YEUNG SHUK MEI v. CHOI SUN MAN AND ANOTHER

HCA 2308/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 2308 OF 2012

________________________

________________________

_______________

D E C I S I O N

_______________

THE APPLICATIONS

1.  Originally, there are two matters before the Court:

(a) the 3^rd Case Management Conference of the present case; and

(b) the Summons by the Plaintiff dated 23 June 2017 (the “Summons”) for leave to file supplemental witness statement (the “Draft Statement”).

2.  The defendants (“Ds”) oppose the Summons.  The parties are legally represented.[1]

3.  In the afternoon before today’s hearing, P has put in another application for leave of taking out the application of amending her Reply and Defence to Re-Re-Amended Counterclaim of D1.

4.  Ds oppose this application.  This application is therefore adjourned to a date to be fixed before myself for argument.  This hearing will proceed without considering the proposed amendments to the Reply.

THE FACTUAL BACKGROUND

5.  The factual background is taken from P’s written submissions.  D1 is a major shareholder of the D2.  By an agreement in writing (the “Agreement”) between the Plaintiff (“P”) and D1, P agreed to assist the D1 in a trademark proceeding in the PRC (the “PRC Proceedings”) so that D2 may successfully register an eagle-shaped trademark.  It is the terms of the Agreement that if on 31 December 2012 the subject trademark belongs solely to D2 then a sum of HK$4,500,000 held in D1 and P’s joint account will be released to P (the “Agreed Sum”).

6.  Eventually, a judgment in favour of Ds was delivered by the Beijing Municipal High People's Court with respect to the PRC Proceedings (“the Judgment”).

7.  It is P’s case that she has duly performed her obligation under the contract by providing assistance to the PRC Proceeding and that she is entitled to the Agreed Sum.  Alternatively, if the Agreement is not enforceable or terminated (as the Defendants allege) for any reason, her assistance provided to D1 has unjustly enriched the 1^st and 2^nd Defendant.

8.  It is Ds’ case that P failed to provide any assistance in respect of the PRC Proceedings and has repudiated the contract by refusing to take action before part of the payment was made to P.

Ds’ OBJECTIONS

9.  Ds have raised objections to this application as follows:

(a) P has failed to provide any credible explanation for the gross delay in making the application to rely on the Draft Statement.

(b) The Draft Statement seeks to put forward a new case which has not been pleaded and/or is inconsistent with existing pleadings.

(c) The Draft Statement seeks to adduce matters of expert evidence and of legal submission which are inadmissible.

(d) The Draft Statement contains matters which are obviously incredible, unparticularised, irrelevant and/or not probative to the pleaded issues.

(e) The Draft Statement will give rise to further interlocutory applications, which will substantially delay the progress of this action, resulting in significant prejudice to Ds.

THE RELEVANT LEGAL PRINCIPLES

10.  The relevant legal principles are trite.  P has submitted the following authorities:

(a) Hong Kong Civil Procedure 2017 Vol. 1 §38/2A/10 on the jurisdiction of the court to allow supplemental witness statement to be served;

(b) Parsad v Great Wealthy Engineering Co Ltd [2012], HKLRD 705 §§6-7 where the court must balance the primary aim of securing the just resolution of the dispute in accordance with the substantive rights of the parties and other factors such as the right of a party relying on relevant evidence, probative value of the evidence, disruptions to the trial and prejudice to the other party;

(c) Chen Jinhui v Wong Kam San and Others (unreported, HCA 1524/2012, 29 April 2016, §29) the burden being on the applicant to give satisfactory explanation why indulgence should be given to the applicant;

(d) Tang Chung Wah v Jonathan Russell Leong and Others (unreported, HCA 169/2011, 15 April 2014, §19) the nature of the dispute between parties should be taken into account;

(e) Liu Wai Keung v Liu Wai Man now known as Liu Hiu Nam Vikki (unreported, HCA 1106/2011, 22 March 2013, §§11-13) where the court has to consider the probative value of the supplemental witness statement;

(f) Million Decade Ltd v Tung Fai also known as Dong Hui (unreported, HCA 1062/2013, 15 September 2015, §11) where the court will require the applicant to set out the factors in support of the application; and

(g) Evergreen (FIC) Ltd v Golden Cup Industries Ltd t/a Super Star Group (unreported, HCCT 14/2015, 26 July 2016) where the court, having considered the probative value of the evidence, allowed the application for serving supplemental witness statement at less than one week before trial.

D has no dispute with the above authorities, but has also cited the following authorities:

(h) Order 1A, r. 4 RHC of the Court’s powers of active case management;

(i) Nam Ching Wun v Tsun Un Pawn Shop & Ors (unreported, HCA 2151/2008, 7 October 2014 §§54-58) where the court emphasized that late applications should not receive the court’s sympathy if such application for admission of witness statement is the deliberate act of the applicant without good explanation and it would raise a new dimension or focus or shift the litigation goalposts, causing serious prejudice to the other party;

(j) Man Fong Hang v Man Ping Nam & Ors (unreported, HCA 7935/1998, 15 July 2003 §11) where the court adopted the UK approach to deal with non-adherence to time limits contained in the rules or directions of the court. However, this case has, in §12 set out the way the court should act as stated by Sir Thomas Bingham MR: “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….”;

(k) Talent Weaving Dyeing & Printer Ltd v Able Billion Textiles Ltd [2013] 2 HKLRD 478 at §5) where the court set out the legal principle that a witness statement must only contain such material facts as a witness is able to prove of his own knowledge and must not contain inadmissible evidence, or any statement of information or opinion without leave of the Court; and

(l) Vastco Textile Ltd v Super Glory Corporation Ltd (unreported, HCA 1678/2009, 11 October 2011, §3) where the court held that the test as to whether the material sought to be expunged is whether the parts of the statement are material to the issues in dispute and the relief claimed.

11.  This Court will also bear in mind the legal principles in its exercise of its judicial discretion. Interlocutory applications are usually matters for the court’s discretion in case management for a fair trial of the matter.  The court will bear in mind the following factors in its exercise of discretion:

(a) Order 1A, r.2(2), the underlying objectives;

(b) the court’s duty to prevent abuse for a fair trial; and

(c) the court being guided by the authorities of the higher courts.

Lam Sai Wan v Minloy Ltd. (unreported, HCA 31/2014, 18 October 2016).  See also Wing Mou Construction Co Ltd v Cosmic Insurance Corporation Ltd & Mansion Holdings Ltd (unrep. HCCT 40/2001, 20 June 2002) where the Court of Appeal stated at §15:

“ (5) The exercise of the court’s discretion in any given case depends on a number of factors…… No exhaustive list of factors can be enumerated but I would suggest the following will regularly feature: the individual prejudice to the parties in the event an order is or is not made, the stage that the action has reached when the application is made, any delay in making the application and any delay that may be caused should an order be made. What weight the court will give to any particular factor will depend on the precise form of the order or orders sought.

  (6) Ultimately, the discretion is exercised, …… as with any exercise of discretion by the court, orders should only be made where necessary, just and convenient.”

12.  The court’s discretion must not be exercised mechanistically, which is also the remark of the Court of Appeal in Chan Cheung Ming Jacky v Siu Sin Man (formerly known as Siu Kit Ling [2014] 5 HKLRD 89 in deciding that delay alone in the application for subpoena, it remarked: “27.  The second caveat we have is about the comment of Poon J at para 6 of his judgment on the possibility of an application being dismissed on the basis of delay alone.  Whilst we would not rule out this possibility entirely, one must always bear in mind Order 1A Rule 2(2).  As with the exercise of other kinds of discretion, the exercise of case management power must be with reference of the facts and circumstances of the case before the court.  There is no place for the application of a mechanical rule that the court will invariably refuse an application simply because a party is guilty of serious delay without any good explanation.  The court must conduct an overall balancing exercise.”

13.  In Wing Fai Construction Company Limited (in Compulsory Liquidation v Yip Kwong Robert & Others (2011) 14 HKCFAR 935 at §75(5), the Chief Justice adopted the following legal principles on delay:

“I would also adopt what was said by Neuberger J in Annodeus[2] regarding the court’s consideration of delay:- “Ninthly, it appears to me that it is normally relevant to consider the following factors. First, the length of the delay; secondly, any excuses put forward for the delay; thirdly, the degree to which the claimant has failed to observe the rules of court or any court order; fourthly, the prejudice caused to the defendant by the delay; fifthly, the effect of the delay on trial; sixthly, the effect of the delay on other litigants and other proceedings; seventhly, the extent, if any, to which the defendant can be said to have contributed to the delay; eighthly, the conduct of the claimant and the defendant in relation to the action; ninthly, other special factors of relevance in the particular case.”

DISCUSSION

14.  Bearing in mind the legal principles above, I shall now deal with Ds’ objections set out in paragraph 8 above.

15.  Before I go into each of the objections raised by Ds, I shall set out the relevant circumstances of this matter for my consideration:

(a) Ds complain that P has been delaying the proceedings for her past conducts;

(b) The stage of the proceedings is that case management has not been completed and no leave has been given by the court for the case to be set down for trial;

(c) The disputes between the parties are fundamentally factual as to whether there was a breach of the Agreement by P or by Ds and there are marked differences in the evidence of the parties;

(d) Oral evidence on details of the acts of the parties after signing of the Agreement will be hotly contested at the trial.

Explanation on gross delay in the application

16.  P has explained that before her application for amendment of the Statement of Claim is dealt with by the court, she was unable to decide what evidence should be included in her supplemental witness statement. Counsel for P has given an example in his supplemental written submissions, §7 that the court has rejected the proposed amendment that the Agreement was partly oral and partly in writing.  The reason for the court’s rejection is that P has failed to provide the particulars, which has been under an order of the court.  P has refrained from putting any oral agreement in her supplemental witness statement.  I am puzzled as to why Ds had not applied for an order to strike out such parts of the Statement of Claim, on which particulars had been ordered to be given by P.  No explanation has been given to me.

17.  This explanation seems to be reasonable.

18.  Even if the explanation is not acceptable and that P has been delayed in making the application, the question then turns on whether P’s conduct amounts to abuse of the process and whether the prejudice that Ds may suffer cannot be compensated by costs.  In my view, there is insufficient evidence to show that P’s late application is an abuse of the process. Ds have not gone to that length to say so.  Delay alone, under the present circumstances, should not be conclusive factor for determination of its admissibility, bearing in mind that the disputes are mainly factual in nature.  I accept that delay would cause prejudice to Ds as they have interest in the money in the joint account.  However, they had caused the delay themselves by not pursuing the particulars further by an application to the court for over two and a half years.  The Court has a primary duty of determining the matter on the merit of the case for the resolution of the disputes.  Man Fong Hang §12.

19.  This ground of objection alone fails.

Pleading a new case inconsistent with existing pleadings

20.  Ds complain that the Draft Statement seeks to put forward a new case not pleaded before and/or inconsistent with the existing pleadings.  Ds have set out three grounds in support of this complaint.

21.  First, Ds complain that §§1-8 of the Draft Statement did not  set out the particulars of facts of how she had allegedly assisted Ds. Ds had asked for the particulars before and an order had been made on 31 July 2013 compelling P to give the particulars within 7 days by 7 August 2013.  Ds further say that up to date P has not complied with this Order. Because of her breach of the said Order, Master Hui had rejected her application to amend §11 of the Statement of Claim.  Ds submit that to allow these paragraphs in the Supplemental Witness statement is to allow her to put the new matters through the back door.

22.  As said above, it is surprising that Ds have not sought a mandatory Order to strike out P’s pleadings in relation to the particulars which the court had ordered P to give.  Without such an Order, P is allowed to put her case to trial. Now P is giving the particulars in support of her case as pleaded.  If Ds allowed P to continue with her claims without the particulars, how can they now complain P giving the particulars at this stage before trial?  For the same reasons, I do not agree that P is putting new matters through the back door.

23.  However, P admits that her pleaded case remains that her contractual obligations under the Agreement had been performed on 30 September 2011 when the Judgment was delivered.  She is not obliged to do anything else under the Agreement and is entitled to the HK$4.5 million.  As such, any evidence outside this scope is irrelevant for the trial and should be expunged from the Draft Statement.  Therefore, item 2 to item 5 in the table under paragraph 1 should be expunged.  As to the rest of the contents in paragraphs 1-8, I note that Ds complain that they are lack of particulars or identities of the persons whom P has referred to in the Draft Statement.  The evidence is clearly relevant to the works that she had allegedly done for Ds.  However, Ds may take out such steps for the particulars or they may test P’s evidence at the trial.  This is for the Trial Judge.  I have no authority to say that such evidence should be struck out or expunged from the witness statement.  They should be allowed to be admitted as evidence.

24.  P admits that part of paragraph 9 of the Draft Statement that she had never met D1 prior to the signing of the Agreement contradicts her 1^st witness statement.  The first two sentences of paragraph 9 should be struck out.  The second part starting with “The Agreement does not specify that I have to carry out the jobs personally…” will remain.

25.  Second, Ds complain that §§11-12 of the Draft Statement appears to be suggesting that Ds have committed an anticipatory breach of the Agreement by issuing the letter dated 22 December 2011.

26.  Ds do not deny having issued the letter dated 22 December 2011.  In fact, they rely upon this letter to say that the letter was an acceptance of P’s breach of the Agreement, absolving them of further performance of the Agreement.

27.  Ds complain that this is a new case based on anticipatory breach which has never been pleaded.  These paragraphs are in response to paragraph 29 of D1’s witness statement.  P is allowed to respond to Ds’ witness statement if she disagrees with them.  I agree that it is good practice to deal with disagreed fact by way of cross-examination.  I agree with P that this is not a new case against Ds.  Paragraph 11 and 12 should remain.

28.  Third, Ds complain in §§18-23 of the Draft Statement, P seeks to rely upon a “初審公告” of the PRC trademark office dated 6 February 2012 to say that D2’s application for registration of the subject eagle-shape trademark had succeeded and that D2 had, by 6 February 2012 already obtained the said trademark.  Ds say this is an entirely new submission which has never been pleaded.

29.  P submits that this document only came to her knowledge when D1 put it in his witness statement.  P further submits that this is a piece of evidence in support of P’s case.  As such, it is unnecessary to plead in the pleadings.

30.  P has already pleaded that she had successfully assisted Ds to register the trademark and as such she had performed her obligations under the Agreement.  This is the main theme of her case throughout.  For a fair trial, P must be given the opportunity of putting evidence in support of her case.  This application is for such facts to be adduced by way of supplemental witness statement.  P has abandoned her application for expert evidence to prove the effectiveness of the 初審公告, a different consideration for such evidence in the proceedings.  I note from D1’s affirmation that D2 had registered the trademark ultimately.  But he argued that such registration was due to other processes after the deadline of the Agreement.  Therefore, they say that P had not performed her contractual obligation under the Agreement.  This evidence is clearly relevant to the issues in dispute and is important evidence to support P’s case.  I do not agree that P should be debarred from adducing the factual evidence in support of her case.

31.  However, P admits that for the reason that P is not allowed to give her opinion in her witness statement, the following parts or paragraphs should be deleted from the Draft Statement:

(a) The first sentence of paragraph 19 from “In other words …… D2 can continue with the application as the owner of the trademark.”

(b) The latter part of paragraph 20 start from “As to there was third party …… I am entitled to the reward from the account as according to the Agreement.”

(c) Paragraph 21;

(d) Paragraph 22.

(e) Paragraph 23, the last sentence: “it proves that D2 had obtained the trademark before the deadline of the Agreement.”

The Draft Statement contains incredible, unparticularized and irrelevant matters & other interlocutory applications causing further delay

32.  For the reasons above, I can simply say that I disagree with Ds’ views. P has now given the particulars that Ds have been pursuing all along.  These particulars are relevant to the issues in dispute.  They may cause further investigation or enquiry by Ds.  However, since there is no milestone date for this matter, such enquiries can be carried out expeditiously through tight timetables if the parties are minded to do so.  This Court can certainly accommodate the parties’ request.  The hearing today is an example.  It only took less than two weeks for the fixing of hearing of the applications.  Weighing this with unfairness that may be caused by barring P from adducing such evidence in support of her case, her supplemental witness statement should be allowed to be considered at the trial.

33.  For the reasons above, I grant leave to P to serve her supplemental witness statement except those parts mentioned above which should be expunged from it.

COSTS AND ORDER

34.  On a broad brush approach, both parties have succeeded in their arguments in part.  I consider that the proper order for costs should be no order as to costs for P’s Summons including the hearing before me.  An order nisi on costs is accordingly made, to be made absolute unless any party raises objection within 14 days from the date of handing down of this Decision.

35.  I shall now make an order in terms as follows:

(a) P’s Summons for leave to take out the application for serving the Supplemental Witness statement be granted subject to the parts expunged as set out in paragraphs 20, 21 and 28 above;

(b) The costs for this Summons, including the hearing today be as per paragraph 31 above.