SUN HING CHEONG TEXTILE LTD v. CHAN WAI MING AND OTHERS

HCA 1745/2013

[2018] HKCFI 765

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1745 OF 2013

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REASON FOR DECISION

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THE APPLICATION

1.  This is the plaintiff’s application for an adjournment of the trial herein due to commence yesterday morning (13 March 2018).  Nine days had been reserved for the same.

THE CLAIM AND THE DEFENCE

2.  The plaintiff’s claim is in gist:

(1)   against the 1^st defendant, for breach of fiduciary duties which he, as a de facto director, owed to the plaintiff;

(2)   against the 2^nd defendant, for breach of fiduciary duties which she, as a director, owed to the plaintiff;

(3)   against the 3^rd to 5^th defendants, for breach of duties of fidelity which they as employees owed to the plaintiff;

(4)   against the 6^th defendant, for passing off and procuring breach of contract. 

The breaches averred to have been committed related principally to diversion by the 1^st to 5^th defendants of the plaintiff’s business to the 6^th defendant, and divulgement of confidential information.

3.  The defendants denied having committing any breaches.  In respect of the 1^st defendant, it was denied that he was a de facto director of the plaintiff. 

4.  The plaintiff proposes to call two witnesses.  The defendants propose to call six.

5.  A number of legal issues have been raised.  One of the main issues is whether the information concerned constituted confidential information.  Cases like Kao Lee & Yip v Koo Hoi Yan & Others [2003] 3 HKLRD 296 and Faccenda Chicken Ltd v Fowler [1987] Ch 117 will have to be considered in detail.  As things now stand, the plaintiff’s List of Authorities contains eight cases, whereas that of the defendants contains nine.  Some of the cases however overlap.

6.  The trial bundles comprise nine files, with more than 2,000 pages of documentary exhibits.

THE PLAINTIFF’S APPLICATION FOR ADJOURNMENT

7.  The application was first made on paper by a letter dated 9 March 2018 from Messrs M. C. A. Lai Solicitors LLP (“MCA Lai”), solicitors for the plaintiff, to the Court.  That letter reached the Court latethat afternoon (by fax at 17:29).  It was disclosed therein that the counsel instructed to appear for the plaintiff, who had been involved since the beginning of the action more than four years ago, would not be available to attend the present trial.  The reason was that he was held up in another ongoing trial. That trial was scheduled to finish on 9 March 2018 but didnot, and was not likely to finish soon (I add that I have now been informed that that case is likely to go on until 21 March 2018).  The learned judge in that case had refused to adjourn the trial.  MCA Lai therefore wrote to me and “seek a direction that the Court deems appropriate, including that the trial on 13^th March 2018 be vacated and adjourned to another date.”

8.  I on 9 March 2018 dismissed that paper application for adjournment.  The plaintiff was notified of my decision on that same afternoon.

9.  9 March 2018 was a Friday.  On Monday 12 March 2018, MCA Lai wrote to the Court again.  It was revealed that during the weekend, the plaintiff urgently approached a leading counsel with a junior.  Papers were delivered on 10 March 2018.  A meeting with counsel was held on Sunday.  It was further revealed that:

“ … in a meeting between the leading Counsel, counsel and us at around 8:00 p.m. on 11 March 2018, the leading Counsel informed us that he considered that he did not have sufficient time to prepare for the case, and he owed a duty to ensure that he would had [sic] sufficient time to prepare for trial before he was to accept instructions under the Bar Code of Conduct, so he would not be able to appear at the trial.”

MCA Lai further wrote that:

“ As the matter stands now, it is practically impossible for our client to secure representation by suitable Counsel at trial. No sensible Counsel would take up this case which involves over 2000 pages of trial materials and 7 parties and agree to get the case prepared overnight.”

10.  Given the new set of circumstances, MCA Lai made a further application for adjournment.  It also submitted that in the circumstances, this Court was not functus officio despite my earlier refusal of the application on Friday.

11.  Having considered the new evidence, I directed the plaintiff to take out a summons for an adjournment of the trial, to be heard on the morning of 13 March 2018 before the commencement of the trial.  The summons has since been issued, and supported by the affirmation of Mr Ng Kwok Tung Cordon (which sets out the facts I have summarized above).

PARTIES’ SUBMISSIONS

12.  The plaintiff is represented by Ms Leung this morning.  She recited to me the factual background of the case and cited to me two cases in which the trials were adjourned due to medical issues of the parties.  She emphasized that the application was not the result of any fault of her lay client.  On the question of costs, she sought an order that costs be reserved. 

13.  Ms Ma appeared for the defendants.  She submitted that what had happened were unfortunate, but she would have to see to her clients’ interest.  The matter had been hanging over their heads for some years.  All of them wanted the case to be done and over with as soon as possible.  She also commented on the conduct of the counsel involved as to whether the question of the plaintiff’s alternative representation should have been raised earlier.  She helpfully pointed out to me that the Summons for adjournment had not been served upon the 6^th defendant, though she equally helpfully informed the Court that she would not be taking the point. 

14.  Halfway through the application, the parties sought time.  I granted them time.  When the matter resumed, I was informed that the plaintiff’s application would now be limited to four days, so that the trial could commence next Monday on 19 March 2018.

CONSIDERATION OF THE APPLICATION

Whether functus officio

15.  I deal first with the issue of functus officio.  This Court has continuous management powers over the case.  There have been new development and change of circumstances.  My attention has further been drawn to the case of Lee Tak Yee v Chen Park Kuen & Others [2001] 1 HKLRD 401, where Rogers VP, having made reference to an order made by the trial judge concerning adjournment, observed at 403D that:

“ Now that is a matter of case management and, of course, orders which are made in respect of case management are in their nature provisional. It is open to the judge on a later occasion to make further orders and to give further directions as to the proper progress of the action.”

16.  On the issue of adjournment, this Court is clearly not functus officio.

The power to vary a milestone date

17.  Order 35, rule 3 of the Rules of the High Court provides that:

“ The judge may, if he thinks it expedient in the interest of justice,adjourn a trial for such time, and to such place, and upon such terms, if any, as he thinks fit.”

18.  The date or period fixed by the Court in which a trial is to take place is a “milestone date”.  Whilst a party may apply to the Court to vary a milestone date, “The Court shall not grant an application under paragraph (2) unless there are exceptional circumstances justifying the variation.”—Order 25, rule 1B(3).  Paragraph 42 of Practice Direction 5.2 explains further that:

“ Milestone dates will be immovable save in the most exceptional circumstances and for that purpose, for instance, late instructions from client, change in the team of lawyers, the absence of prejudice to the other party which cannot be compensated for by costs, will not be treated as exceptional circumstances.“ 

19.  However, as stipulated in Order 1A, rule 2:

“ (1) The Court shall seek to give effect to the underlying objectives of these rules when it—

(a) exercises any of its powers (whether under its inherent jurisdiction or given to it by these rules or otherwise); or

(b) interprets any of these rules or a practice direction.

(2) In giving effect to the underlying objectives of these rules,the Court shall always recognize that the primary aim in exercising the powers of the Court is to secure the just resolution of disputes in accordance with the substantive rights of the parties.”

That it is necessary to bear in mind the underlying objectives of the Rules of the High Court when considering an application for varying a milestone date has been confirmed by the Court of appeal in Law Yin Pok Bosco v Dr Chan Yee Shing (unreported, HCMP 2256/2012, 2 November 2012), per Fok JA (as he then was) at paragraph 18:

“ A court will only vary a milestone date if there are exceptional circumstances justifying the variation. The court has a positive duty actively to manage cases with a view to furthering the underlying objectives of the rules, one of which is to ensure thatcases dealt with as expeditiously as is reasonably practicable. Of course, it remains nevertheless necessary for the court to recognise that its primary aim in the exercise of its powers is to secure the just resolution of disputes in accordance with the substantive rights of the parties.”

Consideration of the facts

20.  With the guidance discussed above in mind, I approach the facts in this case.  I have carefully considered the plaintiff’s application.  Whilst the case does not belong to the most complicated category, it at the same time is not straightforward.  Technical legal principles on breach of fiduciary/fidelity duties, confidential information, and passing off are involved.  Altogether eight witnesses are going to be or may be called.  More than 2,000 pages of documentary exhibits are involved.  As things stood last Friday, with an intervening weekend and Monday, it might have been possible for a new team of counsel to be engaged.  I now accept that the plaintiff has made efforts in that regard, but that the counsel it approached, having considered the bundles, had declined the brief.  There is now very little the plaintiff can further do.

21.  I can make comments on the question as to whether the counsel who the plaintiff originally engaged ought to have raised the issue of his availability earlier, so as to give his client more time to make alternative arrangements. However, whatever comments I can or may make, they could not alter the facts that this application for adjournment was not the result of any fault on the part of the lay plaintiff.  Now that it has no doubt incurred further costs in its unsuccessful attempt to engage a new team of counsel, refusing it this adjournment would in effect be forcing them to act in person.  That, in my view, would be neither just nor fair.

22.  I have considered the wording of paragraph 42 of Practice Direction 5.2, which stipulates that “change in the team of lawyers … willnot be treated as exceptional circumstances”.  In my view, the “change in the team of lawyers” in that paragraph contemplates a voluntary decision by the party seeking an adjournment to change its team of lawyers.  A voluntary decision of such nature obviously cannot by itself support an application to move a milestone date.  The situation will however be different when, as in this case, a change has in effect been forced upon the plaintiff.  In any event, in the present case, the plaintiff’s difficulty has gone beyond mere change in their legal team.  The problem has now become its inability to engage any counsel who can responsibly appear during the trial.

23.  I have also considered the defendants’ desire to proceed with the trial.  The adjournment sought is now restricted only to four days.  Further, the defendants’ desire will have to be considered against the undesirable prospect of forcing the plaintiff to commence the trial and go through part of it, through no fault of its, either in person or with assistance from counsel who have not been afforded adequate time to prepare for the case.

CONCLUSION

24.  Having considered all the circumstances, having balanced all countervailing factors, and having reminded myself again that the primaryaim of the Court in the exercise of its powers is to secure the just resolution of disputes in accordance with the substantive rights of the parties, I have decided that this is one of those exceptional cases where the plaintiff’s application for an adjournment of the trial should be allowed.  I order that the trial proper be adjourned for four days.  It will commence next Monday on 19 March 2018.

25.  On costs, I observe that as between the plaintiff and the defendants, the adjournment was caused through no fault of the defence.  Having heard parties, I order that the costs of the summons for adjournment and the costs occasioned by this adjournment be to the defendants in any event, to be taxed if not agreed.

26.  So as not to waste any valuable court time, I now proceed to hear parties on a number of case management issues.