LAU LAI SHAN LISA v. ZHANG QI AND OTHERS

HCA 1395/2018 &
HCA 1992/2019

[2022] HKCFI 3591

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS. 1395 OF 2018 AND 1992 OF 2019

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(Consolidated pursuant to the Order of the Honourable

Madam Justice Cheng dated 28 February 2022)

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D E C I S I O N

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1.  By summons of 12th July 2022 (“the Summons”), the Plaintiff has applied for leave to file:

1.1.  her 5th supplemental witness statement (“Lau 5th Supplemental”)

1.2.  the 3rd supplemental witness statement of Lau Chun Cheong (“Lau Senior 3rd Supplemental”)

1.3.  her 6th supplemental witness statement (“Lau 6th Supplemental”); and

1.4.  an expert report on handwriting,

and for various consequential directions.

Supplemental witness statements

Principles

2.  Relevant guidance may be found in Sunni International Limited v Kao Wai Ho Francis and others [2021] HKCFI 2418 at [7] to [9].

 

“7. As a general principle, a witness statement should cover only those issues on which the party serving it wishes that witness to give as evidence-in-chief. It is not the function of a witness statement to provide a commentary on the documents in the trial bundle, to set out quotations from such documents, to engage in matters of argument or to deal with other matters merely because they arise in the course of the trial. However, the rules as to witness statements and their contents are not rigid statutes and it is conceivable that in particular circumstances they may properly be relaxed in order to achieve the overriding objective in

CPR r 1 of dealing with cases justly: JD Wetherspoon plc v Harris [2013] 1 WLR 3296 at [39] - [41].

8. There is an obligation on the parties preparing the witnesses’ statements to ensure that they contain no inadmissible evidence. They must take care to omit any statements of information and belief, even if the grounds and sources thereof are given, or any expression of opinion, or any matter which is scandalous, irrelevant or otherwise oppressive: Hong Kong Civil Procedure 2021 para 38/2A/13.

9. Last but not least, the Court must be astute in furthering the underlying objectives of the CJR as set out in RHC O 1A r 1 as well as the primary aim, set out in RHC O 1A r 2(2), to secure the just resolution of disputes in accordance with the substantive rights of the parties.”

3.  A witness would not be allowed[1] at trial to give oral evidence which merely recites relevant events by reference to documents he has read, if he does not have direct knowledge of such events.  Nor would he be permitted to advance arguments and make submissions: JD Wetherspoon plc v Harris and others [2013] 1 WLR 3296.

Lau 5th Supplemental

4.  The Plaintiff seeks to file Lau 5th Supplemental to respond to various points in 1st Defendant’s witness statements and supplemental witness statements.

5.  Paragraphs 31 to 58 of Lau 5th Supplemental seek to comment on the $1m fee paid to the solicitors L&W Lawyers (“L&W”) in relation to the sale of the share in Kidbrooke Group Limited (“Kidbrooke”).  This part of the witness statement analyses the fees and disbursements charged by L&W and challenges their veracity.  However, the Plaintiff does not have personal knowledge of the fees and disbursements charged, and the matters in paragraphs 31 to 58 are in the nature of argument and submission.  They are clearly not evidence which the Plaintiff can properly give.

6.  Paragraphs 59 to 62 of Lau 5th Supplemental seek to comment on the 1st Defendant’s allegation that the 3rd Defendant used the 4th Defendant to handle the sale and purchase and various legal matters.  Again, the Plaintiff does not have personal knowledge of the matters, and the paragraphs are in the nature of argument and submission.  They are not evidence which the Plaintiff can properly give.

7.  Paragraphs 63 and 64 of Lau 5th Supplemental set out discrepancies between (on the one hand) the 1st Defendant’s affirmations filed in support of her application for a variation of the injunction made against her and (on the other hand) her witness statements and her statements to the police.  These are matters which ought to be addressed in submissions, not in a witness statement.

8.  Apart from the above paragraphs, it seems to me that whilst some other parts of the witness statement may be said to repeat what has been said before (for example, paragraphs 7 and 8), summarise Lau 3rd Supplemental (paragraphs 23 to 25), contain an element of commentary (for example, paragraph 26), I accept that such matters are to maintain the flow and sense of the events being narrated in the statement.

9.  There is a further objection that the statement is late, and that the Plaintiff failed to take advantage of the opportunity expressly given to her to respond to the 1st Defendant’s supplemental witness statements.  However, the overriding aim is to do justice between the parties.  I also note that discovery has been ongoing and that the Plaintiff was advised to file a comprehensive supplemental statement as and when discovery was completed rather than in piecemeal form, which accounts to a certain extent for the delay.  The matters covered in the supplemental statement save for the paragraphs which I have indicated to be objectionable go directly to the hotly disputed issues between the parties and are of probative value.  The 1st Defendant will have the opportunity to respond to it.  On balance, it would be just to admit the evidence.

Lau Senior 3rd Supplemental

10.  The Plaintiff seeks to file Lau Senior 3rd Supplemental to address the 1st Defendant’s allegations in her first supplemental witness statement of 11th December 2020 that Lau Senior had asked for financial assistance, and that this explains the payments made to him, contrary to the Plaintiff’s case that Kidbrooke had been established with Lau Senior’s money and he continued to treat the assets as his own.  The statement seeks to identify, with supporting documents, the assets which Lau Senior had at the material time.

11.  It cannot be seriously disputed that the matters in the statement are relevant and of probative value.

12.  Whilst Lau Senior had the opportunity of responding to the 1st Defendant’s allegations earlier, I accept that it took time to collate the historical documents to evidence the various assets which Lau Senior owned in Hong Kong and Canada.

13.  Again, as the 1st Defendant will have the opportunity to respond to the evidence, I consider that on balance, it would be just to admit the evidence.

Lau 6th Supplemental

14.  The Plaintiff seeks to file Lau 6th Supplemental to respond to certain allegations made by the 3rd Defendant in her statement and supplemental witness statement.

15.  Paragraphs 3 to 6 of Lau 6th Supplemental set out arguments and submissions of law relating to the carrying out of the business of an estate agency without a licence, and enquiries made by the Plaintiff’s solicitors with the Estate Agents Authority.  The Plaintiff has no direct knowledge of the matters, and the arguments and submissions are not evidence.

16.  Paragraphs 7 to 15 of Lau 6th Supplemental set out arguments and submissions relating to the statutory requirement to obtain a business registration to conduct business, the veracity of what the 3rd Defendant stated about a service agreement between the 1st and 4th Defendants, and the legality of that agreement.  Again, the Plaintiff has no direct knowledge of the matters, and the arguments and submissions are not evidence.

17.  Paragraphs 16 to 17 of Lau 6th Supplemental seek to comment on the credibility of parts of the 3rd Defendant’s witness statement by reference to the 4th Defendant’s board resolutions.  Again, the Plaintiff has no direct knowledge of the matters, and the arguments and submissions are not evidence.

18.  Paragraphs 19 to 26 of Lau 6th Supplemental set out arguments and submissions that the 3rd and 5th Defendants knew that the sum paid to the 1st Defendant might be proceeds of crime.  Again, the Plaintiff has no direct knowledge of the matters, and the arguments and submissions are not evidence.

19.  Paragraphs 27 to 36 of Lau 6th Supplemental deals with part of the proceeds of the sale of the share in Kidbrooke, and in particular, how the 2nd and 3rd Defendants dealt with the funds.  There are assertions as to the 3rd Defendant’s knowledge, and arguments and submissions as to the veracity of the 3rd Defendant’s evidence.  Again, the Plaintiff has no direct knowledge of the matters, and the arguments and submissions are not evidence.

20.  Paragraphs 37 to 44 contains arguments and submissions as to the conduct of the 2nd and 3rd Defendants in receiving cheques of the 1st Defendant.  There are arguments and submissions as to the 3rd Defendant’s knowledge that the funds paid to the 2nd Defendant were proceeds of crime.  Again, the Plaintiff has no direct knowledge of the matters, and the arguments and submissions are not evidence.

21.  Paragraphs 45 to 60 assert that the 3rd Defendant lied in her witness statement, which the Plaintiff deduced was the case based on correspondence between the Plaintiff’s solicitors and the 3rd Defendant’s solicitors.  There is analysis of, and commentary on, various documents.  All of these matters are not within the Plaintiff’s direct knowledge.  There are also arguments and submissions, which are not evidence.

22.  Paragraphs 61 to 71 assert that the 3rd Defendant told another lie as to a fee in L&W’s fee note, based on analysis of documents and the correspondence between the Plaintiff’s solicitors and the 2nd and 3rd Defendants’ solicitors.  They are not within the Plaintiff’s direct knowledge.  There are also arguments and submissions, which are not evidence.

23.  Paragraphs 72 to 99 are arguments and submissions about certain parts of the 3rd Defendant’s witness statements.  These are matters which ought to be addressed in submissions, not in a witness statement.

24.  Paragraphs 100 to 101 set out discrepancies between the 3rd Defendant’s witness statements and her accounts to the police.  These are matters which ought to be addressed in submissions, not in a witness statement.

25.  I must agree with the 3rd Defendant’s submission that the entire document is not a narration of facts by the Plaintiff, but rather, a set of legal submissions seeking to advance arguments against the 3rd Defendant’s evidence.  They have no place in a witness statement.  Whilst it may well be the case that the arguments would be of assistance to the court, they should be presented in legal submissions, rather than through the Plaintiff.

Expert report

26.  The Plaintiff seeks to file an expert report dated 30th May 2022 to say that the signature of the Plaintiff on the following documents was forged:

26.1.  a fax dated 2nd May 2017 purporting to be an instruction to TLP Corporate Services Ltd, which provided secretarial services to Kidbrooke requesting the preparation of documentation to appoint the 1st Defendant as an additional director of Kidbrooke and to transfer the share of Kidbrooke from the Plaintiff to the 1st Defendant;

26.2.  a tenancy agreement between Kidbrooke and a Villas Win Realty Ltd dated 10th May 2022.

Principles

27.  The relevant principles in the present case are that:

27.1.  expert evidence should be confined to the live, pleaded issues of dispute between the parties: Leung Siu v Bank of China (Hong Kong) Ltd, unreported, HCA 1911/2012, 7th March 2014 at [7f];

27.2.  expert directions should be sought as early as possible, usually after pleadings are closed, or as soon as possible after amendments to pleadings make it necessary to do so: Kam Hing Trading (Hong Kong) Ltd v. The People’s Insurance Company of China (Hong Kong) Ltd, unreported, HCA 1062/2008, 27th July 2009 at [4];

27.3.  leave to adduce expert evidence can be given only if it is in a recognised discipline, reasonably required to enable the court to resolve the issues in dispute, and is proportionate: Saatori v Raffles Medical Group (Hong Kong) Ltd [2016] 4 HKLRD 735 at [13];

27.4.  even if a prima facie case is made out for the admission of expert evidence, the court must also have regard to other relevant circumstances, such as the potential disruption to trial, prejudice to other parties, and the explanation offered by the applicant in cases where a late application is made.  The ultimate aim to do justice between the parties.  See Saatori at [13].

The tenancy agreement

28.  Insofar as the four alleged forged signatures on the tenancy agreement are concerned, the Plaintiff admits that they do not form any part of the Plaintiff’s pleaded case. Thus not even a prima facie case is made out for the admission of expert evidence.

29.  Mr Toby Brown, counsel for the Plaintiff, argues that the forged signatures on the tenancy agreement are nevertheless relevant as they go to the bona fides of the 1st Defendant.  However, expert evidence should not be admitted simply to enable a challenge to a party’s credibility.

30.  Mr Brown also submitted that the signatures gave the handwriting expert “more samples of forged signatures” and this was “influential in the decision to have an expert’s report” as it gave the report “greater probative value”.  However, this does not overcome the collateral nature of the proposed evidence.

The fax instruction

31.  Unlike the tenancy agreement, the plea that the fax instruction was a forgery has been pleaded at paragraph 27 of the Re-Amended Statement of Claim.  However, I agree with the 1st Defendant’s submission that expert evidence is not reasonably required for the fair disposal of the issues between the parties.

31.1.  The real dispute between the parties is whether the Plaintiff signed the written resolution for the transfer of the single share in Kidbrooke and the appointment of the 1st Defendant as a director of Kidbrooke in ignorance (as the 1st Defendant says in paragraphs 66 and 67 of her witness statement) or whether these two documents were signed with the approval and knowledge of the Plaintiff (see Re-Re-Amended Defence paragraphs 26.1 to 26.3 in relation to the written resolution for transfer).

31.2.  Whilst the Plaintiff’s case is that the fax instruction to procure the preparation of the written resolution for share transfer and appointment of director were part of the events leading up to the 1st Defendant presenting the documents to the Plaintiff for her signature, determination of this issue is not necessary to determine the real dispute between the parties as aforesaid.

31.3.  In any event, the Plaintiff would be able to advance her case as to the falsity of the signature on the fax instruction by reference to the factual evidence in paragraph 56 of her witness statement – and she appears to have been content to rest her case on the basis of this evidence between the time of filing of her witness statement in December 2019 and some time in 2022 when the decision was made to engage an expert.  In this regard, I note that during that period, it was expressly confirmed by the Plaintiff’s solicitors to Master Ho at the CMC of 7th September 2021 that no expert evidence was necessary.  I do not agree with Mr Brown’s submission that reliance on factual evidence is insufficient and that expert evidence is “necessary” to establish his case that the signatures were forged: if the Plaintiff’s version of events is accepted, then she establishes that her signature was forged, whether or not there is expert evidence.  I therefore do not consider that the Plaintiff has made out that the adducing of expert evidence satisfies the requirement of proportionality.

32.  I therefore do not consider that a prima facie case has been established for leave to adduce expert evidence in relation to the fax instruction.

33.  Even if I am wrong about that, I consider that the following matters militate against the grant of leave.

33.1.  There has been significant delay.  By the Plaintiff’s witness statement in December 2019, the Plaintiff had already indicated that her case was that the signature on the fax instruction was forged, based on various facts.  No indication of any intention to rely on expert evidence was given until the Plaintiff’s summons of 12th July 2022.  Whilst Mr Brown rightly points out that the delay may not jeopardise any milestone date in the present case, the delay is nevertheless a matter that the court ought to take into account.  Furthermore, the Plaintiff was not simply silent on the issue of expert evidence during this period of delay; rather, the Plaintiff confirmed to Master Ho at the hearing of 7th September 2021 that no expert evidence was required.

33.2.  There has been no adequate explanation given for the delay.  In the 8th Affidavit of Lau Lai Shan Lisa in support of the application, it was said that the Plaintiff’s solicitors discovered the tenancy agreement bore signatures similar to the one on the fax instruction, counsel gave advice, and a handwriting expert was engaged.  No attempt was made to explain the delay.  In the 11th Affidavit of Lau Lai Shan Lisa, the Plaintiff said that she did not ask for an expert before “in order to save time and costs”, and that her legal team had been of the opinion in September 2021 that expert evidence was not necessary; the inconsistent stories told by the 1st Defendant would suffice.  Hence at the hearing on 7th September 2021, the Plaintiff’s lawyers expressly indicated to Master Ho that no expert evidence was required.  However (it was said), things have changed because more forged signatures were discovered in the tenancy agreement.  In my view, however, this does not explain why expert evidence has now become necessary.  Mr Brown says that with a larger number of forged samples, the expert report will be of higher probative value, but even if that is the case, this would not make necessary what was originally not necessary.  Nor is it suggested that any expert report would be of little probative value if it only considered the signature in the fax instruction.  Therefore, the delay has simply not been adequately explained.  (Moreover, the explanation actually given only serves to underline the point that the expert evidence is indeed not necessary for the fair resolution of the dispute between the parties, as this was the Plaintiff’s own assessment.)

33.3.  Whilst it is the case that trial dates have not been fixed, I do not accept that it necessarily follows that no prejudice flows from the attempt to adduce expert evidence at this stage.  The Plaintiff expressly told Master Ho on 7th September 2021 that no expert evidence was to be called, and accordingly, an order was made that the parties were not entitled to adduce expert evidence at the trial.  The Defendants were entitled to proceed with preparing their case on this basis, and have done so for over a year.  To direct a different course now would inevitably cause a degree of prejudice.  The fact that (if it be the case at all) some or all of the delay caused by the introduction of expert evidence may be absorbed prior to trial does not fully answer the point.

33.4.  Taking these factors into account and weighing them against the fact that, even if the proposed expert evidence could be said to have some relevance to the dispute between the parties, it would only be indirectly relevant, I conclude that leave should not be granted.

Disposition

34.  I give leave to the Plaintiff to file and serve:

34.1.  Lau 5th Supplemental substantially in the forms of the drafts attached to the Summons except for paragraphs 31 to 64 thereof; and

34.2.  Lau Senior 3rd Supplemental substantially in the form of the draft attached to the Summons.

35.  I make consequential directions giving leave to the 1st Defendant to file evidence in response, if so advised, in terms of paragraph 2 of the Summons.

36.  I decline to make any order under paragraphs 1(c), 3 to 6 of the Summons.

37.  I will now hear the parties on costs.