WANG RONGAN v. SILVER INTERNATIONAL INVESTMENT LTD AND OTHERS

HCA 1425/2015

[2021] HKCFI 3198

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1425 OF 2015

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J U D G M E N T

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Introduction

1.  This is the restored hearing of the Plaintiff’s application by summons dated 14th February 2020 for leave to:

(1)  all his witnesses, 6 factual (including himself) and 1 expert, to give evidence at the trial of this action by way of video-conferencing facilities (“VCF”) at the Technology Court or at a courtroom deemed fit by this court; and

(2)  participate and observe the trial by use of VCF.

2.  If the VCF application is granted, the Plaintiff says the witnesses will be testifying at a commercial unit at Shenzhen: 广东省深圳市南山区侨香路5068号智慧广场A栋01单元25楼. 

3.  As a matter of procedural history, the PTR was heard on 26 September 2019.  The trial of this action was originally scheduled to commence on 26 February 2020 with 14 days reserved but was adjourned due to the GAP.  On 30 March 2020, the application was by consent adjourned sine die with liberty to restore. By a Notice of Trial dated as earlier as 12 May 2020, the parties were notified of the new trial dates commencing on 23 November 2021.

4.  Belatedly, on 15 October 2021, the Plaintiff filed the 4th Affirmation of Cheung Ka Wai (“Cheung 4”), a partner of his solicitors, to restore the application.  At the hearing, the parties were given leave to file the 5th Affirmation of Cheung Ka Wai dated 22 October 2021 (“Cheung 5”) and the 1st affirmation of Li Choi Ying dated 25 October 2021 (“Li 1”).

5.  The application, which is extremely rare in that none of the Plaintiff’s witnesses propose to attend the trial to testify, is met with strenuous opposition from the Defendants. 

6.  At the hearing on 25 October 2021, the Plaintiff, again belatedly, limits his application to only 3 witnesses viz Yang Liujun, Professor Xiao Yongping and Wang Lei.

Deliberation

7.  Practice Direction 29 governs the use of video-link and the Technology Court.  The more pertinent provisions are:

(1)  It is a case management question within the discretion of the Court.

(2)  In making its decision, the Court will take into account the views of all parties, the availability of the Technology Court, the subject matter of the proceedings and all other material circumstances, including in particular, whether the proposed use of the Technology Court is likely inter alia to promote the fair and efficient disposal of the proceedings.

(3)  Applications should be made as early as practicable, bearing in mind the possible need to fix a hearing to consider any opposition to the application and, in the event of the application succeeding, the need to ensure that all necessary and proper technical and other arrangements are in place to ensure that hearing is effective.

8.  As far as the applicable legal principles are concerned, they are not seriously in dispute.

9.  InRe Chow Kam Fai [2004] 2 HKLRD 260 at 267-8, Rogers VP laid down the following propositions on the giving of evidence by VCF:

“… the giving of evidence by VCF was an exception rather than the rule and that it would be a matter of privilege accorded to the respondent and not a matter of right for him to be allowed to do so.” (at [16]);

“… The starting point must be that proceedings are conducted in court. …” (at [17]);

“… the atmosphere of a court is highly important as regards the taking of evidence. The solemnity of court proceedings and its atmosphere is something which, I have no doubt, plays an important role in the way justice is administered.” (at [18]);

“There is no doubt that VCF is a highly useful tool. It must be a question of judgment in each case as to whether VCF should be used for the taking of evidence. No doubt, on those occasions when the witness is giving evidence that is technical or purely factual, without important issues as to credibility, a court may be more disposed to allow evidence to be given by the use of VCF. Questions of cost and convenience are no doubt also important considerations that the court will have to weigh in deciding whether to allow evidence to be given using VCF. But, first and foremost, it seems to me that the Judge was correct in his approach that a party wishing to give evidence using VCF should establish a sound reason why that privilege should be accorded.” (at [19]) (emphasis added)

10.  In Raj Kumar Mahajan v HCL Technologies (Hong Kong) Ltd [2010] 5 HKLRD 119, the Court of Appeal upheld the decision of the trial judge in rejecting an application by a defendant to give evidence by VCF by reason of inter alia his alleged medical condition.  At [7], Rogers VP accepted that VCF was a useful tool in situations where the credibility of a witness was not at stake but stressed the importance of the solemnity of court proceedings:

“7. As far as I am concerned the solemnity of the court is most important. In Hong Kong it is important that the members of the court, both the judges and counsel appearing, are properly attired. It is important that the court proceedings are carried on in court in the way that we do. It does give a solemnity to the occasion. One only has to observe parties and witnesses coming to court to observe their demeanour. It does have an impact. Giving evidence via a television link, in my view, dispels part of that. The place for a judge to sit, for witnesses to give evidence and for submissions to be made, is in court.”

11.  Lastly, in Re Nobility School[2020] HKCFI 891, Anthony Chan J wrapped up the Court’s approach at [9(8)] as follows:

“Ultimately, it is a matter of judgment of the court choosing the course best calculated to achieve a just result by taking into account all the material considerations, including whether the witness is capable of attending the proceedings, any prejudice to the other party, the Underlying Objectives [ie RHC O1A r 1], any delay to the proceedings and practical considerations like the availability of the facilities ...”

12.  It is well-known that, post CJR, a late interlocutory application may be dismissed on the basis of delay alone. 

13.  In Li Xiao Yun v China Gas Holdings Limited, unrep, CACV 38/2013, 11 March 2013, Lam JA (as he then was) explained the reason for it at [18]:

“ … Last minute pre-trial applications also disrupt the preparation for the trial on the part of a trial judge in terms of reading into the case. Instead of getting himself or herself familiar with the issues that have to be tackled at the trial, the judge would have to divert attention and spend time and efforts on such applications. Thus, such practice has to be discouraged ...”

14.  In the present case, the gist of the Plaintiff’s application is that his witnesses are all PRC residents and are currently in the PRC.  Due to the outbreak of Covid-19 pandemic, they have difficulties coming to Hong Kong.  The following facts pertaining to their difficulties are taken from Cheung 4:

(1)  The Plaintiff, Wang Wei, Hu Mingzhi, Zhu Haishan are now residing in Shenzhen. Wang Lei and Yang Liujun are now residing in Beijing.  Professor Xiao Yongping (expert witness) is now residing in Wuhan.  They are all fully vaccinated.

(2)  Under the current travel restrictions policy, PRC residents who wish to travel to Hong Kong would first have to apply for permissions from the Immigration Department of the Public Security Bureau (“PSB”) in the PRC.  Upon inquiry with the PSB, the reply was that the longest possible visa period that would be given is 14 days, and no extension would be given.

(3)  Before the launch of Come2hk Scheme, for persons who have only stayed in the PRC on the day of boarding for/arrival at Hong Kong or during the 14 days before that day, there are 2 different quarantine requirements: (i) for those who have not been fully vaccinated, compulsory quarantine for 14 days at designated places and undergo tests; (ii) for those who have been fully vaccinated, compulsory quarantine for 7 days at designated places and be put on “self-monitoring” in the subsequent 7 days, and undergo tests.  The meaning of “self-monitoring” is not entirely clear from available publications.  It is not known whether visiting the Court would be allowable.

(4)  On 15 September 2021, a new scheme named “Come2HK” was introduced by the Hong Kong Government.  It will be available for booking for PRC residents coming from Guangdong Province and Macao only, if a quota could be obtained.

(5)  If the Come2HK Scheme is not applicable, or if the visitor could not obtain a quota, normal quarantine requirements will apply.

(6)  Wang Rongan, Wang Wei, Hu Mingzhi, and Zhu Haishan are eligible for the Come2HK Scheme. 

(7)  Wang Lei, Yang Liujun, and Professor Xiao Yongping are not eligible for the Come2HK Scheme.  They will have to go through compulsory quarantine for 7 days and be put on “self-monitoring” in the subsequent 7 days and undergo tests.

(8)  As for Wang Lei, paragraph 12 of Cheung 4 states:

“Further, I have been informed by the Plaintiff and I verily believe that the People’s Court in China has issued an order to prohibit Wang Lei (王磊) from leaving Mainland China in respect of the winding up of a company called ‘Shenzhen Hemei Group Company Limited (深圳赫美集團股份有限公司)’ which Wang Lei (王磊) was the legal representative.”

(9)  In fact, no PRC Court order was produced in Cheung 4.  What is being relied upon in Cheung 4 is a 1-page statement from Wang Lei himself.

(10)  Belatedly, the Plaintiff filed Cheung 5 exhibiting a legal opinion from a PRC law firm.  The opinion is to the effect that Wang Lei was prohibited by section 15 of the PRC Corporate Bankruptcy Law from leaving his place of residence without permission from the People’s Court. There is however no evidence that Wang Lei had applied for permission but was rejected.  In any event, the Defendants have since obtained an urgent legal opinion[1] from a PRC lawyer Mr Chen Fang disputing the applicability of section 15 of the PRC Corporate Bankruptcy Law.

15.  Apart from the said difficulties, the Plaintiff also submits that (i) it poses a serious health risk to the witnesses and other court users for them to attend the trial during self-monitoring and (ii) 3 of the witnesses viz the Plaintiff aged 68, Wang Wei aged 59 and Hu Mingzhi aged 76 are said to be most susceptible to Covid-19. 

16.  No further explanation is given as to why (i) would be the case if the witnesses are allowed to enter Hong Kong under the present precautions imposed by the Government or (ii) from a medical point of view, fully-vaccinated people are most susceptible to Covid-19 while in Hong Kong.  Both submissions ought to be evidence-based but the evidence in support is not there.  In any event, the Plaintiff is no longer pursuing the application regarding himself, Wang Wei or Hu Mingzhi.

17.  As stated in paragraph 22 of the 4th Affirmation of Tse Ka Lok (“Tse 4”), a partner of the Defendants’ solicitors, neither (i) the witnesses’ places of abode in the PRC, (ii) nor Shenzhen, where the witnesses are proposed to testify by VCF, (iii) nor Hong Kong is currently a high-risk location where Covid-19 is serious.  Indeed, as is generally well-known, both PRC and Hong Kong have a zero-tolerance policy towards Covid-19 cases which are well under control.  In particular, strict sterilisation procedure and social distancing rules are in place in all level of Courts in Hong Kong.

18.  In their skeleton submissions at paragraphs 22 - 24, the Defendants challenge the witnesses’ alleged difficulties in travelling to Hong Kong to testify.  The evidential basis can be found in paragraphs 5 to 20 of Tse 4 and are too lengthy to be repeated here.  In essence, the evidence is that:

(1)  Mr Tse has tried to book a quota under the Come2hk Scheme on its Government website and found available dates.

(2)  The 3 witnesses who reside in Beijing and Wuhan are not, for that reason, excluded from the Come2hk Scheme.  According to a legal opinion from Sincere Qianhai Law Offices, the Mainland Lawyers advised that, at present, Beijing and Wuhan residents are not subject to quarantine requirements when visiting the Guangdong Province.  As such, those 3 witnesses would qualify for the Come2hk Scheme if they (i) travel from their places of residence to the Guangdong Province, (ii) stay there for 14 days and then (iii) travel to Hong Kong. 

(3)  The Mainland Lawyers also opined that the Court in Shenzhen has yet to accept and process (受理) the winding-up petition of the company in question and Wang Lei is not obliged under PRC laws to remain in the Mainland. 

(4)  While the visa period to be given to Beijing, Wuhan and Shenzhen residents to travel to Hong Kong for litigation-related purposes would be 14 days, the visitors may apply to the Hong Kong Immigration Department for an extension.

19.  As far as Professor Xiao is concerned, the Plaintiff’s case boils down to a matter of his convenience.  That is hardly a reason to support the Plaintiff’s application.  Of course it is more convenient for him to testify in his home town.  But he agreed and still agrees to be a witness at the trial to take place in Hong Kong and the Plaintiff knows about it.  

20.  As far as Wang Lei is concerned, there is no evidence that he is by a Court order prohibited from coming to Hong Kong.  All there is before this court are conflicting legal opinions from the parties as to whether or not he is able to do so.  Given the conflicting legal opinions from the parties, this court cannot be satisfied on this state of evidence that Wang Lei is legally prohibited from coming to Hong Kong.

21.  Having considered the evidence, this court is of the view that the Plaintiff has exaggerated the difficulties faced by the witnesses and agrees with the Defendants that the alleged difficulties are a reflection of the Plaintiff’s lack of effort to explore ways for his witnesses to attend the upcoming trial. 

22.  Importantly, the Defendants submit that there are complex factual issues to be resolved at trial.  As set out in the Defendants’ PTR Note, the main issues in this case are as follows:

(1)  Whether in June 2008, or at any other time, the 2nd Defendant had executed 5 undated declarations of trust in favour of the Plaintiff and the Management Team Members of Shenzhen Haoningda Electronic Meters Manufacturing Limited (“HND”), a company listed on the Shenzhen Stock Exchange, acknowledging that he was holding shares of the 1st Defendant on trust for them?

(2)  Whether the alleged oral 1st Trust existed between Hon Kiu and the Plaintiff?

(3)  Whether the alleged oral 2nd Trust existed between the Plaintiff and the 1st Defendant, acting through the 2nd Defendant?

(4)  Whether the previous distribution of share dividends of HND (received by Hon Kiu) to the Management Team Members including the Plaintiff was determined and distributed as bonuses by the 1st and 2nd Defendants at their sole discretion as additional incentives for the Management Team Members’ services to HND, but not as dividends?

(5)  Whether distribution of a portion of the sale proceeds to the Management Team Members (other than the Plaintiff) was made by the 1st and 2nd Defendants out of gratitude for their services and treated as bonuses?

23.  The Defendants submit that the entire case will turn on the credibility of the parties’ oral evidence and that the Court’s assessment of the quality of oral evidence is absolutely crucial.  In the Plaintiff’s skeleton submissions, he accepts that the present case involves factual disputes but submits that the weight of the credibility of the witnesses would not be as substantial as it appears.  That is a surprising submission.  If the Plaintiff’s case could more or less be established by documentary evidence, he would not have to call himself and 5 other factual witnesses to back him up in the first place.  Anyway, that is only a bare assertion by the Plaintiff.  What is more important is how the Defendants propose to defend the Plaintiff’s case.  If the Defendants’ present intention is to challenge the credibility of each and every one of the Plaintiff’s witnesses, including the PRC legal expert, that is really a matter for their legal team to decide - the Plaintiff has very little if any say about it. 

24.  Another objection raised by the Defendants is the Plaintiff’s delay in restoring the present application and the prejudice thereby caused to the Defendants.  They submit that with the Covid-19 pandemic lingering from late December 2019 to the present and the trial of the action re-fixed in May 2020, there is no credible explanation by the Plaintiff as to why the present application could not have been made much earlier, say in early or mid 2021.  Their failure to do so until the 11th hour means that if the Plaintiff’s application succeeds, given (i) the venue proposed by the Plaintiff for his witnesses to testify by VCF is located in Shenzhen, and (ii) visitors from Hong Kong to Shenzhen are subject to 14 days’ quarantine plus 7 days’ home monitoring, there will not be enough time for the Defendants to arrange for their legal and technical personnel to travel to Shenzhen, fulfil the quarantine requirements, assess the conditions and propriety of the Plaintiff’s arrangements, including the setting of the venue, the testing of the equipment, the integrity of the bundle for the witnesses etc and, in case of discovery of any problem, to take instructions, explore alternative arrangements by consent or, in the absence of consent, to apply to the Court for further directions.

25.  There is considerable force in these submissions.

26.  As Anthony Chan J lamented in Re Nobility Schoolat [7], which lament this court shares, the timing of this application, whether intentional or otherwise, is such that the Court is held to ransom in that the refusal of this application could result in an adjournment of the trial.  In the present case, adjourning the trial of the action set down in May 2020 is clearly an undesirable result.  But this court, like Anthony Chan J said in Re Nobility School, must also have in mind the right of the Defendants to a fair trial.

27.  To conclude, looking at all matters in the round, this court is of the view that the Plaintiff has failed to establish a sound reason why the privilege of testifying by VCF should be accorded to his 3 witnesses.  Rather, fairness between the parties and the just disposal of the proceedings compels this court to dismiss the application.

Disposition and costs

28.  The application is hereby dismissed.

29.  The parties have made their submissions on costs. This court hereby orders that the costs of and occasioned by the application be to the Defendants, to be summarily assessed if not agreed, and paid forthwith, certificate for 2 counsel.

30.  In the absence of agreement on quantum, the Defendants are to submit their statement of costs within 7 days, and the Plaintiff is to submit his statement of objections within 7 days thereafter. The matter will be determined afterwards on paper.