KINETICS MEDICAL HEALTH GROUP COMPANY LTD v. DR TSE KIN SANG AND OTHERS

HCA1115/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1115 OF 2010

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REASONS FOR DECISION

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I. INTRODUCTION

1. The 1^st, 2^nd and 3^rd plaintiffs (collectively, “plaintiffs”) were the former shareholders of Kinetics Radio-Diagnostic Centre Limited (“Company”) which operated a medical practice in Tsing Yi (“Tsing Yi Clinic”).

2. The plaintiffs claimed that by an agreement made at the end of 2006, they agreed to sell and the defendant agreed to buy the shares in the Company for a consideration of HK$1,499,994.00.  The transfer of the shares was completed on 15 December 2006, and the defendant became the beneficial owner of the shares on the same day.

3. The plaintiffs further claimed that the parties entered into an agreement for repayment of consideration money with an addendum both dated 7 May 2007.  By such agreement and addendum, the aforesaid consideration of HK$1,499,994.00 was to be paid by the defendant to the plaintiffs by agreed instalment payments between 31 December 2006 and 1 April 2010.  The defendant paid a total sum of HK$540,000.00, but the remaining balance of HK$959,994.00 was/is still unpaid.

4. Under the aforesaid agreement for repayment of consideration money and addendum, further monies being decoration costs and reimbursement of rental deposit in the respective sums of HK$56,619.50 and HK$121,572.00 were due from the defendant to the plaintiffs.

5. On 22 July 2010, the plaintiffs commenced the present action against the defendant to claim for the aforesaid outstanding sums.

6. The defendant averred that the above agreements were made partly orally and partly in writing, and his obligation to pay the outstanding balance of the aforesaid consideration was suspended by a grace period that arose as a result of the monthly income of the Tsing Yi Clinic not meeting HK$53,000.00 and/or the plaintiffs failing to provide adequate clinical, marketing and/or management assistance.  The defendant further claimed that the plaintiffs were in breach of the above agreements which were partly oral and partly in writing, and the 2^nd and 3^rd plaintiffs (“P2 and P3”) were in breach of a collateral agreement made with the defendant to provide locum support and visiting medical officer services. The defendant therefore counterclaimed for his loss and damages arising from the plaintiffs’ breach of contract.

7. The plaintiffs disputed the defendant’s allegations, and further claimed that any support services they provided to the defendant were on gratuitous basis.

II.    PROCEDUAL HISTORY

8. According to the plaintiffs’ Timetabling Questionnaire filed on 11 January 2011, their solicitors proposed to file and serve list of documents within 42 days.  However, in the proposed directions annexed to such Questionnaire, they agreed with the defendant’s proposal to file and serve List of Documents within 14 days of the order to be made.

9. On 2 November 2011, the plaintiffs issued a case management summons seeking inter alia a case management direction that they file and serve List of Documents within 14 days.

10. By the order of Master R Lai dated 5 December 2011 made by consent, it was ordered inter alia that the plaintiffs shall file and serve their List of Documents within 14 days.

11. The plaintiffs failed to file and serve their List of Documents within the court-imposed deadline or even by the time they filed their Listing Questionnaire on 19 April 2012.  But in such Questionnaire their solicitors on one hand confirmed that “discovery has completed” and on the other hand proposed a case management direction that required the parties to file and serve Lists of Document within 14 days from the date of the order to be made.

12. By the order of Master Ko dated 26 April 2012, it was ordered that (a) unless by 10 May 2012 the parties shall serve on each other their List of Documents, the defaulting party would be taken to have no documents to disclose, and (b) there be inspection of documents (if any) within 7 days thereafter.

13. Pursuant to Master Ko’s order dated 26 April 2012, the plaintiffs filed their List of Documents on 10 May 2012.

14. The plaintiffs’ Listing Questionnaire filed on 27 September 2012 again confirmed that “discovery has completed”, that all steps that ought to have been taken to prepare the plaintiffs’ case for trial had been duly taken and complied with, and that it was appropriate in all the circumstances to set the present action down for trial.

15. At the case management conference on 3 October 2012, the Registrar granted leave for the plaintiffs to set the present action down for trial. No other case management direction was granted.

16. The trial of the present action was fixed to be heard on 21 May 2013 (ie less then 3 weeks away) with 6 days reserved.

17. In the plaintiffs’ Listing Questionnaire filed on 22 February 2013, their solicitors again made the same confirmations as in the Listing Questionnaire filed on 27 September 2012 (see paragraph 14 above).

18. At the 1^st Pre-trial Review (“1^st PTR”) on 27 February 2013, Mr Tang (and with him Ms Kei), counsel for the plaintiffs, did not mention any need to make further discovery of documents, and no leave was granted for the plaintiffs to file and serve supplemental list of documents. Indeed, on that occasion Mr Tang informed the court the plaintiffs were ready for trial.

19. Pursuant to the directions made at the 1^st PTR, a 2^nd Pre-trial Review was scheduled to be heard on 30 April 2013 (“2^nd PTR”).

20. On 27 March 2013 (ie one month after the 1^st PTR and less than two months before trial), the plaintiffs filed their Supplemental List of Documents disclosing 69 items of documents or classes of documents in Schedule 1 Part 1 therein.  The dates of those documents ranged from January 2006 to July 2010.

21. The defendant’s solicitors complained about the late discovery in their letter dated 10 April 2013 to the plaintiffs’ solicitors, but there was no reply.  On the same day, the defendant’s solicitors wrote to advise the court of such developments and requested for a hearing to deal with such matters.

22. On 11 April 2013, the defendant’s solicitors wrote to the plaintiffs’ solicitors to request for copies of the newly discovered documents without prejudice to their right to object to the same.

23. On 12 April 2013, the plaintiffs’ solicitors supplied copies of the newly discovered documents to the defendant’s solicitors, but did not offer any explanation for the late discovery.  There was also no intimation that further discovery of documents would be made.

24. On 15 April 2013, the court directed that the 2^nd PTR shall stand.  Given the imminence of the trial (which is an immovable milestone date) and the court diary of the trial judge (being myself), it was not possible to fix another date for argument as proposed by the defendant’s solicitors.

25. On 17 April 2013 (ie about one month before trial), the plaintiffs filed their 2^nd Supplemental List of Documents disclosing a further 9 items of documents or classes of documents in Schedule 1 Part 1 therein.  Most of the documents were undated and the only dated document was made in June 2006.

26. On the same day, the defendant’s solicitors wrote to the plaintiffs’ solicitors objecting to the further discovery of documents.  The defendant’s solicitors also requested for copies of the newly discovered documents without prejudice to their right to object to the same.  There was no reply to such letter.  The defendant’s solicitors also wrote to inform the court of such developments.

27. Notwithstanding the newly discovered documents and the defendant’s objection thereto, the plaintiffs’ Listing Questionnaire filed on 23 April 2013 for the 2^nd PTR again made the same confirmations as in the Questionnaire filed on 27 September 2012 (see paragraph 14 above), but made no reference at all to the plaintiffs’ Supplemental and 2^nd Supplemental Lists of Documents.  The only proposed direction annexed to such Questionnaire was “costs in the cause”.  In short, the plaintiffs did not even intimate any attempt to seek leave to adduce and/or rely on the newly discovered documents at trial.

28. Although the plaintiffs did not issue any inter partes application for leave to adduce and rely on the newly discovered documents at trial, they filed the affirmation of Madam Kwan Mei Sum (“Madam Kwan”) at 4:20pm on 25 April 2013 and served the same on the defendant’s solicitors on 26 April 2013 with a view to explain the delay and justify the relevance of the newly discovered documents (“Kwan’s affirmation”).

29. The defendant was understandably upset about this state of affairs, especially when the bundle of newly discovered documents totalling 309 pages was just as bulky as the existing documents bundle for the trial.  His concern was justifiably heightened by the plaintiffs’ failure to provide any explanation for the late discovery of documents until a working day or so before the 2^nd PTR.

30. I would add as part of the procedural history that the plaintiffs filed the witness statements of Chan Ho Yin David (a director of the 1^st plaintiff (“P1”), “Mr Chan”), P2, P3 and Madam Kwan (P1’s operation manager and director) on 21 June 2012 and P3’s supplemental witness statement on 26 September 2012.  The defendant filed his own witness statement and supplemental witness statement on 21 June 2013 (amended on 13 March 2013) and 13 March 2013 respectively.

III.   Lateness of the new discovery

31. From the above procedural chronology, it appears that the plaintiffs simply treated the recent discovery of documents as if it were part of a continuing discovery exercise that would not require leave of the court.

32. However, as I have explained in Liu Chen v Chan Poon Wing & anor HCPI779/2006 (unreported, 7 October 2009) at para.24, where discovery is given at the eleventh hour just before trial, it is quite impermissible for the litigant giving such discovery to do so under the guise of voluntary discovery without seeking leave of the court to give further discovery out of time.  Mr Tang acknowledged that the plaintiffs’ new discovery was late, but he disagreed it was made at the eleventh hour.  In my view, although the plaintiffs’ new discovery was not made on the first day or in the course of trial, there can be no doubt that making discovery of a substantial volume of documents after the 1^st PTR and a month before trial (irrespective of whether it should be described as having been made at the eleventh hour or not) is patently and obviously late.

33. Given the lateness of such further discovery, it should be anticipated (especially after the Civil Justice Reform (“CJR”)) that the opposing party would complain of such lateness.  It is therefore incumbent on a litigant giving such late discovery to make proper inter partes application to seek leave of the court for such new discovery.  Here, the plaintiffs did not even have to anticipate the defendant’s objection for the defendant had already vigorously complained against the lateness of the new discovery.  Not only did the defendant’s solicitors raise objection in their correspondence, they also criticised the shifting of the plaintiffs’ evidential goalposts without any identification of the relevance of the newly discovered documents. But notwithstanding such complaints, the plaintiffs still did not issue any proper application for leave.

34. However, given the imminence of the trial (which is an immovable milestone date) and the Kwan affirmation filed by the plaintiffs, at the 2^nd PTR hearing Mr Lui, counsel for the defendant, fairly and sensibly agreed that the need for prompt resolution of the parties’ dispute over the plaintiffs’ new discovery took precedence over the plaintiffs’ failure to take out proper inter partes application. He hoped that prompt disposal of such issue would give the parties more time to refocus their energies on preparation for the trial.

35. The Kwan affirmation stated that the plaintiffs’ witnesses had been advised of the continuing duty to make discovery of relevant documents.  Madam Kwan claimed the plaintiffs had difficulty in locating hard/soft copies of the relevant documents since the events took place 6-7 years ago.  They had caused an extensive search to be made, but only managed to find the 8 documents listed in Schedule 1 Part 1 of the plaintiffs’ List of Documents filed on 10 May 2012.  It was thought that most of the relevant emails and documents could be found in Mr Chan’s computer as he was in overall management.  But he acquired a new computer in about 2009, and many documents that were electronically stored in his old computer were lost. Madam Kwan checked her own computer and found she only had bits and pieces of documents.  After discussion with Mr Chan, P2 and P3, she realised that many emails and electronic documents were not copied for her attention.  “Thereafter, similar checks have been done with the computers of [P2 and P3].  But it is not until recently that [P2] finds that many of the relevant emails and draft documents have been stored in his old computer, which he has put away for some time after buying a new one.”  Madam Kwan said the documents so found in P2’s old computer had been listed in the plaintiffs’ Supplemental and 2^nd Supplemental Lists of Documents.

36. I have set out the court’s approach to late discovery in Liu Chen as follows:

“32. There can be no doubt that … the Documents …were very late … Given such lateness, it behoved the Plaintiff to provide the court and the 2^nd Defendant with full information as to the reasons for the lateness.

33. Even before the CJR, the need for an affidavit to account for such lateness for similar applications was accepted in Hong Lok School Limited & anor v Chow Sai Yiu & anor HCA17139/1999 and HCA19001/1999, Deputy High Court Judge Lam (as he then was) (unreported, 7 July 2003) and Guangzhou Green-Enhan Bio-Engineering Co Ltd & anor v Green Power Health Products International Co Limited & ors HCA4651/2002, HCA2802/2003 and HCMP54/2004, Lam J (unreported, 21 August 2004).

34. In Hong Lok School Limited, in dealing with a litigant giving discovery at the eleventh hour, the learned judge held that such litigant should provide the court and the other side with full and accurate information at least as to the following to enable the court to exercise its discretion properly in dealing with possible objections from the opposing party:

(a) the reasons why the subject documents were not disclosed earlier;

(b) the provenance and the makers of such documents;

(c) the relevance of such documents to the issues before the court;

(d) the availability or non-availability of the makers to attend trial for cross-examination in case the opponent objected to the hearsay evidence.

In that case, counsel was unable to deal with the above matters fully, and the court directed the plaintiffs produce an affidavit to account for the late discovery.

35. In Guangzhou Green-Enhan Bio-Engineering Co Ltd & anor, in the wake of objection by the defendants, the case was stood down for the plaintiffs to file affirmations to account for the lateness of the application to adduce further witness statements and documents in the course of trial.

36. Let me say as a general observation that the court is generally unhappy with last minute applications at the commencement of assessment hearing for further evidence to be filed or for further discovery to be made. After the CJR, the court is even more jealous to ensure that the assessment of damages will proceed as scheduled, and that the hearing will not be burdened with last-minute applications that take up valuable time thereby prolonging the assessment hearing, causing an adjournment and/or increasing costs for the party(ies). To say the least, last minute applications fly in the face of the underlying objectives of reasonable expedition, procedural economy, cost-effectiveness and fairness between parties enshrined in Order 1A of the RHC.

37. In the circumstances, after the implementation of the CJR, if there is any last minute application (which necessarily must be a rare occurrence), the court will not expect anything less than what was required even prior to the CJR, namely, a full account for the lateness of the application. In addition, it is further expected that the applicant will place before the court full justification as to why the application should be entertained at all at such late stage notwithstanding the underlying objectives. Failure to do so may result in the court rejecting the application without further ado, especially if there is a history of breach of court timetables or if there is something in the conduct of the applicant that gives rise to suspicion of conscious manoeuvring.

38. Practitioners should bear in mind that it is the duty of the handling solicitor to ensure that his client’s case is properly prepared for assessment of damages. The court expects that careful and conscientious consideration and attention be given to the completion of the Checklists (or timetabling and/or listing questionnaires) before the case is set down for assessment hearing. As Lam J said in paragraph 19 of Wong Siu Yeung v Chu Kwong Wing & ors HCA5249/1999 (unreported, 20 May 2005), ‘[the] court should be able to rely on the diligent conduct of solicitors in the preparation of his client’s case for trial otherwise it will make a mockery of our case management system’. Such observation is even more compelling after the implementation of the CJR.

39. Plainly, the prodigious lateness of … the Documents … cried out for an explanation especially in view of the fact that (a) 6 Checklists prepared between 2007 and 2009 and personally signed by the Plaintiff’s solicitor confirmed that the Plaintiff would have ‘NIL’ witness on factual issues (see paragraph 8 above), and (b) the court had already directed the parties (i.e. including the Plaintiff) to seek counsel’s advice and to ensure that all outstanding interlocutory applications as advised by counsel be sought by 3^rd November 2008 (see paragraph 9 above).

…

42. But in personal injuries litigation, as in any other civil litigation, the case is set down for assessment of damages upon assurances by the party(ies) and/or by his(their) legal representatives that the action is ready for assessment of damages or that any outstanding matter will be attended to forthwith or within a specified deadline so that it will not upset the scheduled assessment hearing.  Thus, at the latest by April 2009 when the initial assessment hearing was fixed, the Plaintiff and/or his legal representatives should have ensured that the Plaintiff’s case was ready for assessment of damages or that there would not be any outstanding matter that would upset such assessment hearing.  If it were not so, it was incumbent on the Plaintiff and/or his legal representatives to deal with the outstanding matter as soon as possible and to alert the court of the same so that the court could have made informed and appropriate case management directions.  But the Plaintiff and/or his legal representatives did not adopt such course of action.  I am therefore unable to accept the explanation in the above paragraph as any legitimate excuse for the lateness of the Plaintiff’s present application.…”

37. I have carefully considered the Kwan affirmation and Mr Tang’s submissions, and am wholly dissatisfied with the explanation offered by the plaintiffs for the delay in making the new discovery.

38. First, insofar as general discovery is concerned, I am not persuaded that the events took place 6-7 years ago.  Madam Kwan frankly admitted that the plaintiffs had been advised of their continuing duty to make discovery of relevant documents.  By the time of the filing of the Timetabling Questionnaire in January 2011 at the latest (if not earlier), the plaintiffs would have been alive to the need to make full and proper discovery.  Moreover, the Kwan affirmation was silent as to when P2 bought his new computer and “put away” the old one.  Had P2 been advised of his continuing duty to make discovery of relevant documents and given that he was able to retrieve documents generated as late as in July 2010 (see item 71 of the plaintiffs’ Supplemental List of Documents) from his old computer (which means that his old computer was still in use at least up to July 2010), I see no reason why in only half a year’s time (ie by January 2011) P2 would not have been alert to the need to search and extract what is now alleged to be relevant documents from his old computer.

39. Secondly, Madam Kwan claimed an “extensive search” of the plaintiffs’ records was made for the purpose of discovery, but she failed to condescend upon the particulars of the scope and purpose of such exercise.  Bearing in mind that some of the documents already disclosed in the first round of discovery (see the defendant’s List of Documents also filed on 10 May 2012) were emails, the logical place to look for other emails would have been the computers.  There was no suggestion P2 had forgotten that he had replaced his computer and “put away” the old one.  No explanation is forthcoming as to why the old and new computers of all three plaintiffs were not checked in the course of the “extensive search”.

40. Thirdly, I agree with Mr Lui that the Kwan affirmation is shy and vague on the timing of the various steps alleged to have been taken by the plaintiffs in relation to general discovery as well as the new discovery.  Significantly, it did not even say when precisely P2 found the newly discovered documents in his old computer.  When a litigant seeks the court’s indulgence to make last minute discovery, it is quite insufficient to merely say that the newly discovered documents were found “recently”.

41. Fourthly, Madam Kwan claimed that upon reviewing the defendant’s List of Documents filed on 10 May 2012, it was considered that the emails disclosed by the defendant were not a complete set “and there should have been many more”.  Logically and necessarily emails would have been stored in computers or in email account servers, so it is rather surprising that P2 failed to look into his old computer throughout the past year.  I also find it strange that when the plaintiffs realised in May 2012 that the emails disclosed by the defendant were not a complete set, even up to today they had not applied for specific discovery against the defendant or referred to such lacuna in the defendant’s discovery in his witness statements.  Rather, the plaintiffs in their Listing Questionnaires time and again confirmed to the court and to the defendant that discovery had completed.

42. Fifthly, I agree with Mr Lui that Madam Kwan’s explanation, ie the plaintiffs’ newly discovered documents were “recently” found in P2’s old computer, is unconvincing. The newly discovered documents revealed that:

(a) There were a number of emails exchanged between the defendant and Madam Kwan but not copied to P2 at all.

(b) There were documents which did not appear to concern P2 and were not copied to him (see, for example, items 49-50, 53-57, 59 and 61 of the plaintiffs’ Supplemental List of Documents).

(c) There were copy emails with footers showing that such emails had been printed in 2010 and 2011 (see items 10-48, 62-65 and 67-68 of the plaintiffs’ Supplemental List of Documents).

(d) The email in item 54 of the plaintiffs’ Supplemental List of Documents had a header that showed it had been faxed in or out.

These matters cry out for explanation, and yet none is forthcoming in the Kwan affirmation.

43. Sixthly, as Mr Lui submitted, a number of documents could have been retrieved from other sources, but all along the plaintiffs had not done so until their Supplemental and 2^nd Supplemental List of Documents.  There is no explanation why the emails sent or received via P2’s and P3’s “yahoo” email accounts or the emails from Mr Chan’s and Madam Kwan’s company email accounts (the former of which appears to be powered by “Gmail” – see items 62-65 and 67-68 of the plaintiffs’ Supplemental List of Documents) cannot be retrieved from those servers.  The emails in items 49-50 and 68 of the plaintiffs’ Supplemental List of Documents were in fact electronically sent and/or copied to the plaintiffs’ solicitors.  Again, there is no explanation why such emails could not be retrieved from such solicitors as agents of the plaintiffs.

44. Seventhly and more importantly, the last point in the above paragraph suggests that Madam Kwan’s explanation for the delay is disingenuous.  The Amended Reply dated 30 March 2012 (and filed in April 2012) which was settled by Ms Kei of counsel referred to 4 emails dated 17 October 2008, 3 March and 10 October 2009 and 9 January 2009 not disclosed in the plaintiffs’ or the defendant’s respective List of Documents both filed on 10 May 2012.  Further, although the plaintiffs described item 60 of the their Supplemental List of Documents as an email dated 17 October 2007 from the defendant to Mr Chan, P2 and P3 that enclosed a breakdown of clinic expenses from March to October 2007, it was in fact an email from Ms Sophia Kwok, solicitor for the plaintiffs, dated 29 March 2012 that forwarded to Ms Kwan and P2 the aforesaid email dated 17 October 2007 with annexure and a message “FYI.  Mailed from [the defendant] on 17/10/07”.  Ms Sophia Kwok was the solicitor who signed all of the plaintiffs’ Timetabling and Listing Questionnaires that confirmed that discovery had completed.

45. It is plain and obvious from the above paragraph that at the latest by March 2012 (ie about a year ago) not only the plaintiffs but also their legal representatives had access to some of the documents which the plaintiffs now claim to have been “recently” unearthed from P2’s old computer.  Yet the plaintiffs and their legal representatives had kept such documents up their sleeves until the plaintiffs sprung such documents on the defendant at the eve of the trial by way of their Supplemental and 2^nd Supplemental Lists of Documents.  Mr Tang was constrained to acknowledge at the 2^nd PTR hearing that some of the so-called newly discovered documents were already in the hands of the plaintiffs and/or their legal representatives “some time ago”.  But when pressed as to what precisely “some time ago” meant, Mr Tang claimed he had no instructions.  This is plainly unsatisfactory, but the above analysis showed that for some of the newly discovered documents “some time ago” would not have been later than March 2012.  I find this is rather alarming since the explanation put forward in the Kwan affirmation for the late discovery was that these documents were only recently found in P2’s old computer, which explanation has been exploded by the aforesaid analysis and is clearly misleading.

46. Mr Tang submitted it was merely “stupidity” on the part of the plaintiffs and/or their legal representatives in failing to make continuing discovery as and when discoverable documents became available and in waiting to make further discovery of documents all in one go just before trial. But there is simply no affidavit evidence from either the plaintiffs or their solicitors in support of such explanation.  Indeed, such explanation is contradicted by the Kwan affirmation which stated that the plaintiffs had already been advised by their legal advisers that they had a continuing duty to make discovery of relevant documents.

47. An applicant who comes to court for indulgence, especially when the indulgence sought may put milestone event(s) at risk, should take special care to be forthcoming and frank to enable understanding and appreciation of the reason for and the ramification of such application at the earliest opportunity.  The plaintiffs’ persistent reticence in face of the defendant’s demands for explanation is of itself worrying.  Yet when they eventually decided to give an explanation a working day or so before the 2^nd PTR, it was, to say the least, incomplete and misleading.  It is disturbing to find out that some of the so-called newly discovered documents were in fact available to the plaintiffs as well as their legal representatives by March 2012 (ie about a year ago), and the plaintiffs and their legal representatives in fact had communicated with each other on these very documents (see Amended Reply settled by counsel and verified by statement of truth by each of the plaintiffs, and item 60 of the plaintiffs’ Supplemental List of Documents displaying an email from the plaintiffs’ handling solicitor to Madam Kwan and P2).  The fact that the plaintiffs’ Listing Questionnaires (which were signed by the same handling solicitor) thereafter confirmed that discovery had completed only served to add to the court’s disquiet.  I find that all these matters lead inexorably to the view that the plaintiffs, who all along were under legal advice, had made a deliberate choice not to make discovery until just before trial under the guise of general discovery of documents that were recently unearthed.  Such conduct must draw reproach from the court.

48. In my view, for all of the above reasons, there is no satisfactory explanation for the delay.  In fact, I go further to say that the explanation offered in the Kwan affirmation is wholly unsatisfactory.

IV.   OTHER CONSIDERATIONS

49. As explained in paragraph 55 of Liu Chen, whether the court should allow a late application for further discovery is a balancing exercise and the considerations of the court are largely three-fold:

(a) the merits of the proposed application, ie whether the application if granted will assist the court in securing “the just resolution of disputes in accordance with the substantive rights of the parties” (see Order 1A rule 2(2) of the Rules of the High Court (“RHC”));

(b) the presence or absence of any real prejudice to the other party;

(c) any conscious flouting of the rules of court, practice directions and/or case management directions/timetables, or any over-reaching or deliberate manoeuvring on the part of the applicant.

50. In respect of (c) above, I have discussed the court’s concern over conscious manoeuvring on the part of the plaintiffs in Part III above (see in particular paragraphs 44-47 above).

51. Before I turn to question of the relevance of the newly discovered documents, I will deal with the factor in paragraph 49(b) above, ie whether there is any real prejudice to the defendant on the assumption that such documents were of some relevance to the disputed issues in the present action.  Even on such assumption, I am still not prepared to allow the plaintiff to adduce and rely on the newly discovered documents.

52. Post-CJR case management recognises that the closer to trial an applicant makes an application to adduce late discovery the more likely it is to cause real prejudice to the other party, especially when a milestone date is likely to be compromised by there being insufficient remaining time until the commencement of trial (which is an immovable milestone date) to accommodate the other party’s response to the application if granted.

53. Mr Tang submitted that most of the newly discovered documents were inter partes documents such that the defendant should also have had or may now still have them in his possession, custody or power.  Mr Tang argued that (a) the defendant should have made discovery of such documents himself, and (b) in any event the defendant should not be surprised by such documents despite the lateness of the plaintiffs’ discovery.

54. Mr Tang’s argument that the defendant too should have disclosed the subject documents is very much a case of the pot calling the kettle black.  As will be seen below, it is the defendant’s case that the documents being the subject of the plaintiffs’ Supplemental and 2^nd Supplemental List of Documents are largely not relevant to the disputed issues.  But even if the plaintiffs thought otherwise and considered such documents to be discoverable, the recourse open to them was to make discovery themselves and to seek specific discovery against the defendant.  They did not pursue either recourse. Instead, what they did was to confirm by their various Listing Questionnaires that discovery had completed and to remain silent at the 1^st PTR hearing as to whether there would be any further discovery, and then afterwards made late discovery.  But more fundamentally, irrespective of whether the defendant had made proper discovery, it did not excuse the plaintiffs from their need to make discovery of documents in their possession, custody or power which they intend to adduce and rely on at trial.

55. As to Mr Tang’s suggestion that the defendant should not be surprised by the newly discovered documents, I do not agree there is no “surprise”.  The focus is not, as Mr Tang contended, on whether there had been previous emails and other communications between the parties in respect of the newly discovered documents, but on what evidence will be deployed at trial.  What the plaintiffs now seek to do is to shift the evidential goalposts that were already crystallised by the time leave was granted to set the present action down for trial by significantly enlarging the pool of documents that will be adduced at trial at a late stage of the proceedings when the parties should really be concentrating their efforts on preparation for trial.

56. Upon my enquiry at the 2^nd PTR hearing, Mr Tang confirmed that should the court grant leave for the plaintiffs to adduce and rely on the newly discovered documents, he would seek leave at trial under Order 38 rule 2A(7)(b)(i) of the RHC for the plaintiffs’ witnesses as to fact to “amplify” their witness statements and explain the newly discovered documents when they give evidence in the witness box.  This is tantamount to accepting that the newly discovered documents do not fully speak for themselves, and that the plaintiffs’ witnesses will need to explain the relevant factual matrix to put such documents in context.  Yet there is no application before the court for leave to serve supplemental witness statement(s), and no draft supplemental witness statement(s) were produced at the 2^nd PTR hearing.  This means that if the plaintiffs had their way, the defendant will be left in the dark (at least until the plaintiffs’ witnesses give evidence at trial) as to how the plaintiffs will deploy the newly discovered documents in establishing their case.  In my view, there must be an element of irremediable prejudice in requiring the defendant to respond to such evidence only in the course of the trial and without the luxury enjoyed by the plaintiffs who had the opportunity to consider these documents with their legal representatives and witnesses (and indeed they had access to some of these documents for about a year – see paragraphs 44-47 above).

57. Mr Tang made an oral application for leave to file and serve supplemental witness statement(s), but I was not prepared to entertain such request made without formal application or even a draft statement.  Fairness dictates that Mr Lui should be given adequate information in order to properly advise the defendant on the ramification of any such application and (if so advised) to properly oppose it.  I echo the observations of Bharwaney J in Parsad v Great Wealthy Eng. Co Ltd [2012] 3 HKLRD 705, 709 that “a late application for leave to rely on additional witness statements, that is to say, an application made after the case has been, or is ready to be, set down for trial, will not be considered without signed witness statements containing a statement of truth being furnished”.  Although such observations were made in the context of additional witness statements, I consider they have equal relevance to supplemental witness statements that touch on new dimensions.

58. Further, if leave were granted for the plaintiffs to adduce and rely on the newly discovered documents, apart from the above forensic prejudice, the defendant will necessarily be called upon to react to these documents by possible further discovery and/or supplemental/additional witness statement(s).  Such efforts imposed on the defendant at the eve of the trial may derail his preparations for trial, and they may even put the milestone trial at risk since the time required by the defendant to properly respond to the newly discovered documents is, as a result of the lateness of the new discovery, as yet unknown.  Bearing in mind that both Mr Tang and Mr Lui agreed that the written opening submissions by the defendant (being the party who is to open the case at trial) should be submitted at least 7 days before trial, there is doubt whether the defendant can put together a proper response to the newly discovered documents within the next two weeks.  There is little reason why the defendant should suffer shifting of the evidential goalposts when there is little time before the milestone trial date for him to properly respond and/or react.

59. In carrying out the balancing exercise, even if the newly discovered documents bear some relevance to the disputed issues, any reliance by the plaintiffs on the late discovery will cause real prejudice to the defendant in their preparation and conduct of the trial.  On this basis as well as on the wholly unsatisfactory explanation for the delay as discussed above, the plaintiffs’ application falls to be dismissed.

60. But Mr Lui went further to submit that the newly discovered documents were largely irrelevant to the issues in dispute, and he analysed this matter in detail in his written submissions.

61. The Kwan affirmation suggested that the newly discovered emails and letters during the period from 21 January to 13 April 2010 showed that the plaintiffs (especially P2) had assisted the defendant in setting up and running his medical practice at the Tsing Yi Clinic (see items 9-70 of the plaintiffs’ Supplemental List of Documents).

62. But in my view, many of these documents are not relevant to the disputed issues. The subject agreements between the parties were made at the end of 2006 and in 2007 (see paragraphs 2-4 and 6 above).  Insofar as there was dispute between the parties as to whether there was any breach of contract, Mr Lui submitted that the issue would not turn on the assistance rendered to the defendant prior to the parties entering into such agreements.  Indeed, the defendant’s witness statement acknowledged that P2 and P3 did answer his questions via telephone and email during such earlier period (see para.I(a) of the defendant’s 1^st witness statement).  Mr Tang submitted that the court would need to look at the nature of the gratuitous assistance rendered by P2 and P3 in the pre-contract period to appreciate whether and if so what assistance should be given to the defendant in the post-contract period. However, P2 in paragraph 8 of his witness statement already explained (and the defendant did not really disagree) that he voluntarily invited the defendant to seek assistance from him whenever the defendant encountered problems in his medical practice at the Tsing Yi Clinic.  Given the parties’ stance, it is unnecessary to review at the trial a large bundle of emails passing between the parties that discussed medical issues. Hence, the bulk of this group of documents being items 9-48 of the plaintiffs’ Supplemental List of Documents covering the period from January to October 2006 are, in my view, unnecessary.

63. Items 56-57 of the plaintiffs’ Supplemental List of Documents are emails in July and August 2007 that contained patient files and photographs of the Tsing Yi Clinic. There is no dispute that the defendant took over the operation of the Tsing Yi Clinic in 2007, so patient files and/or documents related to the clinic would be passed over to him. I do not see this as a disputed issue.

64. As for items 53 and 61 of the plaintiffs’ Supplemental List of Documents, they relate to the printing of name cards.  Although this has been alluded to in the plaintiffs’ pleadings, it is not a marketing support which the defendant claimed the plaintiffs should have provided and failed to provide. I agree with Mr Lui that such documents are not necessary for fairly disposing of the true issues between the parties.

65. In respect of items 71-73 of the plaintiffs’ Supplemental List of Documents, the Kwan affirmation claimed they showed that the plaintiffs helped the defendant to find locum support, purchase medicine and medical consumables, and give administrative support by assisting him to commence a joint practice with a dentist.  However, the disclosed invoices only showed locum support up to July 2007.  Again, this was not disputed by the defendant who stated in his witness statement that locum support lasted until July 2007.  I also agree with Mr Lui that the documents in respect of the purchase of medicine and medical supplies are unnecessary.  Not only did the defendant not complain about these matters, such support had not been pleaded in the plaintiffs’ pleadings.  In respect of the joint practice with a dentist, whilst this had been referred to in the plaintiffs’ pleadings and Madam Kwan’s witness statement, this was not disputed by the defendant in his witness statements and, as Mr Lui submitted, it was not a support which the defendant claimed the plaintiffs had promised but failed to provide.

66. Items 74-75 of the plaintiffs’ Supplemental List of Documents are (a) a draft agreement between P1 and an elderly home and (b) an inspection report dated 30 March 2007.  The Kwan affirmation stated that the latter was relevant to show that the plaintiffs provided administrative support in the form of getting an experienced nurse to write a report on the defendant’s behalf for submission to the government to get funding for the visiting medical officer service to be provided by the defendant.  However, the defendant agreed that the registered nurse Ms Ng provided support until May 2007, so there is no disagreement in relation to the service provided by the registered nurse in March 2007.  In respect of the draft agreement, it was stated in the plaintiffs’ Supplemental List of Documents that such agreement was in fact made or entered into on 10 July 2006, ie long before the subject agreements were made by the parties.  

67. In respect of item 76 of the plaintiffs’ Supplemental List of Documents, Mr Tang conceded that the company search records of Kinetic Asia (HK) Company Limited were not relevant to the disputed issues.

68. The Kwan affirmation stated items 86-94 of the plaintiffs’ 2^nd Supplemental List of Documents were part of the draft practice manuals that would show that the plaintiffs commissioned an experienced nurse in the employ of P1’s group to write the practice manuals for the Tsing Yi Clinic to provide administrative support to the defendant’s medical practice.  However, a substantial part of these documents (ie 18 pages) was stated to be the June 2006 amended version (ie before the subject agreements were entered into between the parties).  Further, the Kwan affirmation falls short of stating that such draft manuals were actually supplied to the defendant.  Still further, the preparation and/or supply of such manuals had not been pleaded by the plaintiffs in their pleadings.

69. In the circumstances, the bulk of the newly discovered documents are either not relevant or not necessary for fairly disposing of the disputed issues between the parties. It is true that a few of the newly disclosed documents touched on, say, email discussions prior to the aforesaid agreement for repayment of consideration money with addendum both dated 7 May 2007 or the alleged exercise of the grace period or the defendant’s proposal to resell the Tsing Yi Clinic back to the plaintiffs. It is, however, inaccurate for the Kwan affirmation to suggest that these documents were about how the plaintiffs assisted the defendant in setting up and running his medical practice at the Tsing Yi Clinic. More importantly, there is no witness statement from the plaintiffs that explains the factual matrix to put these emails in their proper context. As explained above, it is inappropriate for witnesses to explain the interplay between these emails and the relevant factual context only when they give evidence in the witness box. I am not persuaded I should allow the plaintiffs to adduce these emails as it will cause forensic prejudice to the defendant. Nevertheless, I note that the defendant has already disclosed and discovered items 52 and 58 of the plaintiffs’ Supplemental List of Documents.   

70. For items 62-70 of the plaintiffs’ Supplemental List of Documents, items 64-67 have already been disclosed by the plaintiffs.  Items 62-70 concern email correspondence between the parties from March 2008 to April 2010, but by that time the parties were already in dispute and I do not see their essential materiality to the core issues.  In any event, these documents have nothing to do with the assistance which the plaintiffs alleged they had rendered to the defendant in setting up and running his medical practice at the Tsing Yi Clinic as suggested in the Kwan affirmation, which explanation, as I have pointed out, is inaccurate.

V.  CONCLUSION

71. In all the circumstances and bearing in mind the underlying objectives of case management, I have at the 2^nd PTR hearing on 30 April 2013 declined to allow the plaintiffs to adduce or rely on the documents listed in Schedule 1 Part 1 of their Supplemental and 2^nd Supplemental Lists of Documents at trial.

72. There is no reason why costs should not follow event.  The plaintiffs sought indulgence from the court and they were eventually unsuccessful.  At the 2^nd PTR hearing on 30 April 2013, I also ordered the plaintiffs to pay costs of and occasioned by their application to adduce and rely on the newly discovered documents to be summarily assessed and paid forthwith.  I apportion 90% of the hearing time at the 2^nd PTR hearing for such purpose.  For the summary assessment of costs, I also directed that the defendant do within 7 days from the 2^nd PTR hearing lodge and serve statement of costs not exceeding one page pursuant to Practice Direction 14.3, and the plaintiffs do within 7 days thereafter lodge and serve succinct summary of objections of not more than one page in respect of the statement of costs.  The summary assessment of costs shall be dealt with on the 1^st day of the trial on 21 May 2013.