KAN SIU FU v. KAN SIU KEUNG JIMMY AND ANOTHER

HCA 115/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 115 OF 2011

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D E C I S I O N

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THE APPLICATION

1.  This application was taken out by the plaintiff by summons dated 18 February 2015 for leave to serve a supplemental witness statement of the plaintiff for the trial, which is contested by the 1^st defendant (“the defendant”), not on its admissibility as a supplemental witness statement, but rather on some parts that the defendant complains as inadmissible for the reasons that will be discussed below.[1]

2.  The parties are legally represented.[2]

THE MAIN ISSUE

3.  The plaintiff’s written submissions are based upon whether leave should be given for the supplemental witness statement to be served whereas the defendant submits that he has no objection to the plaintiff’s witness statement except for those impugned parts which he considers to be inadmissible[3] and should be struck out.

4.  The parties’ written submissions are serving cross-purposes, which render not much assistance to the court for a fair determination of the issues in dispute, much less as in this application, the main thrust of the argument being on the contents of certain parts of the plaintiff’s supplemental witness statement, which requires careful and detailed consideration of the pleaded issues in the pleadings and the witness statements.  The Court will have to make its own research into the pleadings, which are lengthy and time consuming for the preparation for this hearing.  Fortunately, the plaintiff’s counsel has been able to take me through the exhibits in dispute for the disputed parts of the witness statement.  I shall, nevertheless, take this into consideration when I deal with the costs below.

5.  Having clarified the stance of the defendant in this application, the main issue of dispute boils down on whether those parts as challenged by the defendant should be struck out.

DISCUSSION

The factual background

6.  I shall now set out the brief facts of this case relevant to the issues in dispute below.  These facts are not in dispute between the parties.[4]

7.  This case involves 3 brothers and their parents.  The plaintiff, the 1^st defendant and the 2^nd defendant are natural brothers. 

8.  In gist, the plaintiff is asking the Court to declare that he is the sole beneficial owner of (a) the Golden Dragon Property (which was initially registered in the sole name of the defendant and later changed to become registered in the joint names of the plaintiff and the defendant); and (b) a building known as “富強樓” (“PRC Building”) in PRC.

9.  The plaintiff has pleaded, in no unclear terms, that the defendant was in fraudulent breach of trust and / or the duty to have received rents in respect of the 2^nd floor of the shopping arcade of the PRC building[5]; that the defendant had committed fraud and breach of trust, forgery of documents and misrepresentations.[6]

10.  The defendant’s case is that both the Golden Dragon Property and the PRC Building belong to Wing Fu Hong (永富行) of which the plaintiff and the defendant were partners.

11.  As the defendant only disputes those impugned paragraphs, I shall deal with them accordingly.

The relevant legal principles

12.  The relevant legal principles were set out in my previous decision in Talent Weaving Dyeing & Printing Ltd. v Able Billion Textiles Ltd [2013] 2 HKLRD 479. This is submitted by the defendant and the plaintiff has raised no objection to the legal principles in the Decision.  Broadly, the court has the discretion to expunge the witness statement or any parts thereof on the grounds, inter alia, that the evidence is inadmissible because it is irrelevant or scandalous.

13.  The legal principles for striking out the witness statement are similar to those for striking out the affidavit under O.41, r.6.  The witness statement must not contain inadmissible evidence.  Otherwise, the opposing party may apply to court for striking out of those evidence.  See HKCP2015 at 38/2A/13.  The defendant also relies on Ng Yuk Pui Kelly v Dung Wai Man & Others (unrep. HCA 1826/2011, 28 November 2014 paragraphs 15-17) where the court has to take into consideration the totality of the evidence and will not strike out the evidence if by so doing, the evidence will be incomprehensible or misleading to the trial judge; and in case of doubt, the court should not strike out the evidence and should leave it to the trial judge instead.  Again, the plaintiff has no dispute over this legal principle.

14.  Barma J. (as he then was) has summarized the legal principles on affidavits or witness statements in the case of Re Linea Trading Company Ltd (unreported, HCCW350/2004, Barma J. (as he then was) 11 July 2005) §4:

“4. The principles on which the court acts when considering whether or not to strike out matters in an affidavit pursuant to the rule were not, I think, seriously in dispute. For present purposes, I summarise them as follows:-

(1) Scandalous has the same meaning in Order 41 rule 6 as it does in Order 18 rule 19 dealing with the striking out of pleadings. Thus, degrading, indecent and offensive charges made in an affidavit will be regarded as scandalous if they are irrelevant or inadmissible in evidence to prove any material allegation in the petition (see e.g. Cashin v Cradock (1877) 3 Ch 376; Christie v Christie (1873) LR 8 Ch App 499, in the context of striking out a pleading);

(2) Matters which are material will not generally be struck out even if they are offensive, although where unnecessary detail is given, that may be susceptible to being struck out (see e.g. Blake v Albion Assurance Society (1846) 45 LJCP 663, also in the context of striking out of pleadings).

(3) Irrelevant matter may be struck out even if not scandalous (Re J (An Infant) [1960] 1 All ER 603).

(4) It is wrong to include argumentative material in affidavits and such material may be struck out (see e.g. Deak v Deak Perera Far East Limited [1991] 1 HKLR 551).

(5) The court may take one of three approaches to an affidavit in which there is scandalous, irrelevant or oppressive matter:-

(a) It may decline to strike the matter out, on the basis that it is capable of excluding such material from its mind when deciding the issues which arise for decision; or

(b) It may think it appropriate to strike out some or all of the material complained of; or

(c) It may, in an extreme case, order the entire affidavit to be taken off the court file.

Which of these courses is adopted will depend on the circumstances of the case, regard being had to the nature and extent of the objectionable material.”

Paragraph 7 of the Draft

15.  Before discussing this paragraph, it must be borne in mind that the plaintiff has pleaded fraud, breach of trust and dishonesty in the pleadings.  See §9 above.  The defendant has not taken out any application to strike out those serious allegations as pleaded in the pleadings.

16.  The defendant complains that the plaintiff has not done any investigation into his submissions to the Housing Authority for the application for the public unit.  Yet, the plaintiff said in the proposed supplemental witness statement that the defendant had not disclosed his assets to the Housing Authority, or he had impliedly admitted that he did not have beneficiary interest in the business, of which he claimed to be a partner.  The first objection against this paragraph is that it is a speculation and the application submitted was a fabrication.  That the defendant had signed the statement of truth for the pleadings and the witness statement would amount to knowingly making false declarations.  Those are serious allegations, which the plaintiff had made upon speculations and they must therefore be struck out.

17.  Under paragraph 4(2) of Re Linea Trading Company Ltd, supra, this paragraph should not be struck out.  The parties agree that the case is facts sensitive.  The witnesses will be strenuously cross-examined at the trial in order to test their credibility by the court.  The financial limit for the application of housing will be canvassed at the trial.  The value of the assets of the partnership and the property will also be considered too.  Those matters are relevant to determine the creditability of the witnesses.  The question whether the plaintiff’s accusations that the defendant had not fully disclosed his assets to the Housing Authority can be properly dealt with by cross-examination of the defendant’s evidence at trial.

Paragraph 8(e) of the Draft

18.  The impugned part: “第一被告在其第二份補充陳述書所出示附件58，有數份只有「簡肇富」名字銀行入數單據，蓋有銀行 “受理憑證章” 及 “复印件與原件相符一杜阮農行” 印鑑，蓋章日期為2014年11月3日字樣，本人有理由相信第一被告用不正當手段疏通銀行職員，竊取及篡改本人帳戶資料，嚴重侵害本人私隱權利，以達至其想侵吞本人財產的不軌企圖。” (Impugned Part underlined)

19.  The defendant’s grounds of objection are that “the Plaintiff has failed to substantiate the allegation by identifying which part of the documents that, according to him, has been tampered with and by providing particulars on how the 1st Defendant has used improper means to bribe staff members of the Bank; and on the contrary, the documents at Exhibit 58 have been certified by the Bank to be the true copies of the originals kept by the Bank.  It is obvious from the above that §8(e) is made for no useful purpose but to discredit the 1^st Defendant with bare allegation and is thus clearly scandalous.  It bears no relevance to any issue in dispute and is therefore inadmissible.  As such, the paragraph should be deleted.”

20.  The defendant specifically refers to the allegation by the plaintiff that the defendant must have colluded with the bank officials to use illegitimate means to alter the bank records and to steal the personal data belonging to the plaintiff.  The defendant submits that this is particularly objectionable as there is no evidence to show that.  However, from the evidence before me today, there are two sets of bank documents of the same invoice numbers but contain amended contents, which cannot be explained even as of to date.  I consider that it is quite logical for the plaintiff to infer that the alterations must have been allowed by the bank official(s) as he had not given consent to the alternation himself.  This issue has to be dealt with by the trial judge.

21.  The main objection lies on the allegation that the plaintiff fails to substantiate the allegations by evidence.  The defendant has, in the submissions, pointed out various parts of the witness statements and the evidence in support of his argument.  The plaintiff has referred to the relevant exhibits to show that there were same invoices bearing different names of the payers, some only had one name of the plaintiff whilst the other bore the defendant’s name as well.  All these cry out for explanation.  The plaintiff says that such evidence should be read with the impugned parts.  To go into the details of such evidence is, in my view, tantamount to making a mini-trial of the facts of the issues, which should be the province of the trial judge.  It is fundamentally inappropriate for the court in interlocutory proceedings to conduct a mini-trial of the merits of the case.  See Sunchase International Group (China) Ltd & Others v Vincor Group of Companies (Investment) Ltd & Others [2004] 1 HKLRD 731 at 733D - E) where the Court of Appeal said “It is not the function of the court, when faced with an application for security for costs [also an interlocutory application], to make a preliminary run at deciding the ultimate success or failure of the claim.”

22.  To say that it bears no relevance to any issue in dispute is an overstatement.  The plaintiff has the burden of proof that the defendant was fraudulent and dishonest, a very heavy duty indeed for civil litigation.  Whether the plaintiff has other evidence to prove his case at trial is entirely a matter for the trial.

23.  The defendant fails to demonstrate that this paragraph is inadmissible.

Paragraphs 11 to 17 of the Draft

24.  These paragraphs involve the three official receipts produced as exhibits by the defendant’s supplemental witness statement.[7]

25.  The plaintiff has stated in the proposed supplemental witness statement that after investigation, there exist alleged bribe to tamper with the pay-in slips of the PRC Joint Account, the alleged conspiracy to tamper with the First Copy and Second Copy of the Receipts, etc.[8]  The defendant submits that the inclusion of these serious but unsubstantiated allegations will only result in mini-trial on irrelevant matters which will unduly lengthen the trial and also prejudice a fair trial.

26.  However, the defendant has attempted to bring in the evidence to rebut the plaintiff’s allegations in his submissions, making reference to the documentary evidence, which is very much similar to Sunchase International Group, which the Court of Appeal has deprecated to embark upon a preliminary run of the merits of the issue at this stage of proceedings.

27.  The court has to take a global view of the evidence before it in order to come to a fair resolution on the serious allegations in this matter.  The defendant says that the plaintiff’s allegations are not substantiated with evidence.  This is a matter for the trial judge to assess the evidence and decide whether the plaintiff can prove his case.  This is not for this court in the present interlocutory application.

28.  Again, the defendant has failed to demonstrate that these paragraphs should be struck out.

29.  The plaintiff’s application is allowed.

COSTS AND ORDER

30.  As  to the costs of this application, including the hearing today, the parties agree that there should be two sets of costs, one for the application, which the plaintiff should give to the defendant as the plaintiff is asking for leave.  But the costs for the call-over hearing and the hearing today should be to the plaintiff.  The defendant argues that the costs should be in the cause so that the trial judge may consider the evidence and determine the costs of today.  I disagree with this approach.  Today’s application is on whether leave should be granted by the Court to the plaintiff to serve the supplemental witness statement and the application has been dealt with by me.  It has served its purpose.  The trial judge’s consideration of the quality of the evidence is not relevant to the hearing today.  The costs for the hearing today should be to the plaintiff and summarily assessed under O.62, r.9A RHC.

31.  As I said above that counsel’s assistance should be considered for costs, I shall take into consideration Mr. Ko’s assistance, particularly his written submissions, which do not assist me on the striking out of the impugned parts.  For this purpose, I had, by consent of the parties, considered the defendant’s without prejudice letter, in which the defendant had told the plaintiff’s solicitors that they only disputed the impugned parts of the plaintiff’s supplemental witness statement.  Mr. Ko, counsel for the plaintiff submits that he was not sure if the defendant would object to the admissibility of the supplemental witness statement as well when he had conference with the instructing solicitor.  The answer to it must be it is for the legal representatives to clarify the position with the other side before making the preparation of written submissions for the court hearing.

32.  The plaintiff’s schedule of costs amounts to $89,029.  The defendant opposes several items of the schedule of costs.  I accept that the time for the conference should be reduced, in particular, the solicitor in charge was unable to clarify the issues of dispute with the defendant’s legal representative.  Therefore time was not well utilized.  Time for the solicitor to read the authorities and written submissions should be given, but not for the amount as claimed in the schedule.  Counsel’s fee is $30,000.  As I have said, this fee should be reduced to $15,000.  If Mr. Ko is unable to assist me on the exhibits today, I have no hesitation to disallow his fee in full.  Taking a broad-brush approach, the assessed costs should be $41,829, to be paid by the defendant to the plaintiff within 14 days from the date hereof.  The costs for the application to the defendant are assessed at $4,000 to be paid by the plaintiff, which is to be set off herein, the net amount being $37,829 to the plaintiff.

33.  The Court shall now make an order in terms as follows:

a. The plaintiff’s application is allowed;

b. By consent, the defendant be at liberty to serve a supplemental witness statement in response to the plaintiff’s supplemental witness statement herein within 28 days from the date hereof;

c. By consent, time for the plaintiff to set down for trial be extended for 42 days from the date hereof and the time estimated for the trial be varied from 6 days to 8 days;

d. Costs of the application and for the hearing today be as paragraph 32 above.