IMADA LUENWAH WORLD LTD v. YIP MING CHEONG AND ANOTHER

DCCJ5540/2003

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5540 OF 2003

BETWEEN

          DCCJ6521/2003

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 6521 OF 2003

R U L I N G

1.  This is the plaintiff's application by summons dated 12 July 2006, just three working days before the trial, which is today.  Three days have been reserved for the trial.  The summons seeks:

(1) leave for Imada Luenwah World Ltd. (hereinafter called "Imada") to file and serve the affirmation Suen Ching as per the draft attached to the summons and for the said affirmation to be read at the trial or as the trial judge may direct otherwise;

(2) leave be granted to Imada to file the Re-Amended Writ and Statement of Claim out of time;

(3) leave be granted to Imada to amend the Reply and Defence to Counterclaim as per the draft annexed to the summons.

2.  The summons was made returnable before a master in chambers on 14 July 2006.  Quite properly, the master adjourned the summons to be dealt with by the trial judge.  On 21 February 2006, the case was set down for trial.  Since the setting down, the trial judge has been seized of this case.  The summons seeks reliefs which will impact on the conduct of the trial.  In my view, the relevant discretion as to whether to grant those reliefs should be exercised by the trial judge and Imada's solicitors should have issued the summons returnable before the trial judge either before or on the first day of trial.

3.  The other parties are Yip Ming-cheong and Wong Chi-nang, both trading as Mei-King Machinery Engineering (hereinafter called "Yip", "Wong" and "Mei-King" respectively).  Yip and Wong act in person before me although they were previously legally represented. 

4.  In respect of Imada's application for leave to file the Re-Amended Writ and Statement of Claim out of time, Yip and Wong have no objection.  In fact, Master R. Yu granted leave to re-amend on 3 November 2003 and the Re-Amended Writ and Statement of Claim have been served.  Due to oversight, the same has not been filed and Imada, therefore, seeks an extension of time for late filing.  I consider leave should be granted and I grant an order in terms of paragraph 2 of the summons. 

5.  In the course of submissions in support of the other applications under the summons, Miss Lau, counsel for Imada, applies to adjourn the application and consequently, the trial, to enable the following to be done for the purpose of such applications:

(1) to file and serve an affirmation of Suen Ching, who is the Chairman of the Board of Directors of Imada to account for the lateness of the application;

(2) to file and serve a further report by Dr Chiu Kin-wah to explain the health condition and treatment of Suen Ching to see whether he can attend court hearings at an appropriate time and/or to give evidence in any other manner.

6.  The background to the above is as follows.  Attached to the summons is a report from Dr Chiu Kin-wah of 5 July 2006 which states that Suen Ching has been suffering from acute myeloid leukaemia since May 2004 and he has developed severe chronic renal failure in the recent months.  Since he is undergoing anti-leukaemia treatment and requires frequent hospitalisation for transfusion of blood products, and treatment of opportunistic infection, he is not fit to attend court. 

7.  Prior to the summons, there has been no intimation of the medical condition of Suen Ching.  Although Suen Ching is said to have been suffering from chronic renal failure for some months, no prior attempt has been made to alert Yip and Wong of the possibility that he may not be able to attend court to give evidence or to explore the possibility of deferring the trial to an appropriate time after the current treatment or to another venue with appropriate arrangements.  The latter information is also not placed before this court. 

8.  In respect of Imada's application for leave to amend the Reply and Defence to Counterclaim, the effect of the amendment is as follows.  The existing pleadings show that Mei-King counterclaims for $39,560, being the outstanding balance of the price of the machine sold to Imada.  The present Reply and Defence to Counterclaim denies the counterclaim by relying on the averments in the Reply.  The proposed amendment is to add a further positive defence that due to the malfunction in the label-sticking process of the machine, which was noted by Imada, Imada had verbally agreed with Mei-King that Mei-King would waive the payment of the balance price in the sum of $39,560.

9.  Having carefully considered Miss Lau's submissions and the submissions of Yip and Wong, I am not persuaded I should adjourn the application to amend.

10.  Miss Lau refers me to Guangzhou Green-Enhan Bio-Engineering Co. Ltd. & Anor v Green Power Health Products International Co. Limited  HCA4651 of 2002, HCA2802 of 2003, HCMP74 of 2004, Lam J (unreported, 21 August 2004) at paragraph 14 where it is said that the court will generally allow an amendment to enable the real issue in dispute to be canvassed no matter how late it is applied for.  It is a balancing exercise and the ultimate consideration is fairness (procedural as well as substantive) to the parties in all the circumstances.

11.  I agree with such general principles.  But it is pertinent to note that the learned judge also said lateness and explanation for the delay in making the application are relevant factors to take into account in the exercise of discretion.  Here there is no affidavit to account for the lateness of the application to amend and no or no satisfactory explanation is proffered.  I bear in mind that although Suen Ching is ill, Suen Hung, his son and another witness of Imada, was also involved in this matter.

12.  The question is whether Imada, who has been legally represented all along, should be allowed an adjournment to explain the delay in support of its application to amend.  Having considered the following matters, I consider the proposed amendments are bound to be refused, so I do not consider any adjournment is appropriate.

13.  Lam J in the same paragraph 14 in the case of Guangzhou Green-Enhan Bio-Engineering Co. Ltd. referred to a passage from the judgment of Lord Griffiths in Ketteman v Hansel Properties [1987] 1 AC 189, 220 which draws a clear difference between allowing amendments to clarify the issues in dispute and those that permit a distinct defence to be raised for the first time.

14.  Here the dispute as to liability for the payment of the balance of the purchase price has been raised well in advance of the trial.  The proposed amendment is not technical.  It is a positive averment and a new positive line of defence.  There is no satisfactory explanation why this has not been pleaded much earlier than at the trial. 

15.  In Chan Kwan Yin Shirley & Anor v Wu Wing & Anor HCA7718 of 2000, Lam J (unreported, 27 April 2004), it is said:

"…… As a matter of common sense, a late application raising a new case for the first time that changes the main focus of the trial is more likely to cause prejudice beyond those that can be adequately compensated by costs and adjournment.  Of course, whether such prejudice would actually be suffered (if amendment is allowed) depends on the facts of each case and the court must examine that in the light of the circumstances of the case before it.  It must however be recognised that a last minute moving of the goal posts is not in line with current litigation ethos as reflected in proactive case management and procedural rules for proper and timely disclosure in advance of a case being set down for trial.  Lord Griffiths referred to some other  relevant factors in relation to such an application in Ketteman v Hansel Properties [1987] 1 AC 189 at p.220."

16.  Further, the presently proposed amendments is a bare averment of the alleged verbal agreement without any particularity.  In Lam Wai Hung v Lam Chun Hung & Others HCA 2038 of 2004, Mr Recorder Kwok, S.C. (unreported, 22 June 2006), it was held that the applicable principles are as follows:

"In Heibei Enterprises Limited and others v Livasiri & Co. and others, unreported, HCA20094 of 1998, 3 June 2004, Deputy Judge Poon was taken through a rather comprehensive survey of the relevant authorities; dismissed an application to amend made during the trial and summarised the applicable principles as follows:-

"4. First, an affidavit in support of the application, as a general rule, is not required except that where any delay or special circumstances require explanation ...

5. Second, the proposed amendment must be sufficiently intelligible ... It is incumbent upon the parties seeking amendment to ensure adequate particularity.  It is no answer to an objection that a proposed amendment lacks particulars, to say that particulars can later be given ...

6. This is particularly so in the case of late amendments

……".

17.  Without particulars, it is not known when, where or between whom the alleged verbal agreement was reached in the present case.  Even more importantly, there is no available evidence to support such alleged verbal agreement.  It does not appear in the discovered documents or in Imada's witness statements.  The only support comes from paragraph 24 of the draft affirmation of Suen Ching, which says: "葉先生口頭確認放棄收取此餘款".  But it still does not say when and where the alleged verbal agreement took place and which person on behalf of Imada made such verbal agreement. 

18.  Miss Lau cites no authority in relation to the principles for the exercise of discretion in such circumstances.  However, I have referred the parties to Wellfit Investment Ltd v Poly Commence Ltd & Ors CACV80 of 1995, (unreported, 18 July 2005), where Nazareth VP said, at paragraph 17 as follows:

"Where amendments, particularly material amendments of the present sort, are made so shortly before the hearing, it must be incumbent upon the party seeking them to ensure adequate particularity.  The constraints of time, and the high risk of disruption of the orderly conduct of trials by the courts and of prejudice to the other party must demand strongly that leave be refused …… Likewise in Re Unisoft Group Ltd (No. 2) [1994] BCC 766 at 770-1, Harman J explained in some detail why, in the context of late amendments, requests for further and better particulars are not an answer to the lack of particularity and cause injustice."

19.  I bear in mind, in the present case, the lateness of amendment, the lack of particularity and the injustice that arises from the fact that Imada proposes not call Suen Ching as a witness at the trial so that the proposed supporting evidence is nothing but a bare assertion by Suen Ching, who will not to be subjected to cross-examination.  Imada's other witness, Suen Hung, does not speak to the subject.  Therefore, even if there is a satisfactory explanation before me to account for the lateness of the proposed amendment, I would not have allowed the proposed amendment in light of the applicable principles and the circumstances referred to above.

20.  It is also unfair to Yip and Wong to adjourn the application to enable Imada to provide particulars to "perfect" the application beyond the eleventh hour after the trial date when the particulars of the alleged verbal agreement are not even known or formulated.  Yip and Wong refer to the detriment they will suffer by such adjournment, which cannot be compensated by costs.  They submit that due to the ongoing litigation, Mei-King's credit facilities have been frozen by their bankers and they cannot take advantage of the improved economic condition to expand their business.  Miss Lau criticises the veracity of such assertion and the lack of evidence in support of the same.  But it does not really lie in Imada's mouth to say so since its application for adjournment was not made until close to 12 noon today. 

21.  Having considered all the circumstances and balancing the interests of both parties, I do not consider that it is appropriate to allow the proposed amendment and paragraph 3 of the summons is dismissed. 

22.  As regards Suen Ching, Imada seeks leave of the court to read his affirmation at the trial.  Currently the affirmation is in draft form and has not been finalised.  In the course of submissions, Miss Lau applies for an adjournment of such application with consequent adjournment of the trial to enable Suen Ching to prepare an affirmation to explain the lateness of the application and to explain the differences between his witness statement and his affirmation.  Adjournment is also sought to allow Dr Chiu Kin-wah explain whether Suen Ching can attend trial at a later date after the current treatment or to give evidence in any other manner. 

23.  The need for an affidavit to account for the delay was accepted in the case of Guangzhou Green-Enhan Bio-Engineering Co. Ltd.  No such affidavit is adduced in the present case although Dr Chiu's report states that Suen Ching's poor medical condition has continued for some time already.  The only explanation given by Miss Lau from the Bar table is Imada's hope that Suen Ching may attend court to give evidence.  Imada has been legally represented all along.  It is incumbent upon Imada and those representing them to alert the other side and the court of matters that may affect the impending trial instead of waiting until the eleventh hour to give notice.  In all fairness, the other side should have an opportunity to consider and/or, if appropriate, to challenge the grounds raised.  Even if they do not do so, they should have a reasonable opportunity to assess and prepare the case in light of the developments.  Imada and its solicitors cannot be unaware that Yip and Wong are acting in person.

24.  Miss Lau, in her submissions, suggests that given that Suen Ching is over 70, and the nature of his illness, it is likely that he will require continued future treatment.  Yip and Wong do not take issue over the fact that Suen Ching suffers from medical problems as stated in Dr Chiu's report.  Yip makes the practical and salient point that given Suen Ching's age and the nature of his illness, the prognosis is uncertain and it is unclear whether he will be better or worse or remain stable in the near future.  In short, it is unclear whether he will be able to give evidence.

25.  I believe this is a fair comment on the available information and I am prepared to proceed on the basis that it is not possible to say, on the present material, whether Suen Ching will be able to give evidence in future.  On this basis, I do not consider any adjournment is required for Dr Chiu to expand on Suen Ching's medical condition and prognosis.  That leaves the question of whether the application should be adjourned to enable Imada to file the affirmation of Suen Ching to explain the lateness of the application and the differences between his witness statement and his draft affirmation.  Since the latter purpose touches on the substance of the application, I shall first explain the background. 

26.  Suen Ching's witness statement was filed on 28 June 2005.  The contents of the draft affirmation of Suen Ching are the same as that of his witness statement save and except the following: 

(1) In paragraph 15 of the witness statement, Suen Ching said "美景葉先生同意維修費用將會按維修情況作實報實銷".  In paragraph 18 he repeated "由於葉先生知道實報實銷 ……".  But in paragraph 16 of the draft affirmation, Suen Ching proposes to say as follows: "美景葉先生同意維修工人的開支每人各付一半，而維修零件費用則會實報實銷，美景葉生聲稱人工用去HK$7,800.00 （HK$1,300 x 6天）及零件用去HK$6,465.00 （合共HK$14,265.00），經本公司屢次要求都未能提供單據證明，並且生產線始終未能修理妥當，故此本公司認為尚未需要支付上述費用。".  In paragraph 19 of his draft affirmation, Suen Ching repeats that "由於葉先生承諾實報實銷 ……";

(2) In paragraph 23 of his draft affirmation, Suen Ching newly adds that Mei-King never gave any "電腦方程式及電腦版圖" to Imada; and

(3) In paragraph 24 of his draft affirmation, Suen Ching newly adds that "葉先生口頭確認放棄收取此餘款".

27.  The latter two proposed additions can be dealt with shortly.  In respect of the proposed addition in paragraph 23 of the draft affirmation, since the reference to Mei-King's failure to produce "電腦方程式及電腦版圖" is already made in paragraph 25 of his witness statement, it is not a new assertion.    

28.  In respect of the proposed addition in paragraph 24 of the draft affirmation, since I have disallowed the amendment of the Reply and Defence to Counterclaim, this should not be allowed. 

29.  This leaves the proposed assertion in paragraph 16 of the draft affirmation.  Although Miss Lau seeks to persuade me that what is stated therein is not inconsistent with paragraph 23 of Suen Ching's witness statement, I cannot accept this submission on the plain wording.  "實報實銷" plainly means that the charges were what was actually incurred.  There is no dispute that costs of labour and parts were incurred, and, consequently, paragraph 18 of the witness statement states that Suen Ching requested Mei-King to explain both the calculation of the labour cost and to provide invoice and evidence for the purchase of parts.  On the other hand, paragraph 16 of the draft affirmation states that there was an agreement with Yip for each party to bear half of the labour cost and only the costs of parts would be "實報實銷".  I cannot say that on the plain wording of the two documents they are consistent.  Indeed, it is the very difference between the two that Miss Lau now seeks an adjournment to enable Suen Ching to explain. 

30.  Today is the first day of trial.  Imada proposes the draft affirmation as per paragraph 16 therein.  The question is whether Imada should be granted an indulgence to enable it to move the goal posts still further in a manner not yet known or formulated.  Even assuming that there is a satisfactory explanation for the lateness of the application, I am not persuaded I should exercise my discretion to allow such assertion in paragraph 16 of the draft affirmation of Suen Ching.  Had Suen Ching been able to give evidence, such new assertion would have to be made in a supplemental witness statement if leave is granted and the court will have to be persuaded to allow that to happen.  I am not convinced that because Suen Ching says he is unable to give evidence such assertion can be slipped in by way of his affirmation.

31.  Miss Lau submits that such new assertion is supported by documentary evidence.  She refers to page 125 of the trial bundle which refers to a note dated 11 September 2002, which record, it is submitted, is in line with the new assertion.  There is, however, no evidence or information before me as to who is the maker of that note or the circumstances in which it was made. 

32.  Miss Lau further says that in the Small Claims Tribunal, before Mei-King's claim was transferred to District Court,  Suen Ching's witness statement in those proceedings queried the labour costs and cost of parts.  But such statement, at page 139 of the trial bundle, contains no averment as to the alleged agreement that Mei-King would bear half of the labour costs.

33.  More importantly, such agreement, as well as Mei-King's failure to provide documentary evidence of breakdown, have not been pleaded in the Defence in DCCJ6521 of 2003.  No application to amend has been made in this respect even though a positive line of defence is raised by such assertion, namely, (1) there is an agreement that Imada is not required to bear half the labour costs; and (2) payment of the remaining half of the labour costs and the cost of parts is not yet due pending the provision of supporting documentary justification.

34.  Further, whether the documents support the new assertion is not really of assistance.  After all, a witness statement is a witness's own assertions.  In both the witness statement and the draft affirmation, Suen Ching says that the contents are true and correct but that has to be read in light of the aforesaid differences between the two.  The present consideration is not whether what he says is credible, but what is his evidence and whether a different assertion should be allowed.  I also bear in mind that it is not proposed for Suen Ching to attend court to give evidence.  In such circumstances, Yip and Wong will be deprived of an opportunity to cross-examine him on these matters, even if we ignore, for present purposes, the pleading point. Imada's other witness, Suen Hung, does not speak to such matters. 

35.  In my view, in raising this new assertion, it is a prejudice to Yip and Wong that cannot be compensated by costs after having considered all the circumstances and irrespective of the pleading point.  At first Miss Lau submits that the absence of explanation from Suen Ching can only aid Yip and Wong in their submissions on the weight of such evidence, but she later seeks indulgence for an adjournment of the application for Suen Ching to supply the relevant information.  This is tantamount to having two bites of the cherry.  Movement of goal posts is frowned upon when a case reaches the trial stage.  It gives rise to even more concern when the destination of the goal posts is not even clear.

36.  Looking at the larger picture, I note that even without the new assertion, Imada's case will not crumple.  I also bear in mind that arguments of the parties on the consequence of the adjournment of the application and of the trial.  Looking at all the relevant circumstances and balancing the interests of the parties, I find that it is inappropriate to grant any adjournment and I am not prepared to allow Imada to adduce paragraph 16 of the affirmation of Suen Ching. 

37.  Coming back to the issue of whether Imada should be allowed, under Order 38 rule 2 of the Rules of the District Court, to adduce the affirmation of Suen Ching,  I am of the view that, bearing in mind his age, his illness and severity thereof, as well as the fact that Suen Ching's affirmation, expurgated in the manner referred to above, is the same as his witness statement, so that there will be no new matters that should take Yip and Wong by surprise, I am prepared to grant leave, under Order 38 rule 2, for the affirmation so expurgated to be read at the trial.  Suen Ching's medical illness is unfortunate, but the present case must take such circumstance into account. 

38.  Suen Hung, Imada's other witness, is available to give evidence and his witness statement touches on some matters that overlap with those in Suen Ching's witness statement or Suen Ching's affirmation (yet to be expurgated).   I note there are some areas of factual dispute between Imada and Mei-King (as seen from Suen Ching's witness statement and the statement of Yip) that are not covered by the witness statement of Suen Hung, who will give evidence.  I have carefully considered the weighty consideration of the deprivation of Mei-King's right to cross-examine Suen Ching, but I must also consider the balancing interest of Imada, whose key witness is suffering from a poor medical condition with an unclear prospect of whether he will be able to attend trial in future.  I also bear in mind the unwillingness of Yip and Wong to adjourn the trial if at all possible.  I therefore grant an order in terms of paragraph 1 of the summons save that paragraph 16 and the last phrase "而葉先生口頭確認放棄收取此餘款" in paragraph 24 be struck out.

39.  The matter will now proceed to trial.  No doubt I will, in due course, hear submissions on the weight to be given to the expurgated affirmation of Suen Ching, so the less I say on it the better.

40.  I also note that Yip and Wong have no objection to the photographs disclosed most recently in Imada's supplemental list of documents dated 12 July 2006. 

41.  I will now hear the parties on costs.

(Submissions on costs)

42.  Imada to pay each of Yip and Wong the costs of Imada's summons dated 12 July 2006 assessed at $1,200 for each of Yip and Wong. 

(Corrigendum on 18 July 2006)

43.  The reference to Suen Hung being Suen Ching's son in paragraph 11 above is deleted.