BANK OF CHINA (HONG KONG) LTD v. WONG KAM HO AND OTHERS

HCMP 3324/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.3324 OF 2002

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REASONS FOR DECISION

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1.  The plaintiff has taken out an application for an order in terms of the following:

a. Extension of 60 days to set down a 7-day trial;

b. Within 14 days, leave to serve the supplemental witness statement of Lam Sun Sun;

c. Within 14 days, leave to serve the witness statement of Allen Leung Kam Man;

d. The above supplemental witness statement and witness statement stand as evidence in chief unless otherwise ordered;

e. Reading of the affirmation of Wong Kam Ho (the 1^st Defendent)filed on 18 August 2004 at the trial.

2.  Miss Eva Sit is the counsel acting for the plaintiff and Mr. Allen Lam is the counsel acting for the 4^th Defendant, both of whom have already submitted their skeleton submissions the day before yesterday.  I am grateful for their assistance.

3.  For the present application, it can be briefly stated that the plaintiff is the mortgagee of these proceedings claiming against the 1^st to 4^th Defendants as mortgagors pursuant to two Legal Charges dated 4 August 1997 and 19 March 1998 respectively for outstanding indebtedness owed by the 5^th Defendant as the borrower.  The 1^st and 2^nd Defendants are husband and wife, so arethe 3^rd and 4^th Defendants. The 3^rd and 4^th Defendants had mortgaged their matrimonial home by Legal Charge dated 19 March 1998 to secure the indebtedness of the 5^th Defendant.  Now the 1^st and 3^rd Defendants had passed away and the 2^nd Defendant cannot be located.

4.  The plaintiff had obtained judgment against all defendants before Mr Registrar C. Chan on 5^th December 2002.  On 10^th March 2004, the 4^th Defendant successfully set aside the judgment on the ground that she did not instruct the solicitors purportedly appearing on her behalf before Mr Registrar C. Chan.  The 4^th Defendant now puts up the defence that she had executed the Legal Charge on 19^th March 1998 as a result of material non-disclosure and/or undue influence on the part of the 3^rd Defendant (her late husband) and/or the plaintiff, its servants or agents and she has also made her counterclaim.  [Bundle B - 243][1]

5.  From Mr. Lam’s skeleton submissions [Skeleton - 3][2], I can see that the 4^th Defendant has raised no strong objection to the extension of time for setting down the trial.  Nor had the 4^th Defendant asked this court to dismiss the plaintiff’s claim altogether.  The real dispute is over the plaintiff’s application in respect of paragraphs 1(b) to 1(e) above.

6.  At paragraph 11 of the skeleton submission, Mr. Lam alleges that the plaintiff’s application is to admit (a) the affirmation of the 1^st Defendant, (b) the affirmation of the 2^nd Defendant, (c) the draft and unsigned witness statement purported to be that of the 1^st Defendant and (d) the draft and unsigned witness statement purported to be that of the 2^nd Defendant as evidence in the forthcoming trial, without calling the 1^st and 2^nd Defendants as live witnesses.

7.  This is inconsistent with the contents of the summons set out above.  I have asked Mr. Lam to clarify this for me.  Mr. Lam explains that in Mr. Lam Sun Sun’s supplemental witness statement, the draft unsigned witness statements of the 1^st and 2^nd Defendants were introduced.  He has to say that it is improper for Lam’s supplemental witness statement to bring in the unsigned draft witness statements of the 1^st and 2^nd Defendants.  Miss Sit submits that those witness statements will be subject to the trial judge’s decision as to their admissibility, the hearsay notice of them having been filed and served.  I have specifically asked Mr. Lam if it is possible for the plaintiff to take out an application for leave from the trial judge to admit those draft unsigned witness statements of the 1^st and 2^nd Defendants as evidence at the trial even if they are expunged now.  Mr. Lam agrees that it is possible, but the plaintiff should use the proper application.  In those circumstances, it serves no practical purpose to have a long-drawn argument over this issue as the issue of admissibility has not been determined by me today, but will be determined by the trial judge.  After all, there is no application before me today for their admissibility.

8.  I shall now deal with the plaintiff’s application.

Extension of 60 days to set down a 7-day trial

9.  Although the 4^th Defendant does not oppose extension of time for setting down on condition that paragraphs 2-5[3] of the plaintiff’s summons are dismissed [Skeleton - 3], I do not consider that paragraphs 2-5 should be legitimate reasons for not granting the extension of time for setting down since the 4^th Defendant is not asking this court to dismiss the plaintiff’s claims altogether.  Order 34 rule 2(2) of the Rules of High Court gives the 4^th Defendant the option of setting down if the plaintiff has failed to do so.  The Court of Final Appeal has, in its judgment in Wing Fai Construction Co.  Ltd.  (in liquidation) v. Yip Kwong Robert & 2 others FACV 3/2011[4], stated quite clearly that the parties should not treat the litigation as a game.  It should be taken seriously for resolution of disputes.  See paragraph 34.  Also, the attitude of “letting sleeping dog lie” “is no longer acceptable post-CJR, where all parties to a litigation have the obligation to progress an action so that they are brought closer to the resolution of their dispute, rather than be distracted by litigation tactics.”  See paragraph 47.  In other words, under the new culture of CJR, the 4^th Defendant also bears the obligation of having the matter set down for resolution of her disputes.  Accordingly, I shall accede to the plaintiff’s request to grant the extension as requested.

The supplemental witness statement of Lam Sun Sun

10.  Mr. Lam opposes paragraphs 4-11 and 15-19 respectively only.  For paragraphs 4-11, his reason is that they are simply a summary of what one can read from the documents and do not add anything useful.  Although the summary of fact can be gleaned from thedocuments, a summary of fact not opposed by Mr. Lam will be useful for the court at the trial.  The supplemental witness statement will look odd if the summary of fact is taken out from it.  I find that there is no real reason for expunging these paragraphs. 

11.  As to paragraphs 15-19, Mr. Lam has raised two main reasons for his objection.  Firstly, he says that the settlement of costs between the plaintiff, the 4^th Defendant and Messrs.  Lau, Chan & Ko (solicitors for the other defendants) will not be an issue for the trial.  I adopt my same reasons for paragraph 4-11 in relation to Lam’s supplemental witness statement and for the same reasons, I reject his objection.  Secondly, he says that these paragraphs with the annexure of correspondence between the solicitors are for the purpose of adducing the draft and unsigned witness statements.  For this argument, I have discussed this issue above and I have to say that there is no application before me today for the unsigned draft witness statements of the 1^st and 2^nd Defendants to be adduced as evidence.  This ground therefore fails.

The witness statement of Allen Leung Kam Man

12.  Mr. Lam complains that the plaintiff has put in the hearing bundle Mr. Leung’s draft witness statement without leave of the court.  [Bundle A - 214-219] Since Mr. Lam opposes to Mr. Leung’s witness statement, the draft will be expunged if leave is refused.  It only serves the purpose of allowing this court to make reference to it for the purpose of determining whether it is relevant to the issues in dispute at trial and, if so, whether it can be admitted as evidence at trial.  Mr. Lam argues that Mr. Leung is the conveyancing clerk, who now seeks to give evidence relating to the circumstances under which the 4^th Defendant had signed the 5 Legal Charges in 1987 – 1995, 7-11 years prior to the matter in question.  He further argues that this witness statement raises facts and issues that have not been pleaded by the plaintiff and the 4^th Defendant in any of the pleadings and are therefore inadmissible.  [Skeleton - 21] The issue for the trial, as submitted by Mr. Lam, is purely what happened at the office of plaintiff’s then solicitors on 19 March 1998 when the 4^th Defendant signed the Legal Charge [Skeleton - 21(d)]. 

13.  In my view, Mr. Leung’s witness statement goes to the credibility of the 4^th Defendant, in particular, in her Defence where she pleaded that she is only a housewife, reposing full trust and confidence in her late husband, the 3^rd Defendant in handling all matters, including all finance matters relating to the properties and that she did not know English and that she held no position in the 5^th Defendant, as if she had no experience in commercial business.  See paragraph 2(a) to (f) of Defence [Bundle B - 243-244].  The plaintiff has, in the Reply, refuted such allegations.  See paragraph 3(a) to (d) [Bundle B - 251].  Mr. Leung’s evidence will shed light on her experience in other dealings where she had executed legal documents for securing credit facilities from the bank.  This is obviously relevant for the trial judge to assess the credibility of the 4^th Defendant’s evidence at the trial.  According to Miss Sit, the 5 Legal Charges have been disclosed in the first List of documents and that the 4^th Defendant has also made statements in relation to them in her supplemental witness statement.  There is no valid reason to oppose Mr. Leung’s witness statement.

14.  If the supplemental witness statement and the witness statement are admitted into evidence, it is only a matter of procedure to order them to stand as evidence in chief under Order 38 rule 2A(7)(a) of RHC.  Mr. Lam has not advanced his argument on this issue.

Reading the Affirmation of the 1^st Defendant filed on 18 August 2004 at the trial

15.  Under Order 38 rule 2 (1) of RHC, the Court may, at or before the trial of an action begun by writ, order that the affidavit of any witness may be read at the trial if in the circumstances of the case it thinks reasonable so to do.

16.  Mr. Lam argues that the 1^st Defendant’s affirmation was for the purpose of setting aside the judgment against the 4^th Defendant and it was made for the purpose of determining the costs against the solicitors for the defendants.  Since the question of costs has been agreed, a large part of the 1^st Defendant’s affirmation is no longer relevant at the trial.  He further submits that the 1^st Defendant’s affirmation will touch on the 4^th Defendant’s personality, which, he submits, should be canvassed through cross-examination by plaintiff’s counsel at the trial and it does not assist the trial judge for the 1^st Defendant to say “I formed the clear impression that the 4^th Defendant was a woman of intelligence, with a mind of her own.” [Skeleton - 16]

17.  It is the plaintiff’s submission that the 1^st Defendantis not available for giving oral evidence at the trial.  The question for this court to decide is whether it is reasonable to read out the 1^st Defendant’s affirmation at the trial.  The Court will, of course, take all the circumstances into consideration before exercising its discretion.  The first question is whether this affirmation is relevant to the issues at trial.  Having considered the contents of it, I can easily come to a conclusion that it is relevant for the issues at trial, in particular, the circumstances leading to the joint business between the 1^st Defendant and the 3^rd Defendant and the circumstances leading to the execution of the Legal Charges.  Those circumstances are not the 1^st Defendant’s opinions, but the factual background of the issues in dispute.   This is obviously relevant for the trial judge.  The trial judge should be able to take the facts rather than the 1^st Defendant’s personal opinions to form his own views about the 4^th Defendant.  It is apparent that the credibility of the witnesses, particularly the 4^th Defendant, will play a significant role in the determination of the disputes between the parties.  The second question will be whether this affirmation is reliable as to the facts stated therein.  There is no evidence or argument by Mr. Lam today that the facts stated are false or fabricated.  In fact, the 1^st Defendant made the affirmation without knowledge that he would not be able to go through cross-examination himself, if the plaintiff’s allegation that he has passed away is valid.  The third question is will this affirmation cause prejudice to the 4^th Defendant, and if so, will it not be remedied by costs or other means?  I can see no prejudice if the 4^th Defendant is given the opportunity of making response to the contents of the 1^st Defendant’s affirmation.  Miss Sit has fairly reminded me that she will only ask for an order that leave be given to the plaintiff to rely on the 1^st Defendant’s affirmation as hearsay evidence at trial, subject to questions of admissibility and weight to be determined by the trial judge.

18.  Having considered those factors above, I am satisfied that it is reasonable for me to make the order as requested subject to the 4^th Defendant being at liberty to, within 42 days from the date of this order, serve an affirmation in response to the 1^st Defendant’s affirmation and the costs should be in the cause.

19.  I shall accede to the plaintiff’s application.

20.  As to the costs of this application, including the hearing today, Miss Sit submits that the application should be costs in the cause and the costs for the hearing be to the plaintiff.  Mr. Lam argues that the costs should be to the 4^th Defendant for (a) delay by the plaintiff in taking out the application and (b) the plaintiff has not put in Leung’s draft witness statement in the application until 2 days before this hearing.  He also says that alternatively, the costs should be in the cause.  I accept that delay in the application plays no part in determining the costs of hearing’s today.  I therefore accept Miss Sit’s proposed order on costs.

21.  I shall make an order in terms of the following:-

a. Leave be granted to the plaintiff to set the matter down for trial within 60 days from the date hereof for a 7-day trial before a Judge in the Fixture List;

b. There be a pre-trial review before the trial judge on a date to be fixed 12 weeks before the trial date.  The parties shall raise the issue of recusal, if any, prepare the agreed/certified translation for the Chinese documents and confirm the length of trial by counsel at the pre-trial review hearing;

c. Upon setting down, all interlocutory applications shall be listed before the trial judge or a Judge;

d. Leave to the plaintiff to serve (a) the supplemental witness statement of Lam Sun Sun and (b) the witness statement of Allen Leung Kam Man as per the drafts provided to the court, such statement do stand as evidence in chief unless otherwise directed by the trial judge;

e. Leave to the plaintiff to rely on the 1^st Defendant’s affirmation as hearsay evidence at trial, subject to question of admissibility and weight to be determined by the trial judge and the 4^th Defendant be at liberty to serve her witness statement in response thereto within 42 days from the date hereof; and

f. Costs of this application, including the costs reserved be the costs in the cause and the costs for the hearing today be to the plaintiff, with a certificate for counsel, to be summarily assessed by the plaintiff filing and serving the schedule of costs within 14 days from the date hereof, followed by the 4^th Defendant’s opposition within 14 days thereafter to be determined by the court on a date to be fixed for a hearing of 15 minutes, such costs assessed are to be paid by the 4^th Defendant in any event.  The 4^th Defendant’s own costs be taxed in accordance with the Legal Aid Regulations.