GARWIN ENTERPRISES LTD AND ANOTHER v, HO KAI CHEUNG AND ANOTHER

HCA 2145/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2145 OF 2006

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R U L I N G

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1.  The plaintiffs want to amend the statement of claim to plead the conviction of Madam Ng. The first attempt to do so took place five days before the commencement of the last trial in March 2010. That was abandoned and all parties proceeded on the basis that the conviction would not be relied upon by the plaintiffs.

2.  The plaintiffs’ opening submissions were served one week before the commencement of this trial.  The submissions referred to Madam Ng’s conviction, indicating the plaintiffs’ intention to rely on that, but there was no application to amend the statement of claim to plead that.  Order 18, rule 7A requires a conviction to be specifically pleaded. This was pointed out by counsel for the 1st defendant, Mr Peter Wong, in his oral opening submission on the third day of the trial.

3.  An application was then made yesterday to amend the statement of claim by pleading the conviction, but the proposed amendment did not refer to the relevant matters in the conviction that the plaintiffs want to rely on.  The application was not allowed.

4.  The application was renewed this morning with a fresh draft.  By the fresh draft, the plaintiffs want to rely on:

(i)     the findings of Deputy District Judge Sham that the 1st defendant had stolen over HK$11 million in 37 cheques, a sum of HK$200,000 in another cheque, and another sum of HK$400,000 in a further cheque, and the total sum stolen at HK$12,193,929.30;

(ii)    the ruling out of the possibility by the Deputy Judge that such payments were reimbursements to the 2nd defendant;

(iii)   the findings of the Deputy Judge that the 2nd defendant had shifted the money around from one account to another making the task of tracing impossible, the cash receipt records of the Garwin factory in the mainland were true and accurate, the monthly budget estimates were unreliable as they were exaggerated and the actual expenditure tables were unreliable as they were tainted;

(iv)   the Deputy Judge’s dismissal of the defendants’ argument that some money from the cheques referred to above had gone into the bank account of some individuals rather than the bank account of the factory; and

(v)    the convictions of the three charges as relevant proof of the 2nd defendant’s theft of $12,193,929.30 from July 2003 to August 2006.

5.  If I allow the amendments, the legal burden of proof of all these matters will be shifted to the 2nd defendant.  The amendments also affect the 1st defendant as the matters to be amended are also matters that the plaintiffs have to prove as against the 1st defendant before the claim of conspiracy against the 1st defendant can be established.

6.  The defendants oppose this application.  They say that if the legal burden of proof should be on Madam Ng, the 2nd defendant, they then would have to prepare their case to discharge the burden.  They need to call factual evidence of the money-changer and expert evidence of the law of the mainland on the running of foreign-owned companies and the taxation on them.

7.  The plaintiffs do not want the trial to be adjourned because of the amendments nor does any party would like to have the trial adjourned again.

8.  I think to reverse the legal burden of proof on the important matters mentioned above after the commencement of the trial is a very serious matter.  The plaintiffs could have applied to put in the amendments since the abortion of the last trial in March 2010.  They have not done so and there has been nothing to hinder them from doing so.  There was just delay.

9.  The plaintiffs say that the allowing of the amendment will result in no change in their conduct of the case and the calling of evidence, but I cannot rule out the possibility that the 1st and 2nd defendants might have wanted to prepare their case to discharge the burden if the amendments were made in good time and they were given a reasonable opportunity to do so. 

10.  Though the 2nd defendant is unrepresented and is in the custody of the Correctional Services at all times since November 2009, that does not mean that she could not have prepared her case to discharge the burden if the burden should be on her.  It is also the plaintiffs’ position that the 2nd defendant, though acting in person, is advised and assisted by others behind the scene. 

11.  In the premises, I do not think it right to reverse the legal burden of proof on the matters pleaded in the proposed amendments at this late stage.  To do so would be very unfair to the 2nd defendant, and I dismiss the application solely because it is unfair and prejudicial to the 2nd defendant.  I do not think it necessary for me to consider the opposition by the 1st defendant.  I therefore dismiss the application to amend save for the matters on figures to tally with the report of the plaintiffs’ accountants.  I also order the plaintiffs to pay the costs to all parties including Hypermax with certificate for counsel.  Time spent is two hours.

HCA 2145/2006

Ms Teresa Wu, instructed by Messrs Dundons, for the 1st and 2nd Plaintiffs

Mr Peter K C Wong and Mr Nicholas Y K Lau, instructed by Messrs Rowdget W Young & Co., for the 1st Defendant

The 2nd Defendant, in person, present

HCA2418/2006

Mr Ronny F H Wong, S.C. and Mr Tim Wong instructed by Messrs Wong & Poon for the Plaintiff

Ms Teresa Wu, instructed by Messrs Dundons, for the Defendant