes. Q. -- and the UDL companies -- A. Yes, in relation -- Q. -- for the monetary loss caused to Fonfair, correct? A. Yes, those were -- Q. That was the one eventually settled, correct? A. Yes. Q. And you're also referring to the lawsuit where YK A Court Reporting Transcript by Epiq 32 HCMP 1987/2018 Day 02 started in the bankruptcy proceedings to claim losses against your father's estate? A. I forgot whether that was -- it was a loss, but I know there was a proof of debt filed. Q. Proceedings. Correct? A. Yes. Q. So those actions are taken by YK's side, correct, not Harbour Front's side? A. No, but it's the same -- relate to the same -- same loss. Q. Correct. So you already accepted that in 2008, Harbour Front did not do anything to remedy the misconduct? A. No. Q. So according to you in 2008 when the Littlewoods offer was received, Harbour Front was not entitled to a right to join management; correct? It's just logic. A. We were not represented, yes. Q. Can you answer my question? Harbour Front was not a director of any of the company at the time, and Harbour Front had not remedied its past misconduct at the time. Ergo, Harbour Front was not entitled to participate in the management of either Fonfair or Money Facts at the time. A. Well, yes, we accepted the court's -- and YK -- we asked A Court Reporting Transcript by Epiq 33 HCMP 1987/2018 Day 02 for appointment and YK rejected. Q. But in August 2008, Harbour Front applied for an injunction in the High Court to stop the management to consider the Littlewoods offer. Do you accept that? A. That was -- we asked to -- not to vote on anything. Q. What's the difference? A. Well, the difference is at that time we don't even know what is this Littlewoods offer. We were concerned that the directors thought -- whatever it is at the time. You know, there was -- they called a meeting, right? So without knowing anything, that they would go ahead and vote. I mean, there were a few concerns. There was the Littlewoods -- because it's a joint -- it's a joint offer with On Grand, so we don't even know what was the arrangement between the two owners, and then with the potential seller -- I mean buyer. Q. Ms Leung, if Harbour Front was not a director in either Money Facts or Fonfair, it is not entitled to interfere with the management of either of those companies. Do you agree? A. But we're shareholders. So we can have a say, right? COURT: No, a shareholder isn't entitled to involve itself in the management of the affairs of the company. A. Yeah, but we have a say if they ask. COURT: Well, if they ask, yes, of course. If nobody A Court Reporting Transcript by Epiq 34 HCMP 1987/2018 Day 02 asks -- A. Yes. COURT: -- it's got nothing -- basically, you don't have a say. Only the directors are entitled to involve themselves in the management of the company. A. Yes, yes. Sorry, I don't mean to interrupt, but that was the meeting, the shareholders' meeting called. MS LOK: In fact, why don't we look at the summons issued at the time, at bundle D5, tab 184, page 4024. A. Yes. Q. This is a summons brought in an action in HCA 1598 where Harbour Front, as the plaintiff, sued the two directors at the time. Correct? YK Leung and Sam Wong. A. So is an in-- I don't remember, is this the injunction that you were referring to? Q. Yes, and follow my lead and look at the heading first. A. Okay. Q. This is the action in HCA 1598 where Harbour Front sued the two directors at the time, correct? A. Yes. Q. If you move to page 4026, this is the amended summons for the injunction. A. Yes. Q. If you look at paragraph 1 -- A. Yes. A Court Reporting Transcript by Epiq 35 HCMP 1987/2018 Day 02 Q. -- you asked for the relief that the directors be restrained and that an injunction be granted restraining them until trial, et cetera, "by companies which he controls, his associates, servants, employees and agents or otherwise ... from ... ... taking any action any or procuring any action to be taken by or on behalf of Money Facts ... in relation to" -- then turn the page -- A. Yes. Q. -- voting. You're restraining the directors to vote "on item (6) as contained in a Notice of ... ('AGM') ..." which stated, and in italics: "To consider the offer dated 1st August 2008 received from ... Littlewoods ... for the purchase of the Property ..." So the effect of the injunction is to disable the board from even considering the Littlewoods offer. Do you accept that? A. No. Well, let's say -- just to put it in context, without going into the words, at the time Money Facts should be representing YK and Harbour Front, both sides, right, so whatever the directors do, Money Facts, is reflect both sides' interest. At the time we say this is because Wong Sum -- one of the directors, YK, represented himself, but Wong Sum Yuen is not A Court Reporting Transcript by Epiq 36 HCMP 1987/2018 Day 02 representing us. That's why we have this and say, "Look, you have to sort of properly represent our view first". COURT: Sorry, at this stage, just to make sure I follow the chronology, the court had already dismissed your original petition? A. The -- Susan Kwan's -- COURT: Yes. So, at that time, the court had told you -- I have no doubt Ms Ho will correct me if I'm not following the chronology correctly -- but at this time the court said you weren't entitled to involve yourself in these matters. A. So I might have mixed up the chronology. COURT: 2003 was the judgment. A. Was the winding-up, yes. MS LOK: 2004. COURT: 2004. A. Yes. COURT: This is 2008. So in 2004, the court had decided that YT and his corporate vehicles were not entitled to have a role in Money Facts or -- A. I think I believe -- COURT: -- Fonfair, managerial role. A. I think I believe it is after these proceedings that we learnt -- that the court -- no, we were told that we A Court Reporting Transcript by Epiq 37 HCMP 1987/2018 Day 02 could do something about the breaches. COURT: You say you thought -- your recollection is you think in 2008 you thought you had done what was required. A. No, we were -- we don't even know that -- no. We didn't -- not even have that thinking is -- at the time after this, we were told Harbour Front needs to do something about it. As I explained, because before this, there was already the two claims which we thought, okay, with these two claims, the adjudicate -- there will be a figure in relation to these -- the breaches. Then that's how, you know, the route of the litigation -- those litigations dealt with what Harbour Front needs to pay. Or, in terms of the HCB, that would be the YT side. COURT: But you haven't paid it? A. We haven't paid that -- because was the -- still in the process. MS LOK: There was no adjudication whatsoever, and I thought you already accepted that back in 2008, Harbour Front had not done anything to cure, in your own words, the misconduct found by Mdm Justice Kwan; correct? A. Yes, but as I said, there was already a claim going on. Q. People can claim. It doesn't mean that it is addressed. A. Okay. A Court Reporting Transcript by Epiq 38 HCMP 1987/2018 Day 02 Q. All right? A. But it was claiming Harbour Front. Q. Yes, and Harbour Front did not agree to pay, did they? A. I think it was just still in the process of going through that claim. Q. Yes, your attitude was, "Sue me and obtain a judgment. Until then I'm not paying". Is that not right? A. I don't agree with that. I mean, there was two -- it would be like double claim too, right, that would be like -- actually, be the -- Q. I think it is fairly obvious. But, anyways, Ms Leung, go back to my question. As at 2008, the effect of this injunction application was to disable the board from even considering the Littlewoods offer. Correct? A. No. The effect is to -- to have the directors not to vote on anything in the absence at least -- at least for Harbour Front. We're not even at the considering stage yet. Q. Ms Leung -- A. In my view, right? Q. -- I don't know why you are arguing this -- A. So the effect is that -- no, in my view, the effect is like don't just go ahead and vote without, you know, getting our side of views. Q. Ms Leung, I really don't think -- I mean, I'm just A Court Reporting Transcript by Epiq 39 HCMP 1987/2018 Day 02 giving you one last chance, just to be fair to you. A. Yes. Q. I don't think it is a necessary debate, because if you look at page 4027, the exact term of injunction sought by Harbour Front, and indeed that is obtained, is to restrain the directors from voting on the resolution to consider the Littlewoods offer. A. Well, yes. Say assume if we get the injunction, right, and if we, after discussion, all okay, things, all the information are there, however the company decide to proceed. But as a hypothetical, right, then it would be -- Q. In layman's term, it is to say, "Don't even think about it; you've got the Littlewoods offer, but don't even think about it. As long as Harbour Front is not on the board", that's what Harbour Front is after? A. No, it's "Don't go ahead without us having, you know, a say", a say as in we are considered and we are well informed. Q. Exactly. And you remember my Lord's finding in the last trial of this. Can you -- don't turn this off -- take up bundle D9, tab 343, page 6304. A. Sorry, page? COURT: Page 6304. MS LOK: Scroll down slowly to paragraph 15. A Court Reporting Transcript by Epiq 40 HCMP 1987/2018 Day 02 A. 15? Q. This is where my Lord dealt with the Littlewoods offer. A. So that would be 05, right, 15? Q. Yes, I'm giving you the context -- A. Oh, okay. Q. -- as you often ask to read the document. This is where my Lordship was dealing with the Littlewoods offer, and my Lord made a finding at paragraph 15, you, who gave evidence in the last trial "confirmed in cross-examination that when Harbour Front received this offer [the Littlewoods offer], it did not commission a valuation of the land. Harbour Front did not form a view as to whether the Littlewoods Offer was high or low, or otherwise commercially advantageous to Fonfair. Harbour Front, however, took exception to its continued exclusion from the board." That was the long and short of it, you just didn't like it that -- because Harbour Front was not on the board. So whatever offer that was received from the board, you think should not be able to consider it. A. I respect this court's judgment, but, as I said, whether you believe it or not, at the time it's not even about the value yet, right? There was this -- the offer is made to a joint owner, Lot 1. First, we don't even know what is the arrangement with the Lot 1, they get a A Court Reporting Transcript by Epiq 41 HCMP 1987/2018 Day 02 bigger share, how are the terms, you know, what was the -- what was the arrangement between Lot 1 and our side first, let alone to, you know, valuations. Q. All this took place in 2008, when it was found by the court that Harbour Front was not entitled to participate in management? A. Yes. Q. Yes, and when Harbour Front acknowledged it had not done anything to remedy its misconduct, correct? A. Yes. Q. And that is no surprise that the court did not like this sort of argument, did it? Because you remember this injunction application was dismissed by Recorder Kwok SC? A. Yes. MS LOK: My Lord, the reference is D5, tab 185, page 4037. To be quick, why don't we just look at the screen. A. I will just look at the screen. Q. At page 4038 -- this is a very short judgment. COURT: Very short. Look, it's only two pages. MS LOK: Yes, I wish all the judgments are like that. COURT: Yes. MS LOK: But if you look at paragraph 3, Ms Leung: "I am satisfied that this is an application is an abuse of process and the claim is frivolous or A Court Reporting Transcript by Epiq 42 HCMP 1987/2018 Day 02 vexatious." The recorder did not find serious facts to be tried to try. Do you remember that? A. Yes. Q. Did it serve as a wake-up call to Harbour Front at that time, in August 2008, that, in fact, Harbour Front is really not entitled to intermeddle with the management of the company? A. Yes. Q. Yes, it did? A. Sorry? Q. Did it serve as a wake-up call to Harbour Front, this short judgment, that, in fact, Harbour Front was not entitled to intermeddle with the management of the company? A. Well, I would just put aside -- the intermeddle. The whole thing is, right, we have two-third interest in this. Even -- COURT: So you didn't? A. Sorry? COURT: You didn't? That's what -- you did not have an interest in the land? A. We had two-third interest in the whole thing. COURT: No. No, you didn't, all right, but we don't need to debate the detailed law. A Court Reporting Transcript by Epiq 43 HCMP 1987/2018 Day 02 The position in 2008 was that you had lost the trial. A. Yes. COURT: You had taken the view in relation to the Littlewoods transaction that, for some reason, you were entitled to have a say. Another judge had told you, in very, very short dismissive language, that you weren't entitled to have a say in the management of the company which ultimately controlled ownership and disposal of the land. Did you read the judgment, the short three-paragraph judgment? A. I can read now. COURT: No, no, can you remember reading it at the time? A. Maybe I have. COURT: All right. Can you recall whether, in late August/September, it occurred to you that you were clearly were not, at that time, entitled to a say in the way in which the land was dealt with? A. Well, not as management but as a shareholder. So when I -- when I say -- it's because of the shareholders' meeting that I will have a say. A say meaning my -- saying my views. That's what I meant. COURT: The injunction that you sought, for some reason, was to prevent a general meeting going ahead. A Court Reporting Transcript by Epiq 44 HCMP 1987/2018 Day 02 A. Prevent the -- MS LOK: Voting. A. -- voting. Q. Directors from voting. Does my Lord need the reference? COURT: No, I'm looking at it now. I have to say, I have difficulty understanding why that was the -- why somebody thought that was the right order to seek. That's -- MS LOK: I wonder the same, but that's what it. COURT: Yes, to some extent it's confusing me. I'm assuming, because it doesn't make any sense. If you were trying to -- MS LOK: But the effect is clear, my Lord. The effect is to stop the directors from doing it -- COURT: Yes. MS LOK: It's for submissions. COURT: Anyway, there's not much point in pursuing with Ms Leung what the thinking what the draughter was, because I'm sure she doesn't know. If we can't work it out, we can't expect Ms Leung to be able to. MS LOK: May I carry on with this line of questioning? COURT: I'll let you continue, yes. MS LOK: Which is that at the time you received this very short, sharp judgment from Recorder Kwok, Harbour Front A Court Reporting Transcript by Epiq 45 HCMP 1987/2018 Day 02 did not reflect and say that, "Ah, I'm in the wrong and I should stop interfering with the management of the company". It did not. In fact, it did the opposite. A. Interfere -- sorry, I did not interfere with the management of the company. Q. Yes. About the land you seek the injunction, because Harbour Front actually sought to appeal this, didn't it? A. Yeah. Q. Then if we turn to the judgment of Mdm Justice Kwan, the other one, not only Harbour Front sought to appeal Recorder Kwok's decision but Harbour Front sought interim injunction pending appeal, didn't it? And that interim injunction has been heard by Mdm Justice Kwan, who also gave it short shrift. Do you remember that, or do you need me to remind you? A. I remember there was the later proceeding with Mdm Justice Kwan -- Q. Why don't we see it, then -- A. Sure. Q. -- just to be fair to you. It's in bundle D5, tab 191, starting at page 4054. Paragraph 1 stated that this is an interim injunction application pending appeal. In fact, Harbour Front instructed a silk to argue this, didn't it? It was represented by Mr Daniel Fung A Court Reporting Transcript by Epiq 46 HCMP 1987/2018 Day 02 SC at the time. A. Yes. Q. You can see the summary of Mdm Justice Kwan of the argument below, at paragraph 6. COURT: Could we start with paragraph 5 because what was not clear, if you just read the summons, I don't think, is why anybody would have wanted that order. It's not directed to anything in particular. If you look at paragraph 5 of this decision, it says: "The interlocutory injunction is to restrain the defendants from voting on the above item and from taking any action on behalf of Money Facts in relation to the disposal or redevelopment of the Property, save and except where Harbour Front has ... been fully consulted ..." So am I correct in thinking, Ms Leung, that the purpose of the injunction application was to prevent the sale of the land to whoever Littlewoods were acting for? A. Well, yes, to stop Money Facts from -- to prevent that, if they do decide to sell. Because Money Facts is the shareholder of -- COURT: I know that, but what I'm trying to understand is what you thought the purpose of going to court was. It wasn't just to -- what the commercial purpose was, and A Court Reporting Transcript by Epiq 47 HCMP 1987/2018 Day 02 I assume the commercial purpose was to stop the sale of that land without Harbour Front having a say in the decision. A. There are a few things. To stop -- if there's a sale, the sale, or whatever with -- arrangement with Lot 1, or whatever -- basically, it's a raft of commercial arrangements there is. Because the offer is to Lot 1 as well, right? COURT: Well, no, I'm not concerned with the detail. I'm concerned with, in general terms, what you were trying to do. I assume, and this is obviously what Mdm Justice Kwan assumed because she says it in her decision, is that you wanted to stop the disposal or redevelopment of the property which she's referred to, unless Harbour Front had been fully consult and agreed the terms of any sale. A. Yes, or commercial arrangement. COURT: Yes. That's what you were trying to do? A. Yes. COURT: You were being told by Recorder Kwok in the initial decision that you were appealing that actually you didn't have that right because of the decision of Mdm Justice Kwan's judgment some years before in 2004. You understood that? A. Mm. A Court Reporting Transcript by Epiq 48 HCMP 1987/2018 Day 02 COURT: Yes, okay. MS LOK: But you instructed a silk to seek interim injunction pending appeal, nonetheless? A. Yes. Q. In that decision, you were told by Mdm Justice Kwan again that Harbour Front was in the wrong. If you jump to paragraph 10 on page 4057, fourth line, it was specifically pointed out in that written judgment that: "[Harbour Front] has made no reparation of the losses suffered by Fonfair as a result of its misconduct ..." Here, of course, my Lord, Mdm Justice Kwan was only talking about money, she was not making a reference to loss of trust and confidence, right? A. Yes, money here. Q. And Mdm Justice Kwan said Harbour Front is seeking equitable relief and is not entitled to it in the circumstances that it has done so much wrong. Correct? A. Yes. Q. By this time, we are talking about September 2008. Did it serve as a wake-up call to Harbour Front that it ought not interfere with the management of the companies or the sale of the land any more because it was not entitled to participation in the companies? A Court Reporting Transcript by Epiq 49 HCMP 1987/2018 Day 02 A. That we cannot be in the management. Q. Now you say that, but at that time you still brought the appeal, didn't you? A. Yes. Q. In fact, the appeal judgment is at tab 192, the next tab. That appeal was dismissed -- A. Yes. Q. -- when it was heard the day after Mdm Justice Kwan gave her judgment. And you can see that you got two judges at the appellate level, on top of Mdm Justice Kwan and Recorder Kwok, telling you that Harbour Front is in the wrong and you shouldn't interfere with the management of the company in respect of the land. Do you agree? A. Yes. Q. After having failed in the court and being told by these eminent judges, what Harbour Front did was write a letter to Littlewoods. Do you remember that? A. Yes. Q. Can we look at that letter together, it is at bundle D5, tab 187, page 4042. COURT: Sorry, so this is after the Court of Appeal's decision? I don't like moving around documents. I -- MS LOK: This is before but after the Recorder Kwok's decision. A Court Reporting Transcript by Epiq 50 HCMP 1987/2018 Day 02 COURT: Second. So after Recorder Kwok, before Mdm Justice Kwan, the Chief Judge of the High Court. MS LOK: I thank my Lord for getting clear the chronology. COURT: Yes. MS LOK: All these happened in several weeks in short time. So are you on the page, Ms Leung? A. Yes, 4042, correct? Q. Correct. This is the letter in the letterhead of Harbour Front. Go quickly to the signature at page 4043. Is that you or your brother? A. That's my brother. Q. That's your brother? A. Yes. Q. How old was your brother at the time? A. 26, 27. Q. Was he still studying at the time? A. No, he's working. Q. He started working? A. He's working already. Q. In issuing that letter, I presume he must have talked to the entire board of Harbour Front? A. Yeah, with me. Q. With you? A. Yeah. Q. At that time, 2008 it was you, Jerry and your mother? A Court Reporting Transcript by Epiq 51 HCMP 1987/2018 Day 02 A. Yes. Q. So this letter was sent with the approval of all three of you? A. Yes. Q. You can see this letter was specifically addressed to Littlewoods in respect of the potential sale of land, correct? A. Yes. Q. You identify yourself to be the shareholder, correct? A. Yes. Q. So Harbour Front was sending this letter to put on record the matters stated in the letter. It said "Aha, look into the company Fonfair, there are so many shareholders", you even give a nice little table on the page 1 of the letter. Correct? A. Yes. Q. Then turn the page, you read from the first paragraph on page 4043: "As the owner of the ultimate interest in the property as mentioned above, Harbour Front hereby puts you on notice ..." That is a very lawyerly term, puts you -- COURT: Who drafted the letter? A. I think it was the lawyer who assist me to draft. MS LOK: Mr Tsang? A Court Reporting Transcript by Epiq 52 HCMP 1987/2018 Day 02 A. I think so. Highly likely. Q. He showed himself by the language, but then of course Harbour Front directors agreed to this. A. Oh, yeah, I've read the letter. Q. "... puts you on notice of Harbour Front's objection and disagreement to any representation or holding out of authority by the directors of Fonfair as to their entitlement to deal with the Property in the manner participated in your offer letter." This paragraph is a direct attack on the management of the company's authority. Do you accept that? A. Yeah, we were putting them on notice. Yeah. Q. So you are telling to the potential buyer that in fact the board are not the boss; they can't actually deal with the land? A. No, we -- in a way, we're saying that we are the -- we had a significant interest, but it may or may not be aligned with the board of the decisions. I think that's what we're saying. We did set out in the beginning that we are -- sort of ultimately have two-third interest in this. Q. But you do know, and we have a spent a lot of time going through this topic, that as a shareholder you cannot interfere with the management of the company. Correct? A. Yes. A Court Reporting Transcript by Epiq 53 HCMP 1987/2018 Day 02 Q. And at that time, Harbour Front has no right to management; it is pretty established? A. I have no right, but I have a say to -- at least to tell, you know, people that I do have a significant interest in this thing. Q. This is not what you are saying. The first paragraph is not saying that -- not only saying that Harbour Front has a significant interest; it is putting Littlewoods on notice that the board of the company has no authority to act. A. No, that we may not be -- our interests may not be aligned. Q. I get your answer. A. Mm. Q. Then if you move on to the next paragraph: "You are further put on notice of the following matters ..." A. Yes. Q. You say: "Harbour Front was [not] informed or ... consent to [the] arrangements or dealings between Fonfair ... to receive and to consider the offer." Paragraph 2, you're using all these words about "no authority", and then the directors' authority are "invalid and done without legal basis and ... objected A Court Reporting Transcript by Epiq 54 HCMP 1987/2018 Day 02 to Harbour Front as a shareholder". Do you see that? A. Yes. Q. Then you point out your purpose, don't you, the express purpose at the penultimate paragraph, third line? A. Which one, sorry, can you start read -- Q. Harbour Front repeats its position that it is inappropriate for parties to proceed with dealings which are now subject of legal proceedings. Correct? A. Yes. Q. By "legal proceedings", are you referring to the application for interim injunction? A. I think it means the -- the later -- the later one. Q. Which later one, the one before Mr Justice Kwok? A. No, the one -- the higher court one. Q. So all in all, the intention of this letter is pretty clear, isn't it? Harbour Front want to scare off the potential buyer. A. No, that's not true. If you read further, right, we say -- COURT: Well, frankly, I have some difficulty in not reading it as clearly intending to interfere with the transaction, Ms Leung. Are you telling me that that was not the intention? A. Well, if you read on, we say we're still willing to open to consider any, like, commercial arrangement. A Court Reporting Transcript by Epiq 55 HCMP 1987/2018 Day 02 COURT: But you weren't entitled to become involved in these negotiations. A. Not in the management, yes. COURT: Well -- MS LOK: Does my Lord want a break? COURT: Yes. Because I want to rise a bit earlier, if we just take a 10-minute break. (11.22 am) (A short break) (11.34 am) MS LOK: My Lord, on the housekeeping side, what time would my Lord like to rise? COURT: Make it quarter to. MS LOK: Ms Leung, before we break, we were talking about the Littlewoods offer. Can I point you to your witness statement, C1, tab 1, page 364. A. I can keep these bundles here? Q. You can put them away, thank you. At paragraph 125(1): "... I specifically deny ..." A. Sorry, hold on, first. Paragraph 125? Q. Yes, paragraph 125(1). A. Okay. Q. You make certain specific denial, and sub-paragraph (1) is the denial that the Harbour Front letter sent on 2 September 2008 to Littlewoods was with the intention A Court Reporting Transcript by Epiq 56 HCMP 1987/2018 Day 02 to intimidate the prospective purchaser. I suggest to you that this cannot be correct. Do you accept that? A. No. The letter is to set out the sort of positions to inform the other side, right. In a way, we don't want the other side to end up committing something -- to Fonfair, expose and say, "Oh, I didn't know all this was going on." Q. If you go on to the next letter of consequence, in bundle D5, tab 190, page 4052, in is a letter sent by Ho & Ip, representing the company. A. Yes. Q. It was sent to Harbour Front, do you see? COURT: Sorry, one-nine? MS LOK: Bundle D5, tab 190, page 4052. COURT: 4052, okay. Yes. MS LOK: Here, in this letter, Ho & Ip criticised Harbour Front. In the second paragraph, you can see. A. Mm-hmm. Q. "It is apparent that having abused the court process by commencing HCA 1958 ... and seeking an interim injunction which was dismissed by Recorder Kwok SC on 29 August 2008, you chose to escalate your act of sabotage by writing the letter to deter the intended purchaser from proceeding with the intended purchase of our client's property by asserting rights as to which, as A Court Reporting Transcript by Epiq 57 HCMP 1987/2018 Day 02 already held by the Court, you are not entitled." It was pointed out to you, right? A. Yes, the letter, yes. Q. Yes, and then the last paragraph: "... we are instructed by our client to give a serious warning to you, which we hereby do, that if you continue to act to interfere with the proposed transaction ... [we may take action, so on and so forth]." So YK's side has made it very, very clear to you, Harbour Front, that it does not accept, at least on their part, that Harbour Front has a right to participate, right? There's no understanding, no agreement, however you call it. They say, "No, you're not on the board, stop interfering with the sale." That's what they said. A. Yeah. Yes. Q. If you see the next letter, at tab 196, page 4077, that is Ho & Ip's letter to Littlewoods doing all the explanation they could in the circumstances. But, of course, it is not disputed that Littlewoods did not come back with any further response. Do you agree? A. I do not know whether they did not come back or not -- at least YK told us there was nothing to follow up on that. A Court Reporting Transcript by Epiq 58 HCMP 1987/2018 Day 02 Q. But do you accept that, there's nothing from Littlewoods after your letter? A. That's what YK told us. Q. So can you agree to this, that Harbour Front actually succeeded in intimidating the potential buyer and stopping the sale to proceed? A. I do not agree. Q. The approach by Harbour Front, and we can have so much deja vu in subsequent correspondence, which I will take you to, is to nip it in the bud. You don't even allow negotiation of any potential deal; you just say, "Stop thinking, don't even talk about it." That is Harbour Front's approach. A. No. In my letter, as you see, we said we are open for any commercial arrangements, something of that sort. Q. But only if Harbour Front can have a say. A. I think it would be internally first to deal with the whole arrangement with -- naturally with On Grand first, right? Q. So we are in agreement. You are saying that unless Harbour Front can have a say or participate in the sale process, the board is not allowed to even do some talking with the potential buyer? A. I think at least should have the information first. We're not even to deciding. A Court Reporting Transcript by Epiq 59 HCMP 1987/2018 Day 02 Q. So do you accept this, to wind this up, Ms Leung, that the approach of Harbour Front has been to deprive the company of the chance to even consider the offer? A. No. Q. You can take away the current bundles. We are moving on to another offer we see on the record in 2015, that is seven years after the Littlewoods offer, we got another offer from Chung Sing. Do you remember that one? A. Yes. Q. If you pick up the judgment of my Lord at bundle D9, tab 343, page 6313. I am doing it this way to avoid argument and save time because, in fact, my Lord spent some time in the 2018 judgment to make findings in this regard. So these are all travelled ground, Ms Leung. Do you accept that? A. Sorry, what troubled ground? Q. The Chung Sing offer has been subject to express findings by this court in the 2018 judgment. A. They were mentioning, yes. Q. The paragraphs I want to draw your attention to are 34, 35 and 36. A. I'll read it to myself first. Q. Yes, okay. Tell me when you're done. A. Okay. Q. To clarify, the reference to the presentation of the A Court Reporting Transcript by Epiq 60 HCMP 1987/2018 Day 02 petition in the end of paragraph 36 was a reference to HCCW 111 and 116 of 2015, right? A. Yes. Q. They were tried in 2017, which caused the 2018 judgment. Correct? A. Yes. Q. A very simple question to you, Ms Leung, is: do you accept the finding at paragraph 36: "... Harbour Front's offers and proposal in March 2015 were not genuine, but were made with a view to interfering in the sale of the land to Chung Sing as were the presentation of the Petition." A. Well, at this stage I've accepted the judgments as it is, but to -- if you allow me to explain what -- what happened back then on how this all happened. It was back in 2000 -- late 2014 at the AGM, YK said, you know, things are squared, you know, like, parties are even. Thus we -- he was referring to the drawdown by his side. So that happened so we thought, okay, so that's done. And then in January 2015, that was the settlement with the official receiver, and then the title of the shares were no longer sort of a question which YK was concerned previously. So I think around that time of February, we called a meeting to demand our sort of appointment, right, and it A Court Reporting Transcript by Epiq 61 HCMP 1987/2018 Day 02 got rejected. I think the meeting was early March, around that. It got rejected, and I think since then our legal advisers were saying, okay, we should start, commence the proceedings. The Chung Sing offer -- I mean, there were offers that came before the petition, and then there were offers that came after, so it just happened around that time. Q. So your short answer is that yes, you agree with my Lord's finding at paragraph 36? A. I accept the judgment as it is. Q. The reference to YK telling you the figures are squared -- A. Yes. Q. -- is a reference to YK's information to Harbour Front about the status of the reconciliation, right? A. That the drawings are all done. Q. But Harbour Front did not accept it at the time, did they? A. Well, at the time he didn't really ask us to accept. We were never understand we need to accept it. In our -- Q. Are you serious, Ms Leung, in saying that? A. In the -- from the beginning, right, it was -- from the beginning he said it was sort of the company's exercise into drawing money, that and that, right. A Court Reporting Transcript by Epiq 62 HCMP 1987/2018 Day 02 I think it was only -- so in the beginning, he would say, "Oh, this is an operational thing, he would just draw whenever this fund, blah, blah, blah, right", and then he would produce the interim report from time to time. The first time we received the 2008 report was 2010, around there. Yeah. Q. Ms Leung, before you drift off, can you tell my Lord, very clearly, in your case when did Harbour Front accept the reconciliation exercise? A. That was 2018 -- Q. Correct. A. -- October, yeah. Q. So my answer to you was very simple. We are now talking about the Chung Sing offer -- A. Yes. Q. -- in 2015. At that time, the reconciliation was not accepted, correct? A. It was not -- it was not accepted in a way it was not asked us to formally accept. We were never asked to formally accept. Q. What do you think was required on YK's side to invite acceptance by Harbour Front of the reconciliation report? By sending you all these figures, was that not enough, the report? A. Yeah, I mean, it shows that he drew the money already. A Court Reporting Transcript by Epiq 63 HCMP 1987/2018 Day 02 Q. Don't drift off, Ms Leung, again. A. Sorry. Q. What do you think in your opinion was required on YK's part to invite acceptance by Harbour Front on the reconciliation? A. That he would ask us -- there would be a -- I would assume if he asked us, then there would be a -- eventually, later, he asked us to accept. Q. Right, and if you remember, and I'm sure my Lord does, in the 2015 -- sorry, in the trial before my Lord, you were still raising all sorts of objections to the reconciliation and saying that it was wrongful misappropriation by YK. Do you recall that? A. Yes. Q. Yes. A. At the time we thought, as I said -- now we accept what it is, we were always -- that's -- I have to say at the time, we thought the proper way to sort of pay back Fonfair's loss is to pay back Fonfair directly. At the time, we thought that would be the way. Hence you see all these sort of cheque payments to the company. COURT: Once again, counsel can correct me if I'm getting this wrong, it was clear from Mdm Justice Kwan's judgment that your father had caused money to be improperly paid -- A Court Reporting Transcript by Epiq 64 HCMP 1987/2018 Day 02 A. Yes. COURT: -- out of the company. A. Yes. COURT: And if your father/Harbour Front was to have any prospect of obtaining enforcement of the shareholders agreement, that wrong needed to be remedied. A. Yes. COURT: That was understood? A. Yes. COURT: After the judgments, would I be correct in thinking that your father and you, your brother, your mother, wanted to be able to participate again in the management of Money Facts and Fonfair? A. Yes. COURT: Yes. Did you ever have any discussions between yourselves about what actions you needed to do to remedy the wrong that Mdm Justice Kwan had identified? A. Well, the most straightforward way is to pay back Fonfair's, whatever those are. But I think -- I wouldn't say the "issue", the question is how much, right? So there was this -- already from Fonfair side started the action, 624, that was quantifying the losses or -- we see it as in an adjudicate -- or to determine the figures. COURT: But as I say at paragraph 41 of my judgment: A Court Reporting Transcript by Epiq 65 HCMP 1987/2018 Day 02 "Harbour Front ha made no effort to propose an alternative method for agreeing what is owed and moving on." A. Yeah, eventually we did, but at the time. COURT: Yes. A. Because there were already a few claims going, right? COURT: Well, I don't -- A. Sorry, I don't mean to argue, but we saw that was sort of the process of arriving that figure, of determining the exact amount. MS LOK: Let me try to approach it in this way, and taking it to a chronological order, by asking you two questions. COURT: Well, I'm not sure. I mean, how much detail do you need to go into? Obviously, I reached a decision. You find that in paragraph 41. MS LOK: No, not in detail, but to address any possible argument by my learned friend about a good relationship and the reparation of wrong, I do need to go into a little bit of detail by reference to the knowledge of the wrong, as well as when they start remedying. So this is the next chapter in my cross-examination. COURT: All right. MS LOK: Why doesn't my Lord see where I'm going and we can cut it short any time. A Court Reporting Transcript by Epiq 66 HCMP 1987/2018 Day 02 COURT: Okay. MS LOK: Ms Leung, when in your case now, because you don't really tell us very clearly in your evidence, did Harbour Front really realise that it was in the wrong? Can you give us a year? A. I cannot give you a year. Q. How about by reference to the key judgments? We know on the record, for example, there is my Lord's judgment in 2018 -- A. Yes. Q. -- there is Mdm Justice Kwan's judgment in 2004 -- A. Yes. Q. -- there is also Mr Justice To's judgment in 2002. A. Okay. Q. So you accepted -- A. Yes, we accepted those judgments. Q. Right. So do you actually accept that since 2002, Mr Justice To's judgment, Harbour Front already realised that it was in the wrong? A. Yes, there was. Q. Can you remind us, in your evidence, when was the first time that Harbour Front started to make remedy to pay -- in the sense of to pay Fonfair the money back? Tell us the year. A. I think the type of offers we have, it was 2017, A Court Reporting Transcript by Epiq 67 HCMP 1987/2018 Day 02 something like that. Q. We are talking about a gap of 15 years, correct? A. As I said, I do not agree to that. It would -- in a way, I think that this 624 claims and the rejection of the -- by the OR on the bankruptcy, those were all only cleared around 2015. Q. Let's not confuse ourselves. A. It's the same thing, right? Q. It's not the same thing. We are talking about action taken by Harbour Front to remedy the wrong, not action taken by YK to go after Harbour Front. A. Well, in a way -- Q. Do you see the difference, first? A. In a way you're saying if Harbour Front -- I'm not trying to argue, but if Harbour Front could speed up the proceedings, like the adjudication, all those, are you saying that what we should have done? Q. Well, let me ask you this way: did it occur to anybody in Harbour Front that, given the clear finding of wrong in the 2002 judgment, it is upon Harbour Front to take the initiative to at least pay the money back, not for YK to go after you? A. Well, for Y -- we have to do -- we have to pay it back, but the question is how much, right, and then there were already the proceedings that determined. A Court Reporting Transcript by Epiq 68 HCMP 1987/2018 Day 02 Q. Let's take it one step at a time. A. Okay. Q. Did it occur to anyone in Harbour Front that it was Harbour Front who ought to take the initiative to pay the money back to Fonfair? A. Well, Harbour Front want to pay, but we don't know how much to pay. To -- Q. Right, so when do you say that awareness was made, "I want to pay but I don't know how much"? A. We can't pinpoint, I suppose with the claims already started back then. Q. Do you accept that we have gone through so much of the evidence and we have never seen one single letter until 2017, the problematic letters we will look at -- A. Yes. Q. -- of Harbour Front actually suggesting any figure of repayment? A. It was only the -- our letters, right? Q. Right. But, in fact, it is not very difficult exercise, was it? The complication of the reconciliation and the objections lies mostly in the fact of the dispute over the subsequent legal cost. Do you remember that? A lot of the argument was on how much legal cost was indeed Harbour Front's responsibility and which party incurred the cost. Do you remember that? A Court Reporting Transcript by Epiq 69 HCMP 1987/2018 Day 02 A. Yes. Q. In the very, very beginning, the misappropriation was relatively easy to calculate. Go to Mr Justice To's judgment to find out what exactly that is in, bundle D2, tab 86, page 2927. This is the genesis of it all, where the wrongdoings begin and where the finding of misappropriation was first documented in a written judgment. Do you agree? A. Yes. Q. Yes, so this judgment is written by Mr Justice To. The plaintiff was Fonfair. At the time the director was already YK. The defendant was your father's company UDL, correct? A. Yes. Q. The background is in paragraph 1, which is the defendant UDL's appeal against Master Jack Wong's decision dismissing the summons to strike out. So, in fact, UDL was saying that Fonfair's claim against it ought to be struck out. A. Mm-hmm. Q. Master Jack Wong dismissed it and that decision was upheld by Mr Justice To. A. Yes. Q. Right. After dealing with the background, you look at the finding by Mr Justice To in paragraph 4. A Court Reporting Transcript by Epiq 70 HCMP 1987/2018 Day 02 A. Yes. Q. The seventh line -- not the seventh. Do you see after the words "ratio of 2 to 1"? A. Yes. MS LOK: Does my Lord -- COURT: Paragraph? A. 4. MS LOK: Paragraph 4. COURT: Which line? MS LOK: In the middle. Does my Lord find "ratio of 2 to 1". COURT: I see it. Yes. MS LOK: This is what Justice To says: "[YT], who had the management of [Fonfair], overdrew [the money the rental income of Fonfair] in favour of himself. This led to appointment of an independent accounting firm ... Lau & Au Yeung [CPA] ... to review the accounts of the Plaintiff. As a result, it was revealed that [YT] had overdrawn from the plaintiff's account [2.6 million odd], while [YK] had been underpaid [5.9 million odd]. The reconciliation [exercise] prepared by ... Lau & Au Yeung was accepted by both [brothers]. On 27 November 1997, the Plaintiff duly paid [YK] the amount which he had been underpaid ..." Now, this reconciliation is not the reconciliation A Court Reporting Transcript by Epiq 71 HCMP 1987/2018 Day 02 we have been talking about; it predates the 2008 reconciliation. It happened in 1997, did it not? A. Yes. Q. That was the first time when YT, your father, started the misappropriation, and that was dealt with relatively cordially by the brothers, by working the numbers out by the accountants, and that was settled. Was it not? A. Yes. Q. This Lau & Au Yeung, you remind my Lord, was the exact same accountant firm who handled the 2008 reconciliation? A. Yes. Q. Back in the 1990s, you and Jerry were still children, right? A. Yes. Q. Look at paragraph 5 and see the arrangement made by your father and YT at the time: "In view of the misappropriation by [YT], it was agreed that ... Lau & Au Yeung be engaged to administer the accounts of [Fonfair] whereas the administration of the lease of the [Yau Tong] Property to [UDL] be managed by [YK] to avoid further conflict of interest with [YT] representing both [Fonfair] as landlord and [UDL] as tenant at the same time." So it is pretty obvious that YT had a conflict in A Court Reporting Transcript by Epiq 72 HCMP 1987/2018 Day 02 the interest of the dealing with the land, was it not, and that led to the agreement of having somebody else to deal with the leasing of the property? A. Yes. Q. Right. But: "That agreement, however, was never implemented due to lack of cooperation from [YT]. That was the position towards the end of 1997." So we can see, as a matter of historical record, backed by judicial finding, that the lack of good faith, not sticking to agreement, et cetera, in circumstances of conflict, already started in the 1990s. Do you accept that? A. Yeah. Q. Now, if we move on to paragraph 6: "Prior to that, the Plaintiff and the Defendant had entered into a tenancy agreement [so on and so forth]." So it was the discussion of the situation of the Yau Tong property which UDL had occupied for a very, very long time. If you read the sentence starting with "The term expired on 31 August", "the term" is the term of tenancy in favour of UDL, it expired on 31 August 2000, "but the defendant", that is UDL, "under the control of your father, continued to hold and use the property. There is no dispute that [UDL] has not A Court Reporting Transcript by Epiq 73 HCMP 1987/2018 Day 02 paid any rental since 1 December 1999 and the rental which ought to have been paid as at 31 August 2000 amounted to [1.8 million odd]." Do you see that? A. Yes. Q. This is very clear down to the last figure of how much rental was owed back then in 1990s, right? Your father's misappropriation. A. Yes, a lot of -- Q. It's not that difficult, is it? In the time of the judgment of Mr Justice To, you state, "Well, how about I repay you back that sum?" Nothing difficult in telling the amount, was it? A. Well, this figure -- yes -- Q. Well, but you did not do that, did you? A. No, there was already a -- was it -- sorry, go on yes. Q. So instead of simply paying the money, what UDL said was to raise a defence of set-off, right? It says that, well, "I have no need to pay rent. I have no need to pay rent." A. Yes. Q. If you read on, this is the defence, it doesn't get too technical. A. Yeah, this was the breaches -- Q. "I don't need to pay you rent because I can set off, and A Court Reporting Transcript by Epiq 74 HCMP 1987/2018 Day 02 I also challenge YK's authority to represent Fonfair". This is the sort of defence raised by UDL in the claim, correct? A. Yes. Q. The long and the short is that UDL's defences did not impress Mr Justice To and that application was dismissed. If you go on to paragraph 13 and look at the finding. There again you have a specific finding of misappropriation by your father's side: "Since the safeguards agreed in November 1997 were not implemented, for the period up to December 1999 almost all the rental income received by [Fonfair] from [UDL] was misappropriated by [YT] into the account of [YTL Limited] as shown in the account movement record. Thereafter, the misappropriation took a different form by [YT] simply allowing the defendant to continue in occupation of the property without making any rental payment." Do you see that? A. Yes. Q. So again, by that time, all this shortfall in the rental income, had Harbour Front offered to repay Fonfair, would be easy to repay; there was nothing difficult in the calculation, was there? A Court Reporting Transcript by Epiq 75 HCMP 1987/2018 Day 02 A. I think there was -- there was this -- as I understand it, that still needs to be determined, properly adjudicated, at the time as I understand it. Q. You keep saying the words "properly adjudicated". That is a short form of saying "Sue me and get a judgment or else I won't pay", isn't it? A. No, I think it's just determining the figure. Whether you can call litigation or arbitration or whatever you call it. Q. I see. But I think Harbour Front's response goes further than that, doesn't it? If you move on to page 2934, after the word: "Thereafter, the misappropriation took a different form ..." Do you see that? A. Which paragraph? Q. I'm reading from paragraph 13 still. A. Okay. Q. "Thereafter, the misappropriation took a different form ..." Do you see that? A. Yes. Q. "On 7 January 2000, [YK] raised the question of distribution of the rental income with [YT] at a meeting, but failed to obtain a satisfactory answer. A Court Reporting Transcript by Epiq 76 HCMP 1987/2018 Day 02 He wrote to [YT]", but YT did not respond. Then in brief, YK called the meeting and you can see from the last two lines: "[YT] and Fire Full refused to attend the meeting, which collapsed due to insufficient quorum." Do you call that cooperation or do you call that hostility, Ms Leung? A. Well, obviously, it's not cooperation -- as the judge put it. Q. Exactly, and we are talking about 2000, 23 years ago. A. A long time ago. Q. And that continued, doesn't it? Because if you look at paragraph 16, I will just skim it through, back in that time before Mr Justice To in 2002, not only did Harbour Front not say, "Okay, I'm sorry, there is a -- YT, I'm sorry, I misappropriated and I misused the land, I'll just give the money back" -- instead of doing that, he created some documents to back up his defence, which Mr Justice To found to be recent creation. Do you see the words? COURT: Sorry? Where are you reading? MS LOK: Paragraph 16. COURT: Yes? MS LOK: Fourth line from below: "This casts serious doubts if the tenancy agreement A Court Reporting Transcript by Epiq 77 HCMP 1987/2018 Day 02 [that one relied on by YT] was a contemporaneous document. It is more likely than not that the tenancy agreement was a recent creation sparked from [YK's] notice to convene a meeting to discuss the tenancy." Do you see that? A. Yes. Q. So that is a reference by a High Court judge to a bogus tenancy agreement created after this event to deal with YK's objection to your father's wrongdoing. A. Yes. Q. It is not very conducive to trust, was it? A. Yes. I mean, I think this was all the breaches that relates to the breaches that the court, Mdm Justice Kwan found, right? Q. Exactly. A. Yeah. Q. Then at that time, Harbour Front did nothing; it just went on and on with the litigations, correct? A. Yes. Nothing was done at the time. Q. You can't only look at your father's position without looking at yours, Ms Leung, because you have been Harbour Front's director since 2001. A. Yes. Q. So at the inception of these heavy, serious litigations, you were there, weren't you, despite being very young? A Court Reporting Transcript by Epiq 78 HCMP 1987/2018 Day 02 A. Yes, I was there. Q. I think you accept that in answer to my Lord's question, you read these judgments, Mr Justice To's, Mdm Justice Kwan's -- A. Well, only at a later time. At a later time. Q. Well, after they come out. A. Yes, after they come out, there were all these episodes and by, I would say recent years, I think there should be a term, just do things differently. Q. In answer to my earlier question you accepted that at least since the time of Mr Justice To's judgment in 2002, Harbour Front knew that it was in the wrong. So now can you answer that question? A. Yes, the judgment. Q. Don't confuse the steps taken by Harbour Front with the steps taken by YK. We're only talking about the act of Harbour Front. From 2002 to 2007, within the huge gap of 15 years throughout which you were the director, Harbour Front did nothing to offer to repay even the monetary loss of Fonfair. Do you accept that? A. Well, yes, we did not write those letters until 2017. But for reasons I have indicated previously. Q. Not only that. Let's focus a bit on the date between 2017 and 2018. A. Okay. A Court Reporting Transcript by Epiq 79 HCMP 1987/2018 Day 02 Q. 2017, you said, is the start date of your action of reparation, and I presume you would say that it was all with sincerity, is it not? A. Yes. Q. Can you turn to bundle D10, tab 344, page 6333. A. Yes. Q. This is the notice of appeal to the 2018 judgment, is it not? A. Yes, correct. Q. If you look at the date affixed to page 6365, the date of this notice of appeal was 15 March 2018. A. This says 21st, sorry. Yes, 15th. Q. So that was after, after you say you sincerely wanted to make remedy to Fonfair; correct? A. Yes. That's after the judgment came out, earlier, I think the month before that. The 2018 judgment. Q. Look at page 6336 onwards. We don't need to get into the niceties of the legal arguments, that -- would it be not fair to say that Harbour Front was appealing the 2018 judgments by taking every point possible under the sun? A. Well, I think at the time we were advised to lodge this to preserve our position before we review, you know, where to go next, so I assume it's all legal things. But that's how it was drafted. A Court Reporting Transcript by Epiq 80 HCMP 1987/2018 Day 02 Q. You wouldn't need to review what is going to happen next, Ms Leung, because, according to your evidence, you already made up your mind to make reparation, with sincerity -- A. Yes. Q. -- one year before? A. Yes. But this -- Q. Is that the Harbour Front way of sincerity? On the one way saying that "I want to make repayment" but at the same time appealing the judgment nonetheless? A. At the time, we were advised -- I think there was a time limit if we need to -- if we want to preserve our position before we can do what -- because at that time, YK has not accepted our offers yet, right, so we review, we have to preserve our positions by issuing this notice. As I understand it, nothing was -- has been done or proceeded after we lodged this notice of appeal. Q. What is YK to do with any of this? If Harbour Front want to sincerely make remedy, it just makes the remedy. It doesn't need to preserve its position. A. We were just advised to. Q. How about you? I mean, it is you, the Harbour Front directors, who decide whether to take that advice or not. Did you not say then, "We are all sincere, we are wrong and we have been wrong for 15 years, for God's A Court Reporting Transcript by Epiq 81 HCMP 1987/2018 Day 02 sake, let's just stop this and pay"? A. Yes, I agree, so that's why -- this was done on the legal term, right, so we have continued to, I would say, improve our offers with the subsequent letters. Like, this was filed and nothing was done. It's not like we are pushing to go ahead with this, right? We filed to sort of preserve -- as advised, to preserve the, whatever, you know, whatever -- the right to appeal if we need to. But on the (unclear) side, we said "Hey, look, we need to do something about it, let's just, you know". Q. I suggest to you that this allegation of sincerity is wrong. What Harbour Front did by writing all these letters in 2017 and 2018 is just to try to build a paper trail for it to argue or bully its way back to the management. A. I disagree. Obviously, I'm not saying the lawyer, but eventually I decide to change the legal team, you know, to see what is a more positive way we can deal with this, and that's how -- as you can see, when we lodged this notice, it was still Tsang & Lee. Very soon, I changed the whole legal team to see a positive way or an acceptable way that YK, you know, would be okay or happy with it. Q. I am moving on to the letters themselves, but before A Court Reporting Transcript by Epiq 82 HCMP 1987/2018 Day 02 that, I need to remind us all about the background, which is the reconciliation. A. Yes. Q. Do you remember that when you were first appointed a director of Harbour Front, at that time Fonfair has no money at all? A. I was told that at the time -- Q. We have read Mdm Justice Kwan's judgment, at that time it had only in the bank $100-odd, right? A. That's what I read, yes. Q. Can we all go to the reconciliation resolution, at bundle D5, tab 180, page 4016. You see that this is a resolution of Fonfair. The first three paragraphs set out the background, right? A. Of what? Q. The background to this resolution. It says -- A. Are you talking about the notices? Q. I am looking at page 4014. Oh, I'm sorry, maybe I gave you the wrong reference. A. Okay, yes. Q. The first three paragraphs give you the background? A. Yes. Q. First we see on the first paragraph that as of 8 July 2008, which was some four years after A Court Reporting Transcript by Epiq 83 HCMP 1987/2018 Day 02 Mdm Justice Kwan's judgment, the credit of Fonfair's account already accumulated greatly to $772,000-odd, right? A. Yes. Q. That sort of income was generated when YK was managing the company, correct? A. Yes. Q. And the point is that there were misappropriation by YT, you see from the third paragraph? A. Yes. Q. In this resolution, it gave the sum of misappropriation; do you see that? A. Yes. Q. The rationale of that reconciliation exercise is stated in the fourth paragraph: "... given the surplus funds currently held by the Company and the expected continuing accumulation to this surplus, it would be appropriate to apply such surplus to settle the accounts to the relevant parties ..." Correct? A. Yes. Q. Pausing there, do you accept that this reconciliation adopted by the board in August 2018 was necessary because up to that point, Harbour Front did nothing to A Court Reporting Transcript by Epiq 84 HCMP 1987/2018 Day 02 make the payment to Fonfair? A. Well, I agree -- well, since I accepted the reconciliation exercise now. Q. Correct. And do you also accept, from the face of this resolution, YK, in passing this resolution, was trying to show and explain to Harbour Front the whole rationale of the process as well as giving account of what is going to happen? A. Well, this is the company's resolution, we were not given to this -- we were not given this until later, in later years. Q. It was given to you, but -- I don't think we need to argue that point, but it was definitely given to you -- A. It was not, but anyway. Q. -- by some of the meetings, it's travelled once, but anyway. Let's look at the last sentence at page 4015. The interim report's origin comes from this paragraph which says that: "... with a view of maintaining a reasonable degree of transparency in the administration of the settlement of accounts with relevant parties, [YK] shall report the progress of the settlement of accounts at each General Meeting of the shareholders of the company." Correct? A. Yes. A Court Reporting Transcript by Epiq 85 HCMP 1987/2018 Day 02 Q. That's why the same firm of CPA, who did the first reconciliation in the nineties, were engaged to do this reconciliation. A. Yes, but this is someone different, the format. Q. We note the evidence given by you in the last trial as well as the finding by my Lord that after this resolution was passed, nothing was done by Harbour Front nor its solicitor to follow up on any real or constructive ground of objection. A. Well, I accept the judgment as it was. Q. Do you accept that from -- now we'll move on from 2002. It's now already six years, and this 2008 reconciliation was put in place because Harbour Front did nothing. Do you accept that at least by this point, it would have been easy for Harbour Front to simply say, "Okay, I'm going to repay those moneys"? A. Yes and no because for -- as it goes on, right, there were new things added in, and the way the structure, I -- and then there was the way how the interest charged, the minority interest, so it changes. Q. Well, all of this -- A. So it wasn't clear. Q. All these things happened afterwards. I'm not talking about what happened afterwards. At this point in time, 2008, Harbour Front did not say, "Well, I just pay up A Court Reporting Transcript by Epiq 86 HCMP 1987/2018 Day 02 and then that's it. No need to calculate interest because the principal is paid." A. But at the time, there was just two claims ongoing, right? That was from the adjudication that is still outstanding, at the bankruptcy part. Q. But did you suggest to YK, "Why don't we get rid of those and I'll pay you"? A. Perhaps I can. Q. But you did not? A. No, I did not. Q. Right. And did Harbour Front or you ask YK how much is owed, "I can't figure out"? A. No. There was the -- there were a number of claims set out. Q. Is it still your case that Harbour Front does not like the methodology adopted by YK, that they don't like reconciliation. They say, "You must go to court and get an adjudication and get the court order to tell me how much I'm owed"? A. No. By 2018, as I said, I want to do things positively. So even we gave them the cheques of the payment, the sums stated out in the reconciliation, YK said, "No, we don't take this". That's why I said, "YK, whatever you're happy with it or you find it acceptable", that's why we accepted the reconciliation. We're not going A Court Reporting Transcript by Epiq 87 HCMP 1987/2018 Day 02 back -- I'm not going -- now say I still disagree. Because that's whatever YK is happy with. Q. Let's not get confused on the time because we do have to deal with your letters later. I'm talking about 2008. At that time -- obviously, because I see from your witness statements there are paragraphs and paragraphs of disagreement over the reconciliation, which I need not trouble my Lord with. So, apparently, until the very moment in 2018 when you said, "Well, yeah, all right, I agree to the reconciliation", you still objected to it, fundamentally. A. What do you mean? I -- 2018, I've accepted it. Q. Yes. A. I've accepted. Q. Yes, until then -- A. Yes. Q. -- it was not accepted, correct? A. Oh, yes. Q. My question to you is, therefore, for that long period of over a decade, had that methodology of reconciliation been objected to, you could have counter-proposed to YK, "What is your preferred methodology?", but that was not done, correct? A. There was no alternative, but we were sort of waiting A Court Reporting Transcript by Epiq 88 HCMP 1987/2018 Day 02 for that claim to be -- dealt with the figures. Q. The 2005 action that you refer to many, many times was actually withdrawn, right? A. Yes. Q. In fact, I draw your attention to your own witness statement, C1, tab 1, page 331, paragraph 41. A. Yes. Q. I think paragraphs 41 and 42 are the two claims that you referred to earlier. A. Yes. Q. The statement of claim dated 28 December 2005, correct? A. Yes. Q. Where Fonfair, Money Facts and YK sued your father's camp for the monetary loss, and 42 refers to the similar claim in the bankruptcy -- A. Adjudication. Further proof of debt. Q. Right. Then move on to page 334, paragraph 51, where you will find the reference to the settlement. Do you see that? A. Yes. Q. So, in fact, it is not the case that YK caused Fonfair to simply drop the claim, but also Harbour Front was happy to let the case drop because it was done by consent. A. Yes, and then the adjudication was rejected. A Court Reporting Transcript by Epiq 89 HCMP 1987/2018 Day 02 Q. So the clear conclusion from all these was that Harbour Front was happy to actually let the case, the court case against it, be dropped but at the same time without proposing any alternative to repay Fonfair. Do you accept that? A. I -- yes. There was already the reconciliation, and we did, I think 2015, start saying, "Okay, we will pay, we have these offers." Q. The reconciliation back in those days were not accepted. A. Yes. So we had the offer, if you recall the 2017, later -- Q. Stop jumping ahead of time, 10 years later. A. Okay, sure. Q. We're dealing with this moment. My Lord, for your reference, the consent summons is at D7, tab 284, page 5153. In case my Lord needs to refer to it, it is a normal form of consent order agreeing to the action be withdrawn. Ms Leung, you spent a large portion in your witness statements criticising the reconciliation. Look at bundle C1, tab 1, starting at page 333. I'm not going into the details of these criticisms; I'm just giving you and my Lord the paragraph references. They are from paragraph 47 to paragraph 51, and paragraphs 65 to 66. Can you help us, because it will obviously relieve A Court Reporting Transcript by Epiq 90 HCMP 1987/2018 Day 02 us of a lot of unnecessary doubt, what exactly do you mean by these paragraphs? Because I would have thought, A, that these matters were tried in 2017 and my Lord already rejected that they amounted to unfair prejudice on the part of YK; and B, you told us that you have accepted the reconciliation in 2018. A. Yes. Q. So what is the point of all these complaints? A. I was just giving the background of the changes of how these sort of evolve. Q. So the short answer is that my Lord is not invited to make any findings on these, right, despite you making these complaints in fact -- A. No, we have -- we have accepted all. So the 2016 report, as stated in, we accept it. Q. Just to seal this point and avoid any unnecessary argument in the future when we need to close our case, Ms Leung. Please go to my Lord's judgment at bundle D9, page 6314 of tab 343, paragraph 37. This is a statement of your leading counsel in the last trial of the issues before my Lord. You can see at paragraph 37(3) the, appropriateness of the reconciliation was squarely within the subject matter of that trial. Correct? A. Sorry, I don't get your question. Can you rephrase that? A Court Reporting Transcript by Epiq 91 HCMP 1987/2018 Day 02 Q. Paragraph 37 is a statement given by your leading counsel at the time explaining the issue before my Lord in the 2017 trial. A. Yes. Q. And you can see from sub-paragraph (3) the appropriateness of the reconciliation exercise, the one in 2008, and whether or not it amounted to unfair prejudice on YK's part was an issue in the last trial. A. Yes. Q. If you move on to paragraph 23, my Lord had made findings in that regard already. A. Yes. Q. The essence of the finding was that the reconciliation did not amount to unfair prejudice, given all these factual developments over the years and Harbour Front did not do anything constructive. Do you agree? A. Yes, we accept that. Q. My Lord, the paragraph reference to my Lord's findings touching on that issue is between paragraphs 57 to 68. So back to your -- A. Sorry, I don't need to flip, right? Q. You don't need, no; I'm just giving reference to the judge. Back to your witness statement, Ms Leung, at C1, A Court Reporting Transcript by Epiq 92 HCMP 1987/2018 Day 02 tab 1, page 334, I am at a loss of what you are trying to say here, from paragraphs 52 to 54. What exactly are you trying to say? Are you trying to argue again that the reconciliation was wrongful? A. No, I was giving a background. If you want me to reconfirm again, I can -- Q. You keep saying that you give the background, but I thought you say you abide by my Lord's finding. A. Yes. Q. So all this should be behind us, right? A. Yes, but I just give -- like to give the background of things. Q. Well, to cut this short, can I make it sure in your present position regarding the 2008 reconciliation is that you do not query or doubt the propriety any more? A. You mean as stated in this -- whatever is presented, right? Q. No. Whatever you presented in your witness statement are still making a lot of complaints. A. Yeah. Q. If you still make these complaints -- A. As I said, it's not complaint, I'm giving a background. I said the latest report was 2016; whatever's stated in there, we accept as it is. Q. Now. A Court Reporting Transcript by Epiq 93 HCMP 1987/2018 Day 02 A. Yes. I mean, back then and now I reconfirm. If you are questioning whether I did not accept or not, I -- we did accept and it's -- it remains our position. Q. I don't understand your answer. When did you say you first accept the 2008 reconciliation? A. I think it was October, there was a letter October-something, and then we wrote again in the same month to reconfirm. Q. That's 2018. A. 2018. That's what I said, right? Q. No. A. What did I say, sorry? Q. I was trying to make sure I understand what you say. A. Yes. Q. So until October 2018, the reconciliation was not accepted. A. Was not accepted, yes. We did not accept. Q. The paragraph references that I gave you were all the complaints that Harbour Front had including those in the last trial about why they did not accept the reconciliation. You get it? A. You're talking -- sorry, there's two. There's one with the judgment, we accepted it. There was my witness statement that I lay out the background of what happened. A Court Reporting Transcript by Epiq 94 HCMP 1987/2018 Day 02 Q. The 2008 reconciliation. A. Yes. So those paragraphs was my -- my background I've given of the -- of the reconciliation. Q. And you are not making those complaints any more, are you? A. I don't see it as a complaint; I'm just giving a background. Q. So I just make it very clear, you are not -- A. I'm not complaining today. Q. Not complaining today any more? A. Or the day I wrote this, we're not complaining; I'm giving a background of how it is. Q. Oh, I'll let my Lord be the judge of it -- A. Yes, okay. Q. -- of how to read your witness statement. But it is good enough that you confirm in the box -- A. Yes. Q. -- that today you are not complaining against the 2008 reconciliation. A. And we're not -- we don't have any more issues. We have already accepted it. Q. All right. We have pointed out the background to the reconciliation, correct? Do you accept that by the time of the 2016 interim report, shortly thereafter YK pretty much already squared the figures? A Court Reporting Transcript by Epiq 95 HCMP 1987/2018 Day 02 A. Yes. That's what he said, yes. Q. You understand the nature of the reconciliation is an exercise set-off, correct? A. That is what he proposed, yes. Q. Right, so YK can draw cash from the distributable profit but, at the same time, Harbour Front's drawing was first deducted by the amount that it owed Fonfair. Correct? A. That was the understanding, yes. Q. Do you agree that for things to move on, at least on the monetary side -- and I make it very clear, I am not talking about general trust and confidence among the shareholders, only about the money owed -- it would have been very easy for Harbour Front to say, "I accept that reconciliation", and then you can move on? A. Okay, first at the -- and I need to say at -- it was at the time I did those -- Q. Yes, let's make clear the time, and no need to repeat. We're talking about 2016 -- A. Yes. Q. -- 2017. A. Yes. So we were still of the view that we need to pay the company, you know, directly, rather than this reconciliation. It was never said this is what legal -- like, not legally this is what it should be done, you know, follow this and, you know, that's how it's done. A Court Reporting Transcript by Epiq 96 HCMP 1987/2018 Day 02 So we weren't sure if this is the -- the right form. Or now we eventually, with -- we read -- we have the judgment and, you know, YK made it very clear that's the only way he accepts, so we accepted it. Q. Well, if we see it from the practical perspective, when YK first proposed the reconciliation in 2008, no objection was raised, and we have read my Lord's finding on that. You are now already in 2017. A. Yes. Q. Isn't it a bit too late for you to raise these objections? You say that, "In fact, I find the whole methodology wrong, you ought to have sued me instead." Is it not a little bit too late? A. Sorry, I did not -- I did not object in 2017. What do you mean I object? Q. You just gave me the answer, when I asked you why did not Harbour Front simply say "I accept the reconciliation", "Well, we did not like the methodology." A. It's not like; it's I wasn't sure if that's the right -- Q. You did not agree to it. A. Yeah, we do not do it until -- so we did pay cheque -- we did -- before we accept, we said, "Okay, if this is the sum you say is right, then we pay" -- I mean, there was a long process, right? We pay this sum, and then we A Court Reporting Transcript by Epiq 97 HCMP 1987/2018 Day 02 say this -- the legal costs at the time, we say, you know, maybe yes or no, and then eventually we pay the full sum; still, YK said, "This is not acceptable", and then so we accept -- that's how we ended up -- Q. Because cash offers and the reconciliation is a square peg in a round hole. That's the point, isn't it? Reconciliation is about set-off; you just say yes and that's it. All this calculation about the sum owed and the payment of interest is already done and contained in the report. Do you understand that? A. Well -- sorry, I'm not so legal. But the company lost money, right, it was due to Harbour Front, it's found by previous. So the straightforward way is the company should be compensated and paid back. That's sort of the line of thinking Harbour Front had. Q. You already agreed with me that the reconciliation -- A. I'm not arguing the reconciliation, whether it's right or not today, I'm just saying back then that's what is on the back of our mind. Q. I'll try one last time. A. Yes. Q. Back in 2017, why -- apart from the reason that you don't like the methodology of the reconciliation, was there any other reason to stop Harbour Front from simply saying, "Yes, I agree to that accounting exercise, and A Court Reporting Transcript by Epiq 98 HCMP 1987/2018 Day 02 then we can start distributing cash from a clean slate from then on"? A. Let's put it -- okay, I think, as I recall, right, it was not until the trial and from the judgment that Harbour Front, you know, expressly say, "We accept is the way to go ahead". Does that answer your question? Q. I'm not sure I understand your answer. A. You say why did I not say, "Hey, okay, I accept", right, basically in those words. I say it was not until that written judgment and say, "Ah, really, this is actually what we need to do", and then that's what we did. Q. Okay, let me make sure I understand your evidence correctly. After you read my Lord's judgment in 2018, you became aware that you need to accept the reconciliation -- A. Expressly say that we accept. Q. Okay, and when did you read my Lord's judgment? A. I think 2018. I think it was at the trial already that YK did mention -- I think it was around the trial, around that time. I don't -- I don't exactly remember how -- you know, the exact wording that came about. Q. Would I be correct to say that when the judgment was out, you read it pretty soon afterwards? A. Sorry? I don't get -- when the judgment was out, I read -- A Court Reporting Transcript by Epiq 99 HCMP 1987/2018 Day 02 Q. Read it soon afterwards? A. Yes. Q. Yes -- A. Yes. Q. -- you did, right. Before the lunch break, let's go over a few paragraphs of your witness statement. You can put aside the other bundles. At C1, tab 1, paragraph 74 -- you said it in two different ways in paragraphs 74 and 75. You said: "74. ... in view of [the] 2018 Judgment, Harbour Front should be considered to have remedied or at the very least made serious attempts to remedy its breaches of the Shareholders Agreement since 5 July 2017 ..." Right? A. Yes. Q. You do accept that by that day, you have not accepted the reconciliation, correct? A. Yeah, we have not accepted -- Q. You only did so more than a year afterwards? A. Yeah, after various offers that we made. Q. Then you continue in paragraph 75: "By tendering the 29 September 2018 Payment and further agreeing upon the 'reconciliation exercise' A Court Reporting Transcript by Epiq 100 HCMP 1987/2018 Day 02 based on the 2016 Interim Report ... Harbour Front has remedied all its past breaches ... with the result that it is now entitled to assert its rights thereunder, including the right to equal participation in the management and affairs of Money Facts and Fonfair ..." Right? A. Yes. Q. So can you clarify to my Lord Harbour Front's position, is it that as long as Harbour Front pay Fonfair the money, it means a ticket to the board? A. Two separate things, right? First, it dealt with whatever we had done or the breaches we had done in the past. That's one. First, we need to deal with that first, right? And then obviously we would want to safeguard our interest, and we will ask for that, but it's not a -- it's not like we will do this, only this. Q. "Safeguard our interest" means safeguard Harbour Front's interest? A. Yes, the two-thirds interest we have. Q. So your answer is yes: as long as Harbour Front pays the losses, the money to Fonfair, then it means a ticket to the board for Harbour Front to safeguard its interests at the board level. MS HO: I don't think that is a fair summary of A Court Reporting Transcript by Epiq 101 HCMP 1987/2018 Day 02 the witness's evidence which has already been recorded. MS LOK: Can you answer my question: is that what you think? A. We dealt with the past and then we move on to the future, and obviously the future is we have to safeguard and, you know, be part of this. Q. Let me rephrase. The question is actually very simple. What you need to get a seat in the board is to pay off the money, is that right? That's your view. A. That would naturally happen, I would assume. Q. So, yes, pay the money, seat in the board. A. It's not a conditional thing. It's like you dealt with the past, right? It's whatever it is, you have to deal with the past first. At least the other person, you know, is okay and happy with it and then we move on. Q. Right. A. Yeah, but -- but you're say -- basically, you're asking if -- are we not going to do anything, close our eyes on the two-third interest. I can tell you, we're not going to, you know, sit back -- COURT: No, I don't think Ms Lok is asking you that. A. Okay. COURT: She's just asking you this: did you assume that if you paid what was owed, it would follow that you were entitled to have representation on the board? A. Well, we assumed that that was the understanding that we A Court Reporting Transcript by Epiq 102 HCMP 1987/2018 Day 02 dealt with the past, and then our -- you know, we -- the rights, or whatever it is will be there. COURT: Right, well, I'll take that as no, okay? MS LOK: But did it occur to you that it also depends on whether or not there is a working relationship between YK and Harbour Front apart from the money? A. No. Well, in doing business, right, all this sort of, whatever you call it, mutual trust is aligned -- as long as the interests are aligned, then we can work on. So far in the past, YK and I, we were able to talk, you know, in meeting and discussions, although sometimes it may be disagreements. COURT: Do you want to stop here? We're adjourned until 2.30 pm. (12.44 pm) (The luncheon adjournment) (2.32 pm) MS LOK: Ms Leung, a simple question on the chronology. You started the reconciliation in 2008, it was concluded in 2016 on YK's side, and all the interim -- A. Sorry, 2015, I think. Q. 2015, but then the final interim report was 2016. A. It was issued in -- yeah. Q. Then all these reports in the interim were provided to Harbour Front, correct? A Court Reporting Transcript by Epiq 103 HCMP 1987/2018 Day 02 A. Not timely, but yes, periodically. Q. We don't need to argue, but periodically they were provided to Harbour Front. So you know all the figures and how the figures were calculated, all along, right? A. Yes. Q. When you started writing these letters in July 2017, do you agree that it took Harbour Front more than a year, and to be exact, it's some one year and three months, to finally bring the reconciliation to a close? A. I think it was 2017, we're still making the offers to pay back the company. Q. Correct. A. Yes. Q. And the reconciliation was finally accepted in October 2018. A. Yes. Q. So you agree with me that it took Harbour Front one year and three months of letter-writing to get the reconciliation to a close; correct? A. Yes. Q. Let's look at the letters. Some of them. My Lord, if we go into the details of these letters, we will be here all week. Unless my learned friend takes a strong approach and is formal about it and requires me to go through each and every letter, I don't A Court Reporting Transcript by Epiq 104 HCMP 1987/2018 Day 02 propose to do it. I will only bring some select examples which will bring out the point in dispute. The first letter is at bundle D8. My Lord, I give warning that we will be looking at a lot of letters this afternoon. Bundle D8, tab 311, page 6037. This letter was sent by Tsang & Lee, correct? A. It was Ho & Ip. Q. Hmm? A. Ho & Ip letter, right? Q. Page 6037. A. Well, on the screen it says Ho & Ip. COURT: I think you said tab 311, I think that's what is probably causing the confusion. MS LOK: 315, I apologise. COURT: So it's in that tab but it's -- no. MS LOK: Just look at the page number, it may be easier. COURT: Well, it's not -- if that is the case, it may not be D8. D9. MS LOK: Yes, D9, page 6037. Let me rephrase myself. The correct reference is D9, tab 316, page 6037. A. Yes. Q. The significance of this letter is that it was the very first letter from Harbour Front actually proposing to do A Court Reporting Transcript by Epiq 105 HCMP 1987/2018 Day 02 something about the reconciliation. I rephrase, the first letter from Harbour Front actually proposing something about the monetary loss suffered by Fonfair, is that correct? A. Yes. Q. You can see that at the date column, 7 June 2017. A. Yes. Q. On that date we were still having a trial, weren't we? A. Yes. Around that, right? Q. Yes, in fact, on that very day -- A. Oh, okay. Q. -- we were at the trial. A. Yes. Q. So if you look at the beginning of the letter, it started with a reservation of position by Harbour Front, correct? A. Yes, the line says that. Yes. Q. Yes, it's reserving everything, including the claims by Harbour Front and the position on propriety of the drawings by YK, correct? A. Yes. Q. If one reads on, this letter does not actually propose anything, does it? It's a very short letter saying that, basically, if you claim anything, you have to get a determination from the court on the liability. A Court Reporting Transcript by Epiq 106 HCMP 1987/2018 Day 02 A. Yes. Q. We all remember that YK tried to do that by bringing a claim in 2005, but that was dropped by consent. A. Yes, and then there was the claim against the estate. Q. Correct, and you look at the last paragraph: "The intention of this offer is that the claimed amount shall be retained by [Harbour Front] as security" -- security only -- "for, and may be applied towards satisfying any amount found due from Harbour Front in respect of the breaches." So do I take it correctly that as at this date, 7 June 2017, Harbour Front still maintained the position that it doesn't know how much is owed to Fonfair? A. I think the exact amount, I think that's the proposal of coming to a total sum. That's how I understand the -- Q. So the answer is yes, it was Harbour Front's position then, despite the fact that all these interim reports showing the calculation were sent to Harbour Front over the past decade? A. Well, the interim reports, as I understand it, they were sort of compiled based on something and then they -- the figures written. I'm not disputing the reconciliation report now, I'm saying at the time, as we understand it, it's just an accountant sort of, you know, listing out the figures. So as you can see, eventually, when we A Court Reporting Transcript by Epiq 107 HCMP 1987/2018 Day 02 make the payment, we said, okay, we are not going to dispute, these are the maths, we based on those and, then we make the payment. That's how -- what led to that. Q. Back to this letter, we do not need to debate over Harbour Front's agreement or disagreement over the reconciliation; we've gone past that. A. Yes. Q. But the simple answer to my question is that, yes, despite having those numbers for years, Harbour Front is still saying, "I don't know how much is it" -- A. At the time -- Q. -- and not proposing a figure. A. This letter did not propose. Q. Right. The next letter is at D9, tab 319, page 6113. A. Okay. Q. This letter is in the letterhead of Harbour Front itself. A. Mm-hmm. Q. Whose signature is that at page 6115? A. Yes. Q. Whose signature is that? A. That's my brother. Q. Just Jerry? A. Yes. A Court Reporting Transcript by Epiq 108 HCMP 1987/2018 Day 02 Q. Did you agree and read this letter before it was sent? A. I know the content; I forgot exactly whether I read word for word. Q. All right -- A. I assume yes. Q. But you won't have any reason to assume that your brother would send a letter without your permission? A. No, no, no. Q. Correct. So if you look at page 6113, the second paragraph -- A. Yes. Q. -- you still use the word, fifth line from above: "Despite the lack of any adjudication, [YK] has engaged on a so-called self-help exercise by which [et cetera]." So this self-help was the 2008 reconciliation? A. Yes. Q. This letter was sent on 5 July 2017. That was roundly one month after trial of the -- which took place in 2017. A. Yes, around that time. Q. So at that point in time, Harbour Front was still saying, "If you want to have compensation in money terms from Harbour Front, you need to get a court adjudication", correct? A Court Reporting Transcript by Epiq 109 HCMP 1987/2018 Day 02 A. Can I finish -- read the whole letter so I can recall in context? Q. Well, if you do that, I'm afraid it would take really long, Ms Leung, because there are so many letters. MS HO: But I do think the witness has the right to read the letter. A. Okay. MS LOK: Are you done? A. Yes, it's a long letter. Q. My question to you does not require reading of the entire letter. It was a very simple one. By reading this second paragraph, fourth line from the bottom "Despite the lack of any adjudication", et cetera, so the position taken by Harbour Front at the time was, in order for it to pay Fonfair any money it requires adjudication, correct? A. Yes, I think I did mention because the same claim was under the bankruptcy -- YT's bankruptcy, and the adjudication was rejected or basically rejected, in short, so I think that's sort of where this was coming from, on the adjudication -- I think there was a 3 million that we were -- that was added with other sums. Q. You required adjudication. A. Yes. A Court Reporting Transcript by Epiq 110 HCMP 1987/2018 Day 02 Q. At page 6114 -- A. Yes. Q. -- this is where the offer comes at, at paragraph 2: "Without repeating the detail of the shareholders disputes [et cetera] ... we propose that Fonfair considers the following proposal ..." Right? A. Yes. Q. Do you see that? A. Yes. Q. "1. Without any admission or affecting our rights, should Fonfair allege that Harbour Front has any indebtedness to Fonfair ..." Correct? A. Yes. Q. Do you accept that an objective reading of that line means that Harbour Front is still not accepting that it has any indebtedness to Fonfair? A. No, we accept the liabilities, but we don't -- it's the quantum, right, so I think that is the standard -- or at least it was written, it was the standard wording of how all settlements are like. Q. That's not what is said, is it? A. It's what it meant -- Q. You did not say, "We accept the liability but we want to A Court Reporting Transcript by Epiq 111 HCMP 1987/2018 Day 02 find out the quantum", we don't know what is meant secretly by the writer of this letter, but the objective wording of that line is that Harbour Front does not accept that it has any indebtedness to Fonfair. Do you accept that? A. No. It's -- it's a quantum, right? In all settlement, you would say, you know, these sort of words. Q. If you say so, Ms Leung, but I point out to you the second half of the sentence says: "... Fonfair is invited to formally provide us with details of any such claim ..." A. Yes. Q. "... including any quantification." So you are requiring details of the claim including quantification. So plainly not only the numbers are in question, is it? A. It is the number -- there are a few things, right? I mean, if there's, for example, the legal cost, which our claim was not even part of it, but in there that would be one package, that part and the quantum. Q. I think I have given you sufficient opportunity to explain. Now let's move on to the next letter at D9, tab 328, page 6176. A. Okay. Q. This is a reference to a cash offer of HK$3 million-odd, A Court Reporting Transcript by Epiq 112 HCMP 1987/2018 Day 02 correct? A. Yes. Q. I have questioned you about how cash offers are incompatible with the reconciliation process in the morning, and I won't do that again. Let's leave that behind us, and focus on the wording of the letter. At page 6177 -- A. 177, the next page? Q. Correct -- fourth paragraph from the top: A. Okay. Q. "If [and I highlight the word "if"] the Fonfair board of directors objectively considers that there is outstanding liability owing from Harbour Front to Fonfair, then it is under an obligation to state the nature of such liability and quantum in order to enable Harbour Front to redeem its position by clearing any agreed or adjudicated liability." Now, what do you say to this, Ms Leung? It's not only quantum but also liability, is it, that Harbour Front is not accepting? A. We accepted the past breaches. And how much, you know, to compensate or to pay Fonfair's for those breach, that's what we meant. Q. If it's -- A. So I'm not sure that what you -- A Court Reporting Transcript by Epiq 113 HCMP 1987/2018 Day 02 Q. To say that you accept the past breaches but disagree on any liability is as hollow as hollow can be, Ms Leung, isn't it? We all know what liability we are talking about. We have seen all these judgments and the interim reports, haven't we? A. Yes, we have seen the judgments. Yes. Q. So what do you mean by asking the board of Fonfair to state what is the outstanding liability and quantum? If you just look at the 2016 interim report, you already have all the answers you need. A. Well, let's put it this way, when we wrote this, it's -- it's the same as, I would assume, right, not -- when Fonfair submitted the claim with the OR, whatever they have, adjudication -- none of them, right, none of them -- anyways. But these ones are the quantum we are asking, it's not the liabilities. Q. You're saying the exact opposite of what is stated on the letter. A. Well, I think liabilities in here, when we were drafting this, as I say, it's the means of quantum. Q. Right. Is that your answer? A. Yes. Q. I'll move on. The next letter is at D9, tab 332, page 6193. We have got these letters and moved out to A Court Reporting Transcript by Epiq 114 HCMP 1987/2018 Day 02 the region of August 2017. The second paragraph: "In those letters" -- you refer to the previous correspondence -- "we pointed to the numerous unadjudicated allegations raised against Harbour Front by [YK Leung] purportedly acting in Fonfair's name. Mr [YK Leung] has failed to pursue court proceedings commenced against Harbour Front to obtain an adjudication of any loss for which it says Harbour Front is liable to Fonfair." That is, again, a reference to adjudication, but we have already agreed the 2005 writ claim was withdrawn with consent of Harbour Front. Correct? A. Yes. Q. Had it been Harbour Front's genuine belief in good faith that any liability that it paid Fonfair had to be adjudicated, wouldn't it be honest for Harbour Front to say, "Let's not just drop the claim, let us let it carry on", instead of agreeing for it to be dropped? A. Well, the case is dropped, yes, we accepted that. Yes. Q. Yes, you enjoy the full benefit of having the case dropped, and then pick about it 12 years later and say that you did not proceed with the court claim, hence you don't have adjudication. A. Well, at 2015, YK already said squared, right, squared, so he draw the money. So obviously the -- you know we A Court Reporting Transcript by Epiq 115 HCMP 1987/2018 Day 02 take that he no longer wants to go with that part of the adjudication. Which we disagreed with. Q. After the case in 2005 was dropped and YK proceeded since 2008 of the reconciliation, you all along say, until the very last trial before my Lord, that this is self-help process by YK Leung, it's wrongful that it amounted to unfair prejudice. Correct? A. I think that's what the petition says. Q. The next letter is the response by Fonfair. Let's see what YK said in response, at D9, tab 334, starting page 6200. Paragraph 1, to put things on record is not correct that there was no reply in fact there were discussions orally of the EGMs held. Correct? A. Sorry, which line are you talking about. Q. Third line, paragraph 1, reference to the discussions in EGMs dated 17 July 2017 and 14 August 2017. A. "Please referred to Fonfair's letter ... and the audio records of ..." Okay, yes. Q. Then in paragraph 2 -- A. Yes. Q. -- here Fonfair rebuts the argument by Harbour Front that it deprived it of the opportunity to rectify any alleged continuing default. Sub-paragraph (2): "Notwithstanding the said Judgments, Harbour Front A Court Reporting Transcript by Epiq 116 HCMP 1987/2018 Day 02 never admitted its liability to make any reparation to Fonfair. We regret that it remains the position of Fonfair[sic] to date, as evidenced by your letters which you disputes Harbour Front's liability to pay Fonfair." That was the view taken by Fonfair after reading your letter, do you see that? A. Yes, so obviously the offers were not good enough, and hence the continuation of -- Q. It's not the offer was not good enough. Fonfair was saying that after reading your letters, they understood it to mean that Harbour Front was still disputing the liability to pay Fonfair. Correct? A. That's what he wrote. Q. Yes? A. Yes, that's what he wrote. Q. That's what he thought. Then you look at paragraph 3, on the next page. It says -- the view is taken that these letters were to "build up a paper trail to support further vexatious legal proceedings". Paragraph 4, Fonfair asked you to do two things: admit liability, to make reparation to Fonfair for its default; and, two, "give specific and substantiated objection to the quantum already contained in the interim report". This is exactly my question to you in the last three A Court Reporting Transcript by Epiq 117 HCMP 1987/2018 Day 02 minutes. A. Yes. Q. You already know what Fonfair said was the liability and the quantum, just go and read the report. If you have any objection, tell me what is it. A. I'm not objecting to the figures in the report any more. At the time, we -- as I said, we felt that was the way to do it, and hence the exchange back and forth, back and forth. Q. In these letters -- let us pause here to take some stock. Do you agree that these are not particularly friendly letters? Not like trying to be nice to each other. The tone was very -- if not argumentative, at the very least it was in light of what is going to be argued in the court proceedings. A. These are like business -- it's not love letters, right? It's business letters. Q. So you would agree they were framed in terms of demands, conditions, allegations, deadlines, threatening lawsuits, et cetera, correct? A. I don't see -- is there any threatening lawsuit here? Q. Yes -- A. But anyways, that was the position -- that was sort of parties written in a formal way, hence all in English. Q. Do you agree that in these letters, not even once did A Court Reporting Transcript by Epiq 118 HCMP 1987/2018 Day 02 Harbour Front apologise? A. No, but I suppose on a -- on a business setting, there was no demand for apology. Q. But this is not business setting; this is your entire case, is it, that these are partners? This whole business, your entire claim on exclusion from management is based on the fact that these are quasi-partners. So stop talking about business setting. A. So how does -- how is partner different from business? It's a form, right? Q. Well, can you just accept that throughout all these letters, there was no apology attempted? A. There was no apology, no "I'm sorry" written, yes, I agree. Q. Nothing to the form nor to the effect. Correct? A. Well, I thought that action would says it all, but I guess not. Q. No, it's not. Because you asked me the question, was there any example of threatening lawsuit, yes, there is. If you go back to page 6178, that was the letter I took you earlier on 19 July 2017. Does my Lord have the reference? COURT: Yes. MS LOK: It's 61 -- A. Which tab? A Court Reporting Transcript by Epiq 119 HCMP 1987/2018 Day 02 Q. D9, tab 328, page 6178, the last paragraph. A. Hold on. Q. "Should you fail to confirm the same ..." So whatever demand that was. "... or if we do not agree to the quantification, then we shall have no alternative but to commence proceedings for declaratory relief to pin down once and for all whether there is any outstanding liability owed by Harbour Front to Fonfair and if so, the quantum of such liability." It can't be clearer, is it? A. Yes. Q. This is a letter sent to Harbour Front threatening lawsuit. A. Yes, to reserve our rights and et cetera, et cetera. Q. It's not to reserve right, Ms Leung. A. That's what it meant, right? Q. I disagree. A. Yeah. Q. It is actually to threaten lawsuit and say, "If you don't do what I ask you to do, I will sue you", as simple as that. A. I disagree. I read it as, you know, the way to reserve our rights. Q. So you agree that these letters are not aimed to restore A Court Reporting Transcript by Epiq 120 HCMP 1987/2018 Day 02 trust, are they? They are letters aimed to prepare for litigation. A. These are letters of settlements. I think if you know -- all sort of settlement or offer or those letters, right, it's in similar, more or less that. Q. I don't get your answer. Can you answer again? I asked you -- A. These are -- no, these were offers, these were letters, offers to settle the past breaches. Q. I know that you can name them letters of offers, but can you try to answer my question? A. Yes. Q. They do not aim to restore trust; they aim to pave the way for litigation. A. No. I do not agree to that. Q. Do you agree that these letters that we have seen all assume that once Harbour Front makes payment about the losses in money terms to Fonfair, then they ought to be able to go back to the board? A. Well -- at least assert our rights. In whatever form that is. Q. And by asserting their right, you mean Harbour Front believe that once that payment to Harbour Front was made, it ought to be able to go back to the board, and if Harbour Front -- A Court Reporting Transcript by Epiq 121 HCMP 1987/2018 Day 02 A. Going back to the board is to show that equal participation, yes, in dealing with the land -- Q. Yes, and if YK did not allow that, YK is in the wrong, that was Harbour Front's belief, right? A. In the wrong, I would say that is what we think is our right. Q. So, in fact, in Harbour Front's belief in writing these letters, it did not need to handle YK's feelings or whether or not he still has any trust to Harbour Front; correct? It is just down to payment of money: once you pay, price tag fulfilled, take it to the board. A. No, because the exchanges continues, right, and ultimately, even we pay the cheque, YK said no, that he prefers a reconciliation, and then we accept that. Q. You're not answering. Suppose YK accepts -- suppose YK said, "Okay, I accept that payment", then in Harbour Front's opinion, YK would have no reason to deny Harbour Front a seat on the board, correct? A. To deny the rights we say we have. Q. Correct? A. Yes. Q. Yes. It doesn't matter how he feels, whether or not he still trusts Harbour Front, whether he still trusts YT, it doesn't matter; correct? A. I think it's the rights that we have, right? Whether A Court Reporting Transcript by Epiq 122 HCMP 1987/2018 Day 02 there's a trust. Q. Exactly. Now, if we go on to the later stage of the letters -- shall we? A. Yes. Q. I will fast forward because there are so many of them. Go to D10 -- I'll skip half of the bundle and move to another bundle -- tab 352, page 6400. This time, the letter was signed by you. A. Yes. Q. You can see the signature at page 6402. Do you confirm that to your signature? A. Yes. Q. If you look at the letter, it is continuing from the past offers where, by this stage, Harbour Front had given various different offers of cash in different sums. Correct? A. Yes. Q. And none of them was accepted. Yes? A. Yes. Q. The bit I want you to look at starts at page 6401. A. Yes. Q. "In light of", at the bottom, do you see? A. Yes. Q. "In light of such reasonable stance and offers ..." By those you refer to Harbour Front's offers: A Court Reporting Transcript by Epiq 123 HCMP 1987/2018 Day 02 "It should be beyond doubt that Harbour Front has been and/or is now entitled to be reinstated to its rightful position, rights and entitlement as shareholders of both Money Facts and Fonfair, and to reinforce the relevant rights under the Shareholders' Agreement ... This is not a tactic." Et cetera. So what you are saying in sub-paragraph (1) is that it doesn't even matter whether or not those offers were accepted; as long as you made those offers Harbour Front was already entitled to a seat in the board. Is it not right? A. I need to, sorry, read the whole thing, what I wrote. You know, because there were letters that follows. I'm sorry, your question was? Q. My question was, as stated in that sub-paragraph, Harbour Front's position was that by making all these cash offers, it doesn't really matter whether or not they were accepted by Fonfair. As long as the offers were made, it already entitles Harbour Front a seat in the board. A. Well, the offers -- yeah, we say we made all these offers. So we have done what we could do. I think, back then, we were putting up this cash security and that, right, and only subject to the amounts. Yes. Q. Right, so it doesn't really matter whether, as a matter A Court Reporting Transcript by Epiq 124 HCMP 1987/2018 Day 02 of fact, Fonfair got compensated, it doesn't matter; as long as you make the offer, that is enough? A. We paid the money, right? Q. You offered, but it is not accepted. Whether or not Fonfair was in fact compensated is none of the matter? A. So they did not accept so we went on to the next letter. Q. Let's not jump to and fro to different letters. This is what you said here. So do you agree with me, it does not matter whether in fact Fonfair was compensated? A. No, it matters. That's why we followed up. Q. I have your answer on this. COURT: Before we move on, Ms Leung, who drafted this letter that we're looking at? A. It was with the help of the solicitors. COURT: If you go to page 6400. A. Yes. COURT: You see reference to a figure of HK$12,762,000-odd. A. Yes. COURT: Who calculated that figure? A. That was the sum Fonfair filed for proof of debt. That was Fonfair's proof of debt. That they filed. COURT: So you were prepared to accept that figure? A. Yes, because it's the sum that they submitted. COURT: Yes, Ms Lok. MS LOK: Of course, we know that that sum is already spent A Court Reporting Transcript by Epiq 125 HCMP 1987/2018 Day 02 because since then, parties have moved on and the 2008 reconciliation was implemented. Correct? A. Mm-hmm. Q. So Harbour -- A. Sorry, sorry. Implemented, but the file, the proof of debt was there, it went all the way to the adjudicator, as I understood it. Q. Right, but you well understood that having implemented the reconciliation, Fonfair cannot then turn around and say, "Give me this $12 million of cash" because drawings were already made on the basis of set-off, correct? A. YK didn't say that. Because it was not withdrawn, it was -- Q. Do you not understand that? You studied accountancy in university. You of course understand. After something has been set off, you cannot have that cash paid all over again. That would be double-counting. A. Well, that would be double-claim, yes. Q. Exactly. So why were you still doing this, knowing that the reconciliation has been implemented since 2008, all of a sudden say "I give you 12 million of cash"? Square peg round hole again. A. But this figure was set by Fonfair, right, so we used this figure. Because I think within the reconciliation, there was a sum that was a legal cost. I wasn't sure A Court Reporting Transcript by Epiq 126 HCMP 1987/2018 Day 02 whether it's included in this proof of debt. I assume not because of the time, but ... MS LOK: My Lord, do you have any follow-up on this? Now, how about we move on to the very first letter by your new lawyer, Yiu & Associates, we see on the record, at D10, tab 364, page 6432. You can leave your solicitor to handle the page, and answer this question, when did you change solicitors? A. Around summertime -- around -- basically right after we -- the notice of appeal, and then we pretty much changed. I don't remember the exact date because we've been looking around. Q. By this time it would already have been some time because you got the judgment in 2008 -- A. Yeah. Q. -- and then you filed -- it was about such time you got a new legal representative? A. Yeah, basically we decide we need to do something, because there was a time we have been -- shop around to see what -- you know, who can give us a more constructive, positive way to go ahead. Q. Do you think it's very conducive to restore trust if you find a new firm of solicitors to write to YK or Fonfair about things? Is it the way to apologise or move things on? A Court Reporting Transcript by Epiq 127 HCMP 1987/2018 Day 02 A. Well -- Q. Just out of interest. A. Sorry, I guess if you do business, right -- sorry, I'm just, as a rhetorical question, in business, the mutual trust is all -- we do business with all different people. The mutual trust, as I understand it, is where all parties' interests are aligned. So you don't need to sort of -- it's not the past or the future, but as long as the interests are aligned. With YK, how I see this is, the past breaches, we have -- at least I felt I have dealt with it. The sort of aligned interest we had is, we came together to do something about this land. The land was never meant for a flip but there was to do something -- to do something positive, right? So how I see is, this is the time that, you know, we should put all this behind. And it's a win-win situation that we come in, we bring in synergies to positively do something, rather than just like a rushed sale and just sell off the land, what we can do to enhance the value so both parties are in a win-win situation. Q. Well, Ms Leung, we have digressed enough. This is nothing that you said in this letter that I asked you to read. Page 6342, the very first letter on the record A Court Reporting Transcript by Epiq 128 HCMP 1987/2018 Day 02 from Yiu & Associates -- A. Yeah. Q. -- mentioned nothing about win-win situation, mentioned nothing about cooperation. Do you accept that? A. Well, this is about the settlement, like the past breaches that we had to deal with. Q. It does not mention about win-win situation or cooperation. Do you accept that? A. Yeah, I did not write it in the -- I mean -- Yiu -- yes, we did not instruct -- Q. In fact it is a pre-action letter, isn't it? If you jump to paragraph 7, it ends with a classic. Last paragraph of a solicitor's pre-action letter: "We look forward to hearing from you within 7 days ... failing to which we have standing instructions from Harbour Front to apply to the Court without further notice for a declaration that Harbour Front has purged its breach of the Shareholders Agreement [et cetera] ... and hence is entitled to assert its right to equal participation in the affairs of Money Facts and Fonfair." Do you accept my description that this is the pre-action letter, Ms Leung? A. Well, as things just turned out, right, we asked for appointment and -- to assert our right, and it didn't A Court Reporting Transcript by Epiq 129 HCMP 1987/2018 Day 02 happen. That's how we -- why we are here today. Q. No, answer my question, Ms Leung: do you accept this is a pre-action letter? A. I think the action came later, so no. Q. It says "standing instructions from Harbour Front". So by the time this letter was issued by your new solicitor, you, Harbour Front, had instructed them to start action without notice. A. No, we haven't commenced the -- didn't commence until, I think, later. Q. Look back at paragraph 5: "Without admission to the accuracy of the said sum of [11.4 thousand], and purely out of intent to avoid further delay, Harbour Front hereby offers ... to tender a cheque ... in [that] sum ... to settle any liabilities owed by Harbour Front to Fonfair given rise by the breach of the shareholders agreement." So this whole language of "without prejudice", "without admission", et cetera, lingered on since the very first letter into this. We are now in September 2018, correct? A. Yes, well, but we gave the cheque, the cheque is good to be cashed in. Q. I know, but do you accept that all these were still made on a without-admission basis? A Court Reporting Transcript by Epiq 130 HCMP 1987/2018 Day 02 A. As I say, it's a lawyer's wording, right? We -- that the cash -- that the cheque is good for the money. That's all I can say. Q. Now we move on to the next letter, at D10, tab 373, page 6474. A. Okay. Q. This is the first letter whereby Harbour Front finally deals with the reconciliation. Up to this stage, since July 2017, it was throwing random cash offers at Fonfair. 13 October, for the very first time. If you look at paragraph 7, at page 6475. A. Yes, sorry. Q. "If and to the extent that Fonfair's and YKL's only 'preferred' way to fully and finally settle and to purge Harbour Front's breach of the Shareholders Agreement is for Harbour Front to agree upon the execution of the one-off 'reconciliation ...' based on the figures stated in the interim report ... we state our stance as follows." This is the very first time you state your stance, except what we have read all through the papers about the reconciliation being a self-help exercise amounting to misappropriation by YK, you really did not like it, we've got a lot of that. But this is the first time you state this kind of stance. Paragraph 8: A Court Reporting Transcript by Epiq 131 HCMP 1987/2018 Day 02 "Without admission [again] to ... the quantum stated in the interim report and ... the propriety of the 'reconciliation exercise' for the reasons stated above and in previous correspondence, purely for the purpose of settlement, we have standing instruction to accept your proposed settlement. To avoid confusion and further delay, the said acceptance is upon the confirmation of YKL and Fonfair that your Proposed Settlement would give effects to the below: (1) YK and Fonfair shall regard Harbour Front as having fully purged its breach of the Shareholders Agreement with no outstanding liability; (2) YK shall no longer object or obstruct Harbour Front's exercise of rights and entitlements under the Shareholders Agreement, including but not limited to equal participation in management of both Fonfair and Money Facts ..." Do you see that, first of all, this offer was still couched in the language of "without admission", and "this is a settlement", et cetera? So Fonfair was still not accepting, it ought to? A. Yes, I know Fonfair was not accepting this. Q. No, sorry, I should have said Harbour Front was still not accepting the propriety of the 2008 reconciliation. A. What do you mean by we don't? We accept A Court Reporting Transcript by Epiq 132 HCMP 1987/2018 Day 02 the reconciliation. Q. No, this is what it says, "without admission" to a lot of things, and without accepting the propriety of the reconciliation exercise. So you're saying that whatever you say, basically, we don't think it is correct, but, right? A. We say whatever you say there, then, okay, that's that. Q. Without admitting that "You are right", correct? A. I'm not -- I don't think that's -- anyway, it's the lawyer's words. Q. Do you not understand what is said here "without admission to the quantum and the propriety of the exercise"? It is plain English. A. Oh, yeah, the quantum is -- we always have, you know, doubts and concerns, and I think we say in here, okay, whatever that quantum is, we accept that. Q. And the propriety. A. The propriety meaning like the -- Q. Propriety, whether it's proper at all. A. Yeah, okay. Q. So it's not accepted still up to the date of this letter by Harbour Front. A. We accept the reconciliation. Q. I will move on, Ms Leung. Do you agree the second point: a plain reading of paragraph 8 meant that if, if, A Court Reporting Transcript by Epiq 133 HCMP 1987/2018 Day 02 YK agrees to your proposal, that would mean a ticket to the board? This is what you said in sub-paragraphs (1) and (2). A. Yes, in here it says that, which is no good, so later on we -- I said remove all these, just to make it clear. Q. The next one, and we are coming to an end very soon, Ms Leung, is D10, tab 377, page 6484. A. Okay. Q. Here you are revising the wording in paragraph 2: "Purely for the purpose of settlement without further delay, we hereby reconfirm on behalf of Harbour Front its acceptance of the execution of the one-off 'reconciliation ..." Correct? A. Yeah. Yes. Q. Right, so, first of all, you were treating this as a settlement, correct? A. Yes. Acceptance, yes. Q. And normally we all know that when you go into a settlement, you do not need to adjudicate who is right or wrong, is it right? A. Yes. Q. You just settle it, no need to tell who is right or wrong? A. Yes. A Court Reporting Transcript by Epiq 134 HCMP 1987/2018 Day 02 Q. So by using the word "settlement", Harbour Front is saying, not admitting, that "I'm in the wrong", correct? A. We accept -- I mean, we accept that we were wrong, that's why we accepted this, right? Q. Then why use the word "settlement", Ms Leung? You should have said, "I accept that we were in the wrong and we confirm we accept the reconciliation", full stop? A. Yes. Q. That would be the straight letter to write. A. Isn't that what I meant? Q. No, it is not. But let's not argue. A. Okay. Q. The second point that you reconfirm. When was the first time you confirmed the acceptance of the reconciliation in your opinion? A. I think there was a reference to the 13 October -- Q. The letter that we just read? A. I think so, yes. Q. The letter at page 6474? A. It was -- Q. Correct? A. Yeah, yes. Q. But that letter we have read at length paragraph 8. A. Mm-hmm. Q. That was sort of conditional on YK accepting that once A Court Reporting Transcript by Epiq 135 HCMP 1987/2018 Day 02 he agreed to that offer, Harbour Front would get a seat in the board. A. So we removed all those. Q. Right. A. Yes, in this letter, we removed all those. Yes. Q. You removed all those, so you do accept that the letter, the contents of the offer between the 13 October letter and the 22 October letter are different? A. What we -- the acceptance is the same, but the -- yes, in that letter, we said, you know, all these, in this one, we say, put this aside, as for the reconciliation, we accept as it is. Q. So you accept that the offer, in terms of their contents, in the 13 October letter and the 22 October letters are different, right? A. Yeah, the letters are different. The contents are different. Q. Right. So you cannot possibly, with any accuracy, say in the 22 October letter that you are reconfirming the acceptance because on 13 October, that acceptance was conditional, wasn't it? A. Well, we -- we accepted the reconciliation, and then there were all these wordings which Fonfair replied, and then that's why we wrote, "Okay, we reconfirm the acceptance", and then with this letter we removed A Court Reporting Transcript by Epiq 136 HCMP 1987/2018 Day 02 all those. Q. I have asked you twice so I'm not going to repeat myself. Ms Leung, do you agree that because there has been no admission of wrong in all these letters, it signals objectively to YK that Harbour Front does not accept it has done wrong to the company? A. No, I do not agree to that. Q. Do you at least accept this: if you do not admit that something is wrong, there is a high chance that it will be done again? MS HO: My Lord, I'm not sure if this is a hypothetical question. MS LOK: It's a very easy question. MS HO: It's not about easy or not. COURT: No, I don't think that's helpful, Ms Lok. MS LOK: Do you think it ever occurred to you that paying the lost money to Fonfair, which was due for more than a decade, does not mean that YK will trust Harbour Front again? A. I think as we said, the trust is whether, you know, our interests are aligned. So the trust -- the -- our intention has been still the same, right, to deal with the land. Q. I don't understand you. A Court Reporting Transcript by Epiq 137 HCMP 1987/2018 Day 02 A. And then there was the shareholders agreement that we have agreed to maximise interest, so that's how -- Q. I think we have -- A. So I'm not sure if the trust -- what you're referring to is that. Q. We have agreed and we have seen the letters earlier this morning and yesterday about references to a total breakdown of trust and confidence among the shareholders. Do you remember that? A. Yeah, I remember the -- the winding-up petitions, right? Q. Correct, and I'm asking you again, it's that context: do you think by these letters, whereby Harbour Front says, "Well, I'm trying to make payment to Fonfair more than a decade later", that does not mean Harbour Front will get the trust of YK again? A. I guess it's -- YK love me, I can't say, right, but our interest is in the land, in bringing the maximising value. What I asked is, or what we seek is, if we're back, we can bring -- with us, bring in the synergy. It's a win-win thing. So I can't -- I guess I will never know -- I mean, even if someone say they love you, they may not love you, right, so I'm not sure, you mean the emotional side or exactly. Q. I've asked you twice again. How about this: would it be fair to say that just by the track record of A Court Reporting Transcript by Epiq 138 HCMP 1987/2018 Day 02 Harbour Front, taking some 20 years to make repayment, YK was justified if he does not have faith in Harbour Front? A. He can have faith in me. Q. What do you mean? I asked you, would it be justified for YK to say, "I don't like these people, I don't trust them any more, it took them 20 years to make repayment"? A. I guess he can say he doesn't like Harbour Front. Q. Not only like. Stop confusing trust with like. YK does not trust Harbour Front. Would he be justified in doing so? A. Well, as I said, right, if you professionally look at business, the whole trust thing, you don't -- you have disputes with a client, for example, like, just the background of the construction side, you have this dispute with clients, you will have dispute, and then tomorrow when there's a good deal, you would work with your client or subcontractor again. That's how I see it: it's nothing personal, it's just business. Q. Let's talk about the parallel public tender, Ms Leung. A. Okay. Q. I refer you to your witness statement, C1, tab 1, page 344. At paragraphs 80 and 81, you were describing discussions that took place in mid-July 2018 between Harbour Front on one hand and YK on the other hand about A Court Reporting Transcript by Epiq 139 HCMP 1987/2018 Day 02 the sale of the asset in the companies, correct? A. But the alternative way -- the exit. Q. Right, part ways, say goodbye to each other, correct? A. Well, yes, that's the way -- YK -- I think YK wants to exit the investments. Q. You were amenable to it too at the time. You were talking about selling of shares, selling of the land, et cetera, right? The question is how. A. Yes. Q. Not whether, correct? A. Mm-hmm. Q. Therefore, the question of whether or not Harbour Front want to keep the land does not impact on the question of whether Harbour Front can agree to sell the land, correct? Because there were, in fact, discussions on the sale of the land. Correct? A. No, but -- sorry, I don't mean to play words, but this discussion of exiting the investments, the sale of the land is one form; the sale of the Fonfair share is another form, or another joint venture, whatever. I think in a gist, that was the -- Q. It can be either selling the shares in Money Facts -- A. Yeah. Q. -- or selling the land -- A. In short, to exit to realise the investments. A Court Reporting Transcript by Epiq 140 HCMP 1987/2018 Day 02 Q. Then your evidence, that continues in the next two paragraphs, was that when Harbour Front found out that Fonfair was proposing a public tender to be held to sell the land, Harbour Front tried to stop that. Correct? A. Well, to put things in context, I think by mid 2018, I think, or perhaps a few months before that, there were offers. There was an offer from Wang An(?), I think, to buy the shares of Fonfair from Money Facts and Harbour Front and the minority. So that's how we sort of come together and, you know review the opportunities, watching -- no, sorry, the shareholders received this. I think YK think it's no good, Harbour Front also think, you know, there could be better options, better value. And then there was this discussion on the PPTA. Q. To put things in context, to follow your words, when all these discussions happened by way of letter as stated in paragraphs 82 and 83 of your witness statement -- A. Yes, there was -- Q. 24 August, Harbour Front requested Fonfair to withhold from appointing agents, yes? A. Yes, that was at the previous EGM, we were still talking about the PPTA, the parallel -- Q. Yes, and you didn't like the idea of public tender, right? You said that I want PPTA, not only a public tender? A Court Reporting Transcript by Epiq 141 HCMP 1987/2018 Day 02 A. Yeah, the PPTA provides a parallel form, right? So we -- for this piece of land, you can either -- the company sell the land or the shareholders sell in the form of shares. Q. I know, and I think my Lordship knows that. A. Oh, sorry. Q. The public tender is just to sell the land and so-called parallel PPT means you offer the buyer the choice to either buy the Money Facts shares or Fonfair land. Correct? A. Yes, but I need sort of correct because when -- what we think or believe is when they tender for the shares, the price they put in would be different from the price they put in for the land. Q. Yes, that was your belief, and you didn't like the idea of a public tender anyway so you wanted to stop it. Correct? A. No, no, no, we were okay with the public tender, the PPTA, I did not say we did not like. That when this later land public tender that was -- went ahead, it was went ahead and we had no information of -- it's a different public tender that we were talking about -- Q. Because they only offered to sell the land, right? A. And without an agreed terms with us. Q. Without the term agreed by Harbour Front. A Court Reporting Transcript by Epiq 142 HCMP 1987/2018 Day 02 A. Yes -- well, mutually agreed. So when we talk about the PPTA, it was us discussing with YK, you know, the share, the land, how to set the terms. And I think after the meeting, YK, you know, you have doubts or questions, and we say, "Okay, how about we" -- I think it was like we asked -- we draft this sort of letter for Fonfair to make further enquiry, like, enquiries with the agent on this sort of proposal. Q. And that prompted you to apply for the interim injunction, correct? Before Mr Justice Kenneth Wong. A. Yeah, eventually when things later, you know, I said, developed. Q. So it is a bit of a deja vu, like the previous attempt to sell. Your main objection was that because Harbour Front was not part of the decision-making body, the management at the time, so you don't want it to proceed, correct? A. No, it's very different. We -- before we jump into that, we have been asking questions, (unclear) terms, you know, what is this land -- first, we were not told about this land public tender. We sort of just found out, you know, on the ask, so we wrote and then we asked what are the terms, you know, what was agreed with the agents, what was the reserve price, so on and so forth. A Court Reporting Transcript by Epiq 143 HCMP 1987/2018 Day 02 Q. I know, I saw that. A. Yes. Q. I know, Ms Leung, and all this happening while Harbour Front was not a director, right? That's why I said deja vu: it's exactly like last time except you got the injunction. A. But this time we don't have that -- we don't have informations. Q. So the question is, first, in terms of the chronology, when you asked for all these information and want to stop the public tender without Harbour Front's involvement -- A. Oh, then we asked for the information first. And then we didn't get any information. Q. And then you asked the public tender to stop. That was before -- A. I think -- I think also -- there was a -- I need to sort of read through, but there was -- we also did ask for the appointment as well. I think all those, you know, didn't work out. Q. That was before you unequivocally agreed to accept the reconciliation, correct? That happened in October. A. Well, we've been making, you know, ways, and it was rejected, yes. Q. No. That's not my question. A Court Reporting Transcript by Epiq 144 HCMP 1987/2018 Day 02 A. Yes? Q. You, on your own case, said that you unequivocally agreed to the reconciliation by the letter dated 13 October, right? A. Yes, that's correct. Q. And all this request for information and trying to get into the shoe of the board took place before that acceptance. Do you agree? A. Reconciliation, yes. Q. You mentioned a lot of times about seeking information. If we go to your witness statement at page 357, paragraph 114, the fourth line says you want also the tender documents for the land public tender, right? A. Yes, that would set out the terms. Q. "... and any parameters set off by Fonfair for the Land Public Tender ..." Right? A. Yes. Sorry, let me -- which paragraph am I on? Q. Paragraph 114. A. Okay. Sorry, go on, yes. Q. So, you mentioned seeking information. There were a lot of information that you sought, including the tender document and the parameters set by Fonfair for the land public tender. A. Yes. A Court Reporting Transcript by Epiq 145 HCMP 1987/2018 Day 02 Q. Do you accept that, in fact, Harbour Front was eligible to be in the public tender as it proceeded? A. Well, there's nothing that stops Harbour Front from doing it if we -- Q. Nothing to stop it, right? A. Yes. Q. In fact, Harbour Front would very much like to bid because according to you, it is the piece of land left by your grandfather, and then you want to keep it, yes? A. Yes, and it have commercial value, yes. Q. Then do you not find it extremely odd, and can you justify it to my Lord, while Harbour Front was a candidate in the public tender to bid for the land, it is, on the other hand, seeking the tender document and the parameters set by the company for the tender? Isn't that a plain conflict of interest in this situation? A. No, I don't see that. Which -- will you allow me to explain. First, I'm not saying Harbour Front will for sure bid -- there is two sides, right? When I'm asking for the information, I'm asking as a two-third interest, which I have a significant interest in this land, being put on to a land public tender which I do not know what the terms, what was -- what was the reserve price, how it is, whether it is like a garage sale type or -- I don't know, right? So that's why I raised this A Court Reporting Transcript by Epiq 146 HCMP 1987/2018 Day 02 informations. Q. This is not the point, Ms Leung. It is a bit like the judgment we read by Mr Justice To in 2002, the reference to conflict of interest, a reference of UDL being the tenant and YK being the landlord. This is exactly the same -- A. But I can't -- Q. -- harbour Front may bid and then it wants, by being in the position of a shareholder of Fonfair, to have all these insider information about the bid. A. But the bid would be straightforward offer -- I assume it would be just the value, right, the highest bidder gets it? Q. It makes a big difference, doesn't it, if you know how much the others are bidding or how much Fonfair was prepared to accept if it receives a bid? A. I imagine the bid would be all sort of closed in an envelope. I don't know, right, but -- but if there are situation like this, I assume that we would ensure that there would be no conflict of interest. That's -- Harbour Front will bid. As I said, when we raised this, we are speaking as the two-third interest that we have, we want to ensure that it is properly dealt with. Q. Suppose YK agreed to your proposal to go -- for Harbour Front to go back on the board, and then you guys A Court Reporting Transcript by Epiq 147 HCMP 1987/2018 Day 02 never get to agree on how to proceed with the public tender, the parallel tender, $8 million, $9 million, that would be a deadlock, would it? A. Yes, but I cannot imagine it's -- it's just we would have to work and talk it out until, you know, narrow whatever differences we had and to resolve those. Q. The meaning of a deadlock is that if both shareholders cannot agree, nothing can be done. A. Yes, I know that meaning, I'm just saying -- it's hypothetical, right? I -- we -- if there (unclear) to disagree, then the natural way is, okay -- the natural way is why, the reasons, your concerns, and that's how, in all commercial meetings or -- meetings, business meetings, that's how you work things out. Q. While we are on your witness statement, can you clarify one point for my Lord. At paragraph 102, at C1, tab 1, page 353, you said this: "Given that YK entered into the Shareholders Agreement and understanding under his free will ..." I want to focus on the word "and understanding". What is the difference in your mind, Ms Leung, of an agreement and an understanding? A. An understanding stems -- comes from the agreement, right? Q. So to you, the two phrases have no difference? A Court Reporting Transcript by Epiq 148 HCMP 1987/2018 Day 02 A. One is a document; one is an understanding. Q. So does an understanding have to be mutual? A. Normally/usually, it is. Q. So here at paragraph 102, when you say "entered into the shareholders agreement and understanding", are these two things or one thing? I'm slightly confused, because there are a lot of references to "understanding" in your witness statement. Is this understanding the same as the shareholders agreement? Like yesterday you remember my question to you when you said it was agreed, and then you told me that that actually meant the shareholders agreement. So I just want to clarify with you here, when you say "in understanding", are you saying something separate to the shareholders agreement or is it the same? A. I guess it's the spirit -- the spirit of the -- the whole spirit of the shareholders agreement, that's the understanding. Q. I see, so in paragraph 102, when you said "shareholders agreement and understanding", the understanding came from the shareholders agreement? A. The why we came together. Q. I see. A. Or the whole arrangement, you know, why we were two-thirds held -- why Money Facts was formed and so on A Court Reporting Transcript by Epiq 149 HCMP 1987/2018 Day 02 and so forth. Q. I take you to paragraph 109, page 355. A. Yes. Q. "With the aim of giving effect to the Shareholders Agreement and the understanding ..." So is it the same when you say "and the understanding", that understanding came from the written shareholders agreement? A. Yes, why parties came together. Q. That's what you meant, right? A. I need to read the whole thing, what I wrote. Yes, that's the understanding. Q. Can you answer my question? In paragraph 109 when you said: "With the aim of giving effect to the shareholders agreement and the understanding that ..." So on and so forth -- A. Yeah, "Harbour Front ... should have equal participation in the decisions relating to the Yau Tong property ..." Q. That understanding was not a separate existence but it came from the terms of the shareholders agreement? A. The reason why -- why -- why -- the shareholders agreement and the reason why we -- why we came together, how -- why Money Facts was there. Q. Oh, if you put it that way, that would mean it is not A Court Reporting Transcript by Epiq 150 HCMP 1987/2018 Day 02 something that you, for example, discussed with YK, but it was Harbour Front or your understanding of the shareholders agreement. Is that what you meant? A. It was -- it has been -- the understanding of the equal participations has been understood and has been sort of worked out that, I would say sort of -- we behaved that way. Q. I'm asking you for the source of that understanding. Was that Harbour Front's understanding of the shareholders agreement? A. And the past practice of what we have been doing. Q. So yes, by reference to the understanding, you were relating to Harbour Front's understanding of the shareholders agreement. A. That our understanding, yes. Q. That paragraph goes on to refer to a proposed resolution dated 11 October 2018. We need to refer to that, it is bundle D10, tab 372, page 6473. This is a proposed amendment proposed by Harbour Front, right? A. Yes. Q. To the articles, correct? A. Yes. Q. If you read it, it proposed that from -- these articles be amended with immediate effect by adding after A Court Reporting Transcript by Epiq 151 HCMP 1987/2018 Day 02 clause 3(27) the following: "3(28) That any disposal of its land properties known as Yau Tong Marine Lot ... 2, 3 and 4, and any steps or dealings in relation to such disposal, shall be subject to consent from [Fonfair's] shareholders representing no less than 11,858 shares of [Fonfair's] total ordinary shares in issue." That was Harbour Front's proposal. A. Yes. Q. And the practical effect of that amendment would be that any dealing with the land could not proceed unless with Harbour Front's consent qua shareholder, correct? It doesn't need to be director. A. Yes. Q. So would you agree with me that this understanding, or whatever you call it, was never part of the articles? That's why you need to amend it to add it in, do you agree? A. Yes, but a shareholders agreement at the time, Harbour -- the two sides would be properly equally participation, right? Q. Answer this very short question. A. Yes. Q. Looking at this proposed amendment to the articles -- A. Yes. A Court Reporting Transcript by Epiq 152 HCMP 1987/2018 Day 02 Q. -- do these terms ever find its way into the shareholders agreement? Yes or no? A. The shareholders agreement as the Money Facts this is Fonfair. Q. I know that. I know that, but does it find it way into the shareholders agreement, forget about it -- A. I don't know what you mean by "find its way" -- Q. Is there a term in either of the companies' articles of the shareholders agreement which says any disposal of the land shall be subject to consent from the shareholders, both of them -- from their shareholders having no less than 1,185 shares? Or, put it very simply, shall be subject to the consent of both Harbour Front and YK? A. You mean in the Money Facts shareholders agreement, whether it says this, right? No. Q. Thank you. And it's not in either of the companies' articles, correct? A. It's not in Fonfair, and also Money Facts would be -- Money Facts -- no, I don't think so. Q. I'm moving on to the last topic of the day which is about the IDL offer. A. Okay. Q. Do you remember an offer being received by Fonfair for the purchase of Yau Tong property in May 2019? A Court Reporting Transcript by Epiq 153 HCMP 1987/2018 Day 02 A. Yes. Q. I take my Lord to that offer letter itself, at D10, tab 406, page 6654. My Lord, for the record, the Chinese letter is at page 6550, if my Lord is interested to read it. COURT: 6654? MS LOK: 6650 is the original Chinese, 6654 is the English translation. A. Should I read the Chinese or the English? Q. If my Lord is reading the English, let's read the English together. A. Okay. Q. Have you found the reference? A. Yes. Q. It is the letter sent on behalf of a potential buyer. The name is Investment Development Limited, IDL. Correct? A. I think that was not the full name. Q. Is it not? A. No. If you look at the letter, the original letter. Q. I'm looking at the original, and it is the full name. A. The -- can I flip to the Chinese -- Q. Can we just proceed on the basis it's the buyer and it's IDL? A. As I said, no, because the name is not the -- it's A Court Reporting Transcript by Epiq 154 HCMP 1987/2018 Day 02 redacted. Q. Then if you want, you can look at page 6550. A. Yes. Q. Are you satisfied that the name is Investment Development Limited? A. No, it's redacted. Q. You can look at the screen, Ms Leung. A. Yes. Q. What are you looking at to say it's redacted? A. Because it's -- if you look at the margin, right, it's like something "Investment Development Limited". COURT: Paragraph 2 -- A. Yes. COURT: -- it says, as far as I can see in Chinese, "buyer", and then in English "Investment Development". MS LOK: Yes. A. Yes. COURT: So what do you think is redacted? A. Something -- it looks like it's "something Investment Development Limited". MS LOK: This is certainly new to me. But does it really matter, Ms Leung? Can we just call it IDL? A. Okay, you can call it whatever you want, sorry, just move on. Q. No, it doesn't -- A Court Reporting Transcript by Epiq 155 HCMP 1987/2018 Day 02 A. It doesn't matter. We can call it whatever you want. Q. No, no, it's not what I want. It's on the fact. It's IDL. It's been called "IDL" forever in the evidence. You can see, and this is not a particularly interesting letter, you got the buyer and you got Savills acting for it, and with a proposed price of HK$888 million for the land. Do you recall seeing this? A. Yes, I recall seeing this. Q. Now the next event is turn to D10, tab 394, page 6554. You have -- A. Okay, yes, I've got it. Q. -- a resolution by Fonfair to hold an EGM to discuss this. Of course, the background was that at this time, Harbour Front already obtained the injunction so that the Fonfair board could do nothing about the land unless Harbour Front agrees to it. Correct? A. Yes, they're holding the status quo of the land. Q. Right, so they have to convene the AGM in order to solicit the view of Harbour Front, correct? A. Yes, and Money Facts, all shareholders. Q. Yes, and we see -- in the interests of time, I'm not -- because there is really a lot of paperwork on this -- A. Yes. Q. -- so I'm just skimming through a lot of the fine details. A Court Reporting Transcript by Epiq 156 HCMP 1987/2018 Day 02 A. Yes. Q. If we look at the letter sent by Yiu & Associates on Harbour Front's behalf, at page 6556, tab 396, first, at paragraph 1, it refers to the EGM. A. Yes. Q. At paragraph 2, a very big reminder to Mr YK Leung his "obligation under paragraph 1 of the injunction ... pending determination of [this petition he] is restrained from causing or procuring Fonfair to sell Yau Tong ... to sell ... (the 'Land') without ... prior approval ... [of] our client." That means Harbour Front, correct? A. Yes. Q. Then paragraph 3 stated this: "It is our client's position that, in the absence of Harbour Front's equal participation in the management of Money Facts and Fonfair to consider what is the best way of dealing with the land, whether by sale, redevelopment or other arrangements, it is premature to consider the offer at the companies' EGM." That is what was said on your behalf, correct? A. Yes. Q. So do you agree, by riding on the interim injunction, Harbour Front was actually taking the power from the board to deal with the land and say that unless A Court Reporting Transcript by Epiq 157 HCMP 1987/2018 Day 02 Harbour Front gets equal participation, the board can do nothing about the land? A. Well, I disagree. If -- the purpose of this letter, apart from the lawyers stating the positions, is to invite a meeting prior to the EGM. Q. This is not what paragraph 3 says. In all fairness, Ms Leung, it is saying that unless Harbour Front gets back to the board with equal participation, it is premature even to consider the idea of offer, "You can't even consider it because unless I'm on the board you can't even think about it". We heard that sort of language before, haven't we? A. Well, to consider what is the best way to deal with the land. Q. Yes. A. Yeah. Q. And that too, of course, but you said that in the beginning -- A. Yes. Q. -- but unless you have equal participation, the board cannot even consider the offer. That's your position, correct? A. That's -- so they're to deal with these petitions. Q. And what if Harbour Front was -- COURT: Ms Leung, you saw this letter at the time it was A Court Reporting Transcript by Epiq 158 HCMP 1987/2018 Day 02 sent? A. This letter, right? Yes. COURT: And you assumed that paragraph 3 was correct, did you? A. Yes. COURT: Why did you think paragraph 3 was correct at the time this letter was sent in June 2019? By this time, you had two judgments of the court, unless my recollection of chronology is completely wrong, saying that you didn't have -- effectively, you didn't have a right of participation in the management of the affairs of the company. So why did you think that paragraph 3 was correct? A. We have taken steps thereafter. We have remedied, accept, and this letter was issued after we started the -- the current petition. COURT: All right, so -- okay. MS LOK: So the entire basis was that because you got the injunction, correct? A. Well, the injunction is to -- yeah, it's pending -- depending on the -- determinative of this. The injunction was to preserve the status quo of the land, of what we should do with the land. Q. But do you remember that in fact even for Deputy High Court Judge Kenneth Wong in writing the injunction A Court Reporting Transcript by Epiq 159 HCMP 1987/2018 Day 02 acknowledged that he by no means held one way or the other that Harbour Front was entitled to the management of the company? A. Yes, at the time it's not yet, even today not yet. Q. Even today not yet, correct? A. Yeah. Q. But that would be the effect of paragraph 3, wouldn't it, because you say, "Unless I get back to equal participation of the company, can't even consider the idea of" -- A. No, I think what this means, which relates to the injunction of the petition, is that proceedings is to preserve the status quo. I think it was just recapping of the current proceedings. Q. We may disagree on that, but why don't we approach it in a different way. A. Okay. Q. Wouldn't it be a natural response for Harbour Front to say, "All right, at least I got this injunction which says that the board can now not deal with the land unless with Harbour Front's agreement, but why don't we consider the offer"? A. Yeah, that's why we have the meetings. Let's say before we consider the offer, right, so we still go -- we still had the meetings, and the EGM, and if you look at the A Court Reporting Transcript by Epiq 160 HCMP 1987/2018 Day 02 correspondence later, we say, "Okay, let's review what we can do with the land", and with all this informed -- we have all this informations, our analysis, then we can make an informed decision, assuming at the end we decide the best way is to sell the land as is -- on an as-is basis, then we would say is this a good offer. Q. We will come to your so-called holistic analysis later, but we are concentrating on that offer. It is a real offer. Real money. HK$888 million. The question faced by the board at that time, of course, they also have a duty to consider it, is to accept it or refuse it. Correct? Despite the injunction, the board has to do that. Correct? A. Yes. Q. Yes, and wouldn't it be a natural thing, had Harbour Front been genuine, to say, "Why don't we consider the offer, 888"? What was the value of the land, was it too high, too low, was it a good offer? At the very least, right? A. Well, no. This is on the assumption that selling the land is the best -- is the maximum -- it brings the best return for the shareholders. Q. We are going round in circles, Ms Leung. A. Yes. Q. How do you even know whether or not selling is a good A Court Reporting Transcript by Epiq 161 HCMP 1987/2018 Day 02 option unless you know the valuation? A. Well -- okay, the valuation would assess the land on an as-is basis, right? Just imagine you have a property, like an old -- whatever property. If you stage it, if you do something about it, you may enhance the value and sell it at a better -- better -- just a better price, in short. But what we were saying is, let's assess and do a market analysis of which route to sell. Even if we are to sell the land, right, is it to sell the land, or is it to sell it in a shares, or in what form of -- in what format to -- in short, to realise this investments, that's what we're saying -- Q. To cut it short, Ms Leung, did you for once ask for valuation of a land at the time after you received the IDL offer? A. Well, YK did not -- I think YK did not give it to us. Q. I'm asking you, Ms Leung, did Harbour Front go and get a valuation of the land? A. Not yet, we haven't reached that stage yet. Q. Not yet? A. Yeah, we haven't reached the stage of valuation yet. Q. Did you actually -- A. We asked -- we did ask for the analysis of the market. We did ask for the market, you know, analysis later. A Court Reporting Transcript by Epiq 162 HCMP 1987/2018 Day 02 Q. Please do not digress. I really want to finish your evidence today, Ms Leung. So the short answer is no, we did not get a valuation of the land, Harbour Front did not. What you said in paragraph 3 is that it is premature to consider the offer unless Harbour Front get equal participation in the board. A. No. It's premature to consider -- the offer is to sell the land, right? Why we started this petition is, let's get back together and decide what is the best to deal with this land. You know, to sell on an as-is basis, to enhance the value and then to sell it, or to develop it. That was the basis of the whole thing. Q. You mentioned that you wanted to discuss with YK, did you? A. Yeah, that -- there was a meeting. Q. You want to? You want to discuss with YK about what is the best way to deal with the land? A. Yes. Q. And let's see what happened in that meeting, should we? A. Mm. Q. If you turn to tab 399, page 6574. A. Yes. Q. This is a letter sent by Fonfair after the EGM held on 17 June 2019. A. Yes. A Court Reporting Transcript by Epiq 163 HCMP 1987/2018 Day 02 Q. The first line from the bottom of paragraph 3 stated the background to all these: "Given the fact that the company cannot sell the land without Harbour Front's prior approval or consent unless or until the interim injunction set aside, the company needs to understand what Harbour Front has in mind in terms of the terms and condition prerequisite to its consent all the land." Paragraph 4, so the EGM was attended by Mr Yiu of Yiu & Associates, you, and Jerry. Correct? A. Yes. Q. That's a correct record, isn't it? A. Yes, correct. Q. Six lines from the top, in the middle: "... Harbour Front declined to express any view on the offer, insisting that the EGM was 'not a proper forum' to deal with the matter and that the company should leave the offer to be dealt with by the shareholders." Do you see that? A. Yes. Q. That's true, isn't it? A. No. Q. You dispute that? A. Well, we had a meeting prior to this, like an hour-plus A Court Reporting Transcript by Epiq 164 HCMP 1987/2018 Day 02 meeting. So if you refer to my solicitors, we're invited to have a without prejudice meeting, and then we set out, amongst various things, this land was the -- the offer included. Q. Did you -- A. So we had over an hour of discussions. Since then, you know, there was this EGM, that there were some discussions, but in any case I think the exchange still continues after the meeting, so -- I disagree. Q. Can we at least agree to this, at that meeting, YK invited you to meet the agent and then you refused? A. Yes. Q. You also said that you preferred to discuss things in a without prejudice meeting where no record is taken rather than at the EGM, correct? A. Well, first two things. The -- YK invited the agents, we said no because we haven't really decide on what to do with the land. It was an internal meeting -- to me, an internal meeting. The agent is just here to tell you to take the offer, take -- he's there to sell the land -- I mean, to convince us to sell the land, right? So we think it's premature to have the agent join this meeting, or join whatever discussion we were -- we have, to deal with the land. Q. But nobody asked you to have a shareholders discussion A Court Reporting Transcript by Epiq 165 HCMP 1987/2018 Day 02 with the agent but at least you could meet with him and ask him whatever question you want to ask. A. We think it's not the moment yet. Q. Right. And you prefer to discuss things on a without prejudice basis, on a shareholders level, wasn't it the case? A. Yes, it would be easy for us to share ideas, amongst various things. Q. Right. A. Yes. Q. So after you get this letter, things move on because you can see that at paragraph 5. A. Yes. Q. This is what Fonfair said, signed by YK: "... in particular given that Harbour Front has not raised any meaningful or specific concern or suggestion in respect of the sale of the land, the management will proceed to handle the offer in the normal way. The management will ascertain the current market value of the land and negotiate with the buyer to obtain a price that is as good or as above the market price [et cetera] ... Unless and until the interim injunction is set aside, the company will put the said offer, if any, to Harbour Front to seek its consent to sell the land, pursuant to the term of the interim A Court Reporting Transcript by Epiq 166 HCMP 1987/2018 Day 02 injunction." And: "For your information, the buyer has agreed to extend the validity period of the offer until 12 July ..." Right? Then the next event is your reference to the so-called holistic analysis in the letter of 8 July 2019. My Lord, the reference is D10, tab 400, page 6576. This is what you said in paragraph 6(a): "Harbour Front had indicated repeatedly in the past that the companies' extraordinary general meetings are not the appropriate forum for the two shareholders ... to resolve the outstanding dispute between the parties, including the best way to handle the land. Therefore, a [WP] meeting was proposed and held on 17 June 2019 at 2 pm ... [for free exchange]." Then it went on to say that that record should not be taken in that WP meeting. So it's rather obvious, isn't it, Ms Leung, Harbour Front really likes getting the control from the board and dragging all the decision-making process to the shareholders' level, isn't that right? A. Well, let's say -- to me, it's just me and YK discussing right? Whether the right of shareholder, it's just -- A Court Reporting Transcript by Epiq 167 HCMP 1987/2018 Day 02 just the two -- and we are not a huge major company, just me and him. Q. It's not only that, but given that, you know, quite undisputedly Harbour Front is not a director, it seems the approach by Harbour Front to drag every decision-making process into the shareholders' level and no less to deal with on the without prejudice basis, meaning there will be no record. A. This was a time -- it was the first time we would have this, just to freely exchange ideas and stuff. Q. If you look at paragraph 7, you said this: "As you are all aware, it is the agreed position of Harbour Front and YK ... that Fonfair shall pursue and negotiate any future development plan and other business to safeguard and maximise the interest of the shareholders. In order to achieve that, we do not object that Fonfair, with the assistance of professionals, conduct a holistic analysis of the market in terms of development opportunities / collaborations and other businesses ..." "Holistic analysis". I wonder who came up with that name, "holistic analysis". A. It's just a commercial name. Q. "Holistic" means everything under the sun, doesn't it? A. Like a comprehensive study. A Court Reporting Transcript by Epiq 168 HCMP 1987/2018 Day 02 Q. Right. So you are saying, when the board is asked to respond to an offer and -- by the look of it, quite reasonable, HK$888 million, and divide the land in this litigation-embittered company, you suggested that instead of considering whether or not the price is good or up to valuation, to conduct an analysis of what can be done to the land past, present and future? A. I guess the purpose is are we going to sell the land, you know, not do anything on an as-is basis, or are we going to do something positive to enhance the value, to maximise it? The reason why we were together, you know, why this was arranged. The land was never meant for a flip. Q. Do you agree that being Harbour Front's director since 2001, in the past 23 years that was the very first time this holistic analysis came up? A. I think Harbour Front has been doing -- I mean, sorry, Fonfair had been doing sort of similar -- it was the intention of -- the long history is Fonfair had been considered -- the rezoning, look at other development opportunities, but there was never once that we put everything on the table and to review. Even the land, the CDA itself, there have been changes over the years. Where we came together in the beginning, you know, the CDA, they have the layout plan, and I think by early A Court Reporting Transcript by Epiq 169 HCMP 1987/2018 Day 02 2000 there was a sort of restriction to reclaim the Yau Tong Bay and then things changed, you know, so the whole thing sort of just keep on evolving but never once that we say, "Let's -- today as it is, look at the market, today look at what can be done, how can we assess and go about this?" Q. So the answer is yes, it's the very first time -- A. Did we consider everything -- that we consider everything, we consider everything together, in the one same point. We have been doing different things. Q. By "everything", what specifically did you have in mind, to redevelop the land, to build on the land? What exactly do you mean by "holistic"? A. The holistic -- well, first, in terms of the land itself, right, one of the easy way is, are we going to explore any other sort of investors to invest this in, sort of be the leader, and then we sort of a pick apart of -- if, say, someone came in to develop, decide to develop, we keep a part and get the upside rather than selling the whole thing? I'm just following up different formats. Q. The short answer is you don't have an idea what are you talking about, for a holistic analysis? A. No, I do. No, there would be different things. Just for the land itself, right, the land itself, on an as-is A Court Reporting Transcript by Epiq 170 HCMP 1987/2018 Day 02 basis, or are we going to sort of -- if you have dealt with land development, land sometimes is just the land, and then there will be the sort of the planning process approval. Sometimes, you know, the people will sort of getting planning approval all done. So that part, you can sell at an enhanced value. Someone would buy the land with an approval, and then to build. So it's this whole process. Q. Are you seriously suggesting, Ms Leung, that some other investor would get involved in a deadlocked company to try to redevelop this land for God knows how many years? A. The investors would not be in a deadlock by the time the arrangement -- you know, it would be a majority interest or whatever interest it is. This would be resolved if that deal was sort of able to close. Q. If you look at page 6582, it is a response by the Fonfair board to the potential buyer. My Lord, I don't propose to take you to the valuation, because that is not really necessary, suffice it to point out that valuation has been done. So did you say to the potential buyer that your offer is too low, please reconsider? A. Yes. Q. And as a matter of fact, they overall did consider and come back with a raised offer, and the reference to that A Court Reporting Transcript by Epiq 171 HCMP 1987/2018 Day 02 bundle D10, tab 406, page 6659. The offer was topped from HK$888 million to HK$910 million in July. Do you remember that? A. Yes, I remember that. Q. By that time, Harbour Front still did not commission its own valuation and say that, well, HK$910 million is too low, too high, did it? A. Well, there were three valuation reports provided already. Q. By YK, right? A. Done by YK. And I recall, with this, we did raise other questions. For example, we were not told of -- well, we found out later, from the agent, that the public tender result, the reserve price -- we have to consider the offer, assume selling the land is the best way. We have to consider things in context, right? For example, we did ask what was the public tender results. Q. Did you or did you not, Harbour Front -- A. I did ask. Q. -- commission a valuation yourself, right? A. The valuation report we provided. Q. So if we turn to page 6600, behind tab 406. It is a written resolution of the Fonfair company after a very long preamble putting the background in context, resolving this: A Court Reporting Transcript by Epiq 172 HCMP 1987/2018 Day 02 "The revised offer be put to Harbour Front to procure its consent as required by the interim injunction in which HCMP1987/2018 dated 26 November 2018 and that Messrs Ho & Ip ... instructed to act on the company's behalf on this matter." So, of course, that was because of the injunction, so the board has to do this. A. Mm-hmm. Q. The conclusion of the board at the time is in the middle of that page, page 6601: "Based on the above ..." So they looked at everything and including the valuation, taking into account the three things, including (3), do you see that: "The general outlook of the property market is highly uncertain in light of the recent political climate, after careful consideration, the Directors are of the view that acceptance of the Revised Offer [$910 million] is in the best interests of the company, and safeguards and maximises the interest of the company's shareholders." Do you see that? A. I see that line, yes. Q. The board already, after careful consideration, proposed A Court Reporting Transcript by Epiq 173 HCMP 1987/2018 Day 02 that the revised order should be accepted, right? A. Yes, it says here. Q. And because of the injunction, it had to put this matter to Harbour Front to procure its consent, is that right? A. Yes. Q. And of course, Harbour Front did not procure, right? A. No, I think after this, we wrote further questions, letters. We have further questions. Q. You want a holistic analysis, right? A. I think there were a few -- you can point me to the letter, there were also a few questions of, you know, were there other interests at the public tender, what was the reserve price, and then we observed, you know -- yeah, at least for those. Yes. Q. Out of interest, Ms Leung, if you wanted that holistic analysis so much, did you commission it yourself? A. It has to be the company that do that -- partly because of the whole planning, the -- some of the information, only the company can access. We don't want to -- we're not stepping into the shoes of the company. Market view, we do have, but ... Q. When Harbour Front was insisting on that holistic analysis, YK did reach out to your father, didn't he? A. I think there was a letter. Q. Yes, can we all look at that letter at D10, tab 408, A Court Reporting Transcript by Epiq 174 HCMP 1987/2018 Day 02 page 6679. A. Yes. Q. It is a personal letter addressed to YT. A. Yes. Yes. Q. YK said: "I reach out to you to do what is best for us all." Do you see that? A. Yes. Q. "We both know it is impractical for Fonfair to develop the land itself. The expertise and resources involved in such a big undertaking is beyond our capacity. It has been the case since the 1990s and even more so now because of the ever-increasing land premium involved." YK went on to explain what they did since the 1990s, the attempt to redevelop the land, right? A. Yes. Q. Also, at the bottom of page 6679, YK also talked about the past effort to look for potential joint venture partners, right? A. Yes. Q. If you turn the page, at page 6680, the third paragraph: "With or without a tenant, Fonfair has to continuously pay rates and rents to the government, which has increased over the years (now about HK$139,200 per quarter), plus a waiver fee (... HKD$100,000 per A Court Reporting Transcript by Epiq 175 HCMP 1987/2018 Day 02 month). Even with a decent tenant, Fonfair still has to pay taxes and other outgoings." So it's very practical, isn't it, doing the mathematics of keeping the company at this and keeping the land. YK said this: "We now received an offer for the land at HK$910 million. [It] is roughly 70 years of rent, assuming we do not have to pay anything to earn those rent, and assuming we always have a decent tenant who is willing to pay us [HK$1.1 million] every month for 70 years, nonstop." He's doing the mathematics. "True that Fonfair can keep the land if it is only rented, but who can say what Hong Kong will be like after 70 years?" So I think this is sincerity, isn't it? YK is really opening his heart here to tell you what he is thinking, don't you think? A. Yes. And may I respond? Or you have -- Q. I will ask my question in the end. A. Okay, sure. Q. Let's finish this. He mentioned the free valuation report and then he said: "Please for a moment put aside your anger and see the facts as they are. It is in the best interest of A Court Reporting Transcript by Epiq 176 HCMP 1987/2018 Day 02 Fonfair and us all to accept the offer, reap the profit and think of better things to do. I have tried my best over the years to manage the companies, although no doubt you disagree. Accepting the offer does not mean you approve of me. It is just the right business decision." So do you agree that YK was actually opening his heart behind all these company titles to your father to say "Let's just do the right thing and sell the land" do you agree with that? A. No, I can see-- yes, I can read YK's concern, and then that's why I truly believe we can bring this positively. YK did mention -- I think first he mentioned about the rezoning but that was a completely different thing. I think, as I understand, the application was try to carve up the land from the CDA, but that was not accepted. But with this, on -- in terms of whether Fonfair can develop or not, I think -- I believe Fonfair if it decides to develop, it can with the synergy that we bring in. First, you know, the -- assuming that the planning or the -- the planning application, everything is to be done by the professionals, and then what's -- next is the land premium. Land premium is always by -- land premium, construction costs, those are just A Court Reporting Transcript by Epiq 177 HCMP 1987/2018 Day 02 numbers, just talking about financing, and then eventually when you sell it will be the marketing. Q. You know the expression in English, Ms Leung, a bird at hand is better than two birds in the bush? A. No, sorry. Q. Well, I would suggest to you -- COURT: Have you ever developed a comparable site? A. No, that was the first time. However, we're in the construction, so we know the steps. We're more in the construction and civil engineering area. COURT: So you have never been a developer of a comparable site? A. No, not this. MS LOK: Can we quickly look at your response to this letter of YK trying to reach out to your father after all these years and years of conflict. Your response is at page 6682, behind tab 409. Your father did not respond, did he? A. Mm. Q. You did. A. Yes. Q. So despite a direct effort on YK's part to reach out to your father, he just refused to respond to him. A. I think it would be better, more -- I thought it would be more sincere that if I respond to this. A Court Reporting Transcript by Epiq 178 HCMP 1987/2018 Day 02 Q. That's not what you said. Look at it. A. It was -- I did so -- Q. The second paragraph: "Whether you choose to believe or not, my father is disinterested in the captioned matter and the series of litigations attached thereto." That's what you said. A. It is true. Q. Your father has been here these two days all through, hasn't he? A. Yes, as a support. COURT: Yes, well, I think I ordered -- I directed that. MS HO: Because it was directed -- MS LOK: My bad. But it doesn't matter. Are you seriously asking this court to believe that your father is actually disinterested in this? A. Yes, I can -- I mean, you can imagine, right, as you already said, it's been years. Q. So the long and short of your letter is just a complete refusal to deal with the points raised by YK. Your father refused to engage, and you say, "Why don't we resume the WP meeting" so it's still talking things in secret at the shareholders' level. That's right? A. You can exchange freely -- well, not on record, yes. A Court Reporting Transcript by Epiq 179 HCMP 1987/2018 Day 02 COURT: Ms Leung, when did your father stop taking an interest in this matter? A. I think early 2000 -- I know it -- I think 2000, early 2010, around that. COURT: So since about 2010 -- A. Yeah. COURT: -- you have been primarily responsible for the way in which matters have developed? A. Well, not fully. I guess in a way, I've been -- I must admit there was a time I was sort of relying on sort of what is the legal -- all the legal things, or what should be -- and then it's just -- since the petitions and this court's judgment, I just think also having grown a few more years, we had to do -- it's just business, I wanted to do things more positively. COURT: Yes, but that's not what I was asking you. What you say in this letter is that your father had become disinterested in the matter -- A. Yeah. COURT: -- the litigation, right? A. Yeah. COURT: We'll accept that that is the case. A. Yes. COURT: What I'm asking you in regards to the first question is, from about when until 2010 -- A Court Reporting Transcript by Epiq 180 HCMP 1987/2018 Day 02 A. Around -- around -- I can't say -- COURT: Well, you don't have to be precise, around about 2010/2011. A. Or earlier. COURT: He wasn't involving himself. A. No. COURT: Somebody else had to be principally driving, or two people had to be principally driving. Was it you or you and your brother? A. It was -- I was looking after this matter, yes. COURT: All right, so what you're inviting me to accept, what you're inviting me to proceed on the basis of, is that from around about 2010/2011 -- one or two years doesn't particularly matter -- it is you who has been largely responsible for the decision. A. Yes, I would say that the -- sort of the responsibility and the steering would be -- has grown more over years. COURT: But basically from round about 2010, it had been you? A. Yes. Around that, yeah. MS LOK: Can I remind you of your evidence again -- A. More so after the -- Q. -- again -- A. Yes, sorry. Q. May I remind you of your evidence yesterday. You don't A Court Reporting Transcript by Epiq 181 HCMP 1987/2018 Day 02 need to turn it up, but it is in Day 1's transcript page 131, lines 3 to 15. Your evidence yesterday was that your father was reappointed as director of Harbour Front a few years ago. A. Yes. Q. And he remains a director of Harbour Front today. A. Yes. Q. My last question to you is that -- A. But Harbour Front -- sorry, I don't -- Harbour Front, as I said, is the holding company of all our invest -- all our businesses, including the UDL group. Q. Would you say that this business about the land is an important affair for Harbour Front? A. It's significant. Q. My last question to you, Ms Leung, is that on page 4 of bundle A -- you don't need to turn it up, this is your own petition. At paragraph 11, Harbour Front says as at the date of the petition, the value of the Yau Tong property is estimated at around $1,200 million to $1,500 million. You confirm that to be true, right? A. I think that was from the reference on the -- on the report, on the news report or something. Q. That was the valuation believed by Fonfair at the time of petition, correct? A Court Reporting Transcript by Epiq 182 HCMP 1987/2018 Day 02 A. Yes. I believe, yes. MS LOK: My Lord, I have no further questions. MS HO: Can I just proceed with my re-examination, because it will be very short? COURT: Okay, all right, yes. Re-examination by MS HO MS HO: Ms Leung, I only have three areas to explore with you. I will first remind you what Ms Lok has asked you and then I'll ask you the question. The first area concerns the loss which Harbour Front has caused to Fonfair due its to past breaches of the shareholders agreement. A. Yes. Q. Ms Lok took you to different letters and said that Harbour Front did not accept liability nor quantum, and your reply was that Harbour Front accepted liability but was not sure about the quantum. A. Yes. Q. Can you go to bundle D10, tab 346, a letter by Harbour Front to YK. A. Yes. Q. At page 6385, there was another letter from Harbour Front to Fonfair -- A. Yes. Q. -- dated 24 July 2018. A Court Reporting Transcript by Epiq 183 HCMP 1987/2018 Day 02 A. Yes. Q. Go to the bottom of this page. A. Yes. Q. Penultimate paragraph: "It is noted that YKL had caused Fonfair to submit proofs of debts against the Bankruptcy Estate of [YT] in the sum of HK$12 [million] ... At the conclusion of the adjudication process conducted by the OR, Fonfair's Proof of Debts was rejected. Fonfair did not appeal to this result. Notwithstanding the abovesaid adjudication result by the OR, YKL maintains that Harbour Front remains in breach of the Shareholders Agreement on the alleged basis that there are still purportedly outstanding liabilities owed by Harbour Front to Fonfair." Pausing here, what did you intend to express in these two paragraphs? A. So the first one is there was the proof of debt, and then through -- after the adjudication process, that was rejected. That was what that paragraph said. Q. Then if you can go to the following page, page 6386 -- A. Yes. Q. -- three paragraphs from the bottom: "It was not until 15 August 2017 that Fonfair reportedly replied to the letters referred to above. A Court Reporting Transcript by Epiq 184 HCMP 1987/2018 Day 02 Even then, Fonfair failed to respond to Harbour Front's proposals, including the acceptance of the payment of HK$3 [million] tendered by Harbour Front ... Instead, Fonfair/YKL accused Harbour Front of refusing to admit Harbour Front's liability and ignoring past judicial findings. That is plainly a play with words on Fonfair's and YKL's part by deliberately confusing 'liability' with 'quantum'." A. Yes. Q. Then over the page, page 6387, the second paragraph from the top: "Firstly, for the avoidance of doubts, Harbour Front respects the past judgments and has no intention to shy away from the liability issue. However, as Harbour Front has repeatedly stated, the quantum of Harbour Front's liability (or the precise extent of Harbour Front's breach) has to be adjudicated or otherwise to be mutually agreed. This is precisely why the letters referred to above were issued by Harbour Front with unreserved commitment to finally resolve the matter, to which Fonfair has completely failed to respond to. Indeed, this same point has been made abundantly clear in the affirmation of Leung Chi Yin Gillian filed in HCA 2798/2017. This present settlement proposal is also not made an any without A Court Reporting Transcript by Epiq 185 HCMP 1987/2018 Day 02 prejudice or without admission basis." So what did you intend to express, again, by these paragraphs? A. That we -- we agreed that's -- we don't -- we agree with the liability, not -- the quantum that we have concerns. Q. That would be the first area. A. Yeah. Q. Then I'll move on to the second area, which concerns the name of IDL in the IDL offer. A. Okay. Q. Go back to D10, the same bundle, tab 393. A. Okay, yes. Q. Here you refer to the name of the purchaser -- A. Yes. Q. -- and said that your understanding was that there was a redaction of part of the name -- A. Yes. Q. -- and Investment Development Limited was not the full name. Ms Lok's response was that this concern was new to her, just now. A. Yes. Q. Go to bundle C1, tab 1, page 369. A. Yes. Q. At paragraph 139, here you said: "I must highlight at this juncture that the identity A Court Reporting Transcript by Epiq 186 HCMP 1987/2018 Day 02 of the so-called offerer was never revealed to Harbour Front. As appeared in Savills' letter dated 21 May 2019, the name of the offerer was redacted, and only part of its name, 'Investment Development Limited', was shown. YK Leung abbreviated and referred to it as 'IDL'." What do you mean by this paragraph in your witness statement? A. That the name was not the name; it was redacted. Q. Can you go to a letter issued by Harbour Front back in August 2019, in bundle D13, tab 453, page 7861. A. Yes. Q. One would see a letter by Harbour Front to YK dated 9 August 2019. A. Yes. Q. At page 7862, the following page -- A. Yes. Q. -- paragraph 11: "Without prejudice to the above, we observe that the current agent, Mr Patrick Chau of Savills, representing the potential buyer was one of the joint-agents who represented Fonfair in the public tender. What concerns us, amongst other things, is that in Savills' letter, written as the representative of the potential buyer (name of which you have purposely A Court Reporting Transcript by Epiq 187 HCMP 1987/2018 Day 02 redacted from all documents but only referred to as 'IDL'), to Fonfair dated 29 July 2019 ... Savills referred to the outcome of Fonfair's Public Tender. This letter will no doubt be copied to and/or accessible by IDL as it is part of the Revised Offer documents." A. Yes. Q. So what do you mean here by this paragraph? A. Well, first, I repeated that the name was not -- the name was not the full name. And then second, because Patrick Chau, Savills, who incidentally is also representing -- this time is representing the buyer, and from -- if you look back at the letter, that was the offer letter which meant the buyer would have seen it. It says "the public tender", which -- there was no one -- like, it revealed the public tender results, which means the buyer would know. Q. I'm moving on to another letter. Ms Lok took you to another letter in the same bundle, page 7838. A. Yes. Q. She took you to paragraph 3. A. Yes. Q. And says: "It is our Client's position that, in the absence of our Client's equal participation in the management of Money Facts and Fonfair to consider what is the best way A Court Reporting Transcript by Epiq 188 HCMP 1987/2018 Day 02 of dealing with the Land, whether by sale, redevelopment or other arrangements, it is premature to consider the Offer at the Companies' EGMs." When you responded just now, you mentioned, "We have remedied", and then you had not got the opportunity to finish. A. Mm. Q. You will recall that there was a letter dated 22 October 2018 which Harbour Front accepted the reconciliation exercise. Do you recall that? A. Yes. Q. Was that letter sent to Fonfair before this 5 June 2019 letter? A. Sorry, can you repeat that? I was a bit lost with the date, sorry. Q. Was the 22 October 2018 letter sent before this 2019 letter? A. Yes, correct. Q. I'll move on to the last area, which concerns the holistic exercise. Just now, Ms Lok asked you what the holistic exercise involved. Can you turn to bundle D13, tab 454. COURT: Sorry, D15? MS HO: D13, still D13, tab 454. A. Yes. Sorry, just give me one second. Okay. A Court Reporting Transcript by Epiq 189 HCMP 1987/2018 Day 02 Q. Here, page 7883, this is the cover of that letter. A. Yes. Q. The first paragraph, we see Harbour Front referring to the exchanges between June to August between Harbour Front and Fonfair. A. Yes. Q. Paragraph 2, Harbour Front says this: "Market conditions are always changing and the obsolete past events you referred to, most of which were decades ago, shed little light on the potentials of the Land. It is unfair and irresponsible to conclude that development opportunities of the Land 'do not exist' without carrying out any further analysis. Further, we note in the valuation report prepared by Jones Lang LaSalle, the surveyors observed that if the stages of planning application and land premium negotiation / assessment are completed, the market value of the Land would increase further under the same market condition. To this end, we have made enquiries with professionals and received a proposal from WCWP International Limited ('WCWP') dated 18 December 2019 (the 'Proposal'). A copy of the Proposal, which is self-explanatory, is enclosed herewith for your reference." A. Yes. A Court Reporting Transcript by Epiq 190 HCMP 1987/2018 Day 02 Q. Can you turn to page 7888. Here, we see a proposal by WCWP with the heading "Planning submission for redevelopment on Yau Tong Marine Lot Nos 2, 3 & 4." A. Yes. Q. Does this proposal and this letter have anything to do with the holistic exercise that you referred to? A. Yes, but it was also one steps further, right? Q. How is it related? A. The holistic, we review the whole thing. This one now we looked at, as I mentioned an example, is it's -- it's to get the planning approval sort of to enhance the land value, to put it, as I said, a norm -- old flat and then you redecorate it, refurbish it. This is the planning approval. It would -- if it's -- if it could be done or feasible, we could, you know, sell it. If we decide not to further develop it, we could sell it at an enhanced value as well, something we have done in our other property developments -- investments before. COURT: If you look at this letter, Ms Leung, as we can see it's dated December 2019 but it's addressed to your father. Why is it addressed to your father? A. CPY, it's a -- an old acquaintance that my father -- the UDL group know for a long time. I think it was -- it was out of respect that this was addressed to my father, but it was me and also my colleague, the -- our A Court Reporting Transcript by Epiq 191 HCMP 1987/2018 Day 02 contracting director who do the liaison. It was more like, you know, the Chinese respect. MS LOK: The final two letters that I'll deal with. Go to bundle D10, tab 406. You remember that on 31 July 2019, there was this resolution and recommendation by the board for the acceptance of the IDL offer, and Ms Lok has taken you to that. A. The letter, right? Q. Yes. You can turn one page, yes, then page 6600 would be the recommendation and all the documents. A. Yes. Q. Just now when you answered Ms Lok's question as to why or the fact that Harbour Front did not accept this recommendation, you mentioned "We need more information." A. Yes. Q. Turn to tab 407. A. Yes. Q. This was a letter sent by Harbour Front on 9 August 2019 to YK. A. Yes. Q. Look to paragraph 5: "Having said that, we are always open to negotiation for alternative amicable solution of the outstanding disputes. However, for any meaningful negotiation to A Court Reporting Transcript by Epiq 192 HCMP 1987/2018 Day 02 take place, it is of fundamental importance that both parties be fully informed of all relevant materials so as to put them in a position to properly consider any settlement proposal. [We] have so far failed to stay frank ... A. "You have", yes. Q. "You have", sorry: "You have so far failed to stay frank and open to us." Over the page, we can see: "6. Notwithstanding our repeated requests and reminders to present to us all relevant information that concerns the Land to provide a complete full picture, you continue to only provide selective information as and when it suits you. At Fonfair's EGM on 17 June 2019 (the 'EGM'), the undersigned specifically raised this issue of lack of transparency. Importantly, at the EGM, when the undersigned asked you specifically whether there was any other information concerning the Land to present to the shareholders, you confirmed that there was no other information and that you have circulated all information on hand." Then there are other paragraphs about the information you required. A. Yes. A Court Reporting Transcript by Epiq 193 HCMP 1987/2018 Day 02 Q. By this letter -- because you are the undersigned and then it was you who raised these questions in the EGM. A. Yes. Q. By this letter, what were you intending to express? A. That there's not enough -- we don't have enough information to make an informed decision. Q. Lastly, Ms Lok took you to the letter which YK sent to YT, the letter at tab 408. Do you remember seeing this letter just now? A. Yes. Q. Then Ms Lok said that in your letter, which I'll take you to, you did not -- there was a complete refusal on your part to deal with the points raised by YK. Go to your letter in the following tab. A. Oh, okay, yes. Q. Starting from paragraph 3: "We, Harbour Front, have always been open to discussion for alternative amicable solution of the outstanding disputes. Indeed, Harbour Front has been taking proactive steps seeking to bring things forward, including initiating a number of [WP] meetings. As previously noted, for any discussion to be meaningful, it is of fundamental importance that both parties be fully informed of all relevant materials so as to put them in a position to properly consider A Court Reporting Transcript by Epiq 194 HCMP 1987/2018 Day 02 any proposal to resolve the outstanding disputes. Therefore, I would urge you to respond to our queries in the Harbour Front letters previously sent to you and Fonfair. As you may agree, market conditions are always changing. The obsolete past events you referred to, most of which were occurred decades ago, shed little, if at all, light on the potentials of the Land. Without repeating what Harbour Front has already said in its previous letters, I would urge that a proper and independent professional analysis be conducted to enable parties to decide what is best pursuant to the Shareholders Agreement." A. Yes. Q. So what do you mean by these paragraphs in your letter addressing to YK? A. That we should have, you know, a well-informed -- all the informations before us to make any decisions. MS HO: I do not have further questions. COURT: Thank you, Ms Leung, we have finished with your evidence. (The witness was released) COURT: Tomorrow, we go straight into Mr Leung's evidence. MS LOK: Correct. Mr YK Leung will give evidence. COURT: We're adjourned until 10 am. A Court Reporting Transcript by Epiq 195 HCMP 1987/2018 Day 02 Mr YT Leung doesn't have to turn up if he doesn't want to. It's entirely optional for the rest of the trial. Anything else? MS HO: No, not for today. Thank you, my Lord. (4.47 pm) (The hearing adjourned to 10.00 am the following day) A Court Reporting Transcript by Epiq 196 HCMP 1987/2018 Day 02 I N D E X P A G E MS LEUNG CHI YIN GILLIAN (on former ..................1 oath) Cross-examination by MS LOK (continued) ..........1 Re-examination by MS HO ........................182 (The witness was released) .....................194 A Court Reporting Transcript by Epiq