1 HCMP 1987/2018 Day 03 Wednesday, 6 December 2023 (10.02 am) MS LOK: May it please the court. The next witness is Mr Leung Yuet Keung. But before he proceeds, I need to inform my Lord that he just underwent a surgery not long ago. He can still give evidence, however, he may need a few more toilet breaks, and the general fatigue, et cetera, but I -- COURT: Sorry? MS LOK: The general fatigue, et cetera, we'll have to play it by the ear as to his condition. COURT: How long do you think you will be, Ms Ho? MS HO: One day. MS LOK: My Lord, may I call the witness? MR LEUNG YUET KEUNG (affirmed) Examination-in-chief by MS LOK MS LOK: Mr Leung. A. Yes. Q. You can tell us whenever you need a break. A. Okay, yes. Thank you, that would be very helpful. Q. And we will do it slowly, yes? A. I will, thank you. Q. You have made three statements in these proceedings? A. I have. Q. I will first take you through the relevant pages, and A Court Reporting Transcript by Epiq 2 HCMP 1987/2018 Day 03 the solicitor will help with the bundles. The first statement is in bundle C1, tab 2, page 386. Do you remember this witness statement? A. Yes, I do. Q. If you turn to page 421 -- Mr Wong, can you help with the page? A. Yes. Q. Pages 420 and 421, those were your signatures, correct? A. 421, yes, and 42 -- yes, those two signatures are mine. Q. Then if you turn to tab 4, page 436, that is your reply witness statement. Do you remember? A. Yes, I do. Q. Your signatures are at page 487. A. Yes, I see my signatures. Q. Tab 5, 489 is your witness statement made in HCMP 1471. A. It is. Q. Your signatures are at page 521 and page 522. A. 521, yes, that's my signature, and 522, yes, that's also my signature. Q. Then if you flip the page, in this statement you also included a detailed chronology of the attempts to develop the Yau Tong property over the years. A. Yes, that's correct. Yes, it's quite a lengthy one. Q. Do you want to adopt your witness statements, as I have referred to, as your evidence today? A Court Reporting Transcript by Epiq 3 HCMP 1987/2018 Day 03 A. I do. MS LOK: Now Ms Ho, counsel for Harbour Front, will have some questions for you. As I said, if you need a break, just let us know. A. Of course, thank you. Cross-examination by MS HO MS HO: Good morning, Mr Leung. A. Good morning, Ms Ho. Q. How many children do you have? A. Three. Q. Three children. How old are they? A. My first child was -- is -- is a boy and he's actually now -- he was born in 1977, so that makes him, what, 46 now. 46, I think maybe just passed 46. Yes. Q. Second one? A. And the second one, she was born in 1978, so I think work it out, I think she was born in December 1978. And then the last child is also a daughter. So the second is a daughter, the third is a daughter. She's born in 1982. Q. They are now all in Canada? A. No. They all split everywhere. My son's actually in Canada. He's in Vancouver. The second daughter actually number two, Amy, she's now in Germany. And then the third daughter, she's in the States. Yes. A Court Reporting Transcript by Epiq 4 HCMP 1987/2018 Day 03 Q. Then we'll go back to Fonfair and Money Facts. A. Yes. Q. You can try to speak up a little bit. A. I will try. Q. Because the mic will not amplify your voice, it will just record, so we still rely on you to project a little bit. A. I understand that. I will try. Yes, I'll try to get as close as I can. Q. We know you have taken over the management of Money Facts and Fonfair since 2001, right? A. Well, I mean, basically -- actually, I think after the bankruptcy proceedings, after the bankruptcy order was made against YT, there used to be actually, you know, I mean, for the management of Fonfair there used to be, you know, two directors on each side, and for Money Facts, one on each. So I think with this bankruptcy, he became disqualified, so Fonfair had three directors and Money Facts had one. So, in that regard, yes, I had control of -- of both company -- actually -- on the board level. Q. And then shortly, subsequently, Fonfair's directors were only Marcon and you, correct? A. I think actually afterwards I think actually there was an issue about Fire Full. Fire Full, in fact, was known A Court Reporting Transcript by Epiq 5 HCMP 1987/2018 Day 03 to be a company, you know, owned by YT, so I think at -- the issue at that time was an associate party, I mean, they actually thought -- their qualification on the board was questioned, and I think there was some question about -- I think there was a -- Mr Bobby Chan who claimed that he was actually sort of like given the share or transfer the share or sold the share, or something, and I think at the end, I think we sought clarification, eventually. I cannot remember how many years later, several years later, maybe two/three years later, I think he gave up and just, you know, gave up being director. So in that sense, I think it became Marcon and myself. Q. Yes, so after he gave up, and that period of time -- A. After he gave up, yeah. Q. Then you and Marcon were brought -- A. So until then, actually, yeah -- I think there was a lot of actually important action, I think we're trying to pursue -- Q. But we just want to know the point in time. A. Sorry. Of course, of course. Q. Then I'd like to ask you some questions about your management of Fonfair and Money Facts since the time you took over the companies. A. No problem. A Court Reporting Transcript by Epiq 6 HCMP 1987/2018 Day 03 Q. We can see from your evidence that according to your understanding, the dealings and the sale of the land will be within the power of the management, correct? A. That's my understanding. Actually, what the managing -- management is supposed to do anyway, or part of it, what a manager is supposed to do, to be tasked of, you know, I suppose, of their job. Yes. Q. Do you agree that selling of the land is an important decision for Fonfair? A. Of course, of course. Q. But you also told us in the evidence that as a matter of practice, the management, ie, you, will consult the shareholders to seek their views, not that they can decide but you will seek their views before you decide what to do? A. Yes, that's -- that was the practice. Yes. Q. You would agree that before the shareholders can provide any proper view as to whether the land should be sold or not, the management has to give them accurate information? A. Of course. I mean, what -- you know, why else actually would you consult them if you're not going to give them information for them to respond? Q. And the management would also need to give them information which the management consider to be relevant A Court Reporting Transcript by Epiq 7 HCMP 1987/2018 Day 03 so that they can consider? A. Well, I mean, I think basically I think we understand actually different roles actually, you know, I think the -- say, wouldn't say management, I just actually say, I call them directors, they have a different role from the shareholders and they have actually different rights and different obligations. So I think, you know, bearing that in mind, we try to actually sort of recognise their right as shareholders and actually sort of give whatever -- and if actually sort of like -- if they're entitled to right as shareholder, then obviously I think our duty is actually the company, make sure the company's interests are protected, and then proceed on that basis. There's no secret about that. Q. Yes, but focusing on the information to be given by the directors to the shareholders so that they can properly express their view -- A. Yes. Q. -- you would agree that the directors would have to give them relevant information in the directors' view or these information are relevant to the shareholders to consider this decision, then the directors should give it to them? A. Yes, relevant decision to the issue. Relevant to the issue. Yes, of course. A Court Reporting Transcript by Epiq 8 HCMP 1987/2018 Day 03 Q. That would also apply to the mode of sale, or when the shareholders are considering whether a public sale should be conducted, the directors should give them accurate information to consider? A. I'm not sure actually about the mode of sale, but, I mean, I think -- we decide each case on its own, whatever circumstance and merit. So I'm not sure actually I can generalise and say, well, you know, in terms of mode, you have to do this and that. I don't think actually -- I think that's the way we approach the thing, basically, as I said, we understand the basic rights of actually the shareholder, we understand their basic duties of the directors, so I think we are on track on that basis, you know. We never try to actually cut any corners, anything like that. I mean, I think that's what -- Q. Yes, so I understand from you that directors' duties for the shareholders to properly consider a matter would be to give them accurate information and relevant information in directors mind. Correct? A. Well, I mean, I think the directors' duties is to the company. Q. Yes. A. So -- Q. But by giving accurate and relevant information, A Court Reporting Transcript by Epiq 9 HCMP 1987/2018 Day 03 the directors would be discharging their duty, according to you. A. Yes, if it's in the interests of the company, of course. If it's not, then we have to actually limit access information. If, let's say, there is a conflict of interest involved, then -- Q. Understood. A. -- obviously we cannot expose the risk -- the company at risk just because we want to be nice or not nice. Q. Understood. Then going on to the operation of Fonfair, can I take you to Fonfair's articles, at bundle D1, tab 3, page 2086. You can put away your witness statement for the moment. Your solicitor will give you the articles. A. Yes, bundle -- Q. Tab 3. This is Fonfair's articles. A. Yes. Q. If you can go to page 2086. A. Yes, I have the page. Q. This is the special resolution of Fonfair making some changes to the articles. A. Okay. Q. You can take it from me that the paragraphs below would be the latest version of the relevant articles of Fonfair. A Court Reporting Transcript by Epiq 10 HCMP 1987/2018 Day 03 A. You mean all two pages of it? Q. Two pages, and I'll ask you questions on it. A. Okay, sure. Q. Can you go to page 2087 and count two paragraphs from the bottom. A. Of which side? Q. On the left-hand side. A. Of the left-hand side, two paragraphs. Okay. Yes. Q. Then you will see a "(3)", right? A. (3), yes. Q. "That the articles of association of the company be amended with immediate affect by adding ... the following [clause 8]". Right? A. Yes, I see it. Q. Then look at 8(b). A. Yes. Q. Here, we can see: "A director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the company shall declare the nature of his interest in accordance with the provisions of the ordinance. A general notice given to the directors by a director to the effect that he is a member of a specified company or firm, and is to be regarded as A Court Reporting Transcript by Epiq 11 HCMP 1987/2018 Day 03 interested in any contract, arrangement or dealing with may, after the date of the notice be entered into or made with that company or firm, shall, for the purpose of this article, be deemed to be a sufficient disclosure of interest in relation to any contract arrangement or dealing so entered into or to be made." A. Okay. Q. I'll also invite you to look at 8(c), the following. A. Okay. Q. "A director may vote as a director in regard to any contract or arrangement in which he is interested or upon any manner arising thereout, and if he shall so vote his vote shall be counted and he shall be reckoned in estimating a quorum when any such contract or arrangement is under consideration." A. Okay. Q. So for a director of Fonfair like you, you can actually buy the land. There is no restriction in the article for you to buy the land as long as you make the proper disclosure. Is that the case? A. I mean, by the reading of it, it seems so, yes. Q. You, as a director, can also cast your vote in deciding whether to sell, even if it is sold to you, as long as the disclosure of interest is fulfilled. Correct? A. Well, I mean, I think it's a question that actually -- A Court Reporting Transcript by Epiq 12 HCMP 1987/2018 Day 03 that never came before me before so, I mean, I think I'm just actually -- I can just address, I think, from reading this thing, because I never actually kind of like, I suppose -- Q. Yes, from reading this? A. Yes, have views for this -- you know, I think -- that was never the -- I don't think in so many years it's ever an issue. Q. But from reading this, a director can -- A. I take your word for it, yeah. Q. A shareholder of Fonfair can also buy the land as long as he makes the proper disclosure. Correct? A. I'm not sure about whether actually he needs to make the disclosure, but I think -- Q. Not really, okay. A. I'm not sure. I mean, I -- Q. It depends -- A. It's a matter of law, I think, maybe, I'm not -- I mean, basically, I just work that if he's interested, you know, he shouldn't actually, you know, have a inside track or anything -- I think that was the issue, I think that was actually brought up in some of my witness statements. So I'm not sure actually what bearing this has -- Q. So your understanding is that the shareholder can still A Court Reporting Transcript by Epiq 13 HCMP 1987/2018 Day 03 buy, just that you think the information should be a little bit restricted because he might be having a conflict of interest. Correct? A. First of all, I don't think we ever questioned a shareholders has a right to buy, right, so I think that was the issue. As to what information actually sort of like, you know, it might hurt the company, I think that is actually a thing, the subject matter that was actually, I think that was actually -- that had some disagreement on. You know -- Q. But you would agree from the articles that there was no restriction for a shareholder, who intends to buy, to gain access to information? Agree? A. Sorry, run by me the question again? Q. Looking at the articles itself, there is no article or no provision saying that if a shareholder wants to buy a piece of land, then he cannot access to information about the sale of the land? A. I don't think actually I read that way. What I read was that, actually, I mean, basically, if a shareholder -- it doesn't talk about shareholders anyway in this article, it talks about director. So we are talking about shareholder, like I said, I don't know the law. I think so far as I know, I don't see why he or she cannot actually buy the land. I mean, it's any one in public. A Court Reporting Transcript by Epiq 14 HCMP 1987/2018 Day 03 But equally, if he buy the land, he shouldn't have any -- in the case of public tender, he shouldn't have any advantage over other people, right, by saying, "Oh, I'm a shareholder, so I need this, I need that". I think that was the issue, wasn't it? Q. You think that was the position because you think that would be in the best interests of the company? A. That -- you -- you're asking me did I think that was the position of the company, that would not be in the interests of the company to disclose the information that might actually put the risk -- the company at risk? Q. Yes. A. Yes, of course. Q. Just one last question about the operation of Fonfair and Money Facts now. The land is currently being leased out, correct? A. Yes. Q. Go to bundle D10, tab 423, this is the audited account of Fonfair for the year ended 2020, the year ended March 2020. A. Yes. Q. This is the latest audited accounts we have before the court. A. Right. Q. So I'm taking you to those. A Court Reporting Transcript by Epiq 15 HCMP 1987/2018 Day 03 A. Right. Q. Turn to page 6766. Under 13, "Investment property", and then paragraph (c): "Amounts recognised in the statement of profit or loss and other comprehensive income ..." We can see rental income, 12 million-odd. A. Yes. Q. That's the rental income that Fonfair earned by leasing the land. A. Is that what the figure says? It must be, yes. Q. You can see below "Rental income", "direct operating expenses from property that generated rental income", 1.6 million-odd? A. Yes. Q. And that would include the rates that Fonfair has to pay, correct? A. Yes. Q. What is the amount of rental which Fonfair earned for the year ended March 2023? That is the most recent year. Do you recall? A. What was the question again? Q. We can see from this 12 million was the figure which Fonfair earned for the year March 2020. A. Yes. Q. I just want to get an up-to-date figure -- A Court Reporting Transcript by Epiq 16 HCMP 1987/2018 Day 03 A. Oh, do you mean now? Q. -- for this. Do you recall? A. Of course, I think during that period -- I think monthly rental was actually 1.1 million. I think right now we changed arrangement to actually leased by the quarter, so the quarter is actually is 2.1 million. Q. 2.1 million per quarter. A. Yes, I think it's substantially reduced, in fact, during COVID, during that period, it was really bad, it was reduced to -- if I from memory, I think it was actually half of it was actually during that period. Because basically, it's just -- business is so bad. Q. But now it's 2.1 million? A. It's 2.1 million per quarter. That's before, I suppose, we have to pay the waiver, and we have to pay the actually -- which I think the waiver -- I think it's actually around about 100,000 a month. And then I think the rates and government rent, I think it's about 240,000 a quarter, something like that. So I think when you actually sort of like add up, it would be about 160, $170,000, so, you know, out of the $70,000, or $700,000, you'll be actually sort of like you know after, you know, after other incidental, probably half a million, like that, I guess. 500,000 a month. Q. Understood. A Court Reporting Transcript by Epiq 17 HCMP 1987/2018 Day 03 A. So I think right now, I think that figure probably we would be looking at about half that figure. Q. Mm. A. Yes. Q. You know the current position? A. Oh, yes. Q. Moving on to another topic. Thank you for letting us know the operation of the two companies. A. Of course, thank you. Q. You can put away this bundle and go to your witness statement, C1, tab 5, page 493, paragraph 10. A. I think that should be 494. Q. Paragraph 10, at the bottom. A. Oh, okay, right. Q. Can you see that? A. Yes. Q. Here, you said: "Moreover, those wrongful conducts by Harbour Front are breach of the shareholders agreement. This is the agreement of trust and confidence which governed the basis of cooperation in the two companies and set out the Purposes of Money Facts as found by Kwan J." Do you see this sentence? A. Yes. Q. Now go to the shareholders agreement itself, at bundle A Court Reporting Transcript by Epiq 18 HCMP 1987/2018 Day 03 D1 -- A. Do I keep this? Q. -- tab 4. A. Yes. Q. .You will see this is the shareholders agreement. A. Yes. Q. Originally it was entered into between you and YT. A. Yes. Q. Later on we know Harbour Front becomes a party in place of YT. A. Yes. Q. Go to the fifth paragraph under both of your names. A. Starting with "YK and YT"? Q. Correct. A. Okay, yes. Q. "YK and YT mutually undertake not to cause newco ..." That's Money Facts? A. Yes. Q. "... to issue further shares without mutual consent except as above provided." A. Yes. Q. Back in 1990 when you entered into this agreement, you agreed to this term and be bound by this term because of your mutual trust with YT. Correct? A. I -- I think actually, basically, if you're asking why A Court Reporting Transcript by Epiq 19 HCMP 1987/2018 Day 03 we did have this, in a way it's actually -- it's to actually ensure the purpose of this company is maintained. In other words, I think actually sort of like, you know, basically, the two parties shall cooperate this -- incorporate this company as a vehicle, a majority shareholder, so actually they would be able to, I suppose, actually sort of have control over Money Facts, and actually sort of it's for the performance of what was actually agreed to between the parties. Q. Just -- sorry, go ahead. A. And this, I think it's just make sure -- (unclear) nobody actually say, "I've got more money, I want to dilute the company and I can actually pass, you know, sort of like a resolution and issue more share, dilute you and then actually sort of like wash out the purpose of this particular agreement." I think that's the purpose. I think it's actually solid trust, maybe, maybe you can even call it against trust because I think we want to actually provide something that make sure the thing is actually done, right. And because I think actually you can say, well, you know, we didn't trust each other, so actually make sure this is there, or you say we trust each other so we have commit ourselves to A Court Reporting Transcript by Epiq 20 HCMP 1987/2018 Day 03 actually having this in place. Q. But from your evidence just now which I took you to, remember, you said that this agreement was the agreement of mutual trust and confidence? A. Yes, yes, but I think the -- Q. Looking at it this way, this agreement was because of the parties' trust at that time -- A. Yes. Q. -- at least, that they entered into this -- A. Yes, yes. Well, you asked actually why this came about and I was just trying to explain to you why it came about. I mean, basically you interpret as trust, or actually not trust, I mean, this -- you know -- Q. Yes, I understand your point. But you do agree that this shareholders agreement, there would be a special relationship, not only the articles but both of you entered into this because both of you would like to maintain a relationship, special relationship, according to the terms of the shareholders agreement. Correct? A. Well, I suppose the fact that actually sort of like, you know, we agree to do this agreement, there must be, you know, certain, you know, kind of like degree of trust. I mean, otherwise it's -- we know that the other person can't be trusted, I wouldn't sign it with him. I think that's for sure, and I think -- I imagine -- it applies A Court Reporting Transcript by Epiq 21 HCMP 1987/2018 Day 03 equally -- Q. So it must be both of you -- A. On YT side as well, so to that extent, yes, of course. Q. -- agree to be bound by this agreement, right? A. Of course, yes. Q. We understand and you will remember in 2015 there were petitions by Harbour Front for buyout, winding-up, et cetera. A. Sorry? Q. For winding-up. A. For winding-up, yes. Q. And it was before his Lordship, do you remember? A. Yes, I remember that. Q. Can I just show you your points of defence. It's not in the bundle but I have copies and I will get you to confirm. This is your document. MS LOK: My Lord, I don't know where my learned friend is getting at. I tried to do the same but she objected so I really want to know where is this coming at first before we get to this. COURT: Why are we interested in the points of defence in the last case? MS HO: Because in the last case, YK pleaded that he affirmed the shareholders agreement and would ask us to hold to the shareholders agreement. So I want to A Court Reporting Transcript by Epiq 22 HCMP 1987/2018 Day 03 ascertain from him -- MS LOK: My Lord, if that point is taken, this is not in dispute. A (unclear) of shareholders agreement is not quite disputed as at that time. But if she is coming at the CIT agreement, that is a point of law for submissions, I don't think we need that. COURT: Yes, so what is the point? Nobody is suggesting the shareholders agreement was not binding. MS HO: Yes. The point is still because at that time he still affirmed the shareholders agreement and asked us to hold on to that, and it follows that he agrees that the mutual trust and confidence was still there as of 2015. COURT: I don't think it just follow. MS HO: If that is the case, then I don't need to take him to it. COURT: Yes. I mean, there has to be a degree of realism. In 1990 they signed an agreement. They signed an agreement, as Mr Leung has pointed out, trusting one another. But that was 33 years ago. I think things move on. But all the time the agreement is enforceable, it is enforceable, it doesn't mean to say that they still trust one another. I would have thought that was fairly obvious. MS HO: I will still try to build on this point by referring A Court Reporting Transcript by Epiq 23 HCMP 1987/2018 Day 03 to documents in my evidence, in the evidence. COURT: Okay. MS HO: And also other points not relying on the shareholders agreement. COURT: Yes, if that's your point -- MS HO: Yes, that's my point. COURT: -- all the time they're relying on the agreement, there's some kind of presumption or assumption that they all seem to trust one another, that's not really a very good point. MS HO: Understand, yes. Then I'll move on. Go to bundle D10, tab 352. COURT: This is the letter at page 6400. MS HO: Yes. This is a letter from Harbour Front to Fonfair dated 9 August 2019. A. Yes. Q. I take you to that just to give you the context. A. Okay. Q. We can see this is Harbour Front's letter to Fonfair trying to put forward certain offers which you say cannot be accepted, which Fonfair later rejected. So this is the context. Go on to tab 353. You can see that this is a letter signed off by you on behalf of Fonfair. You will see A Court Reporting Transcript by Epiq 24 HCMP 1987/2018 Day 03 your signature on the following page. Turn to page 6404. A. Yes. Q. Four paragraphs from the bottom, starting with "Likewise": "Likewise, the settlement proposal is equally self-serving and unrealistic showing not the slightest hint of remorse on the part of Harbour Front or willingness on his part to accept responsibility for its past [conduct]. The settlement proposal was made without any consideration of the specifics of the damage it purports to remedy, nor the inadequacy of the settlement sum for the purported purpose. If anything, rather than being an offer borne out of genuine desire to remedy the wrongs that Harbour Front has committed with a view that it might serve to restore some of the mutual trust and confidence that Harbour Front has by its past and continuing breaches, so thoroughly destroyed, it is reasonably clear it is reasonably clear to us that the proposals are put up as a mean for Harbour Front to buy or bully its way back on the board of the company." So do you agree that at the time when you wrote this letter, you considered that the mutual trust and confidence between you and Harbour Front can still be A Court Reporting Transcript by Epiq 25 HCMP 1987/2018 Day 03 restored? A. Not so. Q. Otherwise you would not have said that to restore some of the mutual trust and confidence, because if there's nothing to restore, do you agree? COURT: I don't. That's not how I read it. MS HO: Yes. COURT: I don't think that kind of forensic analysis of the language in the letter is terribly helpful. I mean, there are quite clear big points. You don't -- I can't be expected to lose sight of how long this has been dragging on, the whole history of the thing. MS HO: Yes. There is just one more letter that I wish to take the witness to, because after all this is my case, I have a duty to put it to him. COURT: Yes. MS HO: Go to tab 373 in the same bundle. A. Yes. Q. Again, just to give you the context, this is a letter from Harbour Front's solicitors in relation to the reconciliation exercise. A. Yes. Q. Just to give you the context. Then go to tab 375, paragraph 3. A Court Reporting Transcript by Epiq 26 HCMP 1987/2018 Day 03 A. Yes. Q. Starting from the fifth line, here, you said on behalf of Fonfair that: "Your client still refuses to admit its liability and instead of putting things right in a manner that is conducive to the restoration of trust and confidence, only tries to bargain and bully its way back to the management, imposing conditions and making demands that it is not entitled to. We regret that this is not reparation made in good faith and falls far short of whether it is needed in the first step towards restoration of the lost trust and confidence." A. Yes. Q. Do you agree that at the time when you wrote this letter, the trust and confidence between you and Harbour Front is still capable of being restored? A. No. Q. Otherwise you would not have said that the steps taken by Harbour Front were not sufficient. A. That's not how I saw it. You know, we had already enough, isn't it bad enough that you have actually saw that and you put more this rubbish to me? I think that's in that sense. I think that's -- to me, that's very obvious. I mean, we said it once and then we say it again, you know, it's like saying exactly the same A Court Reporting Transcript by Epiq 27 HCMP 1987/2018 Day 03 thing. COURT: I can tell you how I read it, Ms Ho. It's saying, "If you'd genuinely wanted to repair relationships, you should have done something but you haven't." Not, "Well, if you did it in the future", which is your point, "maybe we'll all be friends again". I just don't read it that way. MS HO: I understood your Lordship's point. COURT: It's what the witness is saying. MS HO: That would be the second letter and the last one, which I want to put my client's case to him. COURT: Okay, all right. MS HO: Then moving on to the petition which we mentioned earlier on, the 2015 petition. Actually, we can talk about the current one because we know that the current petition, you filed a cross-petition -- A. Yes. Q. -- asking for a buyout order -- A. Yes. Q. -- and saying that there was an irrevocable breakdown in trust and confidence. You think that because there is irrevocable breakdown, the parties should part ways, correct? A. Basically I think the breakdowns happened long ago. It's just that there is no way I actually can get myself A Court Reporting Transcript by Epiq 28 HCMP 1987/2018 Day 03 out, unless a buyout by -- I tried my best to get -- so I can liquidate -- sorry, develop quickly or actually sell the land, you know, fair and squarely, actually, the public tender, doing everything actually, spend $1 million, sort of like doing valuations and advertising, took three years, you know, put together -- and all it took was for Harbour Front to file the two petition, it just went. Since then, what happened? We just see, you know, market actually gone down. COURT: Mr Leung, can I just clarify something with you. Has your thinking been for some years that it is best to sell the land -- A. Yes. COURT: -- and then you divide up the proceeds -- A. Yes. COURT: -- between the two parties or companies -- A. Yes. COURT: -- and you go your separate ways? A. Yes. COURT: So you could liquidate the company and do it, but it makes more sense not to liquidate -- A. Yes. COURT: -- just sell, get the proceeds, then distribute it -- A Court Reporting Transcript by Epiq 29 HCMP 1987/2018 Day 03 A. Yes. In the controlled manner that you can actually pick the right time, pick the right price as well, I mean, and then just go for fire sale. That is the rationale. MS HO: I will continue to put my case, it won't be very long about this part. In the 2015 petition, the last round of the petition, you did not ask for a buyout order or file a cross-petition, it was because you didn't think that the relationship was so bad that the party has to part ways. Do you agree? A. Not so. Not so. Q. Because, as you said, there had been irrevocable breakdown for so long, the parties should have parted ways. Correct? A. Well, part ways, I think actually sort of like which way, you know, I think that's the thing. His Lordship is just saying, you know, the plan is just do it in the proper way to actually sort of make sure that the value of the land is maximised and everybody go away happy. Rather than just say, "Oh, you know, do this and that." I mean, basically I always -- I take the view that actually directors are still responsible for the interests in the company. So to protect the company, to do what is necessary, to maximise actually the benefit A Court Reporting Transcript by Epiq 30 HCMP 1987/2018 Day 03 is actually for -- which I think the shareholder agreement is actually sort of, I think -- it's all about. But come a point and say, well, you know, you've been trying for actually 20-something years, I think -- I just -- you don't have that many years left. Q. Do you agree that -- A. You have to give up some time. Q. Do you agree that prior to your cross-petition or the defence in these proceedings, you have never suggested there was irrevocable breakdown of trust and confidence between the parties such that we have to part ways? A. I think we actually saw that somewhere in the correspondence. I can't point you exactly where because these have been written several years ago, but I'm sure I've said -- actually saw it many times. Because I think that's actually the mindset, you know, that actually what I have -- I mean, more than impression, I know it actually for a fact. You know, I mean, basically, every time we have a meeting, it is always actually opposed, objection, it's never actually sort of helpful. It's just arguing, arguing. Arguing and arguing, but still, basically, we'll buy shares, party -- if actually someone procures an EGM for this purpose, the other purpose, well, we do A Court Reporting Transcript by Epiq 31 HCMP 1987/2018 Day 03 what we need to do. And then, of course, every year we actually have, you know, AGMs, actually, it's required by law, we do everything proper and we try to account to the shareholders, which, incidentally, is not limited to just Harbour Front. They're minorities, even however small they are. In the reconciliation exercise we actually went through the process of say, where, after the majority parties actually saw it, there, we need to actually start bring in the minority, and we actually sought a path of proper resolution and informed the procedure. Everything's proper. So we -- we treat this seriously, believe me. Q. I suggest to you that you did not consider there was an irrevocable breakdown of trust and confidence -- A. I have no idea where you actually made that -- Q. -- prior to Harbour Front trying to remedy its past breaches. Do you agree? A. No, I don't. Q. You now suggest there was an irrevocable breakdown because you dislike the possibility that Harbour Front might go back to the management. Do you agree? A. Well, I don't know, I mean, I'm not sure actually where -- where -- where that question came from, but, you know, the short answer is that, no, I mean, I think A Court Reporting Transcript by Epiq 32 HCMP 1987/2018 Day 03 basically, you know, the book -- the total breakdown actually happened years and years ago, it just actually became more and more deeply ingrained, so this -- you know -- COURT: A similar point to the previous question that I asked. As you will recall in the two previous cases, the first one before that before Mdm Justice Kwan and the second one before me -- A. Yes. COURT: -- there were petitions presented by your brother's side of the family, if I may describe him like that. There were no cross-petitions brought by you. This third series of petitions is different because this time you have presented a cross-petition. Am I right in understanding your case as being this: as you explained in answer to my earlier question, you take the view there needs to be a parting of the ways. A. Yes. COURT: -- the sensible thing to do is to sell the land, divide up the proceeds. A. Yes. COURT: I understand that. That's quite simple. And that remained your view in the two previous proceedings, which is why you didn't cross-petition. A. Yes. A Court Reporting Transcript by Epiq 33 HCMP 1987/2018 Day 03 COURT: Now, the difference is you've reached the stage where you think it just doesn't seem to be working, and, therefore, you're seeking the buyout. A. Yes. MS HO: Just one follow-up question, then I'll move on to the other topic. In the previous petition, you were happy to stay in the company, to continue to deal with the company because you were in absolute control of the company. Correct? A. Like I say, I mentioned, I consider it duty to actually do what I do, right. I mean, I -- you know, you mean happy to stay in the company, actually, to face all these litigation and petitions, et cetera, absolutely not. I don't think anyone would enjoy doing that. I mean, it's taken all sorts of -- so many years of my life. I think in the last petition, I think -- I think counsel for -- your client -- you know, I think she asked, made the suggestion to involve my family, I said absolutely not. I consider it almost like a crime, you know, involve my family in this -- this sort of business, mean thing. So in that sense, I'm not happy, you know. But I think there's a -- there's a -- you know, there's a purpose for me to be there, and I need to sort of like, you know, carry it through. So I think that is A Court Reporting Transcript by Epiq 34 HCMP 1987/2018 Day 03 actually -- so I think it's not about happiness or unhappiness. Q. Just to understand your case, according to you, the shareholders agreement is still binding as of today, correct? A. Sorry? Q. The shareholders agreement is still binding as of today? A. Well, I mean we bind ourselves to the shareholders agreement, I think that's what you mean. Whether it binds the other party to the shareholders agreement, I don't -- I can't answer the other party. Q. But it binds you? A. Yes. We are actually doing everything by the book, without exception. Q. Understood. Then I'll move on to talk about the reconciliation exercise. A. Yes. Q. Can you go to bundle D5, tab 180. This was the resolution passed in 2008, you can turn to page 4105 then you will see your signature there, is that the correct document? COURT: Resolution. MS HO: Yes. A. All right, okay, yes. Q. It's 4014. That is the board resolution of Fonfair? A Court Reporting Transcript by Epiq 35 HCMP 1987/2018 Day 03 A. Yes. Q. It's signed by you yourself, and you on behalf of Marcon? A. Yes. Q. This was the board resolution passed by Fonfair's board for the implementation of the reconciliation exercise. A. Yes. Q. Harbour Front was not involved in the discussion of this resolution, correct? A. This is directors resolution, so obviously not. Q. Of course, Harbour Front was not involved in passing the resolution. A. No. Q. At the time when this August 2008 resolution was passed, Fonfair had already commenced HCA 624/2005 -- A. Yes. Q. -- to sue for the loss for the past breaches. Correct? A. For, actually, the monetary loss and -- yes. Q. Yes, for the monetary loss. You would agree that HCA 264 would be another way for Fonfair to recover those monetary loss, correct? A. Obviously. I think otherwise we wouldn't have commenced it. Q. Yes. A. But I think when you look at the parties we have to deal A Court Reporting Transcript by Epiq 36 HCMP 1987/2018 Day 03 with, I think actually it's so impossibly difficult because -- well, I think what -- reason why so many parties involved, because, actually, YT has this habit of actually sort of like switching, you know, parties. This case, it's him; the next case it was UDL; another case it was UDL is sort of leasing party, and then somebody else say, "Well, I occupy the land", et cetera, et cetera. I mean, when we do the enforcement after, you know, I suppose, I think -- or, actually, pursue actually kind of like enforcing the tenancy agreement, I think that was one of the things that actually sort of happened. So I think 624 is in absence of any other way, I think we thought we ran out of money, right, I think when I took over, I think, you know, I think this number is mentioned many times before, we had $153 or something like that in the bank, which is ridiculous, you know. I mean, for all the rent we have -- so basically, actually, this stealing is actually very thorough. Q. So you think using the reconciliation exercise would be the better way? A. Yes, of course. I mean, basically, you know, we have money coming in that is actually due to be distributed to the party to the company that owes the money. I mean, seems silly not to actually say, "Well, you A Court Reporting Transcript by Epiq 37 HCMP 1987/2018 Day 03 know, I tell you what. I'm going to actually set off what you owe me against what I am going to pay you". That seems obvious, actually, that in the resolution. That's actually caused as a consequence of that is you can't have it both ways, that I want to do this, then sue you for the other thing. Q. You think the reconciliation exercise is a better way because you see that as an enforcement and for future administration of the shareholders agreement; do you agree? A. Well, I mean, I think if -- because actually basically the shareholders agreement is one thing, but I think basically, actually sort of someone owing actually the company something, it doesn't really matter whether it's a shareholder or whatever, let's say you are a supplier, or something, right, and you owe me money, and I happen to see that I actually have money due to you, obviously I think as a matter of business practice, we do a set-off. Q. Can you keep the bundle there, and I'll take you to D5, tab 217. MS LOK: My Lord, while the bundle is being dealt with, I just want to remind my learned friend that there is express findings in the 2018 judgment, about what happened in that date, insofar as my learned friend may A Court Reporting Transcript by Epiq 38 HCMP 1987/2018 Day 03 want to go to that area. MS HO: You don't need to predict, that's fine -- MS LOK: The relevant paragraphs is 24 and 25 of my Lord's judgment. MS HO: I'll be very careful, don't worry. Page 4460. This is the 2010 AGM minutes of Fonfair. A. 2010, yes. Yes. Q. Can you look at the bottom of these minutes? A. The first page? The minutes of the -- Q. Yes, starting with "In relation to". A. Yes. Q. "In relation to the interim report, the chairman pointed out that the reconciliation was being carried out on a stage by stage basis. At the time of the AGM of 2009, the chairman reported that a total of $1.8 million had been paid to the under-drawing party as part of the reconciliation exercise to enforce the shareholders' agreement based on the admission of YT Leung in [one] HCA ..." A. Yes. Q. Over the page: "Whilst it was generally accepted that such action taken (as part of the reconciliation exercise) was subject to review and change as dictated by further future findings and events ... the report was considered A Court Reporting Transcript by Epiq 39 HCMP 1987/2018 Day 03 by the chairman necessary as a way forward in addressing the issue of past misappropriation and future administration of the provisions of the shareholders' agreement." A. Yes. Q. So you do think that the reconciliation exercise would be an enforcement of the shareholders agreement and a future administration of the shareholders agreements; do you agree? A. Well, we have to distribute, I think actually that's actually purpose 1, actually, of the shareholders agreement, so I think the distributing parties, right, so let's say -- so -- Q. But you do agree what I read to you just now was an accurate record of what you said at that time; correct? A. In what respect it's not accurate? Q. You agree that this was accurate, correct? A. That what I wrote here? Q. Yes. A. Yes. Q. Then go back to 2008. After Fonfair passed the board resolution, I will take you to the next document. A. We're done with this? Q. Done with this, but in the same bundle. A Court Reporting Transcript by Epiq 40 HCMP 1987/2018 Day 03 A. Actually, because I think the -- actually the page has come undone again. COURT: Sorry, 218? MS HO: To 194. COURT: Sorry, tab 219? MS HO: Tab 194. Just now I took the witness to the board resolution and now I'm taking the witness to the EGM. A. Yes. Q. Here, we can see that in paragraph 1 of page 4071, can you go to 4071? A. Yes. Q. The fourth line from the top, in the middle: "... a resolution of the directors of the company dated 1 August 2008 was presented to the meeting." A. Yes. Q. So that was the resolution that we looked at, about the reconciliation exercise. A. Yes. Q. I just want to point to you that during the EGM, the board resolution was only read to the shareholders but the resolution itself was not given to the shareholders. Correct? MS LOK: My Lord, I have pointed out, first, this is an AGM and, B, all these matters had been explored in the last A Court Reporting Transcript by Epiq 41 HCMP 1987/2018 Day 03 trial and has been subject to my Lord's finding about what actually happened in the AGM, et cetera. MS HO: My Lord, I think your Lordship should allow me to proceed with the line of examination. We are not trying to challenge the reconciliation exercise. COURT: Well, sorry, I don't quite understand what we get out of this. "In relation to item 4 of the notice", I don't know what that says, "and responding to question 3 of the list of questions and statements tabled by Harbour Front", there was something in two documents at the meeting, and then there's a quote and then: "... a resolution of the directors of the company dated ... was presented to the meeting." A resolution of the directors. It wasn't a resolution of the shareholders. MS HO: But I have asked Mr Leung and he has confirmed that this board resolution was the Fonfair resolution which we referred to just now about the approval of the reconciliation exercise. COURT: Your point was that the shareholders hadn't seen it other than the (inaudible). MS HO: Yes, that was my point. I do hope your Lordship will let me ask a few questions. It will not be long -- COURT: All right. MS HO: -- but it will not be fair for me to disclose why I A Court Reporting Transcript by Epiq 42 HCMP 1987/2018 Day 03 am asking. COURT: Okay. MS HO: Do you agree that during the AGM, the board resolution of Fonfair about adopting the reconciliation exercise was only read to the shareholders? A. Well, it was referred to, actually, in the -- in the AGM. I mean, I don't -- actually, if it's important, I'm sure actually we can go back to the audio record, I think 2008. I think, yeah, we -- we should have somewhere around, I think. Typically, I think Mr Tsang of Tsang & Lee, presently he is no longer the solicitor handling Harbour Front's affair, but I think routinely, I think, you know, he would be there. And I think in those days, I think I didn't even have a recorder, relying on Mr Tsang to give -- otherwise I couldn't have written all these things -- Q. But you can't recall whether it was given to Harbour Front? A. Yes, so basically, I think this is kind of like done, like audio record. So, I mean, I cannot -- obviously it's referred to because it's actually done here, because actually sort of like we're talking about 2010, we're talking about 2010, I can't -- I can't honestly tell you actually whether the question was even asked that actually sort of like, can we have a copy of A Court Reporting Transcript by Epiq 43 HCMP 1987/2018 Day 03 the resolution. I don't know. Maybe, I think she saw if -- Mr Tsang saw where that -- perhaps not entitled to actually -- maybe the question would not have been raised. So I mean I couldn't tell you one way or the other, whether I had given a copy, whether they had in fact requested a copy. I mean, from this, I -- I can't tell you, and if actually it's relevant, like I said, I think the audio record and we take the trouble, we'll probably find out. Q. Then if you can go to the fourth paragraph -- A. Starting with what? Q. Starting from the top. A. No -- Q. It's the paragraph just above the header of "Statement of accounts". Do you see that paragraph? A. I see that paragraph, yes, yes, yes, yes. Q. "Harbour Front requested access to further information in response to which the chairman confirmed that whilst the company was bound [et cetera] but it is for Harbour Front to make a case for its request and the company would consider such request on the merits of each request on a case by case basis." A. Yes. Q. So can you recall, during this EGM, only the content of the board resolution, the previous board resolution was A Court Reporting Transcript by Epiq 44 HCMP 1987/2018 Day 03 given, and no other information was given? A. I mean, this thing doesn't help me actually sort of like say, to say, well, when did they even ask for that particular document. That actually states they asked for documents, which I think obviously they're not entitled to, where actually that document at that time they asked is the resolution or something else, I can't remember. Q. We know that since November 2009 up to 2016, there were a total of seven interim reports prepared by the accountants. A. There were quite a few, but how many I can't -- Q. You can take it from me it's seven. When the interim reports were sent to Harbour Front, you did not explain to them how the calculations were carried out, correct? A. I think actually that's the purpose of the report. It's not for me to explain; it's for the report to explain. Q. So, again, you would agree that the accountant did not go to explain; you just rely on Harbour Front to read the reports by themselves? A. No, I think that the explanation, whatever actually sort of is considered relevant, would be in the report. I think that's the whole point. I think the report is actually sort of, you know, to ensure there's actually A Court Reporting Transcript by Epiq 45 HCMP 1987/2018 Day 03 transparency and accountability. I think that's what it is -- it says in the resolution. Q. So the reports, you read it -- A. So when we do it, we just -- we can't just do it as we please, we have to follow certain rules, and we set those rules sort of like you know right at the beginning, even before we started the exercise. Q. Go to your witness statement at bundle C1, tab 2, paragraph 62, page 402. A. 62, yes, I have. Q. Here, you explain the basic mechanics of the reconciliation. A. Yes. Q. Turn to the next page, three lines from the bottom. A. Of the page over this? So basically we are at -- Q. 403, yes. A. The bottom of paragraph 62? Q. Yes. Starting with "The findings of". Do you see that? A. Yes. Q. "The findings of the interim reports relating to Harbour Front's deemed drawings would only be posted in Fonfair's books when the reconciliation exercise is completed and agreed to by the parties." A. Yes. Q. So it means that when the findings of the A Court Reporting Transcript by Epiq 46 HCMP 1987/2018 Day 03 interim reports are booked into Fonfair's account, from Fonfair's point of view, Harbour Front has accepted the reconciliation exercise. Correct? A. That's what was -- that was the intention, yes. Q. Can you go to bundle D10, tab 421, which is the written resolution of Fonfair's directors. At page 6730, you will see your signature. A. Yes. Q. Turn to page 6729, the second paragraph. A. Second paragraph from the top? Q. Yes. A. Okay. Q. "Subsequent to the dismissal of the 2015 petition and their appeals, Harbour Front commenced the proceedings in HCMP1987 [that is these proceedings] which Harbour Front apparently considered necessary to abandon its long standing stance against the reconciliation exercise, as a result of which shortly before the commencement of HCMP1987 ... in the letter from Harbour Front's solicitors, Yiu & Associates dated 22 October 2018, certain representations was made of Harbour Front acceptance of the reconciliation exercise." Can you see that? A. Yes. A Court Reporting Transcript by Epiq 47 HCMP 1987/2018 Day 03 Q. Then if you go down to paragraph 4, the fourth paragraph. A. Yes. Q. Starting with "Thereafter": "Thereafter by way of these letters dated 27 December ... and 28 January ... Yiu & Associates further represented that Harbour Front had already unequivocally accepted the reconciliation exercise by its letters dated 13 and 22 October ... and it has always been Harbour Front's intention to bring this matter to a close." A. Yes. Q. Then the following paragraph: "In relation to the above, whereas there remains disagreement on the part of Fonfair to Harbour Front's claims, amongst other things, that the acceptance of the reconciliation exercise [has] 'fully and finally to settle and ... purge [the] ... breaches ...' the company was of the view that the matter had by then progressed to a stage whereby Fonfair could proceed to effect distribution under the reconciliation exercise to the minority shareholders of Fonfair." A. Yes. Q. Then we see page 6730, the board passed the resolution for the findings of the reconciliation exercise to be A Court Reporting Transcript by Epiq 48 HCMP 1987/2018 Day 03 booked on the account. A. Yes. Q. So you agree that the 22 October 2008 letter by Harbour Front's solicitor would be a valid acceptance of the reconciliation exercise. Correct? A. It says "acceptance", and that's acceptance. Q. So it's not a sham or a pretence, correct? A. Well, I think we actually sort of comment on the actual -- the nature or whatever the condition attached, which is actually what we disagree, but we happily take the acceptance and say, "Okay, well, we can call it a day, that part and you can claim whatever you claim, you actually say what you say, but we don't recognise it." I think that's actually basically the rationale. Q. But the acceptance of a reconciliation exercise itself, not about the effect but the acceptance itself, you would consider that to be genuine? You really accepted it? A. I think basically the resolution said, okay, upon acceptance, we actually do this, all right, the resolution we passed previously, and we actually have the other side say, "We accept", you know, the reconciliation exercise. Whether it has the effect of clearing everything beyond what the reconciliation exercise, you know, scope, those and beyond and A Court Reporting Transcript by Epiq 49 HCMP 1987/2018 Day 03 the future, continuing whatever thing, we're not interested. Q. I'm not talking about the other things but from Fonfair's -- A. No, actually, that's what that letter -- actually, you know -- you know, purports to do. It's actually all the past breaches. Like I said, basically, there's so many of them. I mean, I think actually that reconciliation exercise, I mean -- honestly, just actually saw a fraction of it, but because it's already bad enough, we're not looking to actually start another war, we just want to actually, you know, do the -- what we actually need to do, which is actually sort of like, you know, maximise the value of the land. We say, okay, well, let's not make that any worse. Q. So insofar as the monetary loss is concerned? A. Whatever is named in the reconciliation exercise, it's actually very detailed, right. So we say -- Q. But that acceptance, I just want to clarify with you. That 22 October 2008 acceptance was taken by you as a genuine acceptance, ie, it's not sham or not a pretence, correct? A. Well, like I said, acceptance, we don't actually care whether they want to do it or it's a trick or whatever, we just take acceptance, acceptance. For the purposes A Court Reporting Transcript by Epiq 50 HCMP 1987/2018 Day 03 of the reconciliation exercise, we can say, well, we can actually do away with this. And we can actually -- instruct the auditor, to say, okay, well, this year, we can actually incorporate the thing into the -- into the account, which we did, right. In fact, actually, before that, I think actually what this says is that we can proceed actually sort of like before we incorporate, we have to deal with actually the minority, which, I think in all, holds only but 150 shares of the -- what, 12,000 -- each share of Fonfair. So it's just a small, tiny amount of money, I think in total it's about 300, you know, less than $400,000. But that is actually the spirit of the thing. So, basically, we go, like I said, for -- by the book. We don't close the thing. We might have actually, you know, said this and the other at the time, but at the end of the day, this is actually what happened. When someone actually say, "Yes, I agree", regardless of what he actually assume that agreement to mean -- Q. But that agreement you take it as -- to mean agreement? A. Like I said, he actually seek -- looking to buy his way back, his way back to the board, that's beside the point -- Q. That's something else. A Court Reporting Transcript by Epiq 51 HCMP 1987/2018 Day 03 A. Yes. Q. But focus on this, the acceptance you agree is an acceptance and it is valid otherwise you would not have included it in the account, correct? A. Like I said, it's relevant to the reconciliation exercise, that was actually what is sort of the relevance. Q. Yes. A. Beyond that, you know -- Q. That's something to argue about. A. -- Fonfair can say whatever it wants to say. Q. Yes. Then can you go back to your witness statement. Page 410. You can see in paragraph 91 that there was a reference to the 22 October 2018 letter. A. Yes. Q. Then over the page, you can see that your view was: "I find this letter wholly disingenuous and was written by Harbour Front in bad faith." A. Yes. Q. I suggest to you that the letter was not issued in bad faith. Do you agree? A. I do not. Q. Because you have taken that into account for the acceptance of the monetary loss, the reconciliation exercise, so the acceptance must have been genuine. Do A Court Reporting Transcript by Epiq 52 HCMP 1987/2018 Day 03 you agree? A. No. Q. Can I take you to paragraph 95, at the bottom. A. Yes. Q. You said: "On 12 November 2018, 3 weeks after that letter Harbour Front commenced [the present proceedings]. The timing of the letter [that is the 22 October letter] and the 2018 petitions was no coincidence; it shows clearly that the letter was not any bona fide attempt to amend the shareholders' relationship, but part of a premeditated paper trail to build up the 2018 petitions." I suggest to you that the letter was a bona fide attempt on Harbour Front's part to amend the relationship. Do you agree? A. No, it was not, otherwise I would not accept that. Q. Going back to the 22 October 2018 letter, do you agree that this letter and the acceptance which you, as the board, has considered, was sufficient for the auditors to confirm that the reconciliation exercise was accepted and then proceed with preparation of the accounts? A. I think, actually, I mean -- I'm not sure, you know, what the question is, but the directors actually A Court Reporting Transcript by Epiq 53 HCMP 1987/2018 Day 03 considered actually this letter, say, well, I mean, so far as actually the reconciliation exercise, that actually sort of like has this scope, you know, of actually recovery, looking to do, they actually -- we said -- actually, I suppose, actually, the criteria of actually -- being those that the other side accept, and like I said before, they have to accept it, right, so basically, while he may have his purpose, he may actually sort of be looking to this, we leave actually Harbour Front to sort of do whatever they do next. And like I said, I mean, here, we knew actually what was coming, but that's not what's we -- acceptance, acceptance, we actually want to actually have that acceptance, to actually close off the reconciliation exercise, which I think, you know, at that time it has been ongoing for 10 years, right, so basically actually the resolution was actually passed, was at August 2008, and then now we are talking about, you know, October, 2018, so it cost money to actually, I mean, basically, before actually we did that, we also actually sort of had to, I think, do another actually, final, actually reconciliation exercise, to actually work out how much stake should the minority actually is entitled actually to receive. So that took actually sort of some time, it took A Court Reporting Transcript by Epiq 54 HCMP 1987/2018 Day 03 some doing, and I think actually we did everything, I suppose, actually, everything, as I said, by the book and actually sort of brought the thing to a close actually in 2010 -- not 2010, I mean, 2020, right. That's 12 years. Q. Go to bundle D10, tab 382. COURT: Do you want to take a break here? MS HO: I'll just finish two more questions, then I will take a break, because that will be -- COURT: I was thinking about Mr Leung. Would you like to take a break? MS HO: Yes, it's up to him. COURT: Let's take a break now, and I would like to finish at about 12.45 pm again. (11.22 am) (A short break) (11.46 am) MS HO: Mr Leung, you can take away these bundles and I will move on to another topic. I'll go to the Littlewoods offer in 2008. Can you go to bundle D5, tab 179. A. Yes. Q. Here, we can see an offer from Littlewoods' solicitors acting on behalf of the client -- A. Yes. Q. -- dated 1 August 2018. You can see from the addressee, A Court Reporting Transcript by Epiq 55 HCMP 1987/2018 Day 03 it says: "Managing Directors, On Grand Limited and Fonfair Co Ltd." A. Yes. Q. So On Grand was the owner of Lot No 1. A. Yes. Q. And 2, 3, 4 would be our land? A. Would be Fonfair's, yes. Q. John Leung was On Grand's director at the time? A. Yes. Q. The identity of the purchaser was not disclosed to you? A. No. Q. Here, we can see "Purchase Price"? A. Yes. Q. 400 million. A. Yes. Q. At the following page, we can see 5, 6, 7 and 8 are the other terms, and the paragraph: "Please consider our client's proposal with reference to the above terms and conditions and if they are acceptable to you, kindly instruct your solicitors to let us have all the relevant title deeds and documents ... together with their draft formal agreement for ... sale and purchase for our approval on behalf of our client." A Court Reporting Transcript by Epiq 56 HCMP 1987/2018 Day 03 A. Yes. Q. The penultimate line: "We look forward to receiving your early and favourable reply ..." Go to tab 181. A. Yes. Q. We can see this is a notice of 2008 AGM? A. Yes. Q. You will see item 6 would be for the shareholders to consider the 1 August Littlewoods offer -- A. Yes. Q. -- and consider to give their views as to what specific course should be taken. A. Yes. Q. Then we can go to the minutes itself. A. Which is at ... Q. Tab 194. First thing, can I take you to page 4073. A. Yes. Q. The fourth paragraph from the top, under the header "Redevelopment of the Yau Tong property". A. Yes. Q. "The chairman", that is you, "briefed the meeting on the status of the rezoning of the ... [land] and highlighted the various [restrictions] features proposed to be incorporated into the redevelopment design A Court Reporting Transcript by Epiq 57 HCMP 1987/2018 Day 03 guidelines to be adopted by the government [et cetera]." A. Sorry, where was it again? Q. Page 4073. A. Yes. Where was it? Q. Fourth paragraph from the top. A. Yes. Q. "Redevelopment of the Yau Tong property". A. Four paragraphs from the top. Yes. Q. Here, we see you, as the chairman, briefed the meeting on the status of the rezoning of the land. A. Yes. Q. And the Yau Tong CDA and highlighted the very restrictive features to be incorporated into the redevelopment guidelines, et cetera. A. Yes. Q. At that point in time, redevelopment of the land was still an option, was that the case? A. No, actually -- well, basically, actually that -- well, geographically it is located at the -- it's a U-shape bay, Yau Tong Bay, we are actually lots 1, 2, 3 and 4. Lot 1 is right at the end, you imagine a U-shape, the open ended U sort of faces Quarry Bay, so facing the harbour. On the left-hand side of the U, we actually saw it in second, third and fourth lots. Of this whole area, the so-called Yau Tong Bay CDA, it's actually A Court Reporting Transcript by Epiq 58 HCMP 1987/2018 Day 03 includes all the -- so the property that fringe this bay, it's actually the seafront, so it's sort of like every single lot, it sort of fronts the sea. Right, because previously, like the shipyard or saw mill, something like that, that needs marina access. So it's the CDA -- well, I guess actually should be constitutes -- I think maybe three lots, maybe 5 per cent, or something, I can't remember, actually, offhand, but actually it's a big CDA -- it's a big area. Comprehensive development means that each lot is not supposed to sort of develop on it own, but the whole area should be developed, and that is actually what brought about this consortium that was formed by, amongst others, Henderson, Wheelock, and -- there's a lot of -- I think New World, I think, at that time. So they started buying up various lots along the -- I think it's probably -- actually quite a lot of lots, actually, around the perimeter. So they actually sort of like proposed this plan, and actually invited people to join the consortium and say, okay, let's develop this together -- because, you know, like I said, we tried, actually I think sometimes sort of like -- I can't remember the year, but, you know, to rezone it into residential development E, which is to pull it out of the CDA but it wasn't allowed -- so they actually -- A Court Reporting Transcript by Epiq 59 HCMP 1987/2018 Day 03 the planning, the town planner -- the Town Planning Board or who actually the minister, this -- I think saw that it will not actually -- it would be the best interest is not to actually develop fragmented, which I suppose is true -- Q. The entire U-shape. A. Yes. So basically, the development is not talking about us. The development is about the whole CDA, right. Actually, in fact, they tried to develop itself, I think we tried that and actually it didn't work. But basically, at this time, I think we have actually already done those things so basically we just agreed, kind of like, go back history, which I think -- Q. Probably I don't need you to go back in history. COURT: Your question was a little obscure. Because presumably you meant the redevelopment of the land by Fonfair. MS HO: Mr Leung -- COURT: I know, but that's not what you asked. Mr Leung has explained is that this is talking about the redevelopment of the area generally. MS HO: Yes. COURT: Of course, it's anticipated that somebody who buys it will redevelop it. The question is who might that might be and what is the most proper way of somebody A Court Reporting Transcript by Epiq 60 HCMP 1987/2018 Day 03 doing it. MS HO: Yes. The answer is sufficient for my purposes and I'll develop that in my closings. Then we can go back to page 4072. A. Yes. Q. It concerns the Littlewoods offer. The second paragraph under the header "Joint development of Yau Tong Marine Lots 1, 2, 3 ... 4 ..." A. Yes. Q. You can see, in the first paragraph under this header, because there were certain questions raised by Harbour Front and you tried to answer them one by one in the meeting -- A. Yes. Q. -- as far as we can see from these minutes. Here: "In relation to item 4.1 of the list of questions tabled by Harbour Front ... 'whether there is in place any joint venture or any agreement or understanding between Fonfair as owner of Yau Tong Marine Lots 2, 3, 4 ... and On Grand Limited as owner of Yau Tong Marine Lot 1 to sell the [land] ..." You said there was none. A. Yes. Q. Then if we go to 4.2, here: "... the chairman confirmed that there was no A Court Reporting Transcript by Epiq 61 HCMP 1987/2018 Day 03 conversation conducted for the purposes of coming into a consensus for the sale of the property." This conversation was with On Grand, correct? A. I -- well, I mean, I mean I think actually sort of like if I actually know the question actually, you know, I can't recall what the question was, but the question was about On Grand, obviously it is. In reference to a question which I do not recall, I think, from these minutes. Q. But can you recall whether your answer here was -- because it was your confirmation, right, there was no conversation conducted for the purpose of coming into a consensus for the sale of the property? So was the conversation with On Grand -- A. Yes, I think most like it would have been On Grand because it followed the other paragraph, the preceding paragraph, I don't have any arrangement or any joint ventures. No. Yes. Q. Then, 3, you said that "the offer letter was an unsolicited offer was not solicited by Fonfair or On Grand." A. Yes. Q. So you are referring to the 1 August offer which we looked at. A. Yes. A Court Reporting Transcript by Epiq 62 HCMP 1987/2018 Day 03 Q. In relation to 4.4: "... the chairman confirmed that he had met a person purportedly to be in a position to procure from the buyer an offer for the purchase of the property. Other than that, the chairman [had] no knowledge of the identity of the ... purchaser." A. Yes. Q. Yes? A. Yes. Q. That was why just now when we were talking about the offer, you said you did not know the identity of the purchaser, right? A. Yes. Q. Then 4.5: "... the chairman confirmed that, as reported in reply to question 4.2, no conversation was conducted for the purpose of coming into consensus for the sale of the property, much less the division of the offer sale price. Having said that, the chairman also noted that though unspoken, one can reasonably expect that if a sale did ultimately materialise, the proceed would inevitably be split prorated to the area of the land." A. Yes. Q. So here the conversation, again, was a conversation with On Grand, correct, because we're talking about A Court Reporting Transcript by Epiq 63 HCMP 1987/2018 Day 03 the splitting of the proceeds? A. I suppose, actually, so, basically, you know, I mean, considering, actually, the offer was made to On Grand as well, I mean, I can't remember whether it was John Leung who actually contacted me or I contacted him. It was actually an offer to us, and that offer was actually to cover 1, 2, 3, 4. Then obviously I think -- we probably have to -- I suppose reach out to other party at some time say, you know -- I mean, basically, we're neighbours, right, and I think, you know, they actually say -- they are a family business, well, I think they ran a saw mill and we are sort of like a shipyard. So, basically, we knew each other, right, or actually at least I knew John Leung, we had each other's phone number, and I think it -- basically, it's just natural that actually sort of say, you know, we don't have any arrangement, but we say, you know, this offer, somehow it came in, and actually offer to buy your land and my land, so, you know, I can't recall, I mean -- he said -- Q. But no arrangement? A. No arrangement, no. Q. And as recorded here, there was no conversation reaching a consensus? A. No, no, no, no. Q. Then 4.7 -- sorry, 4.6 first: A Court Reporting Transcript by Epiq 64 HCMP 1987/2018 Day 03 "[Again] ... chairman confirmed that the answer was in the negative. In following up with the discussion, Harbour Front was invited to comment on the offer ... but Harbour Front declined to give any indication ... [and then] it was agreed that directors be entrusted with the following up on the offer with the understanding that the directors should not cause the company to enter into any arrangement with the effect of binding the company to the sale of property without prior knowledge and consent of the shareholders." So when we're talking about the follow-up, the follow-up would be the counter-offering, the higher price, that type of follow-up, is it? Is that the case? A. Of course, yes, yes. Actually talking about see whether actually the deal can materialise, yes. Q. Then 4.7 recorded your confirmation that the company had no intention to accept the offer in the term as it was received. A. Yes, yes. Q. Then 4.8, here recording your confirmation that other than the offer in the form of the letter as it was received from Littlewoods, there's no information available and hence none could be provided to the shareholders for their consideration. A Court Reporting Transcript by Epiq 65 HCMP 1987/2018 Day 03 A. Yes. Q. So only the 1 August letter was available. A. Yes, yes. Q. Go to bundle C4, page 1286. A. Yes, I have 1286. Q. Page 1286. A. Yes. Q. C3, sorry. My apologies. Here, we can see a letter dated 23 June 2008 from Littlewoods to On Grand and Fonfair. A. Yes. Q. So this letter was before the 1 August offer which you presented to the shareholders. Correct? A. Yes. Q. We can see the purchase price was $300 million, correct? A. Yes. Q. Again, the price was for the four lots and selling as a package. A. Yes. Q. If you can go to page 1288. A. Yes. Q. There was a draft SPA -- A. Yes. Q. -- annexed to this letter, correct? A. Yes. A Court Reporting Transcript by Epiq 66 HCMP 1987/2018 Day 03 Q. Then if you go to page 1298, we can see this was a draft SPA -- A. Yes. Q. -- for the sale of Lot 1, because you can see the first schedule mentioning Lot 1. A. Yes. Q. Then if you go back to page 1297, paragraph 29, the bottom paragraph. A. Yes. Q. Here we can see: "The vendor acknowledges and understands that the purchaser is entering into this agreement as well as the agreement for sale and purchase for other land situated in Yau Tong ... Nos 2, 3, 4 ..." That's Fonfair's land. A. Yes. Q. "... with the view to joint develop and/or redevelop the property and in the other lands in the said lots already committed to be sold to the purchaser ... The Vendor agrees and undertakes that completion of the sale and purchase agreement of the property [that's lot 1] will only take place if the owner of the second properties [that's Fonfair's lot] entered into the SPA at the same time to sell the other ... lots ..." The Fonfair lots. A Court Reporting Transcript by Epiq 67 HCMP 1987/2018 Day 03 A. Yes. Q. This June offer, you did not inform Harbour Front of this, correct? A. It wasn't -- it wasn't addressed to us, was it? Q. It was addressed to Fonfair as well, if you can see -- A. Oh, is it? Q. Yes. A. Okay. I don't know, I don't picture -- I don't remember, actually, this, actually. I don't -- I don't recall. Actually, I mean, I think probably this was copied to me by John Leung, I think at some point in time. So -- Q. Just to remind you, this document was produced by you as an annex to your witness statement showing the steps that you have taken in relation to the land. Do you remember that? A. In these proceedings? Q. Do you remember that this document was -- I can just tell you that this document was produced by you. A. Well, obviously, actually the writing on top, actually, the right-hand corner of this copy -- Q. That's your handwriting -- A. -- is my handwriting yes. So actually I recall actually at the time, that actually I did speak with John Leung, 6 -- 30 June, followed up with ... A Court Reporting Transcript by Epiq 68 HCMP 1987/2018 Day 03 Q. Someone. A. Someone. Q. And then counter-offering 400 mill? A. No, no, actually -- yeah, 400 mill for something, yeah. So -- I don't know -- Q. So your handwriting, you can see that your handwriting saying that on 30 June, you and John Leung followed up and tried to increase the offer to 400 mill. Was that the case? A. Honestly, I don't remember, actually. Q. But you confirm those were your handwriting? A. Yes, yes, yes. The -- I mean, they are. I mean, that's my handwriting on the right-hand corner. But I don't recall actually sort of like you know this letter. Q. The 1 August offer of 400 million which you presented to the shareholders -- A. Yes. Q. -- was as a result of you and John Leung's counteroffer as recorded in handwriting here -- was that the case? A. I honestly don't remember that. I just -- my memory is actually that it actually came somewhere, right, and I think this happened, and it must have slipped my memory. Yes. I just -- Q. So it was wrong for you to have said in the AGM, which I took you to just now, that there was no conversation A Court Reporting Transcript by Epiq 69 HCMP 1987/2018 Day 03 between Fonfair and On Grand for the sale of the land; is that correct? A. No, I think it's actually was joint venture or something, it was an informal arrangement or something, I think -- was there? I think that's what I remember said. It's not about conversation. Like I said, it's only very natural that we probably say we received this common offer and actually called each other. I don't think that was the -- what I said actually -- the -- whatever actually we were reading before, right. Q. Can I just show that to you again so that we can have the two documents together? A. Yeah, of course, of course. Q. D5, page 407 -- A. I keep this, right? COURT: You're referring to 4.1? Item 4.1 on page 4072? MS HO: Yes, items 4.1 and 4.4. COURT: Well, that doesn't say -- that's more specific; it doesn't say there's no conversation. MS HO: I can build on this. A. Yes, you're talking about item 4.1, right? Q. Look to 4.2. A. Okay. Q. Just now, there's the paper copy. A. Right. A Court Reporting Transcript by Epiq 70 HCMP 1987/2018 Day 03 Q. 4.2, there was a record that there was no conversation conducted for the purpose of coming to a consensus for the sale of the property, and you confirmed the -- A. Yes, 4-point -- in relation to 4-point -- Q. 4.2. A. Yes. Q. Just now we looked at this paragraph, and you told us that the conversation for the purpose of coming into a consensus for the sale of the property should be with On Grand. Just now you said. A. Yes, yes. Q. If you go to 4.5. A. Yes. Q. Here, again, there was a reference to "no conversation was conducted for the purpose of coming into a consensus for the sale of the property"? A. Yes. Q. And that would be with On Grand as well? A. Yes. Q. So I suggest to you that it was wrong for you to have told the AGM or shareholders at the time that there was no conversation in relation to coming to a consensus of the sale because there was this conversation between you and John Leung back in June. Do you agree? A. Having a conversation, I mean, I was -- I mean, having A Court Reporting Transcript by Epiq 71 HCMP 1987/2018 Day 03 conversation is, I think, very different from having consensus. So having conversation, we can talk about the thing and we say, "Yeah, let's start this", I mean that sort of consensus, perhaps. I think if we are talking about consensus, which on how much, the term, et cetera, et cetera, I think obviously it's very immature, basically it's somebody is going to offer you, I don't think John Leung would start a conversation on saying okay, let's sell on so much. Q. There was at least a consensus from your handwriting, with John Leung, that you would counteroffer this 400 million to the other side, correct? A. I'm not sure -- actually, like I said, you know, I don't remember, actually, that, I mean, I don't confirm that's my handwriting, that's it. And I don't recall the context of the -- whatever the situation that actually caused me to do that. And, like I said, you know, actually saw that basically, I was under the impression I didn't receive anything before and he said, well, you actually have a copy too. I looked at what I read and it doesn't seem to be addressed to us. It could be actually John Leung's contact, and then sort of like -- then the thing actually got rolling, and then actually probably John Leung would say, well, you know -- I don't know, I'm just actually speculating. Like I said, A Court Reporting Transcript by Epiq 72 HCMP 1987/2018 Day 03 I don't remember (unclear) talking to this person, and sort of say about 400 million or something, and then actually saw the first thing that actually came to my attention, I think I actually saw it in terms of an offer, was actually that letter that we referred to, that we put to the shareholders, you know, the EGM. So I don't -- Q. You can look -- sorry, go ahead. A. Like I said, I mean, you're asking me questions -- I said I don't remember ever seeing that letter, although I admit, it sort of like -- that itself looks like my handwriting, you know. Whatever -- whenever I wrote on it, I don't know, but it seems that on the -- is that 30 June? I think had this conversation with John Leung, that's it. So the conversation is conversation, and the consensus is consensus. I think actually that's it. I mean, the distinction, I tried to -- not trying to argue. I don't understand -- I don't know if there was any consensus. In other words there -- I want to say, okay, let's just settle together, actually, that price, otherwise I wouldn't actually bother to put it to the shareholders. Q. Go to the bottom of the page, about 4.8. I've taken you to that. A Court Reporting Transcript by Epiq 73 HCMP 1987/2018 Day 03 "... [as] the chairman [confirmed] that other than the offer of the [1 August] letter ... no further information was available and hence none could be provided to the shareholders for their consideration." A. Yes, in relation to -- Q. This is wrong, correct? Because the 23 June offer was there and there was this draft SPA, which you did not inform Fonfair. Correct? A. Like I said, I don't even recall actually ever seeing that, although, actually, obviously, I think it's copied to me and actually I had a conversation with John Leung. Like I said, I mean, from that letter, I look at actually who it was addressed to, it wasn't addressed to us, to Fonfair. Q. I will have to take you back to that letter because you repeatedly said it was not addressed to you. A. Well, that's what that letter -- apparently it -- this is not -- Q. Here it says: "Managing directors. On Grand Limited and Fonfair." Correct? A. Oh, I see, okay. Q. It was addressed to you, do you agree? It was addressed to Fonfair and you were in management. A Court Reporting Transcript by Epiq 74 HCMP 1987/2018 Day 03 A. Oh, I see, see. Okay, you're right. Yes, yes. Q. And according to your handwriting on the right-hand side -- A. Yes. Q. -- which you confirmed -- A. Yes. Q. -- it was after seeing this offer letter, then you and John Leung counteroffered the 400 million. Correct? A. Like I said, I mean, I don't remember this, right. I think -- I mean, basically, I mean, I think that's the answer to your question, I don't remember. I mean, although, like I said, looking at this -- we must actually have known about this, and why actually I was under the impression like I said what I said to the shareholders, I can't remember. I mean, basically, honestly, I think it's -- at this moment, my recollection has always been that is actually saw it the first thing that actually saw it, that we have actually anything to put to the shareholders. And, you know, I mean, that's -- that's the best I can do, really. Q. But you would agree that this 23 June offer would be a piece of relevant information that a director should have informed the shareholders like Harbour Front, because that would be relevant to the shareholders' A Court Reporting Transcript by Epiq 75 HCMP 1987/2018 Day 03 conversation of the Littlewoods offer, do you agree? A. Well, I mean, I can't speak for the -- for the shareholders. I mean, that's the point. But I think actually like I said, I -- to me didn't exist, but obviously it did, right. So I could only tell you that. I mean I don't -- just don't remember this, so it might be one of those moments that actually sort of like -- I can't -- I can't tell you any more. Q. But you told us earlier -- COURT: If you're going to go to it in this detail, do you have the questions and the statements to refer to, that they came from your client? MS HO: Yes, but we don't have that in the evidence. COURT: I don't see a lot of point in going round and round in circles on this unless I can see the document that your client sent. MS HO: I have asked the questions I need and got the information I need. Then I will move on to bundle D5. You can put away bundle C4. D5, tab 187. COURT: That's the tab. What page number is it? MS HO: Page 4042. A. Yes. COURT: You do mean C4, do you? A Court Reporting Transcript by Epiq 76 HCMP 1987/2018 Day 03 MS HO: D5, I'm at D5, tab 187. This is the letter from Harbour Front to Littlewoods dated 2 September 2008. A. Yes. Q. Do you remember? A. Yes. Q. You will see on page 4044 the letter was copied to On Grand, Fonfair, Money Facts, yourself, Marcon, Mr Wong, and the OR. A. Yes. Q. Harbour Front did not hide the fact that it was sending this letter to Littlewoods from you, do you agree? A. Yes. Q. Going back to page 4042, in the first page of the letter under the header, here it was stated: "... Harbour Front ... [as] a shareholder of Fonfair ... and Money Facts ... [and] Harbour Front is the de facto owner of ... two-thirds of Fonfair ..." Et cetera. A. Yes. Q. Here, you can see that Harbour Front made clear that it was writing as a shareholder; there was no holding out of Harbour Front as the director of Fonfair or Money Facts. Do you agree? A. Yes. A Court Reporting Transcript by Epiq 77 HCMP 1987/2018 Day 03 Q. At page 4043, at the top, it was stated: "As the owner of the ultimate interests in the property as mentioned above, Harbour Front hereby puts you on notice of Harbour Front's objection and disagreement to any representation or holding out of the authority by the directors of Fonfair ..." Et cetera. A. Yes. Q. Then you will see: You are further put on notice of the following [points]: "Harbour Front was never informed of nor did it consent to any dealings between Fonfair and On Grand ..." Then point 2: "Harbour Front considers that any resolution reportedly passed ..." Et cetera. So you can see from these paragraphs that Harbour Front was expressing its view from Harbour Front's perspective. Do you agree? It was not trying to say anything on behalf of Fonfair or Money Facts. A. I think, actually, sorry, if you read on, if you consider any resolution, et cetera, et cetera. So basically they're saying, well, the directors are A Court Reporting Transcript by Epiq 78 HCMP 1987/2018 Day 03 actually not authorised to do this, right? So basically, I mean, I mean, I don't agree with it, I think actually that's exactly what the directors are appointed to do. And then I think, actually, it's -- there's a right to veto any dealing, I don't know where that actually came from, right. We might actually, as a matter of courtesy or actually whatever purpose they consider the directors consider necessary to refer the matter to them for review, but I don't certainly -- I do not agree at any point in time that they have a right to veto the agreement or could ever -- dealing (unclear - simultaneous speakers) -- the thing, correct, so ... COURT: Sorry, what is your point? MS HO: It's just to show that Harbour Front did not allegedly hijack the management, because that was one of the allegations. COURT: Clearly, this letter was written to interfere with the progress of the sale. MS HO: But I would still need to put my case to the witness. COURT: Well, you can -- I mean, yes, you can. If you're suggesting that on a reasonable reading of this, it was not an attempt to interview with the sale. MS HO: That would be something that I need to put to him. A Court Reporting Transcript by Epiq 79 HCMP 1987/2018 Day 03 COURT: Yes. MS HO: You will see at the penultimate paragraph that Harbour Front stated its "willingness and open position to consider viable commercial propositions if believes [that it was] beneficial to Fonfair as a whole, Harbour Front repeats its position that it is inappropriate for parties to proceed with dealings which are now the subject of legal proceedings which could have immense ramifications to the exposure of the parties involved." A. Yes. Q. Here, reading from the letter, Harbour Front could not have intended the letter to deter the Littlewoods potential offer. Do you agree? A. No, obviously I don't agree. I mean, basically, they should be talking to me, not the directors, not the company. If they choose to do otherwise, you know, be warned. There will be ramification. I mean, actually the used word is "immense ramification". I suppose party obviously I think -- I think obviously it's whoever actually Littlewoods or whoever Littlewoods represents. So, to me, I mean, what else is there? It's not actually to override -- the board and say, okay, look, you guys, what do you -- people actually still -- to us, A Court Reporting Transcript by Epiq 80 HCMP 1987/2018 Day 03 it doesn't count. Isn't that obvious? Q. I have to suggest to you, and you can give me your obvious, is that by issuing this letter, Harbour Front was not acting in bad faith. Do you agree? A. Absolutely I don't agree. I mean, I think basically this letter came after actually the hearings, the court ruling, to say, "Look, we don't have exercise -- actually the right to participate". I mean, that is actually the background of this letter, because, actually, they sought, you know, to actually get their way to the board, and they failed. And yet knowing actually they'd been refused, they actually sought whatever they would find to restrain directors from actually doing -- even conducting the meeting, not actually talking anything about the sale. Conducting meeting, right, you can't even (unclear) the meeting. I think that's the context. So this is the background of this letter. So basically, their actual intention is clear, is that if we cannot do it, you know, I mean, we will actually take matters by our own hands and we'll do it, whatever the alternative would be. To me, I think that's a long answer to the question to say I don't agree with what you're suggesting. A Court Reporting Transcript by Epiq 81 HCMP 1987/2018 Day 03 Q. Then at tab 195 is a letter dated 5 September 2008 from Ho & Ip on behalf of Fonfair to Littlewoods. A. Yes. Q. This letter was to Harbour Front. At page 4077, tab 196, this letter was from Fonfair to Littlewoods, the solicitors. Here contains Fonfair's clarification of the information. Do you remember? A. Okay. Q. Over the page, at page 4078, we can see the penultimate paragraph: "It is clear from the Court's decisions both at first instance and before the Court of Appeal that Harbour Front has not even been able to make good an arguable case [et cetera]. We hope that the above information will be of assistance to you in advising your client in relation to the intended purchase." A. Yes. Q. I suggest to you that with the two letters in front of Littlewoods, which is a firm of solicitors, the firm of solicitors would have properly advised the potential buyer, so the letter of 2 September would not have the effect of deterring the potential purchaser from proceeding with the Littlewoods offer. Do you agree? A. So let me get this -- so you're saying the -- let's be A Court Reporting Transcript by Epiq 82 HCMP 1987/2018 Day 03 specific, actually, this letter from Ho & Ip trying to explain to Littlewoods what the -- what actually -- rather than actually sort of believing what Harbour Front -- is it Harbour Front's letter or somebody's -- letter to them actually threatening, actually sort of like, you know, "immense ramification", you say this letter actually has the effect of actually convincing Littlewoods to say, "Don't worry about it, we okay." You're saying that? Q. Mm-hmm. A. Obviously not. Q. There is no letter from Littlewoods to Fonfair saying that they withdraw the 1 August 2008 offer. Do you agree? A. There's no such letter, but, I mean, at the same time I say do you need such a letter? I mean, if I was Littlewoods, just say forget it. Q. If you go back to the Littlewoods offer itself -- A. Which is? Q. -- which is at tab 179, page 4013. I've taken you to the three paragraphs earlier on. It was stated in the Littlewoods offer that if the 400 million is agreeable, then it would be for Fonfair to respond. Last line, "Looking forward to any favourable reply to this offer." A Court Reporting Transcript by Epiq 83 HCMP 1987/2018 Day 03 So you did not procure Fonfair to issue any letter to Littlewoods to follow up apart from the 5 September letter. Correct? A. 5 September letter would be the one -- Q. The Ho & Ip. A. Ho & Ip. Well, I suppose -- I mean, I think basically, actually, it never happened, so I think I'm just trying to imagine, you know, what -- what the situation was. So you have Littlewoods actually making an offer, and we actually just saying -- try to do the right thing and say, "Okay, well, let's actually see what the shareholders actually, you know, want to do." We -- Q. Maybe we can focus on this, because what we are talking about here is that after the 5 September letter from Ho & Ip, do you agree that you did not ask Fonfair to issue any follow-up letters to Littlewoods? A. No, actually, Ho & Ip's letter was the follow-up letter to say, "Look, I mean, you know, what you received from Harbour Front" -- Q. "Just ignore", mm-hmm. A. -- "is not the case. We give you the fact, or actually what happened prior to this letter, they tried to assert their right, I suppose, alleged right, like shareholder, to participate and actually to veto as you say actually the -- A Court Reporting Transcript by Epiq 84 HCMP 1987/2018 Day 03 Q. But do you agree, looking from this letter at page 4013, the three paragraphs, we know that after this August offer, the next step would be for Fonfair to get back? If it agrees, give the SPA; if not agrees, counteroffer another price. Correct? A. Well, I mean, basically, actually we called for a meeting, and we actually looked to have a discussion, a meeting, so we were not about to jump, you know, on the offer and say, "Look, let's actually sign, you know, do it quickly and ...", you know. Like I said, we -- we try and do it actually properly even though actually things is actually all very difficult actually all this time. And, I mean, yes, I think the other side say, well, we can't even have the meeting, so that's actually how -- how it was. And then actually of course, I think the thing actually sort of stopped because there was actually application to court to restrain us, and then immediately after actually they failed, they then actually wrote this letter, and then after this letter, they instructed Ho & Ip to say -- to explain the situation. And had actually, you know, Littlewoods be still interested to say, "Okay, well, we understand the situation" -- I mean, I'm just guessing, actually. But that never happened. So had they actually come back A Court Reporting Transcript by Epiq 85 HCMP 1987/2018 Day 03 and say, "Okay, we understand the situation, shall we carry on?", then obviously we would follow it up, but that never happened. And because -- I think actually the letter actually saw that -- from Harbour Front served its purpose, I think, you know, as they had expected. Q. But going back to the Ho & Ip letter, at tab 195, page 4076, here Ho & Ip only clarifies the position and said -- sorry, it's the following tab, at page 4077. Page 4078, the last paragraph, Ho & Ip only clarifies the position; it did not go back to ask Littlewoods. Do you agree whether they would -- A. Page 4075 you are talking about? Q. Page 4077. A. Oh, sorry. Q. Just now you referred to this letter and said that you would expect, after seeing this letter, it would be for Littlewoods to consider whether they will come back. Correct? I want to take you to page 4078, the last two paragraphs. Here, Ho & Ip was clarifying the position, and Ho & Ip did not ask Littlewoods to come back on their views as to the offer. Correct? A. That's -- that's not the instructions. I think basically you can say, look, you know, what actually -- A Court Reporting Transcript by Epiq 86 HCMP 1987/2018 Day 03 in fact, what actually -- to put it in context, actually sort of like, you know, what actually Harbour Front, you know, alleged in this letter to Littlewoods, in giving -- they have no right, (unclear). But they -- obviously there's hostility there, which I think actually this letter cannot explain away. And, I mean, I -- I don't know because I'm not Littlewoods, or actually Littlewoods' client, saying, "Sort this out, it's a mess, you know what I mean, let us not do it." I think that's -- that's what I think the effect of actually the Harbour Front letter was, to actually push people away and say, "Don't -- don't even think about it." I think the effect -- Q. I suggest to you that Littlewoods did not come back because Fonfair did not get back to them in relation to the offer. Do you agree? A. I disagree. Q. I'll move on to the Chung Sing offer, 2015. A. Okay. Q. Go to bundle D7, tab 253. A. Yes. Q. You can see the offer from Sidney Lee on behalf of Chung Sing. A. Yes. Q. Then we can see the terms of the offer. A Court Reporting Transcript by Epiq 87 HCMP 1987/2018 Day 03 A. The terms of the offer, yes. Q. Then at internal page 3, at page 5022, saying: "If the foregoing is to your client's satisfaction, please kindly arrange your client to indicate its agreement to the foregoing by countersigning a copy of this Letter of Intent [et cetera]." A. Yes. Q. Then we can go to page 5023, the next tab. A. Yes. Q. Here, we can see from the second paragraph: "We are instructed that the estate agent has represented to our client that your client would like to have more time to consider [the offer]." Do you see that, the second paragraph? A. Yes, second paragraph. Yes. Q. Yes. Then you can see from the third paragraph: "In the circumstances, should our client's offer as stated in the said Letter of Intent and the terms of the [PSPA] are accepted by yours, please kindly arrange your client to sign and return the duly signed [PSPA], together with copy(ies) of all existing tenancy agreement(s), to us by close of business on 10th April 2015." So that would be the date when the offer will lapse. A. Yes. A Court Reporting Transcript by Epiq 88 HCMP 1987/2018 Day 03 Q. Then we know after this next event would be a calling of an EGM -- A. Yes. Q. -- and the EGM will held on 8 April 2015. A. Yes. Q. But before that, we can go to tab 259. Here we see a letter from Harbour Front to Fonfair saying that Harbour Front would offer to buy the land at $379.6 million. A. Yes. Q. The offer was not sent or copied to Chung Sing or Sidney Lee. Do you agree? This was only sent to Fonfair, agree? A. Yes, that's true. Q. Do you agree that this letter was sent by Harbour Front not in bad faith; it was just trying to propose an offer to Fonfair? A. So, basically, I think -- I think we -- obviously we -- you know, the directors have to pass resolution -- you know, we have a -- put to the meeting, and then Harbour Front actually says, seeing the offer, say, "Okay, well, I actually sort of like, you know, make a slightly actually sort of, you know -- see you a better deal". It's -- I think -- what was the previous offer price, is -- A Court Reporting Transcript by Epiq 89 HCMP 1987/2018 Day 03 Q. 369. A. Three-six-something, so basically, "We're giving you another 10 million-odd, right. You take this, right." I think that's -- that's what it is. So, I mean, obviously I think it's actually to -- to procure actually the companies' sort of like, I suppose, agreement to say, "Okay, we'll take the offer, we won't pursue Sidney Lee's offer", right. Q. So for the company to accept -- A. For the company, yeah. Q. And hopefully will accept. A. Would accept. At the same time, I think there's a number of other actually so-called offer -- Q. Yes, I'll take you to that, yes. A. -- for shares, et cetera. And then I think within days, if I'm not -- I remember right, then petition came. So, basically, I'm not sure what was happening. They were not pursuing the SA, "Okay, well, we make you this offer, why don't you think about it", let's say put this to the shareholders, conduct a meeting, as you propose, and we'll actually put it in the meeting, right. But that's not the case. It's almost like surrounding the thing, say, "Look, nobody touches the thing, right, we've given you the offer, you accept this." And I think, you know, perhaps actually A Court Reporting Transcript by Epiq 90 HCMP 1987/2018 Day 03 realising that -- actually to make sure that they -- nobody actually gets in, they actually put up this fence around it by going with the petition, say -- Q. We'll go to the petition in a moment but just focus on this letter. You told us that this was an offer from Harbour Front for Fonfair to consider. A. Well, I mean, basically, it's addressed to Fonfair. Q. Yes. A. I think that's -- obviously that's the case, yes. Q. I'm well aware of the time, don't worry. Just one more letter and then we'll break for lunch. Tab 261, page 5067. A. Yes, I have it. Q. This letter was sent by Harbour Front to you. A. Yes. Q. You will see from the paragraph at the bottom of this page, saying that Harbour Front offers to purchase the shares from you. A. Yes. Q. Again, the offer was only sent to you and not copied to Chung Sing, correct? A. I think it's about shares, isn't it? Q. So it's none of Chung Sing's -- A. Yes, so, I mean, Chung Sing wasn't looking to buy the shares. Yes. A Court Reporting Transcript by Epiq 91 HCMP 1987/2018 Day 03 Q. So was this, again, another thing which Harbour Front offered this time to you so that you can consider? Is that how you understand this? A. Well, it's an offer, yes. Q. So that you can consider? A. Yes. Q. You're not compelled to accept it, but you can consider. A. Like I said, you know, basically, you have a choice of A, B, C, doesn't mean I may, you know. Offer D which is outside -- offered by outsider, you don't -- you cannot even consider it. I mean, I don't know, I mean, is that an offer -- is that a choice? I don't think it is. I mean, basically, it's just that you have to decide, it's -- "Let me buy you out or actually what -- buy your -- the value of the land for that much, or actually buy your shares for that much." Q. This letter was sent by Harbour Front and not sent in bad faith, do you agree? A. I don't -- do I agree? No, don't agree. MS HO: Thank you. I will proceed with your cross-examination after lunch. COURT: How long do you think you will be this afternoon, Ms Ho? MS HO: I think an hour. COURT: Okay, so if we can adjourn until 2.30 pm, please. A Court Reporting Transcript by Epiq 92 HCMP 1987/2018 Day 03 (12.42 pm) (The luncheon adjournment) (2.41 pm) MS HO: Mr Leung, I'll proceed with my cross-examination. A. Of course. Q. Before the lunch, we were at bundle D7, tab 261. We were talking about the 2015 Chung Sing offer -- A. Yes. Q. -- and this was a letter from Harbour Front to you offering to acquire from you the Fonfair shares. A. Yes. Q. Go to the next tab. A. Yes. Q. We will see an advertisement by Harbour Front. Here, we can see: "Harbour Front ... offers for sale ... [its] interest in [the land] represented in the following shares ..." A. Yes. Q. You agree that Fonfair, by selling its shares in Harbour Front -- Harbour Front, by selling its shares in Fonfair and Money Facts, will not affect Fonfair's right to sell the land. Do you agree? A. Harbour Front's offer to sell the shares would not affect Fonfair's right to sell the land, yes, I suppose. A Court Reporting Transcript by Epiq 93 HCMP 1987/2018 Day 03 Q. Do you agree that this advertisement would not have impacted on Chung Sing in deciding whether to acquire the land from Fonfair? A. Would not impact on -- I'm not sure actually whether -- I mean -- I mean, I don't think I have the answer to that question, really, yes. Q. Do you agree that this advertisement was not put up by Harbour Front in -- A. Sorry, what was the question again? Q. Harbour Front put up this advertisement not in bad faith. Do you agree? A. Not in bad faith? Well, I mean, basically, so far as I understand at the time, the -- the shares were pledged to the Official Receiver to secure the performance of the settlement agreement. So I think actually I couldn't help wondering, you know, how Fonfair -- not Fonfair but Harbour Front would be entitled to do this. I mean, I think that was actually the question I had in mind, I think, rather than whether it would affect Fonfair's sale of the land or not. In any way -- in any case, I think we were quite far away from selling the land at that time, because at that time I think -- we just actually received an offer, right, and it's going to talk about it, but, you know, I suppose actually subsequently, upon, you know, calling A Court Reporting Transcript by Epiq 94 HCMP 1987/2018 Day 03 the meeting, all these things happened. Q. We can focus on this advertisement. A. Sure, yeah. Q. Just now you told us -- COURT: Is it correct that the shares were pledged to the Official Receiver? MS HO: My understanding is yes, but I can confirm and get back to you, my Lordship. MS LOK: My Lord, correct, and this was dealt with in the trial last time. COURT: I'm not sure this gets you very far. I mean, if your clients were trying to sell shares which they knew were pledged to the Official Receiver -- MS HO: All I need to get -- COURT: -- that doesn't look right, which is what the witness just said, I'm not sure it takes me very far. MS HO: Yes, that's the answer -- COURT: You're not suggesting your client ever explained to Mr Leung -- MS HO: No. COURT: -- why they were thinking of doing this? MS HO: No. COURT: I don't really think in the circumstances -- MS HO: But I do need to put to him that it was not put in A Court Reporting Transcript by Epiq 95 HCMP 1987/2018 Day 03 bad faith because that is the allegation against us, for doing that and I get the answer from Mr Leung. All I'm doing since this morning is to deal with YK's case. Can you go to your reply witness statement, bundle C1, tab 4, page 466. A. 466? Q. Yes. A. Yes. Q. At paragraph 66, the last paragraph, the third line, you said: "However, instead of accepting a leveled playing field and compete fairly ..." A. Sorry, bottom paragraph? Q. Yes, paragraph 66: "However, instead of accepting a level playing field and compete fairly, Harbour Front tried to put the land out of reach of the other arm's length buyers by, the case of the Chung Sing offer, commencing the 2015 petitions." A. That's what it says, yes. Q. Then you also say: "Had it not been for the 2015 petitions, Fonfair would have followed up with the Chung Sing offer and negotiate with the buyer as any reasonable seller would A Court Reporting Transcript by Epiq 96 HCMP 1987/2018 Day 03 in a similar situation." A. Yes. Q. Do you agree that the petitions would not prevent Fonfair from continuing with the negotiation? A. My understanding is that once actually the petition, I think, though, is in place, I think the directors are actually bound not to actually sort of do anything -- actually has the effect of disposing the land, including even leasing out the land. That's why I think actually at some point in time, we actually tried for validation order to actually enter into this renewal of the lease, which I think Harbour Front opposed, so we have to go through the whole process. And then I think also which we -- I think at some point in time, I think, responding to Harbour Front's suggestion that they want to do a -- sell it by public tender, I think they opposed to it, I think at the end, I think -- I think the matter was actually heard by his Lordship, I think -- which I think may be I understood, actually there was another alternative which is actually dispose -- let's say if you dispose of this trial, and then you can then get on with engaging the agent, et cetera. I think actually that was, I think, one of the things that we have to do, I think -- so basically, to answer your question, it's no, we were restricted. I mean, that is actually what A Court Reporting Transcript by Epiq 97 HCMP 1987/2018 Day 03 I was talking about earlier on, about fencing off, actually building a wall that we can't sell to anyone except -- I imagine the scenario to say okay, well, I agree to one of the terms, whatever the choice essentially of Harbour Front, Harbour Front actually agrees to withdraw the petition or something, because then Fonfair would be free to dispose or deal with the land. Until that is done, or, actually, until the petition is disposed of, I think the legal effect of it, I mean, that's what the petition was about. So I don't understand your question. I mean, really, is that -- of course it does, the effect of, you know -- well, interfering with actually sort of whatever Fonfair would actually normally be, as director, would normally be entitled to do. Q. But you would agree that if you, as the management of Fonfair, consider that a transaction for Fonfair to sell the land is in the best interests of the company, you could have applied for a validation order. So there's nothing to restrict Fonfair from selling, correct? A. Well, I mean, I think -- as I was saying, two things we applied for, I think I remember distinctly, one is entering into the lease, which is basically renewing the lease, and we're supposed to, right. I mean, A Court Reporting Transcript by Epiq 98 HCMP 1987/2018 Day 03 I don't -- I don't understand the problem. I mean, what is this all about? Except that we're going to oppose everything you do. Second is that, okay, we actually want to apply for validation order to actually authorise the location to some funds to actually engage some agents so actually so I can develop this idea at the -- actually I think that Harbour Front was putting up as -- I don't know, actually, one point of time, they say, oh, well, it shouldn't actually be -- you shouldn't actually be engaged with Chung Sing or anything like that, actually the best way to do it is public tender. So we followed that up, and then they say, "Well, you can't do that", you know, because that is disposing of the land, or something to that effect. I can't -- it's actually been some years, I distinctly remember we applied validation order for those two items and those two items, for some reason, I think Harbour Front just said, "No". Q. But in the end, the opposition were rejected and the tenancy could be renewed, correct? A. Yes. One of the things, but I think actually for the engagement agent, I think she sort of like his Lordship I think made the order that, actually, well, you can -- you can -- you can engage the agent but only A Court Reporting Transcript by Epiq 99 HCMP 1987/2018 Day 03 for the extent of -- I can't remember -- actually it's not -- about -- I can't remember what -- Q. I can quickly take you to that so that you can refresh your memory. A. Yes, yes, I think that -- COURT: What is the point you're getting to here? Of course Mr Leung could continue to talk to people if he wanted to, to pick up the phone, but that's not really the point, is it? The point is were your clients, on the face of it, interfering and in a way which Mr Leung may have assumed impacted seriously on the ability of Fonfair to sell the land. MS HO: Two reasons why I say this is relevant. Firstly is if your Lordship is with Harbour Front's case and then up to the stage that we have remedied, and your Lordship will enter into the stage of exercising a discretion, whether, not withstanding the remedy, we should be able to get back to management. One of the things that we have done previously would be this Chung Sing 2015 act, and I am now trying to get the point that the effect of this act would not, as alleged by Mr YK Leung, sabotage or damage the deal. That is the first reason. COURT: Well, it seems more a matter of degree than anything else. MS HO: Yes, that is the first reason. A Court Reporting Transcript by Epiq 100 HCMP 1987/2018 Day 03 COURT: Well, okay. MS HO: The second reason of course is their case saying that there is flagrant and recurrent breach leading to breakdown. Again, I'm trying to minimise the effect of this 2015 act. That is the purpose of me talking about the actual event. I won't be reopening the finding that there was this finding of us doing it, trying to interfere with the sale. I'm not trying to do that, but I'm talking about the actual effect. It's not as what Mr Leung is saying, oh, because of the petition, then he couldn't go to get back to the -- COURT: Yes, I mean, I understand the distinction you're drawing. MS HO: Yes. COURT: I'm not sure that the distinction is material. That's a matter for another day. MS HO: Yes. I hope that in the closing submission, with all the evidence before your Lordship, you will be persuaded. But these are the facts that I would like to elicit for the purpose of my cross-examination. Just very, very quickly, if you go to the validation judgment, go to D8, tab 302. Do you see page 5601? A. 560? Q. 1. A. Tab 302 starts with 5604, I think. A Court Reporting Transcript by Epiq 101 HCMP 1987/2018 Day 03 Q. Can you turn a few pages. A. 5601. Q. Is it missing in the -- A. 301? Behind the tab right? Q. Do you have page 5601? A. 5601, that is the-- the -- Q. The first page of a judgment. A. Yes. Yes, I do. Q. That is the validation judgment which you mentioned. A. Right. Q. And then you say you have to ask for a validation order because Harbour Front was opposing. A. Oh, I see what -- what happened. I think 5601, I think -- I think it's actually placed in the -- before the tab page of 302. So I think maybe it should belong after 302. Q. Perhaps you can see the page -- as long as you can see the pages, that's good. A. Yes, I think actually it goes -- so which page are we talking about? Q. I was just reminding you, this validation judgment was a result of what you just mentioned, that Fonfair wanted to renew the lease -- A. Yes. Q. -- and then Harbour Front opposed -- A Court Reporting Transcript by Epiq 102 HCMP 1987/2018 Day 03 A. Yes. Q. -- and then his Lordship dismissed the opposition. A. Yes. Q. Do you remember? A. Yes. Q. And there was the other matter that Fonfair wanted to do, and that is to retain Savills. Do you remember? A. Yes. Q. At page 5609, bottom of paragraph 12, that deals with the second item. Just now, you were trying to think -- A. The exact terms of the order, yes. Q. He said: "The retainer is to be limited to the pricing of the pricing of the property, the best methods of marketing for sale and the preparation for sale of the material for marketing the property. An agreement should be prepared and submitted for the court's approval. Alternatively, the matter can be stood over ..." A. Yes. Q. I understand from what your evidence and what you said just now was that you eventually decided to postpone it after the -- A. Well, to take the alternative action as set out in the judgment. Because I think it's actually -- it's a A Court Reporting Transcript by Epiq 103 HCMP 1987/2018 Day 03 continuous thing rather than, you know, actually -- we might get through the first stage and then there will be another opposition, and then we get broken up into the thing, I think it is actually very difficult to engage someone just to -- for a small part of the -- it's just a practical decision, I think. So basically, two choices, we just elected to take the alternative as long as -- in the judgment, yes. Q. Going back to the Chung Sing offer, you decided not to follow up with the Chung Sing offer, was also your own decision, just like postponing the Savills retainer, correct? A. I thought I explained that I couldn't follow up. What is to follow up? I mean, basically, do we say, "Well, we're not allowed to sell it", and that's then that's a follow-up? I mean, I don't understand the question. Q. So I suggest to you, and you can agree or not agree, that the petitions, the 2015 petitions, would not render Fonfair not able to follow up with the Chung Sing offer. A. I do not agree with that. Just -- no. Q. It would also not preclude Fonfair from selling the land subject to a validation order that that's in the best interests of the company. Do you agree? A. Well, I suppose actually, you know, if you say subject to validation order, I can -- you know, I mean, A Court Reporting Transcript by Epiq 104 HCMP 1987/2018 Day 03 obviously, but that is actually where it is, isn't it? I mean, so, basically, do I need to be subject to the order -- validation order so I can actually negotiate this party and say, well, but it's subject to actually this order? I don't know, I mean, to me, it doesn't really say -- I'm not sure what the question is. Basically, it's just -- I don't agree it impacts, you know, the sales process. I mean, that's the purpose of it. That's what I believe, the petition said -- to fence off so nobody can touch it except, you know, Harbour Front, that is, with Harbour Front's blessing. Q. I'll move away from the 2015 Chung Sing offer and go to the PPTA and the public tender. That would be 2018. A. Of course. Q. You can put away this bundle, bundle D12, tab 445. A. Yes. Q. A letter dated 17 July. A. Yes. Q. Here, we can see Harbour Front issuing letters to yourself, Marcon, Money Facts and the estate. A. Yes. Q. The shareholders of Fonfair, right? A. Yes, yes. Q. Then in the first paragraph, you will see there was a reference to Wang On offering to acquire the shares of A Court Reporting Transcript by Epiq 105 HCMP 1987/2018 Day 03 the Fonfair shareholders -- A. Yes. Q. -- rather than acquiring the land. Correct? A. Yes. Q. You were aware of this offer too, correct? A. Yes. Q. Another letter, same bundle, page 7322. A. Yes, I have it. Q. You will see from the first paragraph saying that Harbour Front was referring to a letter from Knight Frank -- A. Yes. Q. -- to Harbour Front and Money Facts. A. Yes. Q. Here, the second paragraph: "[There has been] indications from the market that there are potential buyers who would be interested in purchasing the land by acquiring a controlling stake in Fonfair, instead of purchasing the land directly ..." Right? A. Yes. Q. So the idea of selling the shares in Fonfair to potential buyers has been raised by different companies. So this is not an option which is completely outrageous, do you agree? A Court Reporting Transcript by Epiq 106 HCMP 1987/2018 Day 03 A. In fact, actually, I think this -- this -- I think Wang On is one of the rare offers, you know, I mean, basically, most of them are just straightforward, actually it's like we like the land, we offer to buy it, and that's it. And, in fact, actually, this issue was dealt with, I think, in discussion. Q. Yes, I'll take you to the discussion in a bit. A. Yes, of course. Q. But you will also see the other interest indicated by the Knight Frank letter, the Wang On and Knight Frank. A. Well, I cannot remember, actually, sort of like the role actually Knight Frank put -- was involved in, in the Wang On offer. Basically, that is what Harbour Front is saying, that's what Harbour Front is saying. I cannot recall actually Knight Frank being involved in the actual share offer. At the end of the day, it's actually between Wang On and the individual shareholders, in a sense, it's probably nothing to do with Fonfair as a company, there are certain -- maybe there's some provision in the articles, I don't know, but subject to those, I mean, it's the shareholders assets and it's not up to the company to be -- to be involved. Q. Then you mentioned the discussion on this topic and some other topics -- A Court Reporting Transcript by Epiq 107 HCMP 1987/2018 Day 03 A. Yes. Q. -- which would be in the Fonfair EGM in August. A. Yes. Q. Next day. A. Yes. Q. I will take you to the transcript of this discussion, just showing you some of the parts, and I'll ask you some questions. A. Of course. Q. Go to bundle D15. A. I don't need this any more? Q. No need. D15, page 8488. A. Oh, okay. Q. That's the first page of the transcript of the EGM on 16 August 2018. You can see the "Persons Present", Male 2 would be you, YK. A. Yes. Q. Female 1 is Gillian. A. Yes. Q. And Male 3 is Jerry. A. Yes. Q. Then can you go to page 8572. I'll first deal with the PPTA. A. 8572, yes. Q. You will see at the left column there will be line A Court Reporting Transcript by Epiq 108 HCMP 1987/2018 Day 03 numbers, you will see 338. A. Yes. Q. Can you go to 346. A. Yes. Q. Male 2 will be YT. A. Yes. Q. Go to the right column: "So, why is, I understand, I try to understand the question. Your question is, would you consider to actually ask if they want to buy the company after they have won the bid for the land. That's your English, is it correct?" You say "yes". "[YT]: I say, why don't you actually give them The option at the tender stage so that they can give you the answer. My, my English is more simple." You recall during this meeting, at this juncture, you and YT were discussing whether -- your suggestion is just let the land be put up for bidding, and for the highest bidder we can enquire if he wants to buy the share. A. Well, I think -- basically, I think the -- what was discussed wasn't -- after (unclear), I think I suppose basically, what it was, was that this -- so at this point in time, I think we were actually about to A Court Reporting Transcript by Epiq 109 HCMP 1987/2018 Day 03 actually sign a deal -- commence on this actually sort of public tender. And that meeting was called, I think, actually, by Harbour Front, actually, tabling issue amongst other things, they want the company to procure the resolution to be passed that obligates the company in my description, it's piggybacking the -- piggybacking the so-called PPTA onto the public land sale. So I think before this, this idea surfaced actually by way of this, or actually shortly before that, I think it was -- as I explained in the meeting, I think this particular meeting, I think some other similar meeting, that this idea was -- all actually public tender was Harbour Front's idea, and we actually, you know, start doing something about it, at the validation order hearing, right, that's what we -- we want to do. We're saying, well, you want public tender, we would actually engage so and so, actually do something like that, and then actually their side, they oppose. So from his Lordship's actually suggestion, as an alternative, we decided, well, we were actually pretty close to actually -- I mean, basically at this time I think -- I can't remember exactly, either the hearing is been done or just about to be done, so this could be resolved anyway, so with that, yes, probably that's a bit better, better choice. So we A Court Reporting Transcript by Epiq 110 HCMP 1987/2018 Day 03 actually just, you know, withdraw the -- anyway, we didn't actually do the partial route. So we wait for this. And then I think actually sort of like -- then we talk about, in this particular meeting, I think spoke about what is the exercise -- what is the topic, the tender actually -- Q. I will deal with the public tender in a bit -- A. Yes, yes, I'm trying to answer the question. I'm saying basically, the PPTA came at a point that, actually, the -- the public tender was about to actually sort of like to -- I mean, I think it's about to begin. To the extent that we have explained, you know, who the candidates are, the agents are, you know, how many agents that we actually say we would likely propose, the -- but we'll be procuring, actually sort of like I suppose the valuation, and basically -- Q. Mr Leung, let me talk about the public tender and I'll take you to the relevant part of it. We're focusing on the PPTA. A. Okay, all right. Q. Here, both of you were discussing the PPTA. You said it's not workable. That's your recollection, right? A. Basically, I think actually -- I remember the question. The question is, you know, what you're saying is that, A Court Reporting Transcript by Epiq 111 HCMP 1987/2018 Day 03 you know, you're suggesting why don't we actually carry on public tender first and then exercise -- you know, I mean, they actually saw the -- the alleged advantage of the PPTA is that it would save stamp duty, which, subsequently, I checked with the agent, it said, basically, you just delay the step, whatever, like the paperwork, sent to you, you just -- Q. Understood. A. -- so, basically, we're actually dealing with the actually so-called merit of actually the PPTA, and I think at the same time we also said, well, basically, the PPTA is actually -- is actually this, it's an idea that just came off the shelf. And in fact it begs a certain question I have to raise, which I think Harbour Front didn't even bother. Q. Perhaps I can ask you one question to cut it short and then we can move on to the public tender, and that can be discussed later on. A. I've not lost sight of your question, you know, that basically, what you suggested is that, okay, we'll deal with the -- the share afterwards, what actually proposed to say, okay, well, it's much easier process to do it by public tender. And actually, how about offering it to -- the bidder, maybe actually even shortlist some bidder, and actually sort of like, you know, let's say A Court Reporting Transcript by Epiq 112 HCMP 1987/2018 Day 03 do a bid of extra enhancement exercise, I mean, what the alleged benefit is, let them decide, okay, this is actually the situation, you know, if we should offer you thing, which would you actually increase your bid or something? So basically it's a two-stage thing, it's not necessarily a mutually exclusive to say, well, you're not taking benefit of the fact that actually sort of it would offer saving, which, to me, I think is explained in the meeting is -- is -- is not there. Q. It's a stage issue. A. It's not -- there's no saving. In fact -- Q. Stage issue, it's like stage 1. A. No. The nature of buying land is actually totally different from buying shares. Buying land is actually -- you have legal title, valid title, you transfer it. You sign on the line, and that's it. For shares, you have to go through a lengthy process of due diligence, and actually checking things, so this is -- like this. It's non-starter. You actually have a bunch of shareholders actually been fighting for years, you try to sort that out in the due diligence. I mean, I can't imagine. But, of course, I think these are not problem to YT, he's are only interested -- because you have to commit the company to actually sort out undertaking, to actually sort of not -- he is A Court Reporting Transcript by Epiq 113 HCMP 1987/2018 Day 03 piggybacking, but you have to actually get all the shareholders all in place, agree to pool the share. To me, that is the background, and that is actually what -- why I say if there is actually real benefit, why don't we actually let the actual bidder decide, rather than you decide actually there's a benefit, right? By starting with something very simple, and then as an add-on, that is the honest answer I try to put to you. Q. Start with something simple and then -- (unclear - simultaneous speakers) -- A. Yes, and not actually to say in parallel. As I explained in the discussion. Q. I understood your point. And then we can go on to the public tender. A. Of course. Q. Thank you for explaining the background. It's very clear. Then we'll go on to the discussion about the public tender. You can keep the transcript with you first, and turn to C1, your witness statement, tab 4, page 449, paragraph 26. Here, you're talking about the discussion about the public tender, and you said: "The EGMs for Fonfair and Money Facts were duly convinced on 16 [August] 2018. Present at the meeting A Court Reporting Transcript by Epiq 114 HCMP 1987/2018 Day 03 were YT, Jerry, Gillian and I. As director of Fonfair and Money Facts, I chaired the meetings. Having prepared a speaking note, I gave the shareholders a complete update on the current status of the sale of the land. Views and questions in relation to, amongst other things, the identity of [the] potential candidates to be appointed as agent for the public tender, the number of agents to be appointed, timing of the appointment, timing of the commencement and closing of the public tender, bid consideration parameters, validation reports, commencement of the advertising were [discussed] ..." A. Yes. Q. So you considered these items are matters which the shareholders are entitled to discuss, correct? A. Well, I mean, I think basically it's an EGM procure, you know, I suppose, by Harbour Front to suggest that there's a better way. So basically, I think the shareholders -- actually, I mean, the particular shareholder I'm referring to actually, it is Money Facts. So Money Facts actually thought, well, if you don't actually sell, you consider this other alternative, we better know what you sell, what the company that Fonfair is actually sort of doing, with the land, how they -- like the other alternative is A Court Reporting Transcript by Epiq 115 HCMP 1987/2018 Day 03 going, in other words, the public tender. So, basically, that's actually sort of what this -- I was just saying. So I think if someone say, "Well, let's actually sell the -- our shares", and actually thinks the company should be involved, I think it's actually as a shareholder in the part of -- Money Facts as a shareholder, majority shareholder for Fonfair, I think they need to know, right? Even though, of course, as a company, I know, but I think for -- just in case the minority would also know, that would be the opportunity, including Harbour Front. Q. Shareholders. A. Yes, I mean, everyone, all the shareholders. Q. Everyone. A. Yes, because I think that letter, you remember, it addressed all the shareholders, including, I think, if I'm not mistaken, the estate, which I think at that time owned 75 shares, or actually 4,008 shares of actually Fonfair. Even that, I think they have rights -- Q. To know about this. A. Yes, of course. So what we were doing was we thought act responsibly, and say, okay, well, the -- Fonfair, tell us actually what's happening, I mean, not for -- A Court Reporting Transcript by Epiq 116 HCMP 1987/2018 Day 03 for my benefit, as a -- someone who knows, but for those who actually need to know but do not know, or actually wants to know, but do not know. So it's a formality that, actually, I care to follow, right. So, basically, I came prepared. I have actually saw very detailed speaking note and actually some -- address any point. And on this PPTA, actually, I think I did raised a point, I think on the thing -- Q. Shall I take you to your speaking note first? A. Of course, yes, yes. Q. And then we can focus on the public tender. A. Yes, of course. Q. But what I understand from you just now is that you would consider these matters, for example, the timing and commencement of the public tender, et cetera. These matters are what the shareholders should know about -- A. I mean, basically, those actually -- I think the timing, et cetera, it -- it could have been actually sort of part of what I had to prepare, but it could have been in response to YT's question, because it was quite a long discussion. Q. But insofar as any information that you disclosed in that meeting, those are the information you think Harbour Front can know, because -- can obtain, because earlier on you mentioned that if information or not in A Court Reporting Transcript by Epiq 117 HCMP 1987/2018 Day 03 the interest of Fonfair to be disclosed to Harbour Front -- A. Well -- Q. -- will not have done that, correct? A. I mean, we try to -- what I think I listed, say, the number of actual agent at that point. Ultimately when the agent saw the methods, the sales was advertised, you would know, you know. It's a matter of time. So, basically, there's no point kind of like, keeping it and saying, "We're not telling you how many", because ultimately it would be public. It's actually like, I suppose, the timing, well, we have some timing idea, you know, when actually that would be commence. In fact, we delayed the appointment of the agent because of, you know, this PPTA, and the holding -- Q. Mr Leung, shall I take you to the transcript so that we can understand what you have told Harbour Front? A. Of course, yes. Q. I will focus on a few pieces of information if you have told Harbour Front. A. Right, okay. We keep this? Q. No, that's fine. If you can first go to your speaking note. Bundle D10, tab 355, page 6407, which is the first page of your speaking note. Then go to page 6408, A Court Reporting Transcript by Epiq 118 HCMP 1987/2018 Day 03 paragraph 1. A. Yes. Q. Here, you said "Our company has three proposals from the agent to stage the public tender"? A. Yes. Q. Paragraph 2, you said: "Based on the proposals, the company is in the process of formulating a ... set of terms of engagement on which the company can engage one or [more] agents ..." A. Yes. Q. Third paragraph: "Other than the valuation report procured from Savills ... the company has also procured an additional new valuation by Knight Frank delivered [in] August 2018 and considers that there is enough to set a reserve price for ... tendering process to proceed." A. Yes. Q. This exact paragraph was also being read in the EGM itself. I'll just state the page reference for record, that will be D15, tab 464, page 8504. A. I don't need to take that -- Q. You don't need to take that. So you did inform Harbour Front that a reserve price would be set for the tendering process, correct? A Court Reporting Transcript by Epiq 119 HCMP 1987/2018 Day 03 A. That's -- I mean, obviously that's what I did, yes. Q. Go back to your witness statement, C1, tab 4, page 479. The bottom of the page, paragraph 107. You say: "With regard to the notion ... that 'it may even be possible that Savills had revealed to IDL the reserve price at the ... public tender'. For the record, no reserve price was set for the land public tender. Instead of setting a reserve price, Fonfair's intention was to follow the practice of the typical government tenders for land sale, which is to consider the bids received against valuation of the land as at the closing date of the land public tender." A. Yes. Q. So what you told Harbour Front in the EGM back in August 2018 that there was a reserve price is wrong. Yes? A. I suppose, actually, I think strictly speaking, I was wrong, but I think what I had in mind was that I was going to rely on the three valuation that would be done at the time of the selection of the side, what we consider to be the winning bid. So it's not a reserve price actually, sort of like subjective and then send a subjective price and say, "Okay, I think it's actually worth so much, so much". So that reserve price, I think it's a matter of actually -- practicality has to come A Court Reporting Transcript by Epiq 120 HCMP 1987/2018 Day 03 from a -- an independent valuation, and not only any independent valuation but timing-wise, close enough to sort of like tender closing, and that is actually what I think I actually meant in the reserve price. So in other words, if we decide -- someone comes up with a bid that is actually way below what is actually determined to be the fair market price, then that is the reserve price that you -- that you need to meet and it won't be sold. But it's not, you know, the cheapest possible. I mean, I think in that context, I think I still stand by what I said. But if you say, okay, well, like, I conceive idea, this should be so much, I don't think actually even the government, they do the thing, they do this. Basically, they must have actually something to go by, rather than objectively saying, well, I set the reserve price at such a level. That is actually the sort of idea about the reserve price, which I think is actually borne out by, I suppose, what actually happened. Q. Perhaps we'll deal with the first piece of information which I'm interested in, then the other one would be the agent, appointment of the agent. A. Yes. Q. Go to the transcript, page 8505. You will see at the bottom, Male 1, that's you talking. Go to A Court Reporting Transcript by Epiq 121 HCMP 1987/2018 Day 03 the page before this, you will see "male" -- A. Number what? Q. It's number 77, so you will see the 77 -- A. Oh, the bottom part, yes, okay. Q. It will be you talking. A. So it starts at -- Q. A few pages. A. It's actually the previous page. Q. But the relevant part starts from page 8505. Here, you say: "Well, I think for the record, I think you are also interested, that is to get this copy. Then for me on the record, I have given a copy, that is the report from Knight Frank, the content of which is in general to er estimate the, that is, regarded as, that is the market value." Then Male 2, YT, then asks: "I would like to ask whether Knight Frank is one of the so-called 3 agent[s]?" A. Yes. Q. Then you replied, "Yes." A. It's actually one of the three candidates. Q. Then go to page 8507. A. Yes. Q. Here, at line 95, Male 2, YT, saying: A Court Reporting Transcript by Epiq 122 HCMP 1987/2018 Day 03 "You have not -- you have not ..." Line 96, you say: "Engage[d] anyone ... That's right, that is for the moment it is in the pros of formulating a common set of terms ..." Et cetera." A. Yes. Q. Then go to page 8518, line 124. A. Yes. Q. YT was asking about the time frame, that's the time frame of the public tender, so when the public tender will start and when it will end. A. Yes. Q. And the discussion goes on to page 8519, still talking about the time frame. A. Right. Q. If you can go to page 8520, line 137. A. Yes. Q. Male 2, YT said: "No, I think the tender time start ..." And you said, "When it will start?" And YT said "Hm". Then you say: "I think I should say, my understanding is that it took about 3 weeks, that is ... [YT]: Then take it from, from 31 August, you got A Court Reporting Transcript by Epiq 123 HCMP 1987/2018 Day 03 the person to come to work." As the agent of the work. Then you said yes. "YT: That is, the person who came to work said in 3 weeks ..." A. Yes. Q. Then line 145, YT said, "That is", and then you said, "Yes", then he says: "... no, three weeks to commence, right ... appoint ... appointment of the agent." A. Yes. Q. So during the discussion, there was the discussion that the public tender would commence around three weeks after the agent was appointed? A. Yes. Q. You can put this aside, and go to bundle D10, tab 385[sic]. A. Yes. Q. This is a letter dated 31 August 2018. A. Yes. Q. At page 6420 -- tab 358. You will see a letter from Harbour Front dated 31 August 2018. A. Yes. Q. The last paragraph, Harbour Front asked Fonfair to "confirm that you have not proceed with the appointment A Court Reporting Transcript by Epiq 124 HCMP 1987/2018 Day 03 of any agent for the sale of the land (as you indicated at the EGM)." Do you remember Harbour Front seeking this confirmation? A. I think it's a matter of record rather than memory, I think actually basically the time actually we appoint the agent is a matter of record. I mean, I don't -- I -- what was that thing? "For the avoidance of any misunderstanding, please ... confirm that you have not proceeded with the appointment of any agent for the sale of the land ..." So actually this letter is dated 31 August, I think that is actually about -- I think that meeting was actually 16 August, I think, I can't remember what it was it, that EGM date. I think we said actually we delay actually by about -- at least two weeks or something like that, so it's about that, that period of time. I mean, I think we did -- was this referring to the meeting? I think that was the case, I think that is absolutely true. I think, referring to the minute, we did not commit to any -- any -- appoint any agent at that time. So the -- Q. Then perhaps we can look at another letter, at tab 361, A Court Reporting Transcript by Epiq 125 HCMP 1987/2018 Day 03 a letter dated 12 September 2018. A. Okay. Q. Here, we can see Harbour Front asking whether you intend to proceed with the sale of the land without further investigation of the feasibility of the PPTA and also whether you have appointed agents for the sale of the land in the absence of consultation with shareholders and from shareholders. A. Yes. Q. So, here, Fonfair was asking again whether an agent has been appointed. A. Oh, Harbour Front asking Fonfair? Q. Asking Fonfair. A. Yes, yes, yes. Q. But there was no response from Fonfair or yourself, do you recall that? A. I think basically I think -- you know, from Fonfair's point of view, is that why are you asking us to actually sort of, like, you know, conduct this, do this enquiry and feasibility or whatever actually -- YT might have in mind? Our thinking was that, you know, whoever actually owns the shares, I mean, it's your share, why would -- permit us? And plus actually there is a fundamental question which I think, one of the directors is, well, where is our right to -- referring to A Court Reporting Transcript by Epiq 126 HCMP 1987/2018 Day 03 this advertisement. The settlement agreement is not settled yet actually with the OR. So, the -- actually the idea that sort of like, you know, Harbour Front has got these shares to pool with other shareholders -- Q. Mr Leung, I'm not so concerned about number one. A. I know. You are asking why I did not respond. Q. Why you didn't tell them, Harbour Front, whether an agent has been appointed. A. Well, because I think actually that's been done and we have delayed it. So, basically, I mean, we can't decide every time you ask something, you know, I mean, our time, basically -- and actually -- so not in relation to actually sort of the interests of the company, it's interest of -- in relation to the PPTA. I mean, we -- like I said, we -- we -- we don't consider ourselves actually obligated to -- shareholders actually, you know, represent you, to actually sort of like canvas support or other shareholder to actually organise it, to sell your shares, so I didn't it -- the question actually forced to be answered. So hence -- Q. So you do not consider it is necessary for the management to tell a shareholder when the agent for the public -- A. No. I think she is basically -- the manager -- what it A Court Reporting Transcript by Epiq 127 HCMP 1987/2018 Day 03 was, was actually in that meeting, the EG -- EGM, basically, I think I did raise the question, I think with YT, and say, well, I mean, you guys, you can do this and do that and, you know, in fact, are you sure you have the right to sell the land? And that, you know, YT actually sort of said to me, I think you can actually sort of find that from the transcript. It's none of your business. Now, if someone tells it's none of my business, then I take it a point that it's none of my business. Q. Going to the point, you have discussed and you have confirmed that during the EGM there was a discussion and the public understood that the public tender would start around three weeks after the agent was appointed. A. That was the intention. I mean, that was actually sort of I mean basically why should I -- Q. And my next question is so the timing when the agent was being appointed would be important for a shareholder like Harbour Front to know so that they know when the public tender will start. Do you agree? A. Why is it important? Can you explain to me? I mean, I don't mean to ask the question back, but I want to give you an answer that is relevant -- Q. Do you agree? A. Agree with what? A Court Reporting Transcript by Epiq 128 HCMP 1987/2018 Day 03 Q. Do you agree with what I suggest to you? A. Appointing a shareholder? Q. Mm-hmm? A. I thought if I'm the shareholder, I would just be interested in getting the best price for whatever actually I -- interest I -- the land. Rather than actually when it's going to be done, right? Q. Remember when the witness statement, which we looked at earlier on, you said that in the 16 August EGM, there was a complete update about the public tender? A. Update at that time, yes. Q. One of the information which was discussed would be the time frame of the public tender. Would you agree that the start of a public tender is a piece of information important to shareholders? A. I did not answer actually that -- that mention because I thought it was important; I actually answered that question because actually YT raised that question. I did not see any, you know, reason I should actually not dispose it because, like I said, ultimately it would be disclosed anyway. I mean -- Q. So in your view the shareholder does not need to know when the public tender will be put up? They just find it on the website, correct? A. I didn't expect to, but I think obviously I think, you A Court Reporting Transcript by Epiq 129 HCMP 1987/2018 Day 03 know, for YT, who obviously, I mean, Harbour Front is a shareholder, they consider so, but I don't understand why. I mean, what's the timing of it? Basically, the best time is actually sort of when you actually get the best -- we think you can get the best price, when you have everything ready, that's the best time, right? So it depends on actually -- it's not subjective decision again, it depends on whether everything is ready or not. At that time, basically, we still have three candidates, right, and we have to make a choice, so this has to be -- actually have to be a decision process to go through and say why did we ultimately actually chose Savills, and Cushman & Wakefield, and not actually Knight Frank. I mean, there was actually a process. So it's not actually say, okay, well, you know, because we said that, there's any significance to it, it's just as a matter of course, actually it happens, and actually the whole point is to maximise the benefit to the -- to the company. Not because actually because some shareholder thinks important. Q. Can we go to tab 378, page 6486. That was a letter from Fonfair to Harbour Front dated 23 October 2018. A. There's no heading. I don't know -- I don't think so. It's actually YK it's -- my share -- it's a shareholder. Q. From you? A Court Reporting Transcript by Epiq 130 HCMP 1987/2018 Day 03 A. Yes. Correct. I mean, it's obvious, there's actually no Fonfair letterhead. Q. Right, thank you for correcting me. A. Yes, yes. Q. You can see from page 6487, the next page -- A. Yes. Q. -- the fourth paragraph from the top -- A. Paragraph 4, the caption "Paragraph 4". Q. Yes. A. Okay. Q. Not caption "Paragraph 4", it's counting four paragraph. A. Okay. Q. You say: "On 18 September 2018, having deferred the appointment of agent by some 18 days ..." A. Yes. Q. My question for you is: this was the first time you informed Harbour Front when the agent was being appointed, correct? A. I'm not sure. I mean, I think, you know, could have been. It could have been before, I don't know. I mean, this letter -- actually doing that, so I have no idea actually whether I've indicated to -- I mean, anyway, it's actually sort of -- I think it's actually supposed to be myself, I mean, I think, you know -- A Court Reporting Transcript by Epiq 131 HCMP 1987/2018 Day 03 Q. It was the first letter that we saw containing this information. A. It could have been. It could have been. I don't know. Q. But that would be after the tender has started, if we look at the timeline. A. Well, I mean, what's the date of this again? Q. Because the advertisement, if you go to tab 369 -- A. Well, I think -- oh, yes, yes, yes. This letter is actually 23 October. I think this would actually be the closing date, I think the closing date was 10 November, if I remember right. I think it's 30 November-something. So this actually puts actually the -- I think it's a seven-week advertising period, so you actually count that backwards, this would be about four weeks, so it would have started actually -- maybe about three weeks, thereabout, actually start before this letter. So, I mean, it's actually already public information they've been appointed. Yeah. Q. Do you agree, by not informing Harbour Front as a shareholder as to when the agent was being appointed, you have provided incomplete information to Harbour Front for it to consider the -- A. "You" meaning actually Fonfair now? Or -- Q. Fonfair management. A. I don't think so. I mean, we are not -- I don't think A Court Reporting Transcript by Epiq 132 HCMP 1987/2018 Day 03 we -- we have any particular actually, you know, I mean, reason to hide the information. But on the other hand, I don't think actually sort of we are bound to sort of like tell them everything. I think that answers your question. Q. My follow-up question, and then you can say whether you agree or not. Because without the information as to when the information was appointed, Harbour Front, as the shareholder, did not know when the public tender was going to start. A. Before they actually saw the advertising? Q. Mm-hmm. A. That means -- so -- what -- you're implying that there's an obligation on Fonfair's part to tell the actual shareholder? I mean, I think that's the -- Q. I'm just saying that by not telling this piece of information, you are giving selective information to Harbour Front. Do you agree? A. I don't agree, no. No. Q. Then I'll move away from the public tender and I'll go to the IDL offer and the holistic exercise. A. Okay. Q. So you can put away. A. Put away. Q. Can you go to bundle D10. Maybe it's still the same A Court Reporting Transcript by Epiq 133 HCMP 1987/2018 Day 03 bundle, tab 393. This is the offer from Savills, remember? A. Oh, yes, yes. Q. Just one thing I want to ascertain from you, number 2 "mai fong", the purchaser, is Investment Development Limited the full name of the purchaser? A. Well, I don't know, that's actually Savills says here, it's actually what is written there. Q. When you received the offer, the purchaser name was stated like this, correct? A. Apparently, yes. Yes. Q. Then after seeing this offer, the next step would be you, as management, called an EGM for Fonfair -- A. Yes. Q. -- and Money Facts to be held on 17 June 2019. A. Right. Q. Do you recall that before the EGM, on the same day but before the EGM of the two companies, you and representative from Harbour Front had a WP meeting, without prejudice meeting? Do you remember? A. Yes, I remember there was a WP meeting, yes. Q. You don't need to tell us what was discussed, but you remember that the meeting lasted for around an hour? A. As a matter of record, again, I think -- I think it's supposed to start at a certain time, I think usually it A Court Reporting Transcript by Epiq 134 HCMP 1987/2018 Day 03 starts at the right time, if -- start time of the company meeting is delayed, and I think it -- just d the arithmetic. Q. Do the calculation. A. Yeah. Q. In the EGM, after this without prejudice meeting, I understand that there was an allegation, I'll put it this way, that Harbour Front was not expressing itself views, unreasonably not expressing their views. Remember? A. Well, it's a fact; it didn't express a view. Q. I will suggest to you that in the EGM, Harbour Front did not express its view because they have already said so in the without prejudice meeting. Do you agree? A. Am I supposed to refer to the content of the WP meeting? Q. No, but you can just say -- A. So basically, what's the question? I don't understand. Did they actually sort of, you know, say something that I'm not supposed to -- Q. They have already said that so they don't need to repeat; do you agree? It's a question for you. A. Oh, I see. So, actually, "As shareholders, we already actually said what we need to say in the WP meeting, so we're not going to say what we need -- you know, what we" -- A Court Reporting Transcript by Epiq 135 HCMP 1987/2018 Day 03 Q. Don't need to, yes. A. "We're required to say, 'Hey' ..." COURT: I don't think the witness knows why they said or why they didn't say it, unless they said, "We're not going to comment because". MS HO: Yes. Then I'll move on to the reason, which was expressly stated. You remember during the meeting, not the WP one but the EGM, Harbour Front has told you that the reason for not expressing their view was because in the past there were occasions where the information provided by you, as in management, was inaccurate or incomplete. Do you remember that? A. "Selective", I think the word used, and I think that was covered in the -- in the audio. And I made a special point, I think -- I think at the time, I think, actually sort of, you know, I think -- I think Gillian Leung accepted that selective is not about the IDL offer but in the past, and said "Can you stick to the IDL offer?" I think basically, I mean -- actually -- used "selective" is used, but in fact it's admitted by Gillian Leung, for this one is not -- and plus, actually, we actually offer actually the -- for them to actually meet with the agent, the Savills agent, Mr Chau, who actually sort of was acting -- was waiting A Court Reporting Transcript by Epiq 136 HCMP 1987/2018 Day 03 downstairs at one point in time. But they said no. So basically they're saying, "Well, we're missing information you're not providing me." I said, "Well, I've given you everything I have, but if you say you want more, you are free -- we invite you to actually sort of, you know, talk to this agent." They said, "No, we don't want to talk to him." So in that sense, what are we -- what are we talking about? What information that actually sort of we are supposed to disclose that we're not? I mean, I don't understand. Selective, I think Gillian Leung more or less, in my mind, you know, took it back. So what's this allegation -- for this actually to take an offer, it wasn't -- it didn't apply. Whether it applied to the other offers or not, I would not actually get into that. But for this one, it's just an excuse to say, "Well, we don't want to talk about it is because of this." I mean, you can -- you can make up any -- any excuse, any reason. But -- Q. I also suggest to you that Harbour Front was not acting in bad faith in not expressing their views in the EGM. A. You're suggesting that -- Q. If you agree or not. A. -- I just give you the answer to say no. I think it was A Court Reporting Transcript by Epiq 137 HCMP 1987/2018 Day 03 bad faith because I have to get your consent, and you have to tell us actually what you want, so that we can actually sort of, you know, get your consent, and you actually say, "Well, we don't want to talk about it", then you say, "Well, regardless of what you're going to say, what you're going to tell us, we're not going to consent." I mean, is that -- I think to me that is actually equivalent of bad faith. Q. It is not in bad faith, because Harbour Front had valid concerns about selective information. Do you agree? A. I disagree totally. Q. Moving on. It will be the board's recommendation of the IDL offer that I will take you to. A. Okay, yes. Q. D10, tab 406. That would be the cover letter from Fonfair. At page 6600, that would be a written resolution by the directors of Fonfair recommending the IDL offer. A. Yes. Q. Enclosed with the recommendation, go to page 6641, you will see in paragraph 2, from the top, there are certain valuation reports. A. Yes. Q. You will see from the fourth paragraph there was an analysis by Savills which you provided to A Court Reporting Transcript by Epiq 138 HCMP 1987/2018 Day 03 Harbour Front. A. Yes. Q. So you would consider that this piece of information would also be relevant to Harbour Front's consideration of this IDL offer? A. Well, I mean, we are giving them everything. I think that's actually -- that's what they want. I mean, that's everything, yes. Q. If you go to the analysis report itself, at page 6635, you will see this is an analysis report prepared by Savills -- A. Yes. Q. -- basically to say IDL -- to sell to IDL will be the preferred option. I can take you to the contents itself. A. What was the question again? Q. I haven't asked the question. A. Right, okay. So I've got actually the -- Q. Page 6635 and then go to page 6647, and you will see "Option Analysis". A. The same report or different report? Q. Page 6647. It's the same report, but in the previous section of the report, Savills was analysing the economic and social condition of Hong Kong. A. Okay. A Court Reporting Transcript by Epiq 139 HCMP 1987/2018 Day 03 Q. And then if you go to page 6647, Savills talked about different options. A. Okay, right, yes. Q. At page 6648, here Savills will talk about option 1: to keep the land and just rent it out. A. Yes. Q. And he will say what are the advantages, what are the disadvantages. A. Yes. Q. Over the page, the second option will be redevelopment. A. Yes. Q. Again, advantages/disadvantages. A. Yes. Q. And last would be sell now. A. Yes. Q. Advantages and disadvantages. A. Right. Q. You will agree that this analysis report would be relevant for Harbour Front to consider the IDL offer. A. We have this and we shared this report. Yes. Q. As the management, you would consider this report to be useful for Fonfair to compare the different options. A. For us to consider actually sort of whether it's valid, you know -- so at the end, you know, it's the management's decision, yes. So that's one side of A Court Reporting Transcript by Epiq 140 HCMP 1987/2018 Day 03 it, I think, you know, from the agent. We obviously have to look at the other aspect as well. Q. Compare, see which is the best. A. Yes. Yes, of course. Q. Then let's go to the holistic exercise, still this bundle, at tab 404. This is a letter by Harbour Front to Fonfair dated 26 July 2019. A. Yes. Q. You can see from paragraph 3, here Harbour Front said: "As you know full well, until the two shareholders. YK Leung and Harbour Front, are in a position to consider and resolve 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 Fonfair's and Money Facts' EGMs." A. Paragraph 4, right? Q. Paragraph 3. A. Sorry, paragraph 3, okay. Yes. Q. Then you can also look at paragraph 5. A. Okay, paragraph 4 is interesting. Q. You can also look at that too. A. Yes. Paragraph 5, yes. Q. Paragraph 5: "Given that, under the Shareholders Agreement, A Court Reporting Transcript by Epiq 141 HCMP 1987/2018 Day 03 Fonfair shall pursue and negotiate any future development plan and other business to safeguard and maximise the interest of the shareholders, any decision made in relation to the Land blind-folded without proper analysis of the current market conditions would be contrary to the agreed rights and obligations." Then paragraph 6: "Market conditions are always changing [and past events may not be relevant]." Do you see those paragraphs? A. Yes, of course. Yes. Q. Then going to another letter, just for you to read it first before I ask the question. At tab 411 is a letter from Harbour Front dated 20 December 2019. A. Yes. Q. You will see that at paragraph 1, Harbour Front referred to the exchanges between the parties, suggesting the directors to carry out a holistic exercise of the market in terms of development opportunities and of collaborations to enable shareholders to decide what is the best to safeguard and maximise their own interests. A. Yes. Q. Then at paragraph 2, Harbour Front repeated their view: "Market conditions [will change ... [and] without carrying out any further analysis ... Further, we note A Court Reporting Transcript by Epiq 142 HCMP 1987/2018 Day 03 in the valuation report prepared by Jones Lang [et cetera] planning application and land premium negotiation/assessment ... 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 ..." Then you will see the report annexed at page 6697. A. Yes. Q. If you go to page 6700, the last page, you will see that the report was signed off by Mr CP Wai, a director. A. Yes. Q. Mr CP Wai had been engaged by Fonfair as an architect before -- A. Yes. Q. And that was back in 1993/1994. A. 1993/1994, yes. Yes, I think so. And subsequently, I think -- Q. And it was your recommendation that Mr Wai -- A. My recommendation? No. No, actually, basically before actually I was sort of involved in the management of Fonfair. In fact, 1993, I think -- or part of 1993, I was actually working in Singapore, and I think from 1993 -- actually, I think from 1991 to 1993 I was in Singapore, and I think from 1993 to probably 1996, I was actually -- most of the time I was actually in Dongguan A Court Reporting Transcript by Epiq 143 HCMP 1987/2018 Day 03 because I was actually managing a company involved in the -- in assembling actually the structural steel part of the (Punti spoken). So in those times, actually, basically, I was not involved because I had actually an active job to actually deal, so it was actually -- it was under the charge of YT. Q. It's okay, but you do agree that Mr CP Wai had worked as the architect for Fonfair before, right? A. Obviously he's actually -- he's worked for YT before, yes. Q. Just quickly, very, very quickly because that would be the penultimate question of me for you, since you said you were not in charge. Can you go -- keep it there, but can you go to bundle D1. A. Keep what there? Q. Keep this page there, and then your solicitor will give you another bundle. You can put it there first and then I will tell the solicitor. D1, tab 42. A. Yes. Q. Do you remember this memo written by you? A. Yes -- well, I mean, I don't remember the memo, but this is my handwriting, I think. Q. It was disclosed by you in these proceedings? A. Yes. A Court Reporting Transcript by Epiq 144 HCMP 1987/2018 Day 03 Q. Then we can see this memo was dated 1999, and then you wrote to Mr CP Wai. A. Yes. Q. You said at the first paragraph, that you were happy to engage Mr CP Wai. When you talk about the timeline 1999, Mr CP Wai worked for you, Fonfair, and it was you who liaised with him, right? A. Well, he actually didn't work for me, I mean, basically, you know, I think I'm sure I actually sort of like, I think, ran whatever, the plant and -- was -- sort of like, I suppose, Mr CP Wai's part was in the plan, by YT. I think it was a series of memo when I actually was managing, actually, Fonfair, I mean, I make sure actually YT knows about everything that's happening, I was talking to actually a certain consultant, actually inform him. So basically Holly Foo worked for YT, so she looks after the account of Fonfair. So, basically, actually, so for me to actually engage anyone, I think obviously it would have to be agreed by YT at that time because I mean basically actually you know he -- he actually signed the cheque. So if you say works with me, I -- Q. I don't mean to say "work for you", I was referring to Fonfair. A. Yes, I mean -- A Court Reporting Transcript by Epiq 145 HCMP 1987/2018 Day 03 Q. Sorry for the slip of the tongue, yes. For Fonfair. A. Yes. Q. So just the last question to put to you -- A. And I think -- obviously, it's his part, for the -- it actually refer to Mr Yu of Nomometric. Q. But we are not concerned with that. A. So basically Mr Y was part of actually sort of like a plan of something that actually -- to actually -- to support of Mr Yu, I think. I recall, yes. Q. The last question I put to you is that if you go back to the WCWP report -- A. Yes, are we done with this? Q. Done with this. The last question is that Harbour Front are proposing to engage professional experts to look at the different options -- A. Yes. Q. -- for the future of the land. A. For the holistic, actually, analysis in what way -- Q. For the holistic, it's not bad faith, do you agree? A. I don't agree, in that, actually I have lots to say about the holistic exercise. Because I think what happened is actually I saw -- I think what happened was that to me this is just a file. This is actually that so-called report that -- from Mr Y. Because I think she -- what I did was that I said, okay, if we're going A Court Reporting Transcript by Epiq 146 HCMP 1987/2018 Day 03 to look at this seriously, let's actually question the validity of actually what this report is -- is actually suggesting. Because by then I think she saw we are talking about 2019, I have actually been doing actually a lot of things actually sort of in relation to land for 20 years. We'd done actually, you know, tried to rezone the land to separate out from the CDA. As I was saying, the CDA is not for any little company like us. I mean, actually as a developer, they joined together, right. I mentioned to you before, I think the consortium is led by no less than, I think, Henderson, New World and Wheelock, I mean, that's only I know. So basically they had the thing, and they tried to pool together. And what happened was that for them to get this plan approved, they actually started to pool together and they put out kind of like a basic budget of $50 million to get -- to get what they call the master layout plan approved. In other words, there was -- the CDA is actually rezoned by the -- Q. Mr Leung, perhaps I've got your answer, you already disagree with what I said, that this proposal was not in bad faith, and you have disagreed. A. It's in bad faith, yes. Q. I got the answer, that's enough. A Court Reporting Transcript by Epiq 147 HCMP 1987/2018 Day 03 A. Yes, okay. That's understood, yes. MS HO: Yes. I've completed my cross-examination. Re-examination by MS LOK MS LOK: Mr Leung, just to follow up on the last answer, my learned friend asked you whether or not you agree the suggestion of holistic analysis made by Harbour Front was not in bad faith. You disagreed, and you said it was just a prop. A. Yes, it's -- Q. Just a prop for what? A. To stall, actually, to make an excuse to say, "Okay, well, you know, we have this on the table, let's not deal with this, let's actually sort of, you know, deal with something else", which is say, "Okay, stop, do something else." I mean, I'll give you an example. Q. Can you stop and tell my Lord, clearly and slowly, just a prop for what. A. Sorry. Which is to sabotage whatever the company was doing at the time. I would actually give an example -- is that okay I give you an example? Q. Yes. A. The so-called PPTA, which I think actually Harbour Front's counsel actually sort of referred to, actually demonstrates sort of like, you know, the purpose of thing. It was actually sort of a feature A Court Reporting Transcript by Epiq 148 HCMP 1987/2018 Day 03 of actually sort of, you know, I suppose, commencing HCMP, the two petition, basically, I think, to say, okay, they refused to actually sort of consider this, so we are stopping them, I think, so (unclear), et cetera. For the record, the PPTA was never mentioned again afterwards. Never. So basically, it served its purpose, that's it, right? So time and time again, these things happen. A certain excuse, "Okay, well, you know", similarly for this. And I know for a fact that actually sort of, you know, the so-called merit in there are not actually cannot withstand serious consideration. In that sense, I think ... MS LOK: That's my case. Unless you have any questions for Mr Leung. COURT: No, that's fine. A. I can go? COURT: Yes. A. Thank you, my Lord. (The witness was released) H O U S E K E E P I N G MS HO: The other matter after the evidence would be the closing. According to the timetable, we will propose submission of the written closing to your Lordship on Friday and coming back for oral A Court Reporting Transcript by Epiq 149 HCMP 1987/2018 Day 03 closings on Monday, just subject to one point, which I'll raise for your Lordship's direction. The original plan was for the parties to exchange their closing at, for example, 4.30 pm on Friday, but given my learned friend's raising that she would want to ask for the valuation of the shares, which was only raised in the opening -- and if one looks at YK's witness statement, they actually said liability to be determined first -- if that is still her position, we do hope that she will send us the closing first so that we can consider her position in this respect, for example, 2.30 pm on Friday, and then we will put in our closing at 4.30 pm. COURT: This is extremely straightforward. I'm not likely to be very taken by her valuation. There's no valuation evidence, is there? Nothing you would conventionally describe as valuation evidence. MS LOK: It's not evidence of valuation in the usual sense, but we have evidence of an actual offer which was approved by the board but then, in the unusual circumstances of the case, could not be taken because of Harbour Front's doing. So it is a matter of legal analysis. Of course, I don't need to push for it. We can do -- COURT: Well, we have to see what Ms Ho says, but what Ms Ho A Court Reporting Transcript by Epiq 150 HCMP 1987/2018 Day 03 just said is we weren't coming to court expecting to deal with valuations. MS HO: Certainly not. If I can just -- COURT: We don't have to deal with that now. So it's not going to take very much on her part to persuade me that it wouldn't be appropriate to deal with valuation now, but that doesn't mean to say you can't put something in. But for it to have any prospect for success, it's got to be pretty straightforward. MS LOK: Either my Lord likes the idea or doesn't. COURT: Yes. And of course I was going to say that if I don't like going on a dismissive, I'm just going to leave it for another day and have to worry about directions. MS LOK: Exactly. COURT: The original plan was that submissions would be exchanged at 4.30 pm on Friday. What would be helpful is if, since you've finished a day earlier -- MS LOK: I was having that exactly in mind. My Lord, in fact, if my Lord is with me, we can do exchange of closing tomorrow and come back on Friday. COURT: It wasn't particularly that that I was thinking about, I was just thinking about me getting stuff earlier. You don't have to do everything a day earlier. Even if you're going to stagger it, you can give me A Court Reporting Transcript by Epiq 151 HCMP 1987/2018 Day 03 something first thing on Friday, for example, and then Ms Ho can give me something before lunch, something like that, and then I'll be able to read it. But if the two of you think you can get everything done -- I mean, is it easier to stick with Monday? MS LOK: I'm in my Lord's hands, but I find the idea of having it done within Friday very attractive, but that is subject to my Lord's direction. COURT: What's your view, Ms Ho? MS HO: I would suggest that we stick to the original time because there is quite a bit of law which I would hope I can digest and then give your Lordship a useful solution -- COURT: Well, let's just think about what the issues might look like. Obviously we've just dealt with the (unclear) question, you don't need to worry about that. But, firstly, from an administrative point of view, what I would like is a separate document which are the agreed facts. Because at the moment, what I have is Ms Ho's version, then your version indicating where, if I have understood it correctly, Ms Ho hasn't agreed. But that's not what I want. What I want, and I don't mind having it, but what I also want, what I originally wanted, is something I can append to the reasons, A Court Reporting Transcript by Epiq 152 HCMP 1987/2018 Day 03 basically, so to save me -- or say I'm going to copy and paste what's agreed as part of the introduction. MS LOK: Well, that can be easily done because if you delete everything in red -- COURT: I don't want to delete it, I want you to delete it. MS LOK: I will do it. COURT: But in the process, I will -- there are a number of other things that you put in red are simple facts. It's not a matter of whether you think it's relevant; it's whether it is a fact. So anything that either party thinks may be relevant, which is purely factual, it should go in. So if Ms Ho can have another look it. But if it is simply saying a judgment was handed down on A, B, C, I think that's one of the examples that you put in but it's in red, then it should be included. It's not your job to debate what is relevant, it is only your job to agree as many facts as possible. That's point one. The second point is this, which I have been thinking about but not reaching any kind of conclusion. I think Ms Ho agreed with me that it necessarily followed that if I agree with the cross-petition, then her petition falls away. Which invites a consideration of how one should start off thinking about -- or how one should think A Court Reporting Transcript by Epiq 153 HCMP 1987/2018 Day 03 about what the material issues are, because the previous two cases were different. One in obvious material respect, there was no cross-petition. As Mr Leung explained in answer to a question from me, his thinking had been there needs to be a parting of the ways; the obvious thing to do is to sell the property and then the proceeds would be distributed, and that brings all the arguments to an end. So there's never been any question in his mind of the company continuing in existence, carrying on the business as a property developer. There doesn't seem to me there is much room for argument about that. One way to understand how that might be relevant is to say, "Well, what do you think I would have done if there had been a cross-petition last time?" I might well have found in the respondent's favour. I might have taken the view there's clearly a break in the trust. So that being the case, it invites another question: well, if that was probably the way things looked back in -- I don't remember if it was -- 2017/2018, how is that position likely to have changed, if it has? I suppose that invites consideration of, well, can you remedy your wrong? Having got yourself in a position where you're likely to have a buyout order A Court Reporting Transcript by Epiq 154 HCMP 1987/2018 Day 03 made against you, if the party who had sought that order didn't, for reasons (inaudible), seek it, does that mean that he could have lost a right that he might otherwise have had? How might that work in terms of the way the story develops, how the law develops as well? And there are probably different ways of thinking about that, depending on which party you're acting for, of course. But it does suggest one question which needs to be considered is, which petition do you start with in terms of your analysis? Do you start with cross-petition, say, all right, let's look at that because it's quite easy to understand, it's quite easy to understand history, and the courts have already made a large number of findings on that. And you've got, on the face of it, a strong foundation to say there's a breakdown in mutual trust and confidence. There's reference to it in the different judgments but because there was no cross-petition the courts actually didn't have to find, as a fact, that there had been a breakdown as part of a reasoning which led to a particular order because nobody -- because you weren't seeking an order. If that is the correct approach, then I might to deal with it, it's very easy to decide -- so I will decide this before you got back. I know quite a lot of history on the case. A Court Reporting Transcript by Epiq 155 HCMP 1987/2018 Day 03 That from your point of view, Ms Lok, is quite straightforward, you might find that quite attractive. The question is, how might that be wrong, or might it be qualified? That's a matter for Ms Ho to dispute for obvious reasons because as I say you may take the view that while it's pretty, it's entirely artificial to suggest that there wasn't a point in time, many, many years after the sorry saga started, where there had been a break down of mutual trust and confidence. So unless there's reason to suggest that there had been a significant change in relationship, then it's very easy to find in your favour on fact. You'll say pretty obvious that there hasn't been a material change in circumstances for the matters (inaudible) very simple. A major problem with Harbour Front's case is that it started before there was a cross-petition, perhaps on the assumption that -- probably going to fall through -- that they were never going to face a cross-petition, these two rounds, they thought, oh, well, we washed our hands without realising that all you had to do was issue a cross-petition and that was it, it's a complete waste of time because the result is going to be obvious, heard by a judge who had heard some of the sorry saga before, you were almost bound to win. This has been an exercise in futility. A Court Reporting Transcript by Epiq 156 HCMP 1987/2018 Day 03 That suits your client's case. I think, Ms Ho, it's perhaps more of an issue for you to think through because, as I say, distilling it to its absolute simplest, it amounts to saying you were always liable to have an order of (unclear) sought by Ms Lok's clients made against you. MS HO: It depends on -- COURT: It just hadn't happened on the two previous occasions for the reason that in fact Mr Leung has explained. MS HO: I will -- COURT: But you should have realised after -- just let me finish my reasoning so you understand what you have to get to grips with. MS HO: Yes. COURT: So, in fact, having lost twice, there wasn't much your client could ever do to avoid the possibility next time round, still didn't (inaudible) kicked out of the running of the company, to avoid an adverse finding of cross-petition issue. MS HO: Yes, I understand the issues raised by your Lordship, and, of course, we will deal with this point, and we will make submission as to the effect of Mr Leung not doing it in the previous occasion and how would that affect his right. A Court Reporting Transcript by Epiq 157 HCMP 1987/2018 Day 03 COURT: If it affects anything. But I'm not sure, unless you can find a case where this has happened before, which I suspect you can't, at least on the facts -- I'm pretty sure, I hope -- MS HO: I'll try. COURT: I'm not sure that it's a matter of trying to bury me in cases because I'm likely to just push them aside and say, look, let's start off with the simple facts. There's clearly been a breakdown of mutual trust and confidence by the time of the judgments in 2018. Realistically, is there any reason to think that hasn't changed? No, of course there isn't. So there is a breakdown of mutual trust and confidence. Your client is suggesting that actually, we're nice. It may not convince me very much. It doesn't convince me. It seems to me to be utter nonsense. It is plain there was, and is, a breakdown of mutual trust and confidence for reasons which are clear every time you read one of the letters. So what you have to do is to come up with an argument which says, well, even if that is the case, somehow or other we're entitled -- one, Ms Lok is not entitled to the order that she seeks, and presumably it will be tied, given the indications I've just given you -- it will be tied to the fact that the order hadn't A Court Reporting Transcript by Epiq 158 HCMP 1987/2018 Day 03 been sought previously, and that you think -- of course, I may not accept this either -- that you have washed your hands of your previous sins, you've confessed. You haven't actually confessed, have you, because you admitted you never apologised. So you understand the point. I don't think, in the first instance, it's a matter of seeing how many obscure cases you can find where there is a sentence that seems vaguely relevant to what is going on, I think it is more a matter of getting the structure of the thing right to think about it. That is the way my mind is working at the moment. So I'm inclined to the view that it may actually be extremely simple. But no doubt you will manage to make it much more complicated. MS HO: Understood. COURT: Is there anything about that or anything else? MS LOK: We still need a timetable. COURT: Well, I wouldn't mind the opportunity to read and think this through, which is why I think we might stick to Monday, because if I really think it's very straightforward, I might even try -- probably won't succeed -- in drafting reasons I can give on an ex tempore basis or almost immediately. That's where I'm going. But for me to get this, get this out A Court Reporting Transcript by Epiq 159 HCMP 1987/2018 Day 03 of the way, which obviously will be better, I need a little bit of time to myself. I won't promise that I will get much done unless I have a bit of time to think and read. Tomorrow, I can obviously do a certain amount of work myself, and then I'll have your efforts to confuse me on -- which day is it -- today is Wednesday, so that would be Friday. Ms Ho, you would like Ms Lok to deliver something first. Given Ms Lok's issues, she hasn't actually beaten anything out before the end of the week, presumably that's not a problem for you. MS LOK: I don't mind that at all, but I would add that as it has been observed before, in fact, we are the petitioner in the cross-petition. COURT: Oh, yes, of course. That's a point, yes. MS LOK: And we have treated at a slight disadvantage, because my learned friend has been going first for everything and last on the closing. I'm just wondering would that be a fair -- COURT: What you could do is exchange on everything bar this quantum point, and then you just reply on the quantum. MS LOK: I think that is a wonderful idea, my Lord. COURT: Yes. If you are in a position to give me stuff on Monday morning, say, 9.30, so you can finish it A Court Reporting Transcript by Epiq 160 HCMP 1987/2018 Day 03 overnight and just leave it for a messenger to bring round to court, that would be helpful. Then, if Ms Ho gives me something on quantum, which I'll probably be less interested in, actually, it will be self-contained and easy to read and think about, after lunch, I don't -- that's fine. Does that suit you, Ms Ho? MS HO: That's Friday or Monday? COURT: Friday. I wasn't suggesting you do it tomorrow morning. You can if you like, but -- MS HO: It's Friday. I'll try to make you less -- MS LOK: Friday -- how about this, my Lord, to avoid the mad rush in the hours, Friday 10 am for the exchange and then Friday 2 o'clock for the reply? Would that work? COURT: That's just Ms Ho's reply. You can put something else in if you want. MS LOK: But you know me, my Lord, I won't put in anything -- COURT: You don't have to, but obviously Ms Ho would like to put something in dealing with quantum. That's what I had in mind. If you want to put in something as well, or Ms Ho wants to say a bit more about how bad your submissions are, she can do so, after lunch on Friday. MS LOK: Yes, and Monday we will come back at 10.00? COURT: Let's assume 10.00, unless for some reason I think you should come back -- I don't have anything before A Court Reporting Transcript by Epiq 161 HCMP 1987/2018 Day 03 10.00. How long do you think you will be? MS LOK: One hour-ish. COURT: Let's say 10.00, unless you hear to the contrary. All right, anything else? (4.33 pm) (The hearing adjourned to 10.00 am on Monday, 11 December 2023) A Court Reporting Transcript by Epiq 162 HCMP 1987/2018 Day 03 I N D E X P A G E MR LEUNG YUET KEUNG (affirmed) .......................1 Examination-in-chief by MS LOK ...................1 Cross-examination by MS HO .......................3 Re-examination by MS LOK .......................147 (The witness was released) .....................148 H O U S E K E E P I N G ............................148 A Court Reporting Transcript by Epiq