ANTHONY FRANCIS LI and CLARENCE A LI, Managers of LI TO WAN TSO v. KWOK WUI KNITTERS LTD

HCMP 1044/2019

[2024] HKCFI 3472

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1044 OF 2019

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DECISION

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1.  This is the Pre-trial Review (“PTR”) of the trial set down to commence before this Court on 31 March 2025.

2.  Mr Anthony Francis Li (“AFL”) and Mr Clarence A Li are the current joint-managers of a Tso.  In that capacity, they are the jointly named as the plaintiff herein (“P”).  28 lots of lands are registered under the name of Tso (the “Lots”).  Its former manager was Li Lap Kin (the “Former Manager”).  He passed away in August 2016.  The current joint-managers have been appointed in his place.  The Former Manager in his capacity as such entered into a provisional agreement dated 14 August 2014 for the sale of the Lots (“PS&PA”).  The purchaser is the defendant (“D”). The trial concerns the validity and enforceability of the PS&PA.

3.  An issue has arisen as to the admissibility of the affirmation of AFL filed on 16 December 2019 (the “Subject Aff”).   

4.  P first sought to adduce the Subject Aff via their supplemental hearsay notice dated 28 July 2023.  D has maintained its objection.  It says that as P have failed to exchange any witness statement despite an unless order of 18 January 2023 against them (the “Unless Order”), P are debarred from adducing the Subject Aff.

5.  The Unless Order is in the following terms:

“Unless the parties do exchange signed written statements of factual witnesses by 4:00 pm on 3 February 2023, the party in default shall be debarred from adducing evidence from factual witness at trial, and the party not in default shall immediately thereupon file and serve their signed written statements of factual witnesses”.

6.  The matters were before Master Dick Ho on 14 November 2023. Having heard parties, he directed parties to seek the trial judge’s direction or otherwise make submissions on the same during the PTR.

7.  In support of P’s application, Mr Shum puts forward 3 main reasons as to why he submits P should be allowed to rely on the Subject Aff as hearsay (“Reason #1” to “Reason #3”).  He summarises them at §18(a) to (c) of his written submission.  Reason #1 is the principal one, that:

“… adopting its ordinary and natural meaning, the Unless Order ONLY prohibits statements of fact of witnesses to be exchanged pursuant to O.38, r2A of the RHC with the effect that the defaulting party is debarred from calling such witnesses at trial who have not given his/her witness statement. The Unless Order is NOT framed as (nor was it intended to be) a blanket prohibition against admission of ‘all factual evidence’ including hearsay evidence under O.38, rr.20-22 of the RHC and/or ss. 47 & 47A of the Evidence Ordinance.^”

As Reasons #2 and 3, Mr Shum submits, in gist, that hearsay is in general admissible in civil proceedings, and that the contents of the Subject Aff are material and relevant.

8.  I have considered the Unless Order.  I have also considered the procedural history leading to its issue.  I have also considered the various authorities which parties have cited to me.

9.  I do not accept Reason #1 Mr Shum puts forward.  I have considered his detailed submissions on the regime under O.38 on the exchange of witness statements.  However, whilst that may be the procedural backdrop against which the matters are to be considered, the decisive consideration is not that regime or the intricacies of its operation.  It is the scope of the Unless Order properly construed and understood according to its ordinary and natural meaning.  It does not with respect as Mr Shum submits “prohibits statements of fact of witnesses to be exchanged pursuant to O.38, r2A”.  It provides that unless parties do so, the party in default “shall be debarred from adducing evidence from factual witness at trial”.  That is what is to be debarred. The position will be different when it comes to for example the production of some letters and their reliance as hearsay.  But here, it is an affirmation of a co-plaintiff which we are dealing with.

10.  I have considered the contents of the Subject Aff.  This action was originally started by Originating Summons.  P filed an affirmation in support. D then filed an affirmation in opposition.  The Subject Aff was filed by AFL in reply.  The contents clearly could have been made in the form of, or incorporated, into a witness statement and exchanged.  P have decided not to do so.  They are instead seeking to introduce it via a hearsay notice.  They are in my view clearly seeking to adduce evidence from AFL as a factual witness, albeit in hearsay form.  They have been and are debarred from doing so by the Unless Order.

11.  In my view, the effects of O.38 r.2 and O.38 r.2A(10) reinforce D’s objection to Ps’ intended reliance upon the Subject Aff:

(a)  O.38 r.2 governs the admission and use of affidavits at trial.  Mr Shum accepts and acknowledges that;

(b)  In relation to the operation of O.38 r.2, I have considered the authorities raised by Mr Shum, which include High Fashion Garments Co Ltd v Ng Siu Tong & Ors [2004] 1 HKLRD 928, Cheung Wei Man Vivien & Anor v Centaline Property Agency Ltd & Ors[2004] 1 HKC 692, and Hung Hing Yue Patrick v Ho Yin Man [2017] 1 HKLRD 1193.  Relevant are these principles and considerations, that for an affidavit to be relied on at trial, the proper course is to take out an application under O.38 r.2 for directions before set down, that in deciding how the court’s discretion is to be exercised in that regard, account should be given to the legitimate interest of the other party in cross-examining the witness, and that such right will not be by-passed by s.47 of the Evidence Ordinance (Cap. 8);

(c)  Whilst the above are not necessarily decisive, they are important considerations to be applied in conjunction with the facts of the particular case;

(d)  O.38 r.2A(10) also applies.  That sub-rule provides that:

“Where a party fails to comply with a direction for the exchange of witness statements he shall not be entitled to adduce evidence to which the direction related without the leave of the Court.”

(e)  The Unless Order obviously relates to the contents of the Subject Aff;

(f)  AFL is one of the co-plaintiffs.  Whilst he is beyond the seas, I have no explanation as to why he chooses not to come back to Hong Kong to give evidence and to face cross-examination;

(g)  I have considered Reasons #2 and 3.  They make it more the more important to consider D’s legitimate interest to cross-examine AFL;

(h)  Given the Unless Order and the procedural history leading to its issue, on the facts of the case, I in any event see no basis to exercise my discretion in favour of Ps whether under O.38 r.2 or O.38 r.2A(10).

12.  I note and appreciate that in an usual case when objection on admissibility of hearsay is taken pretrial, it may be sensible and logical to defer the consideration of the objection till trial upon conclusion of the evidence, so that all the considerations set out in s.49 of the Evidence Ordinance (relevant also to the question of admissibility under s.47) may be taken into account holistically.  However, in the present case, P faces the Unless Order.  They have to clear that hurdle first.  On the facts, and for the reasons set out above, they have not.   

13.  For the above reason, I order that P shall not be entitled to rely on the Subject Aff as hearsay, as they seek to do by the supplemental hearsay notice.

14.  I otherwise give PTR directions as per those suggested by Mr Phang, subject to some minor changes therein as discussed.

15.  In terms of costs, I order that the costs of today be in the cause.  I have been informed that the costs of the hearing before Master Dick Ho have been reserved.  I will leave them as they are, and revisit them at the end of the trial.