AGEAS INSURANCE CO (ASIA) LTD v. CHOY HOI YAN, JACQUELINE

HCA 1599/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1599 of 2014

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J U D G M E N T

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Factual circumstances

1.  On 1 March 2012, the defendant (“Ms Choy”) was appointed, by a written agreement called an “Agent’s Contract”, as an insurance agent, under the title of Unit Manager by the plaintiff (“Ageas”).  By a document made on the same day, known as a “Side Agreement” additional terms that had been agreed between Ms Choy and Ageas governing a performance bonus and other general terms was signed.

2.  On the same day, a further document known as a “Loan Agreement” was signed between Ms Choy and Ageas under which Ageas agreed to advance a loan of $3 million to Ms Choy on certain terms.  On its face, the Loan Agreement is a straightforward document under which a sum of $3 million was advanced to Ms Choy against future commissions and performance bonus, to be earned.  If the Agent’s Contract or the Side Agreement were terminated, the loan was to be immediately repayable.

3.  On 14 April 2014, Ageas terminated Ms Choy’s Agent’s Contract.  Ageas says that in consequence of the termination, the loan of $3 million less commissions totalling $22,461.52 became repayable.  On 28 April 2014, Ageas made demand of Ms Choy for repayment of the sum said to be owing.

4.  Ms Choy did not make repayment, and on 14 August 2014, Ageas issued a writ and statement of claim seeking the balance said to be due in a sum of $2,977,538.48, together with interest.

5.  On 24 November 2014, Ms Choy filed a defence to the writ together with a counterclaim.  The essence of the defence that was filed is that liability under the loan was admitted subject to a contention that the conduct of Ageas was such that Ms Choy was prevented from properly performing her obligations under the Agent’s Agreement and the Side Agreement.  It is pleaded that as a result of that prevention, Ms Choy was unable to earn either commission or the performance bonus.  Consequently, the pleading goes, no liability to repay the loan arose.  The counterclaim sought, inter alia, damages for the loss of a chance to earn future commission and performance bonus.

6.  On 28 January 2015, Ageas filed a Reply and Defence to Counterclaim.

7.  On 17 June 2015, the Master made an order that Lists of Documents must be filed within 14 days, namely by 1 July 2015.  At the same time, the Master ordered that signed witness statements be exchanged within 42 days, that is by 29 July 2015.  The parties were required to obtain counsel’s advice within 28 days thereafter, if required.  Any further interlocutory applications must be taken out 14 days thereafter.  Further interlocutory applications were accordingly required by 9 September 2015.

8.  Ms Choy had failed to file her List of Documents within the required time and an Unless order was made requiring compliance by her by 17 June 2015.  Ms Choy also failed to exchange witness statements within the required time, and on 29 September 2015, by consent, a further Unless order was made requiring the witness statements to be exchanged on 19 October 2015.  The exchange of witness statements took place on that date.  Ms Choy herself did not file a witness statement.  However a witness statement from her mother was filed by Ms Choy.

9.  On 19 October 2015, the solicitors for Ms Choy wrote to the solicitors for Ageas sending a short draft witness statement by Ms Choy in which she simply confirmed that the contents of the statement of her mother were true and accurate and were adopted and repeated by her.  The letter indicated that if no reply was received within three days of the letter, a summons would be taken out to achieve the filing of that witness statement out of time.

10.  The three days passed, but no application was ever made by Ms Choy to file the witness statement.

11.  On 13 January 2016, following Ms Choy filing a Listing Questionnaire dated 12 January 2016, in which she expressly represented that her pleadings were in order and required no amendment, leave to set the matter down was given by the Master.  At the same time, the Master ordered Ms Choy to seek counsel’s advice and to take out any interlocutory applications that may be advised within 14 days.  Any such applications were accordingly required to be taken out by 27 January 2016.  Ms Choy did not make any such application.

12.  On 17 February 2016, after time to file further interlocutory applications had expired, by letter, Ms Choy’s solicitors requested an extension of time of 28 days to take out further interlocutory applications.  That request was rejected and no application of any nature was made by Ms Choy.

13.  The matter has been set down for trial over five days to commence on 7 October 2016.

14.  Now, nearly six months after the time to make further interlocutory applications has expired, and only 12 weeks before the trial is due to commence, Ms Choy has made an application for leave to file and serve an amended defence and counterclaim, and for leave to file her own witness statement.  That witness statement, instead of being the brief statement previously offered, goes to five pages, and deals with the matters raised by the draft amended defence.

15.  Not surprisingly, Ageas does not consent to the application, which has been argued.

Applicable legal principles

16.  There was no dispute between the parties as to the applicable legal principles which may be summarised as follows:

(i) Late applications to amend pleadings and file late witness statements will be closely scrutinised by the court.

(ii) An applicant must establish, by way of affirmation, exceptional circumstances to explain and justify the delay.

(iii) Delay is itself a ground justifying refusal of leave, especially when milestone dates will likely be affected.  Delay of the trial is, of itself, prejudicial to the other party, who has every right to expect that a trial fixed a few months ahead will proceed.

(iv) If the delay is the applicant’s own fault and she has only herself to blame for the delay or inactivity, eg when the need for an additional witness statement is already evident at an earlier stage of the proceedings, the court is unlikely to grant indulgence to allow the late applications.

(v) The court expects parties to consider conscientiously before filling in a listing questionnaire for the setting down of the trial.  Disobeying rules of court and court imposed timetables without good reason makes a mockery of the case management system envisaged by the Civil Justice Reform (CJR).

17.  Those principles are tempered to an extent by the following statement by the Court of Appeal in 厦門新景地集團有限公司v Eton Properties Ltd & Ors, (unreported, HCMP 13, 15, 18, 21/2012, 14 February 2012, per Cheung CJHC):

“ 29. However, I do agree with the defendants that the late amendments, or more specifically, the new paragraph 35(5), took them by surprise and left them with inadequate time for the proper preparation of their defences in relation to it. Furthermore, such a late application for amendment also went contrary to the letter and spirit of the civil justice reform and made a mockery of the requirement for filing information checklist before a case management conference.

30. All this does not necessarily mean, however, that the court must refuse the amendments, bearing in particular in mind that the ‘primary aim’ in exercising the case management (or other) powers of the court is to secure the ‘just resolution of disputes in accordance with the substantive rights of the parties’: O 1A, r 2(2), the Rules of the High Court (Cap 4A). Driving a party away from the judgment seat without proper adjudication is always a serious matter. Such a power of exclusion, like all other powers given under the rules, must only be exercised after considering all the relevant underlying objectives set out in O 1A, r 1.” (my emphasis)

The proposed amendments to the defence

18.  The proposed amendment to the defence first seeks to enlarge upon particulars of the circumstances in which the various agreements were made between Ms Choy and Ageas.  An assertion is made of certain “assurances” that were allegedly given to Ms Choy and her mother.  An assertion is made as to a new meeting alleged to have taken place in addition to a meeting that had earlier been pleaded.  A plea is made that the Loan was not in fact a genuine or repayable loan but a “signing fee”.

19.  It is now pleaded that assurances were given to Ms Choy and her mother that Ageas would not enforce or seek repayment of the Loan.  Further paragraphs are added in which any liability in respect of the alleged Loan is denied, and that Ms Choy was entitled to rely upon the “prevention principle” that a person is not permitted to take advantage of his own wrong.  A plea of estoppel and particulars in that respect are included.

20.  Mr Kok says that the amendments are insubstantial and involve no element of surprise to Ageas as they had been, in effect, set out in a letter from Ms Choy’s former solicitors to Ageas’s solicitors on 27 May 2014.

21.  Mr Kok it says that the amendments and the additional witness statement are necessary to determine the real question of controversy between the parties and would not cause Ageas any injury or prejudice which could not be compensated for by costs.  His contention is that the trial dates will not be affected.  He says that the consideration of fairness between the parties points strongly in favour of granting leave.

22.  Ms Ho, for Ageas, points out, correctly, that in the Defence and Counterclaim filed on 21 November 2014, the only defence raised was that the Loan should be set off against the loss which Ms Choy suffered as a result of Ageas’s alleged breaches of implied terms in the Agent’s Contract, the Side Agreement and/or the Loan Agreement.

23.  Ms Ho says that reliance upon the so-called “prevention principle” is a new plea, that the plea that the Loan was not a genuine loan but a “non-repayable signing on fee”, is new, as is the argument based upon estoppel.

24.  Ms Ho also points out that Ms Choy has had more than sufficient time to file a witness statement, and that she had made an apparently deliberate decision not to file any statement.  Ms Ho says that if the amendments are allowed Ageas would have to amend its Reply and Defence to Counterclaim to respond to the newly raised defences.  This would require further evidence from the witnesses for Ageas.

25.  Most significantly, Ms Ho points out that there is no affidavit at all explaining the delay on the part of Ms Choy in making this application.  Mr Kok said that he had no instructions at all in respect of the delay and was unable to offer any explanation for the delay.  Consequently the delay is quite unexplained.

Discussion

26.  In reaching my decision in this matter I have been very conscious of the consequence of refusing the leave sought.  I am fully aware that if leave is refused Ms Choy will be denied proper adjudication of all of the issues she seeks to raise in the proceedings.

27.  Ms Choy has on the face of it behaved in a most cavalier way, consistently ignoring time limits, and then coming to the court without any explanation whatsoever to seek an indulgence to repair her situation.

28.  It is correct that the assertion that the Loan was not a genuine loan had not previously been specifically pleaded.  It had however been pleaded that the loan was a “sweetener” to persuade Ms Choy’s mother and Ms Choy to commit to the various agreements.  It is further pleaded that Ageas treated the Loan is part of commission payable to Ms Choy.  A sufficient inference arises from those pleas, vague though they may be, that the Loan was not a genuine loan, and did not give rise to a liability to repay.

29.  It is right that the plea of a second meeting in December 2011 will require further witness statements.  But they will essentially be denials either of the meeting or of the particulars asserted in respect of the meeting.  I do not see the further witness statements required as being extensive.

30.  The pleas as to the “prevention principle” or estoppel are pleas of matters of law which were open to counsel to argue, on the basis of the evidence, whether they were pleaded or not.

31.  Of the five days allocated to the trial half a day has been allocated for opening by Ageas’s counsel, and half a day for opening by Ms Choy’s counsel.  Having regard to the factual circumstances of the case which are in a narrow ambit, and that the judge will be provided with written openings by both counsel I am satisfied that those estimates are excessive.  It is only in the most complicated cases these days that a judge requires a full oral opening from counsel.  Having been able to read the opening the judge is more likely to simply enquire of any matters that might require clarification from the written opening and then proceed promptly to the evidence.

32.  I take into account the fact that there are 12 weeks before the trial is due to start.  That is a significant period of time and one which, I am satisfied, is sufficient for Ageas to file an appropriate response to the amended defence and any further witness statements that might be required as a result of the amendments.  Had these amendments been sought closer to the date of the trial it is likely that they would have been refused.  But I am satisfied that in the particular circumstances of this case there is no need to delay the trial.

Disposal

33.  For the foregoing reasons I am satisfied that Ms Choy should not be driven from the seat of justice and should have a final opportunity to put her house in order.  Leave is accordingly granted to amend the defence and to file the witness statement.

34.  The Amended Statement of Defence and the witness statement are to be filed, in the form attached to the Summons, no later than 5 pm, on Monday, 11 July 2016.

35.  Ageas will have until 5 pm on Wednesday 3 August 2016, to file any witness statements it may be advised to file in response to the Amended Statement of Defence and Ms Choy’s witness statement.

36.  Neither party shall file any further witness statements without the leave of the court.

37.  I make the following further directions in respect of the trial:

(i) The parties shall prepare agreed or certified English translations of the witness statements and any documents which they intend to rely on or before 9 September 2016 (4 weeks before trial).

(ii) The plaintiff shall lodge and serve agreed trial bundles on or before 15 September 2016 (3 weeks before trial).

(iii) The parties shall lodge an agreed chronology of events, dramatis personae and list of issues on or before 23 September 2016 (2 weeks before trial).  If agreement cannot be reached on any of the above documents, each party shall prepare their own version and serve the same on the other and send a copy to the Court on or before 23 September 2016.

(iv) The plaintiff shall lodge and serve its written opening submission and list of authorities on or before 30 September 2016 (1 week before trial).

(v) The defendant shall lodge and serve her written opening submission and a list of authorities on or before 4 October 2016 (3 days before trial).

Costs

38.  As I have said, I consider that Ms Choy has behaved in the most cavalier way in these proceedings and has, only just in time, sought an indulgence that has been granted.  She must pay the costs of and incidental to the summons on an indemnity basis, forthwith.

39.  I will make a summary assessment of the costs. Solicitors are to file and serve a schedule of costs for summary assessment by 5 pm on Tuesday 12 July 2016.  Ms Choy’s solicitors may comment on that schedule by 5 pm on Thursday 14 July 2016.