MAK SIU BO v. YEUNG WAI FAN t/a WAI HING TRADING CO

DCCJ4057/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4057 OF 2004

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R U L I N G

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1. The plaintiff claimed against the defendant for repayment of three loans and an investment sum which he gave to the defendant in late 2003 to early 2004 together with interest thereon.  In light of the defendant’s application before me this morning, it is necessary to repeat some history of the present legal proceedings, which has been set out in my earlier ruling on 4 December 2006. 

2.The Writ of Summons was issued on 6 August 2004.  At first, both parties were legally represented.  On 11 April 2005 the defendant filed Notice of Intention to Act in Person.  He filed his witness statement on 21 October 2005 but did not attend an interlocutory hearing before a Master in chambers on 26 October 2005.  He was again absent at the checklist review hearing on 20 December 2005.  On 13 February 2006 fresh solicitors filed Notice to Act on his behalf in these proceedings. 

3.At the pretrial review hearing on 14 February 2006, Master T Chan set the case down for trial, to be heard on 21 and 24 April 2006.  But on 18 April 2006, i.e. shortly before the trial, the defendant filed a Notice to Act in Person.  He also applied for legal aid and a Memorandum of Notification of an Application for Legal Aid was filed.  On 20 April 2006, Deputy Judge S T Poon directed that all proceedings be stayed and the trial vacated and refixed to a date after 42 days. 

4.On 22 May 2006, in the absence of the defendant, the trial was refixed by the listing clerk to 4 December 2006.  On 18 August 2006, by Memorandum of Notification that a Party has been Refused Legal Aid, the Director of Legal Aid informed the court that he has declined to grant legal aid to the defendant.  On 29 November 2006 the plaintiff filed a summons for leave to amend the Reply. 

5.As evident from a Memorandum of Notification of an Application for Legal Aid dated 1 December 2006, the defendant applied for legal aid just one and a half working days before the refixed trial date.  He did not turn up at the refixed trial hearing on 4 December 2006.  On that day the plaintiff, by his counsel, Mr Ng, applied ex parte to lift the legal aid automatic stay.  After hearing submissions, I held that it was not appropriate to do so, but acknowledged that the plaintiff was aggrieved by the turn of events brought on by the defendant’s applications for legal aid, which twice aborted the trial.  I therefore ordered there be a speedy trial, which should be refixed to the earliest possible date after expiry or lifting of the legal aid stay. 

6.On 16 February 2007 the plaintiff filed his Amended Reply.  The trial was refixed to be heard before me on 11 June with the following day reserved.

7.The defendant appeared in person at the trial.  Due to the defendant’s lack of legal representation, Mr Ng opened the plaintiff’s case at some length by explaining the factual and legal issues.  Both parties agreed to adopt their witness statements as part of their evidence and had no objection to the authenticity and admissibility of the documents in the trial bundle. 

8.On the morning of the second day of trial, i.e. 12 June 2007, the defendant, whilst cross-examining the plaintiff, applied orally to discover and adduce further documents, including copies of a loan document and cheque, which are now pages 85 to 88 of the documents folder of the trial bundle (hereinafter called “Document A”) for the purpose of the trial. 

9.Mr Ng was put into difficulty because the plaintiff was then in the witness-box being cross-examined by the defendant.  With the agreement of both parties the defendant continued to cross-examine the plaintiff on other topics and he completed his cross-examination on such other topics just before breaking for lunch.  I asked the defendant whether he intended to adduce any other document apart from Document A.  He indicated there might be more.   I informed the defendant that if he wished to apply for leave to discover and adduce further documents, he had to first identify and then show them to the plaintiff through Mr Ng.  I gave the defendant until 2.30 pm to identify such documents, whereupon, without demur from the defendant, the plaintiff’s legal representatives would be at liberty to take instructions from the plaintiff in respect of such documents.

10.Before breaking off for lunch I also reminded the defendant that this case has taken a long time to come to trial; it was incumbent on him to come fully prepared for trial, especially when discovery of documents on his part was handled by his previous solicitors.  The plaintiff was in no way to blame for the delay and the court has to adopt a fair and even-handed approach to avoid prejudice to the plaintiff, especially when the defendant’s cross-examination of the plaintiff had almost drawn to a close.  I informed the defendant the court would not smile kindly on any disruption that would unnecessarily prolong the trial (particularly as I had granted an order for speedy trial).  I also warned the defendant that this would be his last opportunity, and he should make use of the lunch break to identify any further material he wished to adduce and to make his application after lunch. 

11.After the lunch break, the defendant informed the court that he wished to adduce Document A and three pages of sales and expenditure breakdown, which is now Exhibit D1 (hereinafter called “Document B”).  The defendant also wanted to put in a bundle of supporting documents for document B but eventually withdrew such request.  Mr Ng had no objection in respect of Document B so it became Exhibit D1.  The defendant proceeded to cross-examine the plaintiff on the same.  Mr Ng then re-examined the plaintiff.  In the circumstances, but for the issue raised by Document A, the plaintiff’s evidence was complete, and Mr Ng was ready to close the plaintiff’s case. 

12. In respect of Document A, Mr Ng required inspection of the original copies of such documents.  Since it was anticipated that the trial would have to be adjourned part-heard in any event, both parties agreed that inspection could be carried out during the adjournment.  I therefore directed, inter alia, that:

(a)	the defendant to bring the original copies of Document A to the plaintiff’s solicitors’ office on 23 June 2007 for inspection;
(b)	the plaintiff, within 14 days thereafter, write to the defendant, with copy to the court, stating whether he would object to discovery and reliance at trial by the defendant of such documents;
(c)	if the plaintiff had no objection, he be granted leave to file and serve supplemental witness statement limited to matters arising from Document A within 14 days thereafter;
(d)	the defendant’s application to discover and rely on Document A be adjourned to today;
(e)	costs of the hearing on 12 June 2007, apportioned as 45 minutes in respect of the defendant’s application, be reserved;
(f)	the trial be adjourned part-heard to today.

13.On 6 July 2007 the plaintiff’s solicitors wrote to the court indicating that the plaintiff had no objection to document A.  Pursuant to my order, the plaintiff filed and served a supplemental witness statement on 7 July 2007.  Both the new documents and supplemental witness statement have now been included in the trial bundle.

14.Today, without objection by either party, I, inter alia, granted leave to the defendant to discover and adduce the documents at pages 85 to 88 of the documents folder of the trial bundle at this trial.  The plaintiff also adopted his supplemental witness statement as part of his evidence-in-chief.  But for the present application of the defendant, which I shall come to, Mr Ng is ready to close the plaintiff’s case, and the defendant’s case can commence. 

15.I note here that two days, i.e. today and tomorrow, have been reserved for completing the adjourned trial, which estimation I believe, barring unforeseen circumstances, is realistic given the scope of the plaintiff’s remaining evidence and the defendant’s evidence. 

16.However, on 11 September 2007, i.e. three and a half working days before the adjourned trial hearing today, the defendant applied by letter, described as “supplemental submission”, to the court enclosing (a) his draft supplemental witness statement dated 11 September 2007; and (b) three cassette tapes said to contain telephone conversations between the plaintiff and the defendant.  Worse still, such documents were served on the plaintiff’s solicitors only on 13 September 2007.  Not only is the application extremely late, there has been no provision of any transcript of about 170 minutes of tape recordings.  Mr Ng for the plaintiff opposes the application today. 

17.Even though the defendant is not legally represented, it must have been clear to him from the events at the trial hearing on 11 and 12 June 2007, that he was not entitled to disclose and adduce further evidence without leave of the court.  It must also have been clear to him that the lateness of the application will put the plaintiff in difficulty in adducing evidence to meet the new evidence that he proposes to rely on.  Further, it must have been obvious to him that such application, and, if successful, such new evidence, would disrupt the trial timetable with risk of further adjournment. 

18.Notwithstanding the above, the defendant did not do anything for three months since 12 June 2007, and then sprung this application on the plaintiff at the eleventh hour prior to the adjourned trial hearing date. 

19.First, the tape recordings in the three cassette tapes are not new documents that arose after the adjournment in June 2007.  According to the defendant they were his recordings of telephone conversations with the plaintiff in mid-2004.  He said that he needed time to go through the extensive tape recordings of his office telephone in order to identify the relevant telephone conversations, but there is no reason why he could not have given early alert of his intention to rely on telephone recordings pending identification of the relevant recordings so as to give the plaintiff a chance to have early consideration of what he will have to face.

20.Secondly, I disagree with the defendant’s claim that it was a while after the last hearing that he thought of telephone recordings.  In my view, he could not have forgotten the existence of the tape recordings because, when he cross-examined the plaintiff on the second day of the trial, at 12:09:39 he asked the plaintiff whether there was tape recordings of the telephone discussion in relation to the reference of additional interest of 10 per cent per month at page 71 of the documents folder of the trial bundle.  The matter of the telephone recordings was very much alive on his mind that day.

21.Thirdly, even in the defendant’s “supplemental submissions” of 7 September 2007, and his draft supplemental witness statement of 11 September 2007, it is beyond doubt that he was aware of the significance of the telephone recordings as early as at the trial in June 2007.  In his “supplemental submissions” it was said that “基於本案在07年6月11日之審訊，本案原告人經過宣誓站於法庭證人台上，而作出之證供與發生過的事實不符，顛倒是非，誤導眾人，對被告人引發不公平的結果，因此，今天上書懇求法庭及法官大人給被告人呈上與此案有關的三片錄音帶”.  In his supplemental witness statement, it was said that “在07年6月11日之審訊，原告人站於證人台向法庭宣誓而所作的證供，有與事實不符之處，因此，本人有需要提供進一步的證據。在07年6月11日本案審訊，本人沒想到今時今日之文明還有舞弊存在，固有必要提供此陳述書。在此案未審訊前，本人也沒預料到事實情況，會有相反之證供”.  So even if the defendant did not realise the significance before the trial in June, he recognised the significance then. 

22.In my view there is no satisfactory explanation for the lateness of the application.  I do not accept the suggestion in the defendant’s “supplemental submissions” that it was because he was ignorant of the law.  I will return to the question of lateness of the application below.

23.I find it is useful to deal with the more fundamental issues first.  I will start with the issue of authenticity.  The defendant claimed that the recordings in the three cassette tapes were true recordings and constituted irrefutable evidence.  In respect of such contention, I have a few observations. 

24.First, the defendant admits that the three cassette tapes submitted to the court were the dubbings of the original recordings, and they were a handful selection of his telephone conversations with the plaintiff out of many.  The selection was his alone and his criteria was how the recordings would aid him in showing that the plaintiff did not tell the truth in respect of the genesis of various documents and cheques.  There had been no offer to allow the plaintiff to inspect the original recordings which not produced today.  The plaintiff and the court cannot be satisfied of the full context of the recorded telephone conversations now intended to be adduced in the cassette tapes.  To be so satisfied would necessitate an adjournment, which would severely disrupt the trial.

25.Secondly, I am informed by the defendant that the telephone conversations recorded in the three cassette tapes, marked 1, 2A, 2B and 3A, 3B, are sequential in the order as marked.  But there is no identification of the dates of the recorded telephone conversations save that the defendant admits, and as surmised by the plaintiff’s legal representatives from the contents of the recordings, that the recorded telephone conversations were from June 2004, i.e. after the issuance of the defendant’s 簽收確認書 that was countersigned by plaintiff on 1 June 2004, together with the defendant’s cheque in favour of the plaintiff for the sum of $118,600 dated 4 June 2004, at pages 69 to 70 of the documents folder of the trial bundle (hereinafter called “letter of acknowledgement” and “June cheque”) to August 2004.

26.Next, it is necessary to consider whether the recorded telephone conversations on the three cassette tapes are without prejudice communications or negotiations which were genuinely aimed at settlement.  If they were, they would be excluded from being given in evidence (see Hong Kong Civil Procedure 2007 Vol. 1, paragraph 24/5/41 at pages 455 to 456).  The purpose of this rule is to protect a litigant from being embarrassed by an admission made purely in an attempt to achieve a settlement.  There is a public policy justification in encouraging free and frank settlement negotiations prior to trial.  Such exclusion of without-prejudice communications from being given in evidence applies even if the words “without prejudice” or the equivalent are not expressly stated. 

27.Further, the rule benefits both parties and cannot be waived unilaterally.  Thus, if a party negotiating on a without-prejudice basis wants to change the basis thenceforth to an open one, the burden is on him to bring the change to the attention of the other party and to establish an objective basis that the recipient would have realised that a change in the basis of the negotiations was being made (see Cheddar Valley Ltd v Chaddlewood Ltd [1992] 1 WLR 820). 

28.A brief review of the recordings in the three cassette tapes plainly shows that the recorded telephone conversations were in the nature of without prejudice communications.  The defendant’s document dated 11th of September 2007, enclosed under cover of his “supplemental submissions” gives a good illustration.  In such document, the defendant’s own description of the contents of the cassette tape recordings made it abundantly clear that the contents relate to settlement negotiations.  In the circumstances I am firmly of the view that the telephone recordings which refer to dialogues between the parties relevant to settlement negotiations should be excluded from being given in evidence.  This ground alone is sufficient to dispose of the defendant’s application. 

29.But even if I am wrong on this point and there is no without prejudice protection in respect of the telephone recordings, I am not persuaded I should grant leave to the defendant to adduce such evidence. 

30.In his “supplemental submissions” dated 7 September 2007, the defendant submitted that he relied on the contents of the cassette tapes for the following purpose: “本人在07年6月11日之審訊，原告指10%月息及”法定文件夾” No. 71 之文件內容是本人之提出而叫原告人代寫之含冤，在此錄音帶內清晰明顯剖白道出，因此，懇請法庭及吳美玲法官閣下，給被告人“還我事實”接納此申請”. He also stated in his draft supplemental witness statement of 11 September 2007 as follows: “在07年6月11日之審訊，原告之證供中，詳述此案“法定文件夾”No. 71之文件及其內容，是被告人指示原告人而作出：（一）附加10%月息是被告提出，（二）全部文件內容:(包括各詳細)是:被告提出及草擬，對此本人需提供更進一步之證據及證供”。In the defendant’s document titled “錄音帶內容” dated 7 September 2007, it is said that cassette tape 2B referred to “11萬罰息顯示原告解釋及被告隱藏的恐慌及堅定不移......”. 

31.Assuming that the taped telephone recordings dealt with the above matters, is such evidence relevant and/or of probative value to the issues in dispute between the parties? 

32.To consider this issue it is necessary to consider the facts in issue in the present proceedings.  As evident from the plaintiff’s pleadings, witness statement and evidence to date, the plaintiff’s claim is for repayment of -

(a)	the principal sums of three loans, being HK$50,000, HK$70,000 and HK$50,000 pursuant to three Chinese memoranda written by the defendant and dated 7 and 8 November and 4 December 2003, respectively, and supported by three dishonoured cheques;
(b)	the agreed interest sums of $3,000, $4,200 and $2,875 for specified periods of extension of time for repayment of the aforesaid three loans, pursuant to three Chinese memoranda written by the defendant in April 2004, and supported by three dishonoured cheques;
(c)	the agreed interest sums of $3,000, $4,200 and $2,875 for specified periods of extension of time for repayment of the aforesaid three loans, pursuant to three Chinese memoranda written by the defendant in May 2004, and supported by three cheques;
(d)	the balance of his investment sum in the defendant’s business venture in Guangzhou in the sum of $200,000 pursuant to a Chinese memorandum written by the defendant and dated 1 January 2004, and partially supported by a dishonoured cheque;
(e)	profit compensation payable by the defendant in the sum of $20,000 pursuant to a Chinese memorandum written by the defendant dated 8 May 2004, and supported by a dishonoured cheque;
(f)	interest on the above sums pursuant to sections 49 and 50 of the District Court Ordinance, Cap.336.

33.In respect of the document at page 71 of the documents folder of the trial bundle referred to by the defendant in his “supplemental submissions” and draft supplemental witness statement, it was a sample draft letter of confirmation prepared by the plaintiff and faxed to the defendant that referred to additional interest of 10 per cent per month.  The defendant took issue over the plaintiff’s evidence elicited under cross-examination as to the genesis of the proposal or understanding of the additional interest of 10 per cent per month.  However, there is no dispute that the defendant never issued any letter of confirmation as per the sample draft or paid any additional interest of 10 per cent per month.  It is also not part of the plaintiff’s present claim. 

34.As regards the letter of acknowledgement and the June cheque, the defendant took issue that there was no sufficient justification for the issuance of the letter of acknowledgement and June cheque and that he was put in fear in respect of such issuance.  But there is no dispute that the plaintiff never presented the June cheque for payment and is not part of the plaintiff’s claim in these proceedings.

35.It is therefore plain from the above that the defendant’s purpose in adducing the tape recordings were for the purpose of rebutting the plaintiff’s evidence on matters which are not directly relevant to the issues in dispute between the parties.  Further, the defendant did not have any Counterclaim for seeking relief in respect of the alleged wrongful conduct by the plaintiff in asking for additional interest of 10 per cent per month or in demanding for the June cheque.  It is also not averred in the Defence that such alleged wrongful conduct vitiated the plaintiff’s claim for repayment of the loans, balance of the investment sum, profit compensation and interest, as aforesaid.

36.In light of the aforesaid I am of the view that the issues raised by the defendant’s application had no direct bearing on the resolution of the main issues in dispute between the parties in the present proceedings.  Indeed, the defendant said his purpose for adducing such further evidence was to show that the plaintiff told untruths when he gave evidence and to support his contention that he was put in fear.  This is a classic example of collateral issues which affect the credit of witnesses but not otherwise directly relevant to the issues in dispute. 

37.There is an important rule that, while it is perfectly permissible to conduct cross-examination solely on the issue of credit, the cross-examiner may not thereafter introduce further evidence of his own to contradict answers given by the witness during that cross-examination if the further evidence would be relevant only to collateral issues (See Cross & Tapper on Evidence 10th ed. pages 339 - 341 and Guangzhou Green-Enhan Bio-Engineering Co. Ltd. and Anor v Green Power Health Products International Co. Ltd. and Ors HCA4651/2002, HCA2802/2003 and HCMP74/2002 Lam J, unreported, 21 August 2005 at paragraph 35). 

38.In light of the aforesaid, if the defendant is allowed to adduce such intended evidence on collateral issues, it will bring unwarranted confusion to the main issues which the court must decide at the trial.  Further, if such intended evidence is permitted, the plaintiff will have to meet and deal with the same, and the trial will inevitably and unnecessarily be disrupted and prolonged. 

39.This neatly brings me to the issue of the lateness of the application and the consequent prejudice to the plaintiff.  I note that the defendant has finished his cross-examination of the plaintiff, including the topics relating to the letter of acknowledgement, the June cheque and the sample draft of the letter of confirmation at page 71 of the documents folder of the trial bundle.  Mr Ng has also re-examined on these matters.  To cross-examine the plaintiff on these topics without showing him the cassette tape recordings and then to adduce the recordings after he has finished his evidence is clearly unfair and prejudicial. 

40.Whether the court should allow the defendant to rely on further evidence is a balancing exercise and the court must exercise that discretion in a fair manner, having regard to all the circumstances and the explanation given.  Although the court has a discretion to allow a party to adduce evidence so as not to deny an adjudication of a claim on the merits because of procedural default, and lack of a good explanation for the lateness of the explanation is not necessarily determinative, these principles are not absolute, and the court will not allow new evidence if the default causes prejudice to his opponent for which an award of costs cannot compensate.  The court’s practice has been to treat the existence of such prejudice as crucial and often decisive.  At this stage, when the plaintiff, having finished his evidence, is about to close his case, and bearing in mind the history of these proceedings referred to above, the inherent lateness of the application, particularly when the opportunity had been given to the defendant by way of adjournment of the trial to make any application in good time before today, plainly affronts the order for speedy trial and the principle that the case should progress expeditiously. 

41.Bearing in mind all the above considerations, I find that the only fair conclusion is to refuse the defendant’s application to adduce new evidence.  In the circumstances, the defendant’s application to adduce the three cassette tape recordings and his supplemental witness statement  is dismissed.  As a professional judge, I will exclude any consideration of the tape recordings and the supplemental witness statement of the defendant for the purpose of this trial.

42.I will also reserve the questions of costs to be dealt with at the end of the trial.  For the assistance of the taxing master, I apportion 2½ hours of hearing time for this application.