AFH HONG KONG STORES, LTD v. FULTON CORPORATION LTD

HCA 2103/2017

[2020] HKCFI 1566

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2103 OF 2017

______________

______________

____________________

DECISION

____________________

1.  This is the hearing of the Expunge Summons taken out by the Plaintiff (by original action) and 1^st Defendant (by counterclaim) (collectively “AF”) against the Defendant (by original action) and the Plaintiff (by counterclaim) (“Fulton”). It is set down for 30 minutes. In total, and between both parties, some 50 pages of submissions and upwards of 20 authorities have been placed before me. They are helpful. I have read them, together with the hearing bundles. My decision is as follows.

2.  The Expunge Summons concerns the 4^th and 5^th sentences of §8 of, and the exhibit marked “HWS‑4” to, the affirmation of Ho Wai Shing dated 25 October 2019.  I call them the “Disputed Materials”.  The issue is the admissibility of the Disputed Materials for the purpose of the main summons taken out by AF pursuant to Order 14A and scheduled to be heard before me on 7 September 2020 (the “O.14A Hearing”).

3.  The Disputed Materials comprise 3 short emails, and 2 draft leases attached thereto.  What Mr Ho has said at §8 of his affirmation is nothing more than introductory.

4.  The point raised by AF, represented by Mr Fung SC, is that the Disputed Materials infringe the exclusionary rule against evidence on pre‑contractual negotiation.  As explained by Lord Hoffmann in Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101 at §42:

“ The rule excludes evidence of what was said or done during the course of negotiating the agreement for the purpose of drawing inferences about what the contract meant.”

5.  The stance taken by Ms Cheng who appears for Fulton is that the Disputed Materials are admissible as they (as least part of them) either fall outside the operation of that exclusionary rule, or otherwise fall within certain exceptions to that rule.

6.  Mr Ho Wai Shing in his 2^nd affirmation has endeavored to identify for what purpose Fulton says the Disputed Materials are sought to be adduced for.  Mr Fung is not happy with the clarity of those explanations.  Ms Cheng has now in her submissions filed for the purpose of the Expunge Summons specified in some details (in section D) what matters Fulton is seeking to establish by the proposed production of the Disputed Materials.

7.  On the facts of the case, and now with the benefit of the clarifications provided by Ms Cheng at section D of her submissions, my view is that the Disputed Materials should best be placed before me on a de bene esse basis for the purpose of the O.14A Hearing, leaving the issue as to their admissibility to be decided together with the 3 agreed issues.

8.  In my view, the question as to whether the admissibility of the Disputed Materials should be resolved prior to or during the O.14A Hearing has not been pre‑empted by the hearing before and order of Registrar S Kwang of 24 January 2020.  Nor do I believe it is meant to be.  §1 of that Order is that the Expunge Summons be adjourned for argument before me.  I have now heard arguments.  I reach the view as I have indicated above.  Further, the present issue is a case management issue which in any event is a matter for this Court.  The course I propose is also consistent with the observations of Arden LJ at §24 of Anglo Continental Education Group (GB) Ltd v Capital Homes (Southern) Ltd [2009] EWCA Civ 218 (which Mr Fung relies upon), that:

“ … Yet another course would be for the court at the case management conference to direct the parties to identify in writing the precise point which they say the evidence establishes and why they say that that evidence is admissible.”

9.  Ms Cheng has now done just that.  Fulton has now pinned itself down.  AF may now focus on the Disputed Materials with knowledge of the purposes of their proposed production.  AF may file evidence in reply, which I am prepared to grant them leave to do, so that any evidence in reply may also be placed before me during the O.14A Hearing similarly on a de bene esse basis.

10.  One possible objection to the above course is the time and expenses for AF to prepare the evidence in reply.  I have however considered the Disputed Materials.  The amount of the materials is limited. The precise points which Fulton says the materials establish have also been identified.  The time and expenses for AF to prepare evidence in reply should not be disproportionately large.  In any event, any such time and expenses may if need be compensated by an appropriate costs order.

11.  I have considered the alternative cause of deciding the issue in dispute now.  My main concern is the truncation of the proceedings, leading to the possibility of an appeal by either parties, the vacation of the O.14A Hearing, and the overall delay that will most likely be caused.

12.  In the circumstances, I make the following order:

(a)  leave be granted to Fulton to place the Disputed Materials before the Court on a de bene esse basis for the purpose of the O.14A Hearing;

(b)  the above leave is limited to permitting Fulton to seek to produce the Disputed Materials for the purpose of establishing the matters identified by its counsel Ms Cheng at section D of her submissions of 7 July 2020;

(c)  leave to AF to file evidence within 28 days hereof in reply, also to be placed before this Court on a de bene esse basis during the O.14A Hearing;

(d)  costs reserved.