WADDINGTON LTD v. CHAN CHUN HOO THOMAS AND OTHERS

HCA 3291/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3291 OF 2003

_____________

_____________

__________________________

REASONS FOR DECISIONS

__________________________

1.  This case has been fixed for trial on 15 July 2013 with 9 days reserved. I am not the trial judge assigned to hear this case.

2.  In the hearings on 27 March 2013, I made the following decisions:

(i)   allowing the plaintiff’s summons dated 28 September 2012 (“the HSBC Summons”) for third party discovery against HSBC who was the 2^nd defendant’s banker;

(ii)   allowing, in part, the plaintiff’s summons dated 16 October 2012 (“the PWC Summons”) for third party discovery against PricewaterhouseCoopers (“PWC”) who was the 2^nd defendant’s accountant; and

(iii)   dismissing the plaintiff’s summons dated 22 October 2012 (“the EY Summons”) for third party discovery against Ernst & Young (“EY”) who was the auditor of Yugang International Limited (“Yugang”).

3.  The PTR then came before me on 8 April 2013.  Shortly before and after that hearing, the plaintiff and the 1^st defendant have taken out a number of applications before the court.  All these applications, except for the plaintiff’s summons dated 28 March 2013 for third party discovery against Yugang, have been adjourned for argument before me on 24 April 2013.   In that hearing, I made the following decisions:

(i)   dismissing the 1^st defendant’s summons dated 3 April 2013 for security for costs (“the Security for Costs Summons”);

(ii)   allowing the 1^st defendant’s summons dated 12 April 2013  for the withdrawal of the interrogatories served by the plaintiff (“the Interrogatories Summons”); and

(iii)   adjourning the 1^st defendant’s summons dated 3 April 2013 for an O 14A hearing or hearing of preliminary issue (“the Preliminary Issue Summons”) to be dealt with by the trial judge.

4.  I now give my reasons for these decisions.

5.  In the adjourned hearing on 24 April 2013, the parties have also agreed for the court to grant leave to them to file expert evidence on BVI law for the purpose of the trial, and so I do not need to deal with such application in these Reasons.

BACKGROUND

6.  This case has a long history.  It involves a multiple derivative action brought by a minority shareholder (the plaintiff) in the listed parent company (the 3^rd defendant) for wrongs done to and damage suffered by the 5^th defendant, which is the 3^rd defendant’s indirect wholly-owned subsidiary.  The transactions complained of took place in May to July 2000.  At that time, the 1^st defendant was the chairman, executive director and controlling beneficial shareholder of the 3^rd defendant and a director of the 5^th defendant.  The 2^nd, 3^rd and 4^th defendants are intermediate holding companies of the 5^th defendant which have been joined for procedural purposes in the multiple derivative action.

7.  The transactions complained of consisted of:

(i)   the 5^th defendant selling its entire 4.28% shareholding in Prestige Property Holding Limited (“Prestige”), an associated listed company also beneficially owned by the 1^st defendant, in the market at a loss at prices of $0.6 to $0.7 a share between 22 to 24 May 2000; and

(ii)   the 2^nd defendant (a vehicle controlled by the 1^st defendant) entering into an agreement with a third party, Yugang, on 28 July 2000 to sell the 34.25% Prestige shares held by the 2^nd defendant at $2.2 a share, whereby it was a condition precedent that Yugang would not have to make a general offer (triggering point is 35%).

8.  The plaintiff’s case is that these transactions were part of an arrangement whereby the 1^st defendant was to dispose of his own substantial shareholding in Prestige to Yugang at a significant premium (the consideration of the sale to Yugang was $600,600,000) on terms that Yugang would not be required to make a general offer, and to that end the 1^st defendant had to procure the 5^th defendant (which would be regarded as his concert party by reason of his beneficial ownership of the same) to dispose of the 5^th defendant’s Prestige shares.  The 1^st defendant therefore procured the 5^th defendant to dispose of its Prestige shares in the market.

9.  According to the plaintiff, the wrong done to the 5^th defendant was two-fold.  Not only was the 5^th defendant prevented from taking part in the beneficial sale to Yugang (which would have been possible if the 1^st defendant had procured the disposal of part of the 2^nd defendant’s shares to keep the overall percentage under 35%), the “forced sale” of the Prestige shares in the market in fact resulted in a loss to the 5^th defendant in the sum of $56,000,000 (measured against the carrying value of $2.28 a share) or at least $27,700,000 (measured against book value as at 31 December 1999 at 1.46 a share).

10.  It is also part of the plaintiff’s case that these transactions have a number of unusual features which cry out for explanation:

(i)   the 5^th defendant was, on the 1^st defendant’s own case, a portfolio investment holding company, and the 4.28% Prestige shares were one of its 2 main assets.  Those Prestige shares had been held since around 1994 and were classified as a long term investment in the 5^th defendant’s accounts with carrying value of $2.28 a share and updated book value of $1.46 a share;

(ii)   earlier in May 2000, the 5^th defendant had already sold its other main asset, a bloc of shares in Harbour Ring International Holdings Ltd (“Harbour Ring”), but at a very substantial gain of $215,000,000;

(iii)   within a short time, the 5^th defendant saw fit to dispose of its only remaining asset (4.28% Prestige shares) at a significant loss;

(iv)   at that time, the 3^rd defendant’s group was cash-rich and was not in need of funds;

(v)   there is no evidence of any board discussion or approval for the sale of the 4.28% Prestige shares prior to their disposal. Although the 1^st defendant alleges that the sale was “duly approved” by the directors of the 5^th defendant, no board resolution has been produced in support up to now;

(vi)   rather, it appears that on 18 May 2000, a meeting of the board of the 5^th defendant (consisting of the 1^st defendant and To Shu Shing Sidney) resolved to authorise the 1^st defendant to sign all “securities transfer documents of [Prestige]”.  There is no evidence of any discussion at the board of what the proposed transfer was, or its terms, price or rationale.  The 1^st defendant then went ahead and gave instructions to sell the 4.28% Prestige shares;

(vii)   it was only after the event, on 3 June 2000, that the Executive Committee of the board of the 3^rd defendant (consisting of the 1^st defendant, To Shu Shing Sidney, Ip Shu Wing Charles and Cheng Bing Kin Alain) retrospectively ratified the disposal of the 4.28% Prestige shares by the 5^th defendant.  The reason given for such ratification was that “the then market condition was favourable and the disposal was beneficial to the Group as a whole”.

11.  In reply to these allegations, the 1^st defendant denies that there was any breach of fiduciary duty.  The 1^st defendant claims that there was ulterior purpose for the plaintiff in commencing the present proceedings against the defendants, and the plaintiff has no locus to bring this action under BVI law on behalf of the 5^th defendant.  In reply to the allegations about the sale of the 4.28% Prestige shares, the 1^st defendant avers that the authorization given to him for such sale by the board of the 5^th defendant on 18 May 2000 was “in conformity with … the Articles of Association of [the 5^th defendant]”, the sale of such shares was at market price and was ratified by the Executive Committee of the board of the 3^rd defendant.  Further, the loss arising from the disposal of the 4.28% Prestige shares was “more than compensated by the substantial gain realised from the Harbour Ring shares”.

THE DISCOVERY SUMMONSES AGAINST HSBC, PWC AND EY

12.  The plaintiff took out 3 third party discovery summonses against HSBC, PWC and EY in September and October 2012.

13.  There is no disagreement about the following principles for third party discovery under s 42 of the High Court Ordinance (Cap 4) and O 24 r 7A of the RHC (Cap 4) , which were summarised in Ngan In Leung & Ors v Chu Yuet Wah, unreported, HCA 388/2006 (decision of Au-Yeung DHCJ, as she then was, on 14 August 2012) at §§61-62:

(i)   it must be shown that the non-party is likely to have the documents in his possession, custody or power which are relevant to an issue arising out of a claim;

(ii)   the test of relevance is the Peruvian Guano test;

(iii)   it must be shown that the order must be necessary either for disposing fairly of the matters or for saving costs;

(iv)   the order sought must identify with precision the document, documents or categories of documents which are required to be disclosed;

(v)   even if satisfied with the above, the court still has to exercise its discretion, bearing in mind that disclosure orders against third parties are exceptional.  It should not be used as a fishing exercise for documents nor speculative.  It should not be oppressive to the witness, e.g. by the terms being too wide.  It must identify the documents by means of a particular description and not a general description;

(vi)   it will be oppressive if the order requires the third party to make fine judgments regarding the relevance of the documents; or if it requires him to undertake a search of an excessively large amount of documents; or if it does not specify the documents with reasonable particularity; and

(vii)   the court may also in its discretion refuse to order the disclosure of documents which are confidential.

(a)   The HSBC Summons

14.  HSBC was the banker of the 1^st and the 2^nd defendants at the material times.  The documents sought are, namely, a charge over the securities dated 3 February 2000 made by the 2^nd defendant in favour of HSBC (“the Charge”) and all communications related to the Charge and a 2^nd Mortgage dated 28 February 2000 made jointly by the 2^nd defendant and another in favour of HSBC in respect of the 1^st defendant’s residence in Middle Gap Road (“the 2^nd Mortgage”) and the dealings of the Prestige shares.

15.  I ordered discovery of these documents on the ground that they are relevant to the issues arising or likely to arise in the proceedings.

16.  Firstly, these documents are relevant to the issue of corporate control.  It is the plaintiff’s case that up to 28 December 2001, the 1^st defendant was in control of the 2^nd defendant, and through the 2^nd defendant, was in control of the Playmates Group, which is denied by the 1^st defendant.  As the Charge and the 2^nd Mortgage would have imposed substantial financial liabilities on the 2^nd defendant, they would have been executed by those in control of the 2^nd defendant at the time.  Hence, the requested documents may shed light on the issue of corporate control.

17.  Secondly, these documents may explain the reasons behind the sale of the 4.28% Prestige shares by the 5^th defendant and the sale of the Prestige shares by the 2^nd defendant to Yugang. According to the plaintiff, the Charge and the 2^nd Mortgage would have placed the 1^st and the 2^nd defendants under mounting pressure to repay their debts to HSBC.  Such intense financial pressure may explain why the 2^nd and the 5^th defendants disposed of the Prestige shares so suddenly.

18.  The discovery of the requested documents is therefore necessary for the court to determine the aforesaid issues.  The 2^nd defendant has not filed a Defence and has been absent in these proceedings.  The 1^st defendant has not included these documents in his list of documents, and Mr Pun, the then counsel for the 1^st defendant, confirms at the hearing that the 1^st defendant is not prepared to supply such documents.  Under such circumstances, I allowed the HSBC Summons to enable the plaintiff to obtain such documents for the proper preparation of the trial.

19.  In the hearing, Mr Pun submits that the court should not allow the application at that stage because the 1^st defendant may lodge an appeal against the court’s decision.  If the 1^st defendant does so, the trial date may be jeopardised.

20.  I agree that the application could have been made earlier.  However, the HSBC Summons was taken out on 28 September 2012 which was about 10 months before the trial.  Due to the state of the court diary, the application was only heard on 27 March 2013, and yet there was still by then considerable time before the commencement of the trial.  Furthermore, the documents requested relate very much to the 1^st defendant and the operation of the 2^nd defendant, and so I do not expect that the 1^st defendant would have any difficulty in dealing with the materials revealed in these documents.  If the 1^st defendant had no control over the 2^nd defendant as alleged by him, he can simply make a further witness statement to explain the situation or to deal with it in his oral testimony at the trial.  I do not foresee that the 1^st defendant has to carry out extensive investigation in relation to these documents, and it is unlikely that the trial date will be jeopardised.

21.  Further, possibility of appeal is not a valid consideration for the court in determining the merits of the application.  In any event, there is mechanism for the Court of Appeal to deal with urgent appeals thereby minimising the risk of the disruption of the trial date.

22.  The 1^st defendant also argues that HSBC may not keep the documents due to the lapse of time.  If that is the case, the relevant personnel of HSBC can make an affirmation to confirm that the bank is no longer in possession of these documents.  At this stage, the court cannot assume that HSBC has thrown away those documents.

23.  Based on these reasons, I allowed the HSBC Summons. Although the plaintiff succeeds in the application, it should only get the costs of the hearing if it eventually succeeds in the claim against the 1^st defendant.  I therefore made the costs order that, save that the costs of the hearing on 27 March 2013 be the plaintiff’s costs in the cause as between the plaintiff and the 1^st defendant, the costs of the HSBC Summons be costs in the cause.

(b)     The PWC Summons

24.  PWC was the auditor of the 2^nd defendant at the material times.  The documents sought are, namely, the Charge, the 2^nd defendant’s reports and accounts for 1999 and 2000 (ie. the time around the sale of the Prestige shares to Yugang), a Disclosure Letter and the Escrow Letter which form part of the sale agreement of the Prestige shares to Yugang (“the Sale Agreement”), and communications in relation to PWC’s work on the Sale Agreement.  In the hearing, I allowed the PWC Summons save that the documents required to be disclosed do not cover the 2^nd defendant’s reports and accounts for 1999 and 2000.

25.  According to the plaintiff, by reason of the close proximity in time between the sale by the 5^th defendant of the Prestige shares at $0.60 to $0.70 a share in late May 2000 and the sale of the shares to Yugang in July 2000, the 1^st defendant should have known, in May 2000, about the opportunity of selling the Prestige shares at a substantial premium.  The 1^st defendant denies such allegation both in the pleading and in his witness statement without supplying much particulars.  The documents requested would shed light as to when the negotiation for sale of the shares to Yugang had started.  As this is a crux issue of the case, the plaintiff should be entitled to the documents requested in order to investigate whether the 2 sales were unrelated as claimed by the 1^st defendant.

26.  However, I refused the plaintiff’s request for the discovery of the audited reports and accounts and monthly management accounts of the 2^nd defendant for the years 1999 and 2000.  The documents requested, in particular the monthly management accounts, should be voluminous, and so the discovery of these documents at this stage of the proceedings may cause unnecessary burden on the parties in the preparation of the trial. Further, the financial accounts of the 2^nd defendant may be subject to different interpretations and the parties may seek the assistance of experts to interpret these financial accounts, which is highly undesirable in view of the limited time available before the commencement of the trial.  Further, I have serious doubt about the probative or the evidential values of these accounts, and so I refused the discovery of these documents.

27.  I only allowed the PWC Summons in part.  I therefore made the costs order that, save that there be no order as to costs of the hearing on 27 March 2013 between the plaintiff and the 1^st defendant, the costs of the PWC Summons be costs in the cause.

(c)      The EY Summons

28.  EY was the auditor of Yugang at the material times.  The documents sought are, namely, the Disclosure Letter and the Escrow Letter which form part of the Sale Agreement, a Circular by Yugang dated 21 August 2000 containing further details of the Sale Agreement and communications in relation to EY’s works on the Sale Agreement.

29.  Despite that the documents requested may be relevant to the issues of the case, I refused the application for the following 2 reasons.  Firstly, the documents requested are actually Yugang’s documents.  The summons should have been issued against Yugang, or at least Yugang should be given the opportunity to be heard on the application.  Without informing Yugang about the application, it is not appropriate for the court to make the discovery order against Yugang’s auditor.  Secondly, after obtaining the documents, the parties of the present litigation may have to carry out further investigation such as approaching Yugang to seek further clarifications about the contents of these documents.  After all, these documents were prepared by a third party who is not directly involved in this case.  This process may take considerable time and it may jeopardise the trial date which is a milestone date.  Hence, it is not appropriate to order discovery against Yugang’s auditor at such a late stage of the proceedings and I dismissed the EY Summons with costs.

THE SECURITY FOR COSTS SUMMONS

30.  I then turn to the 3 summonses taken out by the 1^st defendant shortly before or after the PTR.

31.  Firstly, the 1^st defendant applies for security for costs in this action in the sum of $10,160.399.37.

32.  There is serious dispute between the parties as to whether the plaintiff is ordinarily resident out of Hong Kong for the purpose of the security for costs application.  However, I do not consider it necessary to rule on this particular issue as I would dismiss the Security for Costs Summons on the ground of delay alone.

33.  After the implementation of the civil justice reform, the courts have repeatedly emphasised that late applications should be discouraged as such kind of applications can easily disrupt the trial dates which are milestone dates.  Further, Practice Direction 5.2 (at §34) has expressly provided that the PTR is not an extension of the CMC.  The court expects a case to be ready for trial at the PTR and late interlocutory applications may be dismissed on the basis of delay alone.  This would have been sufficient for me to dismiss the Security for Costs Summons.

34.  Further, late application for security for costs, in particular when the trial is imminent, per se constitutes very real prejudice to a plaintiff, since the plaintiff is being put in a position of having little or no choice but to put up the security in order not to abandon and waste all the work done and costs incurred in preparing for trial. In these circumstances, the application should be refused (see: BBMB Finance (Hong Kong) Ltd v China Underwriters Life and General Insurance Co Ltd [1991] 1 HKLR 617, 626-628 (per Fuad VP); Tsang Yee Mui v Personal Representatives of Mak Chik Wing, deceased, unreported, HCA 2606/2006 (decision on 21 July 2008 at §§34-38 (per Chu J, as she then was)).

35.  This action was commenced in 2003.  The Court of Final Appeal gave judgment in 2008 stating that the action could proceed as a multiple derivative action on behalf of the 5^th defendant.  In his Timetabling Questionnaire filed on 28 January 2011, the 1^st defendant stated that he intended to apply for security for costs within 28 days after the close of pleadings and even sought directions to that effect.  No further reference to seeking security was made in his Listing Questionnaires filed on 20 September 2011 and 19 March 2012.  Instead, the 1^st defendant confirmed, in his 2^nd Listing Questionnaire, that he agreed not to take out any further interlocutory applications save for those which ought to be made to the listing judge or master.

36.  It was only shortly before the PTR that the 1^st defendant issued the Security for Costs Summons.  The explanation purportedly given for the delay was that the 1^st defendant was apparently uncertain as to whether the plaintiff would proceed to trial.  This is neither a credible nor sufficient explanation for the very substantial delay.  Further, substantial costs had already been incurred by the parties in the conduct of this action.  If the 1^st defendant is genuinely seeking to ask the plaintiff to provide security to cover his costs, one would expect the 1^st defendant to have made such application at a much earlier time.  By reason of the substantial delay, I have reason to believe that the application is only a tactical move by the 1^st defendant to put undue pressure on the plaintiff to raise substantial fund in the limited time before the trial.

37.  Based on these strong reasons, I dismissed the Security for Costs Summons with costs.

THE INTERROGATORIES SUMMONS

38.  The plaintiff served the interrogatories without order on the 1^st defendant on 5 April 2013.  The 1^st defendant applies to the court for an order for the withdrawal of the interrogatories.

39.  As I see it, the interrogatories can be divided into the following 4 broad categories:

(i)   interrogatories relating to the issue of corporate control (Questions 1 and 2);

(ii)   interrogatories relating to the Charge, the 2^nd Mortgage and the 2^nd defendant’s indebtedness to HSBC (Questions 3 to 8);

(iii)   interrogatories relating to the other “investment securities” held by the 5^th defendant apart from the Harbour Ring shares and the Prestige shares (Questions 9 to 10); and

(iv)   interrogatories relating to the circumstances for the disposal of the Prestige shares and the Harbour Ring shares (Questions 11-20).

40.  Firstly, I have no hesitation in disallowing the interrogatories relating to the Charge, the 2^nd Mortgage and the 2^nd defendant’s indebtedness to HSBC.  The court has already allowed the HSBC Summons requiring HSBC to disclose documents relating to these interrogatories.  As I see it, the plaintiff should have no problem in getting the answers to these interrogatories from the documents to be disclosed under the HSBC Summons, and so it is not necessary for the plaintiff to administer such interrogatories for the fair disposal of the case or for saving costs.  Further, it is not the purpose of interrogatories to test the creditability of the counter-party’s case, and so it is not appropriate for the 1^st defendant to provide these answers before the completion of the discovery process against HSBC.

41.  For the remaining interrogatories, I take the view that there are generally relevant to the issues of the case.  Taking into account that the plaintiff knows very little about the circumstances under which the 5^th defendant disposed of the Prestige and the Harbour Ring shares, I would have allowed the interrogatories had they been served earlier.

42.  Despite such observation, I allowed the application for the withdrawal of the interrogatories for the following 4 reasons.  Firstly, the plaintiff only served the interrogatories shortly before the PTR, and the trial of this action is going to commence in about 2.5 months’ time.  In such circumstances, I doubt very much whether administering interrogatories at this stage would result in any saving in costs.  Secondly, the plaintiff has failed to give any reason to explain or justify the delay in the serving of the interrogatories.  Thirdly, the answers to these interrogatories may prompt another round of discovery and interrogatories which may jeopardise the trial date.  Fourthly, bearing in mind the express warning given to the parties as contained in Practice Direction 5.2, it is not appropriate for the court to allow the plaintiff to administer interrogatories at such a late stage of the proceedings.

43.  In fact, there is nothing to prevent the plaintiff to pursue these interrogatories during cross-examination at the trial.  According to the plaintiff, it would be more desirable for the 1^st defendant to provide the answers to these interrogatories before the trial.  If further investigation needs to be carried out to verify the truthfulness of the 1^st defendant’s answers, there may be disruption to the trial which can be avoided if the plaintiff can obtain the answers earlier.

44.  I can see the advantage of obtaining the answers at the early stage of the proceedings, but I doubt whether the late provision of these answers can assist the fair disposal of the issues of the case.  Quite on the contrary, administering interrogatories at this stage may prompt further applications which may unnecessarily complicate the proceedings or even jeopardise the trial date.  As I see it, the plaintiff should try to get the answers during cross-examination at the trial.  If further investigation needs to be carried out, the plaintiff can make the appropriate application before the trial judge, who can then decide the application based on the answers given and the overall circumstances of the case.  Hence, I allowed the 1^st defendant’s summons for the withdrawal of the interrogatories with costs.

THE PRELIMINARY ISSUE SUMMONS

45.  That leaves only the Preliminary Issue Summons, under which the 1^st defendant asks the court to conduct an O 14A hearing, or alternatively a trial on preliminary issue, to determine whether the plaintiff has any right to bring the present multiple derivative action on behalf of or in the name of the 5^th defendant, which is a BVI company, for the allged wrongs done to the 5^th defendant.

46.  Firstly, I have no hesitation in dismissing the plaintiff’s application for an O 14A hearing.  According to the recent Court of Appeal’s decision in East Asia Satellite Television (Holdings) Ltd v New Cotai LLC [2011] 3 HKLRD 734, whether the plaintiff has the right to bring the present multiple derivative action on behalf of the 5^th defendant would depend on the law of the place in which the 5^th defendant was incorporated, which is BVI in the present case.  It is also trite law that question of foreign law is question of fact and not question of law.  As O 14A hearing is for a determination on a question of law, it is not appropriate for the court to order an O 14A hearing to resolve the factual issue as to whether the plaintiff, according to BVI law, does enjoy the right to bring multiple derivative action on behalf of the 5^th defendant.

47.  Further, taking into account the limited time before the trial, it is neither feasible nor desirable to conduct a trial of preliminary issue to determine this particular question.  The trial proper will start on 15 July 2013, and the plaintiff has yet filed the expert evidence on the issue of BVI law.  At this stage, the court has no idea how long the hearing on preliminary issue will take, and it is just impossible for the court to allocate a few days before the trial to determine the question about the plaintiff’s locus to sue.

48.  I also doubt how much costs can be saved by ordering a trial on preliminary issue at this stage.  As the trial proper will start in about 2.5 months’ time, the order for preliminary hearing will actually increase the costs as counsel would have to be retained for two instead of one hearing.  Hence, there would be no separate hearing on preliminary issue before the trial.

49.  In view of my ruling, Mr Lee, SC, counsel for the 1^st defendant, indicates to me that the 1^st defendant would reserve the right to make an application before the trial judge to determine the said preliminary issue on the first day of the trial.  In order to give more flexibility to the trial judge to deal with this matter, I adjourned the Preliminary Issue Summons to be dealt with by the trial judge instead of dismissing the Summons.  However, it has all along been the object of the 1^st defendant’s Preliminary Issue Summons to have a separate hearing before the trial to determine the preliminary issue and the 1^st defendant’s application has failed to achieve such purpose, I ordered that the costs of the Preliminary Issue Summons incurred up to the hearing of 24 April 2013 be paid by the 1^st defendant.

50.  Before I leave the subject on the plaintiff’s locus to sue, I would add one observation about the 1^st defendant’s summons for leave to file expert evidence on BVI law.  The 1^st defendant has taken out such summons as early as 19 March 2012.  The application was not dealt with until it came before me in the PTR.  This is highly undesirable.  It is only with the consent of the parties that avoids perhaps lengthy argument shortly before the trial.  Even with the granting of leave, there is very limited time available to the parties, in particular the plaintiff, to prepare the expert reports for the trial.  Further, since I do not have the benefit of all the expert reports at the PTR, there is no way for me to give any sensible directions for the calling of expert evidence at the trial.  Hence, for case management purposes, question about the right of the parties to adduce expert evidence should not be left for determination at such a late stage of the proceedings.

FINAL OBSERVATIONS

51.  In this action, the parties have taken out a lot of late applications shortly before the PTR.  This practice is highly unsatisfactory and should be discouraged.  Apart from the prejudice likely to be caused to the parties by such late applications including the possible adjournment of the trial, there is serious disruption to the court diary as the court has to struggle to find some time during the limited time before the trial to hear the applications (see also the dicta of Lam JA in Li Xiao Yun & Anr v China Gas Holdings Ltd, unreported, CACV 39/2013, decision on 11 March 2013, at §18).

52.  But for the timing of the applications, most of these applications do have merit and the courts are always puzzled as to why these applications are made so late.

53.  Express warning about late applications has already been given in §34 of Practice Direction 5.2, and practitioners should be reminded that late applications may be dismissed on the basis of delay alone. Unless there are exceptional circumstances and there are good reasons for the delay, one should not expect the courts to grant any late applications taken out shortly before the PTR.  This is the case even if the applications have satisfied all the other threshold requirements for the granting of the relevant orders.  Practitioners should therefore give serious thought about the question relating to outstanding interlocutory applications when they fill in the listing questionnaires before the case is set down for trial, otherwise they only have themselves to blame if their late applications are rejected on the ground of delay alone.  Further, as pointed out by Lam JA in Li Xiao Yun & Anr v China Gas Holdings Ltd, supra, at §18), applicant for late application should normally be expected to face an adverse costs order on indemnity basis.