FAITH BRIGHT DEVELOPMENT LTD v. NG KWOK KUEN AND OTHERS

HCA 9058/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 9058 OF 1999

_________________________

BETWEEN

_________________________

___________________________________

REASONS FOR DECISION

___________________________________

Introduction – why this Decision

1.  Further to my Decision made on 6 September 2010 for the case Sherryknoll Enterprises Limited & Others v Grand Power Limited HCA 1599/2009, in which I had, for the same reason as this case set out below, adjourned the Case Management Summons hearing to another date disallowing all costs between the parties and their clients, this is yet another Case Management Summons represented by solicitors, who have not filed or served the Timetabling Questionnaires in accordance with Order 25 rule 1(1) and the Practice Direction 5.2. Nor had they filed the Mediation Certificates in compliance with paragraph 9 of Practice Direction 31, which came into operation on 1 January 2010. I shall set out my reasons below.

2.  At the time of writing this Decision, I have come across similar cases in other Case Management Summons hearings. I have also gathered information from the Registrar of the District Court that similar situation of non-compliance with Order 25 and Practice Directions of 5.2 and 31 is prevalent in the District Court.

3.  It seems that some of the solicitors have forgotten about the Civil Justice Reform (CJR) and remained in the old era before the CJR. This Decision intends to remind those who have been ignoring or forgetting the changes under the CJR of the importance of the Timetabling Questionnaire and the Listing Questionnaire under Order 25 of the RHC and Practice Direction 5.2.

The application

4.  This Action was commenced 11 years ago. The application was taken out under Order 25 of the RHC. Rule 1(1) of Order 25 provides:

“For the purpose of facilitating the giving of direction for the management of a case, each party shall, within 28 days after the pleadings in an action to which this rule applies are deemed to be closed –

(a) complete a questionnaire prescribed in a practice direction issued for that purpose (Practice Direction 5.2) by providing the information requested in the manner specified in the questionnaire; and

(b)  serve it on all other parties and file it with the Court in the manner specified in the practice direction.”

5.  Paragraph 7 of Practice Direction 5.2 provides:

“The Timetabling Questionnaire shall be filed and served in the form as per Appendix A.”

The heading of Appendix A annexed to Practice Direction 5.2 reads in bold heading “Timetabling Questionnaire to be filed after close of pleadings”

6.  The amended RHC and P.D. 52 under the CJR came into operation since 2 April 2009 and there is no reason for any party to ignore the new requirements.

7.  Rule 1(1) of Order 25 has stated very clearly why this court requires the Timetabling Questionnaires for case management, which requires no further elaboration. It will be useful if we simply revise why there should be Timetable Questionnaire and highlight the relevant parts of the Timetabling Questionnaire to illustrate that the Court requires such information for proper and effective case management.

Significance of the Timetabling Questionnaire

8.  The final report of the CJR explains why there should be such a system of having the Timetabling Questionnaire. At paragraph 361 of the Final Report of CJR, the Committee of the CJR has highlighted the deficiencies under the old procedural scheme, in which a summons for directions was adopted. The Committee pointed out as follows:

“In the existing procedural scheme, a court-determined timetable is intended to be provided at the hearing of the summons for directions. However, experience has shown that such timetable is hardly ever effective. Parties often ask for “standard” time-limits to be imposed, without sufficient thought given to the exigencies of the particular case. The court is often not equipped to form an independent judgment as to the realism or otherwise of the directions proposed. Where a party thereafter drags his feet and fails to meet the time-limits set as the summons for directions, the system relies on the other side to complain ex post facto of such non-compliance by taking out interlocutory applications which generate expense and further delay. Such a system therefore offers opportunities for a party to inflict delay and expense on the other side, with repeated interlocutory applications depleting resources.”

9.  It was with the above deficiencies in mind that the Committee recommended the reform by way of having questionnaire after close of pleadings, which informs the Court of the updated positions of the matter so that the Court may exercise active case management for the administration of justice for the parties.

10.  At paragraph 362 of the Final Report, it suggests the introduction of:-

“(a) an early questionnaire, to help determine what directions are needed in the case and what timetable the court should set;

(b) a timetabled series of milestone dates including the trial date which are largely immovable, but complemented by the parties having flexibility to agree to time-limit changes for matters falling between milestone dates; and

(c) an approach whereby parties are not permitted to hold up the trial on the grounds of their own lack of preparedness (in the absence of some exceptional reason justifying this), but with such parties having instead to bear the consequences of their own lack of readiness as the trial proceeds.”

11.  The design of the Timetabling Questionnaire as per Appendix A to the P.D.5.2 clearly shows the intention of the CJR. Part A reminds the parties of seeking mediation to settle their disputes, which, if successful, is the cheaper and more efficient mode for the resolution of the parties’ disputes as compared to litigation. Part B and Part C deal with the parties and the pleadings. From the answers to these parts, the court will know whether there will be new parties joining in or interlocutory applications to complete the pleadings. If the parties inform the Court that there may be outstanding interlocutory applications such as leave to join another party to the proceedings, amend the pleadings or request for further or better particulars, the Court will fix the time, within which those applications have to be taken out. This measure will minimize delay in the proceedings.

12.  Part D and Part E deal with witnesses on factual evidence and expert evidence. The number of factual witnesses will be helpful to estimate the length of the trial.

13.  Expert evidence will cause special concern for the Court because it may cause delay and waste of expenses for the parties if proper directions are not made for its preparation. Lam J. in his judgment Chok Yick Interior Design & Engineering Co. Ltd. （作益裝飾工程有限公司）v Lau Chi Lun（劉志倫） trading as Chi Hung Construction Eng. Co.（志洪建築工程公司）HCA 1480/2008 has vividly described his experience as the trial judge as follows:

“7. I wish to stress that application for expert directions is not a mere formality. It is an integral part of the case management process. As a trial judge, I have seen far too many cases where the lack of proper preparation of expert evidence resulted in unnecessary costs and time spent on evidence which is of no help to the resolution of the dispute. And such wasteful exercise cost the parties a great deal of money, not only in terms of the fees paid to the experts, but also legal costs spent on paying for the lawyers’ reading, understanding of the reports, discussing the matter with the experts and then the time (and costs) of the lawyers explaining and exploring the expert evidence with the judge by way of submissions and the examination and cross-examination of the experts during trial. Very often, it is not only the party responsible for the mismanagement of expert evidence who has to pay such costs, similar costs have to be incurred (at least on an upfront basis) by his opponent.

8.  Such wastage is not consistent with the underlying objectives set out in Order 1A Rule 1.  Thus, the court, in the performance of its case management duty under Order 1A Rule 4, should give expert directions to avoid the mismanagement of expert evidence.  And the parties and their legal representatives have a duty to assist the court in formulating the appropriate directions (Order 1A Rule 3)….”

14.  In the same judgment, Lam J. has also stated:

“13. Under the CJR regime, parties and their legal representatives must address the question of expert evidence after the close of pleadings when they prepare their Timetabling Questionnaire in accordance with Practice Direction 5.2. Para.8 of PD 5.2 requires the parties to consult each other and para.9 requires them to give as much information as is required in the Timetabling Questionnaire to enable the court to give case management directions. Section E of the Questionnaire deals with expert evidence. Para.20 sets out the general approach of the court regarding expert evidence.

14. If a party envisages the calling of expert evidence, he or she should obtain expert directions under the Case Management Summons. Attempts should be made to agree upon the directions sought. In cases where different experts are engaged by the parties, such directions should generally, in the light of what has been said above, include directions for expert meetings and joint expert report. Whilst there could be cases with exceptional circumstances where expert directions are sought at a later stage, it has to be borne in mind that the purpose of a Case Management Conference [“CMC”] is to review the due compliance with directions already given instead of affording a second opportunity for seeking directions which could have been sought upon the filing of Timetabling Questionnaire (see Paras.28 and 32 of PD 5.2). In the context of expert evidence, if there are previous directions for joint report, the court expects it filed before the CMC to enable the same to be reviewed by the court before granting leave to set down.”

15.  In Applica Consumer Products, Inc. Applica Asia Limited v Tonic Appliances Limited HCA 2011/2006, Lam J. had demonstrated the effect of proper directions on expert evidence, where he said:

“2. The case was set down for trail with an estimated length of 9 days. There were to be witnesses and experts from overseas. The legal costs of a full trial could be colossal.”

The trial had only taken one day and Lam J. had delivered his judgment 2 days later. In his judgment, Lam J. had set out the reasons for such expediency and demonstrated how effectively can proper case management shorten the trial:

“4. To provide for the efficient conduct of the expert evidence, the master had directed joint meeting of the experts. This court noted at the pre-trial review [“PTR”] that the direction had not been complied with. Thus, at the PTR, the court directed that experts meeting would take place by 30 April and joint expert statement shall be filed by 7 May. The court further directed that a defaulting party would be barred from adducing expert evidence at the trial.

5. Instead of complying with such direction, the Defendant instructed its expert not to undertake further work on the case.  Therefore, despite repeated attempts by the Plaintiff’s expert to arrange for joint meeting, the meeting did not take place.  The Defendant, as the defaulting party, was barred from adducing expert evidence at the trial.

6. Another direction given at the PTR ….The direction also provided that the plaintiff’s evidence could be admitted on papers (without calling the witnesses) if the Defendant did not appear to challenge the same.

7. I believe the direction is in line with the underlying objectives under Order 1A Rule 1 and within the case management power of the court under Rule 4.”

The Court will consider the questionnaires in interlocutory applications

16.  The parties should not underestimate the function of the Timetabling Questionnaire and the Listing Questionnaire. In Chok Yick Interior Design & Engineering Co. Ltd. （作益裝飾工程有限公司）v Lau Chi Lun（劉志倫） trading as Chi Hung Construction Eng. Co.（志洪建築工程公司）HCA 1480/2008, Lam J. had taken into consideration the Timetabling Questionnaire when he considered the defendant’s application for leave to adduce the expert report for the trial. Having taken other factors into consideration, he had refused the defendant’s application and the trial proceeded without the intended expert evidence for the defence.[1]

17.  In another case of Winford (Hong Kong) Limited v Ricacorp Properties Limited HCA 2481/2008, the plaintiff applied to the court for leave, among other things, to adduce expert evidence in support of its case. Deputy Judge Carlson had considered the Listing Questionnaire and he said:

“2. Prior to that a listing questionnaire had been answered by the parties in which, amongst other things, the plaintiff’s solicitors had indicated that there would be no need to call expert evidence.”

Deputy Judge Carlson reminded the parties of the onset of the CJR and the new culture:

“8. And all of this against the background now and a culture which has been brought in by the new Civil Justice reforms that dictate that people should really concentrate on the timetable and on being ready and getting pleadings in and ready earlier and witness statements in proper order in good time. …”

Despite counsel for the plaintiff submitted that no prejudice would be made to the defendant and nothing that could not be compensated for in costs, the Deputy Judge said:

“9. But it strikes me that this is really now far too late and it is precisely against this sort of conduct that these reforms are aimed at. And so despite Miss Tong’s best efforts, it strikes me that I should not allow any of the matters that are raised in the summons.”

18.  In the application for security for costs, the court will also rely upon the questionnaire to determine whether there is good reason for the delay in the application.

19.  In Senior Honor Limited (先安有限公司) v Lee Ki Luk （李祁祿）(also known as Lee Ho Kwong) (李濠光) & Others HCA 4043/2001, the defendants applied for security for costs against the plaintiff, which is a “window company” beneficially owned by a state-owned enterprise in the Mainland with essentially no significant asset in Hong Kong. The defendants had set up a prima facie case against the plaintiff. The plaintiff put up an argument of delay on the part of the defendants without good reasons. In his judgment, A. Cheung J. said:

“10. Now, the lack of a reasonable explanation for the delay in making the application is a material consideration that the Court should take into account. One further matter that I should take into account amongst the general circumstances of this case, is the fact that I have already alluded to, i.e. that in the checklist filed by the solicitors acting for the 1^st, 2^nd and 4^th Defendants, the solicitors had on behalf of their client confirmed with the court that there would be no application for security for costs. That confirmation came on 18 March 2003. It cannot be over-emphasized that the answers given by the parties’ legal representatives in their respective checklists constitute important information that the court relies on in the proper and efficient management and disposal of the actions pending before it. One can only assume that those representing the Defendants must have obtained thorough instructions from their clients before filling in the boxes in the standard checklist form. Not only would the court rely on the answers given in order to decide how best to deal with the further management of the case, the opposite party to the litigation would also rely on the information supplied in the checklist for the further conduct of its case and the arrangement of its affairs. That again is a relevant matter that I can and should take into account.”

The function of the checklist before the CJR referred to in the above judgment is similar to the Listing Questionnaire under the CJR. In the end, the defendants’ application for security for costs was dismissed with costs.

20.  In another recent case Raj Kumar Mahajan v HCL Technologies (Hong Kong) Limited & Others HCA 1510/2004 and HCA 954/2005, the defendants had also applied for security for costs against the plaintiff. One of the grounds raised by the plaintiff was that there had been inordinate delay by the defendants in bringing the application. When considering the defendants’ delay, Deputy Judge L. Chan said:

“35. The defendants have also not explained why they should have confirmed in their Timetabling Questionnaire filed on 30 April 2009 that they did not intend to seek security for costs but then made an about turn in July 2010. On delay and the questionnaire, I would refer to the judgment of A Cheung J in Senior Honor Ltd v Lee Ki Luk & Ors, HCA 4043/2001 at paras. 4, 5 and 10 to 12 where the learned Judge opined on the need of a reasonable explanation for delay and the court’s reliance on the answers given in checklists for use in pre-trial reviews or case management conferences.”

Deputy Judge L. Chan had also dismissed the defendants’ application for security for costs with costs.

21.  It will be quite apparent to those who have been ignoring the questionnaires under the CJR the importance of the questionnaires. They should prepare the questionnaires with care and due diligence in compliance with the Practice Directions.

The Court will decline to hear Case Management Summons without Timetabling Questionnaire

22.  In both cases referred to in paragraph 1 of this Decision, I have declined to entertain the solicitors’ request to deal with the Case Management Summons without the Timetabling Questionnaire despite submissions that the court should make such directions that the parties had no objection or the court thought fit. It is true that under the CJR spirit, the court should take such steps as it possibly can do to deal with the matter so as to save time and costs. But to make directions without the information as set out in the Timetabling Questionnaire, in my view, will not save time and costs for the parties. On the contrary, this may cause wastage of time and costs because the court is unassisted in the development and progress of the matter: whether the parties have properly pleaded their case and whether there will be application for leave to join another party, amend the pleadings or there will be interlocutory application for further and better particulars, expert evidence, discovery of documents, so on and so forth. Nor can the court rely upon the solicitors, who seem not to have considered their cases properly before the hearing. Otherwise they would have complied with the Practice Directions. To make directions for the future conduct of the matter under such circumstances is tantamount to shooting a target in the dark – total reliance on sheer luck. This cannot be proper case management under the CJR.[2] But rather, it is a great leap backward to the old era before the CJR. Any wrong directions at this stage will take quite a number of Case Management Conferences subsequently to remedy the situations, which will, no doubt, incur more time and costs for the parties and must therefore be avoided as far as possible.

The current practice for Case Management Summons hearings

23.  It should be borne in mind firmly that now the Court will tighten its grip of active case management at the stage of Case Management Summons. It will heavily rely upon the Timetabling Questionnaires filed by the parties in order to chart the proper course for the future conduct of the proceedings. I should also take this opportunity to set out the current approach of the Court in the Case Management Summons hearing in order to assist the profession to prepare for the hearing.

24.  The Court will generally follow the spirit of the CJR in its approach.

25.  The more economical means for the resolution of the parties’ disputes will be by way of mediation. If parties are agreeable to conduct mediation to resolve their disputes, the Court will consider whether a short stay of the proceedings should be ordered. At that stage, there will be other outstanding matters such as discovery, preparation of the witness statements, expert evidence etc. It will therefore be costs saving if settlement can be reached without those preparations. This is a good reason for staying the proceedings pending the outcome of mediation. However, the Court may refuse the application for a stay if the other party refuses and there is evidence that there have been delays on the part of the applicant. Much depends upon the circumstances of each case.

26.  Whether the proceedings are stayed for mediation or not, the Court will also, in the same Case Management Summons hearing, make directions for the future conduct of the matter if mediation fails to reach settlement for the parties. A Case Management Conference will be fixed for the parties. The Court will give sufficient time to the parties for the preparations so that when they return to the Court for the Case Management Conference, the matter should be ready to be set down for trial. In giving the liberal allowance of time for the parties’ preparations for the trial, the Court will usually make it clear to the parties that it will not entertain any further application for adjournment at the Case Management Conference without exceptional circumstances. The Court will also be more ready to impose draconian order by way of “unless orders” even if it entertains such application for adjournment.

27.  For obvious reasons, the Court will be rather vigilant about cases which require expert evidence, bearing in mind the substantial changes in the directions for expert evidence and also the serious consequences as stated in Lam J.’s judgment Chok Yick Interior Design & Engineering Co. Ltd. （作益裝飾工程有限公司）v Lau Chi Lun（劉志倫） trading as Chi Hung Construction Eng. Co.（志洪建築工程公司）HCA 1480/2008. See paragraph 10 supra. For such cases, the Court will usually call upon the parties for oral hearing so that the solicitors may assist it to identify the issues on which expert evidence is required and to work out the appropriate directions by reference to paragraph 20 of Practice Direction and joint meeting between the experts in order to compile a joint report for the trial as discussed in the above judgment. The parties should note that the Court has the jurisdiction to disallow the party, whose expert has failed or refused to comply with its direction of having a joint meeting with the other party’s expert, to adduce his expert evidence at the trial. At paragraph 11 of the judgment, Lam J. has the following to say:

“The utility of joint meeting and joint report in narrowing down expert issues should not be underestimated. I have explained the proper attitude of an expert in those regards at paras.488 to 493 of Chan Chun Chuen. The Court expects the experts to act responsibly and professionally in attending joint meeting and preparing joint report. An expert who cannot afford an appointment within a reasonable time to have joint meeting should not take up the role to act as an expert in legal proceedings. If an expert fails to meet or fails to confer with the other side’s expert in good faith to come up with a proper joint report, it would be a breach of para.12 of the Code of Conduct for Expert Witness on the part the defaulting expert. Further, failure to comply with expert directions may attract the consequence of barring expert evidence to be led from the defaulting party. When this happens, the case can still be set down but it will be set down on the basis that the defaulting party will not be calling any expert evidence unless he obtains relief under Order 2 Rule 5. Thus, it behoves a party, in choosing his expert, to make the necessary arrangement with the expert to ensure his availability and willingness to attend joint meeting and work conscientiously with his counterpart in the preparation of joint report. In a case where there are substantial disputes on compliance with direction to file joint report, the master can refer the matter to a judge (who can be assigned as the trial judge).”

Checklist for Case Management Summons

28.  In summary, I set out the considerations the handling solicitors should take as the checklist for the preparation of the Case Management Summons:

(1)   Mediation Certificate – advise clients on costs and to seek information from the Mediation Information Centre at the High Court Building, which is free of charge;

(2)   Discussion with the solicitor of the other party or parties on the issues of disputes and the best course to take for the resolution of clients’ disputes;

(3)   Timetable for parties to make arrangement for mediation;

(4)   Should there be a short stay of the proceedings, if so, for how long? If not, what are the reasons?

(5)   The further conduct of the proceedings and the best course to take in order to save time and costs if mediation fails;

(6)   Fill in the Timetabling Questionnaire with caution;

(7)   Where there is an application for leave to adduce expert evidence at the trial, beware that the Court will raise the following issues at the hearing:

(a)   the part of the pleadings on which expert evidence is required;

(b)   the names of the experts, the areas of expertise required with specific directions on the framing of the questions for the experts to answer for the resolution of the disputes;

(c)   Single joint expert to be appointed, if not, why not?

(d)   Timetable for joint meeting of the experts on a without prejudice basis to work out the single joint report, in which the experts set out the issues agreed and the issues in dispute, with their respective reasons to support their views in dispute;

(e)   The time for the compilation of the single joint report;

(f)   If parties consider it is not appropriate to have joint meeting between the experts and to compile a single joint report, the reasons for it.

29.  The hearing of the Case Management Summons may be shortened if the parties have considered the above and made the proposed directions for the Court’s approval at the hearing. If, on the other hand, the parties are totally unprepared for the hearing, the Court may refuse to make any directions and adjourn the Case Management Summons to another date with no order as to costs between the parties or from their respective clients. The Court cannot fix the Case Management Conference for the parties too.

Timetabling Questionnaire and Listing Questionnaire for subsequent hearings

30.  In passing, I will also like to express my own view on the Timetabling Questionnaire and Listing Questionnaire for the adjourned hearings subsequent to the first hearing. The Timetabling Questionnaire for the Case Management Summons should set out all the outstanding matters. If the Case Management Summons hearing is adjourned to another date, the parties may rely upon the first Timetabling Questionnaire unless there are drastic changes, for which, the first Timetabling Questionnaire is no longer applicable, then the parties should file and serve a fresh Timetabling Questionnaire, bringing the drastic changes to the Court’s attention. This applies the same to the Case Management Conference where Listing Questionnaires are prepared in accordance with paragraph 24 of Practice Direction 5.2. Under paragraph 32 (4) of the Practice Direction, the Court may adjourn the Case Management Conference to another date, which, in my view, is a continuation of the previous Case Management Conference though it is called the second or the third Case Management Conference.

31.  It can be seen that it requires substantial time for a solicitor to prepare the Timetabling Questionnaire or the Listing Questionnaire, with all the particulars to be verified. The Court can rely upon the information in the first questionnaire and make directions, with a view to reducing and limiting the scope of outstanding matters. As such, it will be a waste of time for the solicitors to prepare a fresh questionnaire each time, simply to repeat what they had told the Court in their previous questionnaire. The solicitors have the obligation to inform the Court at the adjourned hearing such minor changes that have occurred during the adjourned period that may affect the progress of the proceedings. However, the Court may, in appropriate cases, order that the parties should put in a fresh questionnaire for the adjourned hearing of either the Case Management Summons or the Case Management Conference.

Advice

32.  It is time for the parties in civil litigation to appreciate that the Court is determined to implement the CJR, which aims at changing the culture of the parties in civil litigation. For those who consider that the CJR is only the old wind in a new bottle, they should pause and re-consider. The Court appreciates that it will take time for the parties to adjust and change their mindset in civil litigation. The Court has already made allowance for them in the past 18 months. But there seems to be no option for them other than that either they change it on their own initiative, appreciating that it is for the public benefit or they will be made to change through errors and sanctions from the Court. The Court will expect cooperation from the professions in order to make the CJR a success.