THE BANK OF EAST ASIA LTD v. LABOUR BUILDINGS LTD AND ANOTHER

HCMP769/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 769 OF 2002

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R U L I N G

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1.  In order to obtain a stay pending appeal, the applicant needs to show that the appeal is a bona fide one and that a refusal of a stay will render the appeal nugatory meaning that a refusal of a stay will have a seriously deleterious effect on the appellant.  Mr Whitehead S.C., in resisting the application, has stressed this latter aspect in particular.  Some background is necessary.

2.  A consent order had been made on 30 July 2004 that witness statements would be exchanged within 42 days of the completion of discovery in this substantial action.  In the event inspection took a very long time and was not completed until 13 December 2005.  Given the delay in this, the plaintiff took out a summons on 20 October 2005 requiring witness statements to be exchanged within 42 days.  Master de Souza made that order on 30 October 2005, the effect of which was to supersede the order that had been made on 30 July 2004, and in so doing he was critical of the time that was being taken to get the matter to trial.  That criticism, I am told, was not one-sided.  The defendants decided then that they wished to amend their defence and counterclaim in line with an  order permitting them to do so made by the Court of Appeal on 19 November 2004.

3.  On 9 December 2005, they took out a summons to be allowed to do this, which is to be heard on 6 April this year, with two and a half hours allowed - what I get from that is that this is expected to be a heavily contested application.

4.  On the same date they also took out a time summons to extend time for the exchange of witness statements to within 42 days following the amendment of their defence and counterclaim.  This resulted in the plaintiff taking out a summons for an unless order, which they did on 20 December 2005, requiring the exchange and filing of witness statements under pain of the defendants being debarred from putting in their witness statements and having the defence and counterclaim struck out.

5.  Both summonses came on before the Registrar on 23 December 2005.  He dismissed the defendants’ time summons and made an unless order in these terms: 

“Unless the 1st and 2nd defendants exchange signed witness statements of factual witnesses on or before 5 pm on 27 January 2006, the 1st and 2nd defendants be debarred from calling any witnesses at trial.”

6.  So one can readily see that the order that he made was somewhat different to the one that was being asked for by the plaintiffs.  This the defendants have appealed against and the appeal will be heard on 27 April 2006.

7.  Mr Leong S.C., who applies for the stay, says, firstly, that he has a perfectly good appeal and, secondly, the refusal of a stay will mean that his appeal is nugatory.  He says the appeal will be academic; if there is no stay his solicitors will have to file the witness statements as provided for under the Registrar’s order, and if, in due course - that is to say, on 6 April - the defendants get their amendments,  then very substantial supplemental witness statements will have to be filed.  Against that, Mr Whitehead says that Mr Leong cannot show that a refusal of his application today will have a seriously deleterious effect.

8.  First of all, in approaching this matter, I have decided that this is undoubtedly a bona fide appeal.  Firstly, there is a good argument that the effect of the learned Registrar’s order debarring the calling of any witnesses at the trial, may well have been an order made without jurisdiction in the sense that witnesses may always be called under subpoena, and the effect of the Registrar’s order would, on the face of it, prevent that happening, which would not be right.  The other matter, which Mr Leong stresses, is that an unless order is an order of last resort, and in these circumstances, that position had not been arrived at. 

9.  Whilst the case has made very slow progress, this has been largely caused by the time taken to get through the inspection process, and in a case of this size, perhaps it is not surprising, although regrettable, that this has taken the time that it has. 

10.  Moving on from that I must then ask myself, and Mr Leong has to get over this hurdle as well, whether the absence of a stay will have a seriously deleterious effect on the defendants.

11.  It seems to me that much will hinge on whether the defendants get their amendments on 6 April.  This is by no means certain, particularly having regard to the lateness of the application, and the very substantial nature of the proposed amendments.  If they do get their amendments, this could well provide for a further round of discovery and the inevitable interlocutory skirmishing; I know not about that but I can well imagine that the plaintiff will be resisting this matter very strongly.  And so it is by no means clear at this stage that success is likely.

12.  I sympathise with the defendants, who appear to have got very short shrift from the Registrar, who appears to have come to his order by, if I may respectfully say so, instinct rather than by a fully informed appraisal of the situation.  In saying that, it seems to me  - I get this from having read the transcript of the proceedings before him - that they really do have a perfectly respectable appeal on the merits.  Nevertheless, I do not think that it can properly be said that the refusal of a stay will render the appeal nugatory, in the sense that I have already described.  Any refusal today will result in inconvenience, because if they were to succeed in their amendment, of course, they will have to come up with more substantial supplemental witness statements and added costs, but no more; they would still be able to pursue their appeal and, no doubt, if they were to demonstrate that the learned Registrar was wrong to have made the order that he did, then they will get costs and, no doubt, any consequential costs, having regard to the fact that they will have had the further expense of filing additional witness statements.  But when one stands back from the matter, I cannot help but observe that the defendants really have only themselves to blame for having got themselves into this position, because they have applied to make this amendment very late in the day.  They have had the ability to do so since November 2004.  Had they done so, then, of course, they could have applied to do so in good time, they would have known where they stood in terms of the amendments, and had they got leave, then they would have been able to prepare their witness statements to deal with those amendments as well.  So I am afraid they, whilst I have been sympathetic as to the way in which perhaps the application for that time summons  was conducted, they must bear a lot of the burden for having got themselves into this position.  So I regret, Mr Leong, I have to refuse your application; I suspect, with costs.

(Discussion)

13.  Mr Whitehead will have his costs today.