SIDEPEC INTERNATIONAL LTD v. CHEUNG HING

HCA 829/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO. 829 OF 2010

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REASONS FOR DECISION

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1.  Wong Chor Cheung (“Wong”) and the defendant (“Cheung”) each holds 50% issued shares in Wah Fung Forest Resources Ltd. As representative of the plaintiff (“Sidepec”), Wong concluded an agreement for the purchase of Cheung’s shares in Wah Fung. In this action, Sidepec seeks specific performance of the sale and purchase agreement whereas Cheung seeks rescission or termination of the same. Trial, which is estimated to last for 8 days, will commence on 1 August 2013.

2.  Before me were Cheung’s summons for time to file and serve his supplemental witness statement; and Sidepec’s summons for adjournment of the trial.  The two however had no causal link.  At the end of the hearing, I allowed Cheung’s application and dismissed Sidepec’s.  I now give my reasons.

PREVIOUS DIRECTIONS

3.  I last gave the following order in this case on 30 May 2013:

(1)   Sidepec do have leave to amend the statement of claim as per the draft attached to the summons; and that the amended pleading shall be filed and served by 4:00 of the following day (i.e., 31 May 2013);

(2)   Cheung do have leave to file and serve amended defence and counterclaim within 21 days from the date of the order;

(3)   Sidepec do have leave to amend the reply and defence to counterclaim as per the draft attached to the summons but:

(a)    subject to leave to Sidepec to make further amendment strictly consequential upon the amendments to the defence and counterclaim pursuant to (2) above; and

(b)   the amended reply and defence to counterclaim incorporating the amendments pursuant to (a) above shall be filed and served within 14 days after service of the amended defence and counterclaim pursuant to (2) above;

(4)   Sidepec do have leave to file and serve the supplemental witness statement of Wong (as per the draft attached to the summons) and to rely on the same at the trial;

(5)   Cheung do have leave to file and serve supplemental witness statement in respect of the contents of Wong’s supplemental witness statement (under (4) above) within 21 days from the date of the order.

4.  What happened during and after the pre-trial review as well as my reasons for the above order were set out in writing and handed down on 3 June 2013.

WHAT HAPPENED AFTER 30 MAY 2013

5.  On 10 July 2013, Sidepec filed its notice of change of solicitors.  When chased for the trial bundle, Sidepec through solicitors asked Cheung’s solicitors to prepare them instead.  Cheung through solicitors asked for Sidepec’s consent to time extension for the filing of the amended defence and counterclaim.  Sidepec’s solicitors replied that it had no instruction to reply to such request.  This caused Cheung to take out a summons for the time extension on 16 July 2013.

6.  On 18 July 2013, the time requested by Cheung was finally extended by consent, thus saving a hearing at the last minute.  Nevertheless on the same day, Sidepec did 2 other things.  First Sidepec filed and served the supplemental statement of Wong, though leave to do so was given on 30 May 2013.  This caused Cheung to take out his summons on 19 July 2013 for leave to file and serve his supplemental statement in response (which Cheung had leave to do as directed on 30 May 2013).  Second, Sidepec filed its summons applying for adjournment of the tria6l.

CHEUNG’S APPLICATION

7.  Sidepec opposed Cheung’s application.  Its counsel, Mr Liang, argued that Cheung’s application was late and unjustified because the draft of Wong’s supplemental statement was available when the last order was made on 30 May 2013.  He complained that this put his client in difficulty when he had no sight of the draft of Cheung’s supplemental statement.

8.  I found the opposition totally unjustified.  The order on 30 May 2013 was perfectly clear in that leave to Cheung to file his supplemental statement was given on the basis that Sidepec would indeed file the supplemental statement of Wong; and would do so forthwith.  Hence the 21-day period for Cheung to file his supplemental statement in response.  Unless and until Sidepec did so, Cheung was not obliged to file his supplemental statement as there was simply no supplemental statement on behalf of Sidepec for Cheung to respond to.

9.  The fact was that Sidepec somehow decided to file the supplemental statement of Wong one and a half months after the order.  Not only did Sidepec offer no explanation for that, but it also maintained its opposition to what was effectively a consequential time summons taken out by Cheung.  This was wholly unjustified.

10.  As indicated during the hearing, Cheung could actually file his supplemental statement within the day.  I therefore gave leave to Cheung to do so with costs to Cheung, summarily assessed at HK$800 and payable in 14 days.

SIDEPEC’S APPLICATION

11.  O.25, r.1B(3) of the Rules of High Court and Practice Direction 5.2 provide that a milestone date, such as the trial date, shall not be varied unless in exceptional circumstances.  The ground now put forward was that Chan Sai King (“Chan”), a witness for Sidepec, would be unable to attend the trial due to illness.

12.  Counsel referred to Lam Yin Pok Bosco v Dr Chan Yee Shing & Anor, HCMP 2256/2012 (2 November 2012) and Arko Ship Leasing Ltd v Winsmart International Shipping Ltd [2013] 2 HKLRD 121.  Relevant to the circumstances of the present case were the following considerations:

(1)   The illness of a party or a witness may, depending on the circumstances of the case, justify vacating and re-fixing the trial date.  But the court is entitled to be satisfied that the inability of the litigant or witness to be present is genuine and the onus is on the applying party to prove the need for such an adjournment.

(2)   As far as medical evidence is concerned, it may be relevant to know if any ameliorative measures could be put in place if the party or witness were to have to give evidence; and to explain, if it were the case, why such ameliorative measures might not be sufficient to address the perceived difficulties.  An unexplained recommendation for an adjournment, even if accompanied by a diagnosis of the condition of the patient and the proposed course of treatment, does not serve the purpose.

(3)   It is necessary to consider whether the adjournment is likely to address the problem faced by the applying party.

(4)   It is also necessary to consider the nature of the evidence the witness intends to give, how important it is, and whether he is the only possible source of such evidence.

(5)   The risk of prejudice or disadvantages to the other party if the adjournment is granted should be considered.

(6)   The application must also be viewed in terms of the wider implications on the administration of justice.  This includes the public interest in the efficient despatch of the court’s business, and the effect on the interests of future litigants of vacating a hearing close to the date and possibly leaving the court empty.  In other words, the timing of the application for adjournment is important.

13.  For the purpose of the last hearing dated 30 May 2013, Sidepec already suggested that Chan’s health condition has been unwell since October 2012.  Medical evidence was produced.  I shall not repeat my observation about that as already set out in my reasons for decision handed down on 3 June 2013.  There was then no indication of inability of Chan to attend the trial or intention to apply for an adjournment of the trial.  By applying for adjournment of the trial now, Sidepec had to be suggesting that the condition of Chan has deteriorated since then.

14.  The medical records now produced suggested that Chan attended the hospital again on 13 June 2013.  The diagnosis was coronary heart disease, angina pectoris and hypertension.  Chan refused to be admitted and left with medication.  According to Wong, Chan could not quit all his scheduled jobs.

15.  Chan was eventually admitted to the hospital in Dongguan on 10 July 2013.  Diagnosis remained the same but his condition, as described, sounded like it was poorer than before.  Hospitalisation for half a year was recommended.  Recommendation against emotional excitement, agitation and travelling was made, or he might run the risk of triggering his disease and danger to life.

16.  Further medical records were produced by way of affirmation filed in the afternoon before the hearing.  The more up-to-date record suggested that Chan’s condition further deteriorated.  Whilst the condition was described as crisis, the recommendation remained that of hospitalisation for half a year.

17.  In view of the medical evidence, I was prepared to consider the application, assuming that Chan were prevented by illness from attending the trial.

18.  It was suggested that the trial would not be fair without the presence and evidence of Chan.  I found that to be exaggeration.

19.  Quite irrespective of the alleged beneficial interest of Chan in Sidepec, he was indeed neither a shareholder nor a director of the company.  There is no issue of the presence of Sidepec (which is legally represented anyway) in the trial, even if Chan is absent.  His role in the trial would really be that of a witness for Sidepec.

20.  As I observed in my written decision handed down on 3 June 2013, Wong was evidently behind the steer driving the deal between the parties from conception to conclusion of the sale and purchase agreement.  Wong is obviously the key witness for Sidepec in respect of the pleaded issues in dispute.

21.  Mr Liang specifically referred to Cheung’s allegation that Wong misrepresented that Sidepec was a company of his Mainland customer and friend and that Sidepec was in fact owned or controlled by Wong.  Mr Liang emphasized the importance of Chan’s evidence in rebuttal of that.

22.  The evidence that Chan would give is contained in his statement which is not more than the full length of 2 pages.  The material paragraphs of his statement aim at one point, namely, Wong dealt with Cheung pursuant to his authorisation and instruction.  As to the actual dealings between Wong and Cheung, Chan was not involved and had to rely on Wong’s reports.  When Sidepec saw the need to file supplemental evidence, including that of the detailed background of the dealings between Chan and Wong as well as the alleged beneficial interest of Chan in Sidepec, it was still Wong, not Chan, who made the supplemental statement (as mentioned above).

23.  In the premises, there is simply nothing that Chan plans to say in evidence (as those set out in his statement) that Wong would not be saying in his evidence and perhaps in even greater details.  Even assuming that Chan does not give evidence, Sidepec will not suffer from any handicap in its evidence.  The perceived risk due to the lack of corroboration by Chan of what Wong would say in evidence relating to a particular aspect of the case does not entitle Sidepec to seek an adjournment of the trial in the circumstances.

24.  Mr Liang suggested that there would be difficulty in obtaining instruction, if Chan was not present at the trial.  I doubt that.  I shall not repeat my observation about the role of Wong throughout this matter.  But it should be noted that the condition of Chan has not actually prevented Sidepec’s legal representatives from taking steps in this action.  The notice of change of solicitors was actually filed on the very day when Chan was admitted to the hospital.  Both parties should be ready now for what lies ahead in less than 2 weeks; and Sidepec is still fully represented, though by a completely different legal team.

25.  I disagree with the suggestion that an adjournment of the trial would not entail prejudice to Cheung that could not be compensated by way of costs.  This is an action to enforce an agreement concluded some 7 years ago.  There are other related proceedings between Wong and Cheung.  Then there was the timing of the adjournment being sought.  Allowing the adjournment at this stage and in these circumstances, when it is also not wholly justified, would have frustrated the proper administration of justice.

26.  I therefore dismissed Sidepec’s application for adjournment with costs.  Had the adjournment been granted, Sidepec would have expected an adverse order as to the costs to be taxed on a higher basis.  Now a failure, the application has occasioned to Cheung costs, which likewise ought to be taxed on a higher basis.  I summarily assessed such costs to be HK$95,000, which Sidepec shall pay within 14 days.