MAN FONG HANG v. MAN PING NAM AND OTHERS

HCA 7935/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 7935 OF 1999

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REASONS FOR DECISION

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1. This is an application for leave to put in late evidence for a trial due to commence on 21 July 2003. The summons was issued by the Defendants on 10 July 2003. The application was made against these circumstances. Leave to set down was granted by the Master on 18 September 2002 and the trial dates were fixed well in advance. Notice of trial was given to the parties on 22 November 2002. Prior to the setting down, there had been a history of dilatoriness in the filing of witness statements on the part of the Defendants. On 8 February 2002, there was an order for exchange of additional witness statements within 28 days. Plaintiff filed their witness statements within the time limit. The Defendant failed to do so despite repeated reminders. On 11 April 2002, the Plaintiff took out an application for an unless order. In response, the Defendants took out an application for extension of time. On 19 April 2002, Master Lung granted an extension of time on 19 April 2002 with a warning that unless order would be made on the next default. The Defendants then filed their additional statements on 24 April 2002.

2. The first checklist hearing before the Listing Master took place on 17 July 2002. In the checklist filed on 12 July 2002, the then solicitors for the Defendants indicated to the court, inter alia, that hearsay notices had not yet been served. They further indicated that proofs of evidence had been obtained from all their witnesses and there would be 3 factual witnesses and 1 expert witness. An estimate length of trial of 7 days were given to the court. Another outstanding matter related to expert report which is not relevant for present purposes. The Listing Master adjourned the checklist hearing and gave directions for hearsay notice and expert report. On 16 August 2002, the Defendants filed a hearsay notice and the Plaintiff filed counter notice. The Defendants did nothing about the counter notice.

3. The checklist hearing was restored before the Listing Master on 18 September 2002. The Defendants did not comply with the expert directions previously given and an unless order was made by the master. Parties informed the court that the other orders had been complied with and subject to the filing of expert report, the case was ready for trial. The Defendants did not indicate to the court that they would be adducing evidence regarding the documents in respect of which counter notice has been served. Leave to set down was granted by the Master on that basis on 18 September 2002.

4. The pre-trial review was on 20 June 2003. At that hearing, Mr Fung SC, counsel for the Plaintiff, brought up the subject about the lack of response to the counter notice. He indicated to the court that the Plaintiff had obtained some statutory declarations from some of the makers of the documents referred to in the hearsay notice. Mr Chong, counsel appearing for the Defendants at that hearing, indicated that the Defendants intended to call the makers to give evidence at the trial. This court expressed doubt whether those makers could be allowed to give evidence without any witness statements. In the light of the uncertainty as to the number of witnesses and its impact on the estimate length of trial, a second pre-trial review was ordered.

5. The second pre-trial review took place on 7 July 2003 which was a Monday. Shortly before lunch on 5 July 2003, the Saturday before that hearing, solicitors for the Defendants served a bundle of additional witness statements and documents on the solicitors for the Plaintiff. It consists of 6 additional witness statements, a supplemental list of documents containing 18 items and a hearsay notice. The whole bundle is made up of 145 pages. The timing of the service of this bundle and the volume of its contents rendered it impossible for Mr Fung to have reasonably sufficient time to take proper instructions from his client to deal with these new material. This court was also deprived of any opportunity to properly prepare for the second pre-trial review. This is regrettable since it should have been clear to the parties that the purpose of the second pre-trial review is to apprise the court of the position as to the proposed new evidence from the defence and if necessary, deal with the Plaintiff's objections thereto. These are important for an accurate assessment of the estimate length of trial and one of the purposes of a pre-trial review is to ascertain whether the case can likely be completed within the original time slot allocated for the case and if not, to explore various possible options. It is in everybody's interest that these should be dealt with as soon as possible bearing in mind the imminence of the trial days. It therefore behoves a party making a late application that might have an impact on the length of trial and the trial dates to proceed promptly and diligently. Lawyers representing such a party should not be surprised if the court expects them to try their best in this regard. Smooth and efficient case management depends very much on the co-operation and good sense of the lawyers. Proper preparation by those representing the parties as well as the court are also very important since usually only a short hearing (usually only 15 minutes to half an hour) is allotted for pre-trial review.

6. Due to the late service of the new material, the pre-trial review on 7 July 2003 could not achieve any useful purpose. A third pre-trial review was fixed and it took place in the afternoon of 9 July 2003. I was informed at that hearing that counter notice has been served by the Plaintiff regarding the latest hearsay notice issued by the Defendants. Mr Fung indicated the Plaintiff had oppositions to leave being granted to the Defendants to rely on the additional material subject to some exceptions. Mr Chong briefly explained to the court the relevance of the additional witness statements and attempt was also made to account for the late filing of the same. Mr Fung did not have sufficient time at that hearing to complete his submissions.

7. When it was apparent that the matter could not be concluded in that afternoon, a fourth pre-trial review was fixed. Further, I also directed the Defendants to issue a summons setting out the relief they sought from the court regarding the new material together with the affirmation in support of the application. The summons and affirmation were duly filed on 10 July 2003. I note that the summons did not seek any relief concerning the items in the new hearsay notice except item 449. I therefore take it that the Defendants did not intend to rely on those other items in that hearsay notice at the trial.

8. The fourth pre-trial review was heard on 15 July 2003. On this occasion, the Defendants were represented by Mr A Neoh SC instead of Mr Chong. I heard parties' submissions on the summons and at the end of the hearing, I granted leave to file four out of six additional witness statements (viz. items (1)(i) to (iv) in the summons of 10 July 2003) and I refused leave to file the remaining additional statements. I also determined that five Chinese notes could be produced at the trial by the Defendants without calling their makers because two of them were dead and the other three of them were out of the jurisdiction. Although I did not make any specific order (since Mr Fung could not give me any specific details about the evidence the Plaintiff would file in response), I indicated to Mr Fung that the court would be sympathetic to any applications by the Plaintiff to file additional evidence in response to the new material admitted pursuant to my aforesaid decisions. I now give reasons for these decisions.

9. I shall first deal with the additional witness statements. They could broadly be divided into three categories,

(a) evidence as to the making of 1997 Chinese notes in respect of which counter-notice has been served by the Plaintiff;

(b) evidence pertinent to how a 1994 document came into existence and its perceived effects, referred to as the Circular Letter in the Re-re-re-amended Statement of Claim;

(c) evidence pertinent to an offer of 14 July 1997 from Messrs Andy Lo & Co.

10. The Plaintiff has no objection in respect of the evidence falling within category (a) but objected to those coming within categories (b) and (c). Basically, I allowed the Defendants to adduce additional evidence under categories (a) and (b) but not (c).

11. In my judgment, the proper approach that I should adopt in considering the application is the one laid down by the English Court of Appeal in Mortgage Corporation v Sandoes [1997] PNLR 263. In that case, Millett LJ (as he then was) reviewed the relevant English authorities and after consultation with the Master of the Rolls and the Vice Chancellor gave a ten point guidance as to the approach which litigants could expect the court to adopt to the failure to adhere to time limits contained in the rules of directions of the court at p.284C-285A. They were recited by Godfrey JA in Lessy SARL v Pacific Star Development [1997] HKLRD 1248 at p.1252. An earlier important statement of principles can be found in the judgment of Sir Thomas Bingham MR (as he then was) in Costellow v Somerset County Council [1993] 1 WLR 226 at p.263, cited with approval by Millett LJ in Mortgage Corporation as well as by Nazareth VP in Po Kwong Marble v Wah Yee Decoration [1997] HKLRD 1341 at p.1347 to 1348 and by Keith JA in Hong Kong Housing Society v Tang Kar Hung, CACV 153 of 1999, 9 November 1999.

12. As Sir Thomas Bingham MR reminded us, the resolution of these sorts of problems cannot be governed by a single rule and a rigid and mechanistic approach is inappropriate. Ultimately, it is a balancing exercise and the court has to consider all relevant factors on the facts and circumstances of the particular case before it. No single factor can be regarded as decisive or conclusive. At the risk of repeating the obvious, perhaps I could be forgiven for repeating a dicta of Simon Brown LJ in Willis v Royal Doulton (UK) Ltd, 4 November 1996, also cited by Millett LJ in Mortgage Corporation,

"At the end of the day it must be for the court, upon the individual facts of the case and having regard to all the circumstances, to weigh the competing considerations and decide where the justice of the case lies. Crucially it will ask how serious was the breach, how explicable, and how far it has affected the proceedings or disrupted the administration of justice generally."

13. The actual decision in Mortgage Corporation also served to remind us that the lack of acceptable reason for the delay, though of some importance, might not be fatal, see also Hong Kong Housing Society v Tang Kar Hung, CACV 153 of 1999, 9 November 1999. Mr Fung relied on the judgment of Lord Woolf MR (as he then was) in Beachley Properties Ltd v Edgar, 21 June 1996. I agreed that the change of lawyers cannot by itself constitute a good excuse with regard to the delay in the filing of witness statements. Nor could a litigant expect the court to exercise discretion in his favour just because the evidence is very important to his case. Neither is the non-defaulting party obliged to demonstrate serious prejudice before he could successfully resist an application by the defaulting party for extension of time. However, as pointed out by Millett LJ in Mortgage Corporation at p.276D to 277C, it is incorrect to read the judgment of Lord Woolf as saying that unless there are good reasons for the failure to comply with the time table laid down by rules or directions, the court will not exercise its discretion to extend time. It is important that all relevant circumstances were considered.

14. As also observed by Millett LJ in Mortgage Corporation at p.273C, in the context of a late application for extension of time which might affect the trial dates, logically the first question to ask is whether the trial date should be vacated. Of course, one must bear in mind that the court should strive to keep the trial date if possible and every effort should be made to ensure that there would be a fair trial on the fixed date (see p.278 G to 279A).

15. In the present case, both parties are anxious to keep the scheduled trial dates. Bearing in mind the respective age of some involved in this action and the fact that this action was commenced in 1998, I think it would not be right to vacate the trial dates in order to accommodate the Defendants' wish to place before the court additional material. In view of the history as to the conduct of the litigation as recited in the earlier part of this judgment, it is obvious that the Defendants had been given more than fair opportunity to put in their evidence. I do not think they could complain were the court to tell them now that no further indulgence could be granted to them if such indulgence will inevitably lead to the vacation of trial dates.

16. Since the trial would start before me on 21 July 2003, I will not say more than necessary. Within the short time available, I am of view that the trial would not be fair to the Plaintiff if the Defendants were allowed to adduce and rely on the evidence under category (c) stated above. If admitted, the new evidence would obviously open a new dimension to the case which had not been raised before: it is alleged that the Andy Lo offer was not a genuine offer but rather an attempt by Man Bun to extract money from Wong Shui Ming. Within the short time available, the Plaintiff could not be expected to investigate into these serious allegations satisfactorily. There is evidence that Wong Shui Ming could not be readily located. In this connection, I do not regard the calling of Cheung Chun Kar as a sufficient measure to alleviate the prejudice to the Plaintiff. The Plaintiff should be allowed sufficient time to carry out his own investigation in a manner as he deems fit. Otherwise, he would have a justifiable sense of grievance if the court shall place any reliance on the evidence of Man Bun. In my judgment, if I allow the Defendants to rely on the evidence of Man Bun about the Andy Lo offer, the Plaintiff would suffer prejudice that cannot be compensated by costs.

17. I am of course aware of the Defendants' explanation as to why the proposed evidence from Man Bun could not be obtained earlier as set out in the Affirmation of Wong Chor Wan. But the fact remained that prior to setting down, the Defendants must have accepted that they would not conduct further investigation to locate the maker of the alleged offer. It was on that basis the case was set down and on that basis the Plaintiff made preparation for trial. To allow the Defendants to open a new dimension in the circumstances of this case and impose the same on the Plaintiff at such short notice must require very good and cogent justification.

18. In this regard, I am not satisfied that the Defendants have been as diligent as they should have been in respect of the evidence of Man Bun. I should mention immediately that Mr Neoh, as I understand, was only brought into this case after the hearing on 9 July 2003. However, the current solicitors had received instructions from the Defendants as early as December 2002. I do not regard the delay in transfer of papers as sufficient excuse as far as the Defendants (as opposed to the lawyers) are concerned. Even without a full set of papers, the Defendants should have been able to tell their lawyers the significance of the Andy Lo offer. Although the firm of Messrs Andy Lo & Co. had ceased to exist, there is nothing before me to suggest that Andy Lo himself could not be located and attempts should have been made by the Defendants or their then lawyers to locate him before the case was set down. There is simply no evidence before me to explain why this was not done.

19. In the affirmation of Wong Chor Wan, reference was made to the absence of Man Leung from Hong Kong since mid May 2003. That is not a good excuse in the circumstances of the present case. At least one other defendant was in Hong Kong, viz. Man Ping Nam and there is no suggestion that the solicitors had any difficulties in getting instructions from him. Further, even if specific instructions had to be taken from Man Leung, I see no reason why these could not be done promptly through IDD phone calls or other modern communication aids. As mentioned, given the imminence of the trial dates, the Defendants owed a duty to the court and the other party to proceed promptly and diligently.

20. Neither were the Defendants as forthcoming as they should have been in terms of disclosure about the evidence of Man Bun. According to the affirmation of Wong Chor Wan, Mr Chong contacted Cheung Chun Kar and through him learnt about Man Bun's involvement regarding the Andy Lo offer. Man Ping Nam was advised to contact Man Bun. Mr Wong did not say in his affirmation precisely when these took place. Obviously, the events took place at least some days prior to 18 June 2003. As a result of the contact with Man Bun, a joint conference with counsel and Man Bun was arranged on 18 June 2003. Instructions were taken for the preparation of witness statement. Yet nothing was mentioned by Mr Chong about the possibility of calling further evidence relating to the Andy Lo offer at the first pre-trial review on 20 June 2003. It may be that the Defendants had tactical reasons for not disclosing full details of this latest development at that stage. However, bearing in mind the imminence of the trial and the potential of the evidence of Man Bun disrupting the trial dates, this court expects those representing the Defendants to act promptly and give timely disclosure of information which might have significant impact on the trial to the other side as well as the court. They should have appreciated that time was of the essence and it was imperative that every effort should be made by them to enable the Plaintiff to have as much time as possible between disclosure and commencement of trial to deal with such new evidence in order to reduce the prejudice to the Plaintiff. As it happened, the statement of Man Bun was not disclosed to the Plaintiff until shortly before lunch on 5 July 2003.

21. Although Man Bun also referred to matters falling within categories (a) and (b), I do not find his evidence to be of much assistance to the defence case. Similar evidence is going to be given by other witnesses proposed to be called by the Defendants. Regarding category (b), Man Bun did not sign the Circular Letter and a lot of what he said about that topic appears to be what he learnt from people who had signed the same, and as such constituted hearsay evidence. No hearsay notice had been issued for these evidence. As far as (a) is concerned, as presently advised, I do not see much significance as to exactly why Man Bun had signed the Chinese Note. Since similar evidence had been given by other witnesses, I do not see much purpose in having a further witness on this topic. I am however willing to keep an open mind in this regard and if the Defendants could persuade me at a later stage that the evidence of Man Bun is important in this regard, I shall reconsider the same under O. 38 r. 2A(10).

22. Having regard to all the circumstances of this case, I therefore refused to grant leave to the Defendants to file the witness statement of Man Bun.

23. The position regarding the additional evidence under category (b) is different. In the witness statements already filed with the court, the defence witnesses already referred to matters pertaining to the Circular Letter. The Plaintiff was all along aware of the challenge by the defence to the Circular Letter. Mr Neoh quite rightly pointed out that the additional witnesses would be giving corroborative evidence on the issues already raised. I do not see any reasons why the Plaintiff could not sufficiently deal with these additional witnesses at the trial. As I indicated, I would take a sympathetic stance to any application by the Plaintiff to file additional evidence in response. Since the Plaintiff is relying on this Circular Letter to allege breach of fiduciary duty on the part of the Defendants, after balancing all relevant circumstances in the present case, notwithstanding the criticism one may have about the conduct of the case on the part of the Defendants (some of which I have highlighted above), I am of the view that leave should be granted to the Defendant to rely on items (i) to (iv) in Paragraph 1 of the Summons of 10 July 2003.

24. As to item (vi), I was told that the witness would not be available to attend the trial. In the circumstances, it would be futile for me to grant leave to file his witness statement. I therefore refused leave regarding this item.

25. As to the hearsay documents, the old rules apply because the action was commenced before the new rules came into force. Mr Fung's opposition was that there is no evidence as to the efforts made by the Defendants to secure the attendance of the overseas witnesses. That was not necessary, see Piermay Shipping v Chester [1978] 1 WLR 411 and Rasool v West Midlands Passenger Transport Executive [1974] 3 All ER 638. In the absence of evidence challenging the evidence of Mr Wong that the two witnesses are dead and three of them are outside jurisdiction, I cannot exclude their evidence. The hearsay notice regarding the Chinese Note signed by Man Yung Sau was issued out of time. But I see no prejudice to the Plaintiff which cannot be compensated by costs if I grant leave for this particular item to be admitted as evidence. I therefore made an order in terms of Paragraphs 2 and 3 of the summons of 10 July 2003.