CREDIT ONE FINANCE LTD v. LEONG WUN HENG

HCA 2917/2015

[2019] HKCFI 2223

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2917 OF 2015

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D E C I S I O N

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1.  I have a summons before me taken out by the plaintiff in this action dated 11 July 2019 for leave to amend its Statement of Claim and its Re-Amended Reply and Defence to Counterclaim, and to file 7 witness statements. It first came before Lisa Wong J on 31 July 2019 at the pre-trial review, and was adjourned by her Ladyship to today before me as the judge assigned to hear the trial which has been fixed to commence on 28 October 2019.

2.  On the pleadings as they stand at present, the plaintiff’s claim is for a sum of $2,817,299.85 being outstanding principal and interest (up to the date of writ) in relation to a loan agreement for $2.6 million dated 9 July 2015.

3.  In the Re-Re-Amended Defence and Counterclaim, the defendant says that one Mr Leung and one Mr Wong from a company called C&W, acting on behalf of the plaintiff, made certain representations to the defendant which induced her to enter into the loan agreement with the plaintiff.  Most of the loan proceeds ended up being paid to C&W.  The defendant says that the plaintiff was acting in collusion with C&W, among others, to practise a fraud on the defendant, causing her to enter into a loan agreement that was beyond her repayment ability.  The defendant also complains of breaches of ss 18, 21, 22, 24, 25 and 27 of the Money Lenders Ordinance (Cap 163) (“Ordinance”).  By way of counterclaim, the defendant claims against the plaintiff the aggregate sum of various expenses and charges totalling over $2.4 million.

4.  The plaintiff’s Re-Amended Reply and Defence to Counterclaim, the plaintiff primarily says that it has no knowledge of, and therefore does not admit, the matters pleaded by the defendant, and puts her to proof thereof.

5.  By the proposed amendments to its Statement of Claim, the plaintiff seeks, inter alia, to plead a supplemental agreement of the same date as the loan agreement which concerns the rate of interest, to plead various fees and deductions and to say that the plaintiff actually lent a smaller sum of principal, after excluding some of those fees and deductions which the plaintiff waives.

6.  By the proposed further amendments to its Reply, the plaintiff seeks to explain how it came to have entered into the loan agreement with the defendant, through the introduction of one Mr Danny Ko, an agent of the plaintiff, to Mr Lam Chi Wah, a director of the plaintiff. The plaintiff says that one of its former employees, Ms Cheyenne Chan, explained the relevant documents to the defendant at a meeting and that one Ms Kwok Wai Yan, of the solicitors’ firm of Cheung & Choy, also explained those documents at a meeting with the defendant.  The plaintiff seeks to make various factual assertions and also to change its non-admissions of the defendant’s case to denials.  In addition, the plaintiff seeks to add claims for relief under ss 18(3) and 22(2) of the Ordinance.

7.  As at present, the plaintiff has filed a witness statement of Lam Tsz Chiu Andrew[1] and a witness statement of Chan Siu Fong Eling,[2] and the defendant has filed 3 witness statements of herself successively.[3]  By the summons, the plaintiff also seeks leave to file and serve 6 witness statements from 6 new witnesses, namely, Lam Chi Wah, Cheyenne Chan, Danny Ko, Kwok Wai Yan, Lam Kwok Wah and Hung Nga Nga, as well as a supplemental witness statement of Chan Siu Fong Eling.

8.  It has to be noted that the application comprises a very substantial amount of materials.  The summons, attaching the draft amended pleadings, the proposed new witness statements and their exhibits, comes to 445 pages.  Within them there are a substantial number of new documents.

9.  The plaintiff’s application is made at a very late stage indeed.  The action was instituted by the plaintiff on 9 December 2015.  On 14 April 2016, the plaintiff issued a summons for summary judgment.  The defendant raised her allegations of fraud and collusion in her affirmation in opposition, and the plaintiff’s affirmation in reply[4] denied those allegations and denied any association with C&W.  By consent, the summons for summary judgment was withdrawn with costs to the defendant on 10 August 2016.  On 17 October 2017 directions for the further conduct of the case were given, including directions on discovery and exchange of witness statements.  Pursuant to that order, it was incumbent on the parties to obtain counsel’s advice after exchange of witness statements, and to take out all interlocutory applications within 28 days thereafter.  On 26 March 2018, the plaintiff filed a listing questionnaire which essentially confirmed that everything was in order (with the exception of a supplemental witness statement of the plaintiff and a further amended Reply to the defendant’s Re-Amended Defence and Counterclaim to be filed) and estimated the length of trial to be 2 days.  On 29 March 2018, Master Hui gave directions in relation to the outstanding matters and asked the parties to report to the court to confirm whether they were ready for trial.  On 30 April 2018, the plaintiff filed its Re-Amended Reply and Defence to Counterclaim, followed by the “supplemental” witness statement of Chan Siu Fong Eling filed on 15 May 2018.  By a solicitors’ letter dated 28 May 2018, the parties jointly confirmed to the court that there was no outstanding matter and that they were ready for trial, and asked for leave to set down for a 5-day trial.  Accordingly, on 31 May 2018, the plaintiff was given leave to set the case down for a 5-day trial, which it did on 12 July 2018.  On 9 August 2018, a notice of trial was issued by the Registrar, confirming that the trial would take place on 28 October 2019 with an estimate of 5 days.

10.  On 2 November 2018, the defendant was, by consent, given leave to further amend her Re-Amended Defence and Counterclaim and to file her second supplemental witness statement, with leave for the plaintiff to make consequential amendments to its Re-Amended Reply to Defence and Counterclaim and to file and serve a supplemental witness statement in reply within 42 days thereafter.  The plaintiff took neither of these two steps.  I should mention, however, that the defendant’s “violet” amendments were relatively minor and mainly confined to the addition of (i) paragraphs 24(d) to (g) and the Schedule which concern calculations of the principal and interest; and (ii) paragraphs 25(j) and (k) which are put forward as additional particulars of agency and collusion relating to C&W etc.  As Mr Jin Pao SC submits for the defendant, they did not affect the overall thrust of the defendant’s case or her core version of events.  The plaintiff’s present application is not based on the need to make consequential amendments or to reply to the defendant’s second supplemental witness statement.

11.  There was no indication at all from the plaintiff that it intended to make further amendment to its pleading or to file any further witness statements, until 11 July 2019, when the summons was issued, returnable at the pre-trial review.  As Practice Direction 5.2 states at §34:

“ A PTR is not an extension of the CMC. The Court expects a case to be ready for trial. Late interlocutory applications may be dismissed on the basis of delay alone.”

12.  The trial is now only 8 weeks away.  Despite Ms Leung’s submissions (for the plaintiff) to the contrary, it seems plain to me that allowing the plaintiff’s application would require the trial dates to be vacated.  First, the trial length was estimated with reference to the existing materials, with 3 witnesses in total.  With the addition of 7 witness statements, including statements from 6 new witnesses (even though the plaintiff has indicated that if its summons is granted it will not call one of its existing witnesses, Lam Tsz Chiu Andrew), it is very likely that the original time estimate would be insufficient.  Although the proposed new witness statements are not very long, this does not mean the cross-examination will be correspondingly brief.  There is also the need for interpretation for each witness during the evidence.  Commencing the trial and having it adjourned part-heard would be highly undesirable.  As Wilson Chan J said in Tao Soh Ngun v HSBC International Trustee Limited [2018] HKCFI 2543 at §6(5), if the new evidence[5] sought to be adduced at a late stage could derail the trial dates or prolong the trial beyond the time allocated for the case, the court may refuse leave, even if that means the applicant would have great difficulties in establishing his case.

13.  Secondly, if the summons is allowed, the defendant has to be given the time and opportunity to consider carrying out such investigation as appropriate, gathering information on potential evidence, seeking further discovery from the plaintiff, making amendments to her own pleadings (perhaps even to file a Rejoinder), and filing further witness statements either from herself or new witnesses or both.  For example, as Mr Pao observed, the plaintiff has disclosed only one email from Danny Ko.  The defendant might need to consider carrying out investigations in relation to Danny Ko and Kelvin Ho (whose email was forwarded by Danny Ko to the plaintiff) and applying for a subpoena to obtain further documents from Danny Ko.  The defendant might also be advised to serve interrogatories on the plaintiff.  All this would involve substantial work and time: it is to be noted that on the plaintiff’s own case, after its new legal team came on board on 22 March 2019, and working “as productively and quickly as it could”, they were only able to issue the summons with all the materials on 11 July 2019.  Even assuming the defendant’s legal team have spare capacity between now and the trial to deal with these new matters, it would in my view be a highly unfair burden to impose on the defence side, to have to scramble and meet these last-minute fundamental changes by the plaintiff, and to have to divert their energy and attention away from the actual preparation for trial.  As stated in Tao Soh Ngun, supra, at §5(4):

“ The court in assessing late applications should take into account the fact that such applications disrupt the innocent party’s trial preparation by diverting away attention and requiring expenditure of time and costs on the applications and the new matters arising therefrom, which is in itself a form of prejudice: Star Industrial Co Ltd v Japan Home Centre (HK) Ltd (HCA 2294/2008, DHCJ Carlson, 21.12.10), paragraph 2; Li Xiao Yun v China Gas Holdings Ltd (CACV 38/2013, Lam JA (as he then was), 11.03.13), paragraph 18; Chun Wo Building Construction Ltd v Metta Resources Ltd (HCCT 29/2013, Anthony Chan J, 22.03.16), paragraphs 2, 49.”

14.  Similarly, Deputy Judge Marlene Ng (as she then was) said in Nam Ching Wun v Tsun Un Pawn Shop and others (unrep, HCA 2151/2008, 7 October 2014) at §56:

“ The court will take note of the presence or absence of any real prejudice to the other party. Delay itself can amount to real prejudice, and the later the applicant makes the application to adduce additional witness evidence, the more likely it is to cause real prejudice to the other party, especially when a milestone date is likely to be jeopardised by (a) insufficient remaining time until the milestone event to accommodate the other party’s response if the application is granted, (b) the other party being unfairly or oppressively burdened by having to scramble up a response if the application is granted which thereby adversely affects necessary efforts on his part to meet any milestone event/requirement, and/or (c) significant time that will be taken up by the new matters at trial such that the trial dates are likely to be compromised. The court is also unlikely to be sympathetic to any late application that raises a new dimension or focus at a late stage that shifts the litigation goalposts, especially when time and opportunity have already been given for the applicant to put forward the fullness of his case. Such procedural prejudice can amount to real and serious prejudice, and may overshadow any prejudice the applicant may suffer by, say, not having an additional witness statement admitted into evidence.”

15.  The trial dates are of course a milestone date, which may not be varied unless there are exceptional circumstances justifying the variation: RHC Order 25 r 1B(3).  Practice Direction 5.2 further explains at §42:

“ 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.”

16.  In the affirmation filed in support of its summons, the plaintiff puts the entire blame on its former solicitors, for producing and filing the existing witness statements which were “poorly prepared” and “not putting forward what the Plaintiff had told HYL all along about what happened in the transaction with the Defendant”.  It is said that only the handling solicitor signed the statements of truth to the plaintiff’s pleadings.  However, as Mr Pao points out, Mr Lam Chi Wah, one of the proposed new witnesses, signed the statement of truth for the Re-Amended Reply.  He is the person now said to have received the referral of the potential business with the defendant from Danny Ko.  He must have known for a long time that he had not made a witness statement for the action.  In contrast, the existing witness statement was made by Lam Tsz Chiu Andrew who stated he had been authorised by the plaintiff to do so.  The stance adopted in that statement was that the defendant’s allegations were groundless, that many of the matters stated by the defendant relate to the dealings between the defendant and third parties that had no association with the plaintiff, and that the defendant had not been able to finish any proof to substantiate the allegations against the plaintiff.  This is not a case where a party says his former lawyers have missed a legal point, which the party as the lay client could not itself have detected.  Rather, the new matters being raised are about the factual allegations that the plaintiff wishes to advance as part of its case.  It is also pertinent to note in this context that the plaintiff is not an unsophisticated individual, but a company carrying on business as a moneylender which presumably has had litigation experience.

17.  Although it is now asserted that the plaintiff had told its former solicitors “all along” what had happened, none of the contemporaneous communication between the plaintiff and its former solicitors has been disclosed in the present application.  If the plaintiff had indeed specifically told its former solicitors everything it now wishes to adduce, why would the solicitors not mention them at all?  In particular, if the plaintiff had given the former solicitors copies of the new documents it now seeks to introduce, including the email of 7 July 2015 from Danny Ko and the approval form, why would the solicitors withhold them from discovery?  In my opinion, the explanations proffered leave much room for scepticism.

18.  The excuse put forward by the plaintiff does not, in my view, justify the present application and even if taken at face value, it falls far short of the kind of exceptional circumstances required for adjourning the trial.  In the circumstances it is unnecessary to set out the prejudice that the defendant says would be caused to her if the trial dates were vacated.

19.  I am, however, prepared to allow the amendments to the Statement of Claim which seem to me to raise few substantively new factual matters.  The supplemental agreement has been referred to by the defendant herself and the waiver of certain sums of fees and expenses has been mentioned in an existing witness statement.  Mr Pao also accepted that, viewed in isolation, those amendments are unlikely to cause prejudice to the defendant in the context of preparation for trial.  I am also prepared to give leave for the supplemental witness statement of Chan Siu Fong Eling to be filed since she is an existing witness and it falls within a relatively narrow compass.

20.  For these reasons, there will be an order as follows:

(1) The plaintiff do have leave to amend the Statement of Claim as per the draft attached to its summons of 11 July 2019, and file and serve the Amended Statement of Claim within 3 days hereof.

(2) The defendant do have leave to make consequential amendments (if any) to her Re-Re-Amended Defence and Counterclaim, and file and serve the Re-Re-Re-Amended Defence and Counterclaim (if any) within 14 days of service of the Amended Statement of Claim.

(3) The plaintiff do have leave to make consequential amendments (if any) to the Re-Amended Reply and Defence to Counterclaim and file and serve the Re-Re-Amended Reply and Defence to Counterclaim (if any) within 14 days of service of the Re-Re-Re-Amended Defence and Counterclaim (if any) under paragraph 2 above.

(4) The plaintiff do have leave to rely upon the supplemental statement of Chan Siu Fong Eling as per the draft attached to its summons of 11 July 2019.

(5) The defendant do have leave to serve a supplemental witness statement in reply to the witness statement under paragraph 4 above within 28 days hereof.

21.  There will be an order nisi that (1) the costs of and occasioned by this application and by the amendments to the Statement of Claim be to the defendant, to be taxed if not agreed; and (2) the defendant’s own costs be taxed in accordance with the Legal Aid Regulations.