SABSTEX TRADING CORPORATION v. LAW SAU KIN TRADING AS TAI TUNG INTERLINING FACTORY AND ANOTHER

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

____________

BETWEEN

____________

______________________

REASONS FOR RULING

______________________

1. This application is somewhat peculiar. The Plaintiff sues the Defendant. The Defendant wishes to be indemnified by the Third Party. Third Party Notice was issued and Third Party Directions were obtained from a Master. Para. 5 of the Third Party directions reads as follows :-

"5. That the Third Party be at liberty to appear at the trial of this action and take such part as a judge shall direct and be bound by the result of the trial.

"6. That the question of liability of the Third Party to indemnify the Defendant be tried at the trial of this action (but subsequent thereto)."

2. I was invited to regard these two paragraphs as "usual directions" in this case by Mr. Ho on behalf of the Third Party. I disagree. What should have been sought from the Master is that evidence given in the case by the Plaintiff against the Defendant be taken as evidence in the proceedings between the Defendant and the Third Party with liberty to the Third Party to adduce expert evidence limited in number as proposed by the Third Party, consented to by the Defendant and approved by the Master, with notice of the Third Party Directions given to the Plaintiff so as to put the Plaintiff on notice of the possibility of expert evidence coming from the Third Party AND that the Third Party be directed to supply expert report or reports to the Defendant as well as the Plaintiff. No such directions were sought from the Master.

3. As far as the Defendant is concerned, apart from the oversight of not putting his house in order as it were, he faced an unusual situation in the sense that he could not have envisaged producing any expert evidence against the Third Party. That is understandable because any expert evidence against the Third Party would necessarily be unfavourable to the Defendant himself. Even with that predicament, there would have been no obstacle in the way of the Defendant applying for the directions I have suggested.

4. As far as the Third Party is concerned, there was absolutely no unusual situation. The directions I have suggested ought to be sought and obtained in order to save litigation time and have the same issues adjudicated between the Plaintiff, Defendant and the Third Party at virtually the same time.

5. I ventured to postulate that one possible advantage to be gained by the Third Party from a separate trial would be having a second bite, as it were, at the cross-examination of the Plaintiff's expert, should the Defendant be unsuccessful in the action, with the benefit of hindsight of examination and cross-examination conducted in the action between the Plaintiff and the Defendant. Such advantage is a tactical advantage which I do not regard as completely fair. There could be prejudices to the Third Party. First of all, the Plaintiff's expert in the action between the Plaintiff and the Defendant would be free from any cross-examination by counsel for the Third Defendant. Further, any expert called by the Defendant would not be reinforced by whatever expert evidence intended to be adduced by the Third Party.

6. As far as the Defendant is concerned, the Defendant would stand highly prejudiced. If I were to accept expert evidence from the Plaintiff and reject the expert evidence on behalf of the Defendant, but ultimately found the Third Party's expert irresistably reliable in the Third Party proceedings as opposed to the previously preferred expert evidence called on behalf of the Plaintiff, then used by the Defendant, the Defendant would be put in an unthinkable position of losing both the action and the Third Party proceedings.

7. These matters, prejudices and hardship, could be conveniently avoided and ought to be avoided. Counsel for the Third Party was unable to explain to the Court what other possible advantage that might be gained by a separate hearing between the Third Party and the Defendant.

8. Against this background, I have an application from the Defendant to have evidence taken once and for all in the action as evidence for the Third Party proceedings. The Third Party applies for two completely independent hearings so as to enable the separate dispute between the Defendant and the Third Party to be subsequently adjudicated. I am told that expert of the Third Party can come to Hong Kong within two days. Therefore, the best solution to the whole problematic situation must be, in my view, for evidence of the action to be taken as evidence in the Third Party proceedings as well. I shall take expert evidence to be called o n behalf of the Plaintiff only in chief postponing his cross-examination until Monday. The proposal also suits, I am told, the schedule of the Plaintiff's expert Dr. Yapp.

9. Much time has been wasted and the costs for this morning's submissions and my consequential ruling will have to be reserved. I refuse the application of the Third Party. I accede to the application of the Defendant, and I order that evidence given in the action between the Plaintiff and the Defendant betaken as evidence in the Third Party proceedings with liberty to counsel for the Third Party to have equal right in cross-examination subject to re-examination by the Plaintiff.

10. Counsel have been consulted and all were content with the orders that I have made in the light of my ruling. I have been just told by Mr. Ho, counsel for the Third Party, that in fact the Third Party is unable now to be sure that its expert from Japan would be available by Monday. I was not fed this piece of information, but with the new twist if I may describe it that, the Third Defendant must fall victim of its own manipulation. If an expert could not be made available by Monday, then the Third Party would have to suffer from it. As for Dr. Yapp, he prefers to testify as from Monday.