GTC INDUSTRIES LTD AND OTHERS v. LEE MAN HOI OCEAN AND OTHERS

HCA 600/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 600 OF 2012

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BETWEEN

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DECISION

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The application

1.  Before me this morning is the application of the 2^nd defendant and the 3^rd defendant for an extension of 28 days for them to serve their expert report in reply pursuant to my Order dated 31 October 2012:

“1.b: The 2^nd and 3^rd defendants be at liberty to serve the expert report in reply within; 28 days thereafter.”

2.  The above direction was a further direction of my Order dated 20 June 2012, in which I had given direction that the 2^nd defendant and the 3^rd defendant be given leave to adduce expert evidence on PRC law in relation to the true terms, meaning and effect and enforceability of the employment contract referred to in the Defence and that the plaintiffs be given leave to serve the expert report in response thereto and finally, the 2^nd defendant and the 3^rd defendant be at liberty to serve an expert report in reply.

The brief fact of the case

3.  There is no dispute that the expert evidence is required at the trial.  The disputes between the plaintiffs and the defendants are that the plaintiffs alleged that the 1^st and the 2^nd defendants, being the former employees of the 2^nd plaintiff, a related corporation of the 1^st and the 3^rd plaintiffs, were in breach of their fiduciary duty in that they had used the confidential information and the resources of the plaintiffs and had solicited and/or diverted potential customers of the plaintiffs to become the 3^rd defendant’s customers sometime before August 2007.[1]

Discussion on an “unless order” to be made

4.  This morning, Mr. Kwan acts for the plaintiffs  and Mr. Lo for the 2^nd defendant and the 3^rd defendant.  Mr. Lo has told me that 1^st defendant does not raise objection and Mr. Lo agrees to pay the 1^st defendant’s costs of $800.

5.  Mr. Kwan proposes that an “unless order” with longer time should be imposed for this application. However, Mr. Lo opposes, saying that the court should not impose an “unless order”.

6.  Mr. Lo tells me that the plaintiffs’ expert report in response takes 250 pages (including the annexures), which cause me alarm if the expert report was prepared in accordance with the directions at the Case Management Conference.  Mr. Kwan and Mr. Lo confirm that the expert reports were prepared in accordance with the directions and they are relevant for the resolution of the disputes at the trial.

7.  I enquire with Mr. Lo as to whether he had sought advice from his expert if 28 days that he now asks for are sufficient for the expert to do the reply expert report.  Mr. Lo says that he had not done so and 28 days period is only his own estimate.

8.  I consider that it is not proper for Mr. Lo to take out the application for extension of time without ensuring from his own expert that the extension will be sufficient for his expert to prepare the expert report, in which case it is very likely that he may have to take out another application for further extension of time.  In order to minimize the number of interlocutory hearings for the proceedings, I have to stand down the matter for Mr. Lo to seek advice from his expert as to whether the extension sought for is sufficient for him to prepare the expert report.

9.  Mr. Lo returns and confirms that his expert will need 14 days more in view of the intervening public holidays. Mr. Kwan has no objection to this further extension of time.

Practice Direction 5.2, paragraph 29

10.  Bearing in mind the judgment of DHCJ Le Pichon in K.M. Cheung & Co. Solicitors (a firm) v. Kung Ching HCA 831/2011 (unreported) 26 October 2012, in which the learned Deputy Judge took the view that unless order should only be imposed upon a history of failure to comply, I refer Mr. Lo to paragraph 29 of the Practice Direction 5.2, which provides that the court is entitled to impose unless order for application for extension if directions had been given at the Case Management Conference.  Practice Direction 5.2, paragraph 29 reads:

“29. Parties are expected to have complied with the timetable laid down by the Court by the time of the CMC. Unless sufficient grounds have been shown to it, the Court will not grant extensions of time for compliance. If it does, the grant of extension will most likely be on an unless order basis with self-executing sanctions.”

Mr. Lo agrees that the directions for the expert evidence were given in the previous Case Management Conferences on 20 June 2012 and 31 October 2012 respectively.  He agrees that he has no valid reason against the court making an “unless order”.

The Orders

11.  In the circumstances, I make an order that unless the 2^nd defendant and the 3^rd defendant serve the expert report in reply by 4:00 p.m. 15 February 2013, the 2^nd defendant and the 3^rd defendant are debarred from adducing the expert report in reply.

12.  As to the costs of this application, Mr. Kwan has informed me that he had attempted to agree with the 2^nd defendant and the 3^rd defendant to extend the time on an unless order basis, which proposal was refused. Hence this hearing today.  Mr. Lo agrees that there was such a negotiation.  He counter-proposed longer time if an unless order were made.  In the circumstances, the costs of today’s hearing should be given to the plaintiffs, which the parties agree to be $1,500 to be paid within 14 days.