ELIJAH SAATORI v. RAFFLES MEDICAL GROUP (HONG KONG) LTD

HCPI 1114/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 1114 OF 2006

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D E C I S I O N
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INTRODUCTION

1.  I have before me an application by the plaintiff by summons dated 9 October 2014 seeking:-

(1) leave to file and serve a supplemental expert report of Mr Kwok Kai Bun Benny, the plaintiff’s forensic accounting expert, dated 26 August 2014; and

(2) an order that the defendant do withdraw its request for a supplemental report from the psychologist expert.

2.  In relation to the second matter (ie a supplemental report from the psychologist expert), leave was in fact granted by Master Roy Yu on 9 July 2014 for the parties to obtain a joint supplemental report from the psychologist experts to clarify certain aspect of an earlier report dated 6 March 2013.  However, I am told that no agreement could be reached on the joint instruction to the experts, and the defendant now proposes to deal with the matter by way of oral evidence at the trial.

3.  At the hearing this morning, I am told by Mr Jeevan Hingorani (counsel for the plaintiff) that if the defendant wishes to obtain the supplemental report from the psychologist expert, it should get on with the matter, and the plaintiff does not intend to pursue paragraph 2 of the summons.  In the circumstances, that part of the summons is no longer in issue before me.

4.  In this decision, I shall deal only with the question of whether leave to file and serve a supplemental expert report of Mr Kwok should be granted.

Nature of evidence contained in the proposed supplemental expert report

5.  The plaintiff’s claim herein against the defendant is for damages for medical negligence.  According to the plaintiff, he attended the defendant’s clinic on or about 10 July 2003 for the purpose of wax removal in the right ear.  It is not necessary for the present purpose to describe in detail what happened on that date, because that would be a matter for the trial.  It is the plaintiff’s case that, shortly after the treatment which he received at the defendant’s clinic, he experienced acute, chronic tinnitus which developed into serious physical and psychological injuries and disabilities.

6.  In the Revised Statement of Damages dated 13 December 2013, it is stated that at the time of the incident in question, the plaintiff’s main business was the invention, production and marketing and sale of board games and unique new products, including in particular two games known as (i) Galaxion (a board game) and (ii) Psilink (a memory game), as well as 15 other products under development.  Apparently, the plaintiff’s business was carried on though a company called Zebra Industries (Orgensis Nova) Limited (“ZION”), of which the plaintiff was a 72% shareholder at the material time. At paragraph 3.4.1 of the Revised Statement of Damages, it is said that but for the plaintiff’s injuries and disabilities, ZION would have made a profit of not less than HK$44,639,000 (equivalent to US$5,723,000), which the plaintiff claims against the defendant as part of his “loss of earnings”.

7.  This claim is supported by the first expert report of Mr Kwok dated 12 November 2013.  It is apparent from a reading of Mr Kwok’s report that his assessment of the business loss was based on, inter alia, ZION’s business and marketing plan (“the Plan”) and ZION’s 7-year financial forecast (“the Forecast”).  As acknowledged by Mr Kwok in paragraph 4.3 of his first report, he has not independently verified the information contained in the Forecast, the supporting materials and other data provided to him by or on behalf of the plaintiff.

8.  Apparently, the Forecast provides certain figures for the “estimated gross profit margin” and “estimated quantities sold” in respect of “17 Inventions” over a period eight years from 2003 to 2010.  Having regard to what Mr Kwok describes as “feasibility” and “prudence”, Mr Kwok decides to disregard that part of the Forecast which gives estimated figures for the 5^th to 8^th years.  Mr Kwok therefore assesses the plaintiff’s loss for the 1^st to 4^th years only (ie from 2003 to 2006), giving a range of between US$194,000 and US$5,723,000.  The highest figure has been adopted in the plaintiff’s Revised Statement of Damages as aforesaid.

9.  In the course of his submissions this morning, Mr Raymond Leung SC (counsel for the defendant) has raised various criticisms regarding the assumptions and methodologies adopted by Mr Kwok in his first report as well as the information and materials made available to and relied upon by Mr Kwok in the preparation of his first report.  For the present purpose, it is not necessary for me to deal with those criticisms, which no doubt will be further explored at the trial.

10.  In his supplemental report (the subject matter of the present application), Mr Kwok considers an agreement dated 31 March 2003 entitled “ZION Preliminary Agreement Ref:Z&W01” (“the Preliminary Agreement”) entered into between the plaintiff for and on behalf of ZION and a company called Wah Tong Paper Products Group Ltd, referred to as the “Investor” in that agreement.

11.  The Preliminary Agreement provides, amongst other things, for a “seed investment” in the total amount of HK$280,000 to be made by the Investor in return for a 10% stake in ZION.  The version of the Preliminary Agreement before me has an “Appendix C” attached thereto which sets out the agreed number of products (ie Galaxion and Psilink) to be produced during the first 4 years.  It seems clear that the Appendix C now before me is not the original document that was attached to the Preliminary Agreement, because it bears the date of “March 24th AD 2014”.

12.  Be that as it may, in his supplemental report, Mr Kwok considers 4 different scenarios and estimates the net loss which may be suffered by the plaintiff or ZION for a period of 10 years for each scenario:-

(1) Scenario 1 – Galaxion and Psilink were produced and sold for 10 years without access to venture capital and/or initial public offering, with an estimated loss of approximately HK$32,657,657 (equivalent to US$4,203,044);

(2) Scenario 2 – Galaxion and Psilink were produced and sold for 10 years with injection of venture capital of US$10 million in the 2^nd year and initial public offering within 7 years after injection of venture capital, with an estimated loss of approximately US$76,563,500;

(3) Scenario 3 – same as scenario 2 above save that starting from the 2^nd year, other new products would be launched, with an estimated loss of approximately US$300 million;

(4) Scenario 4 – Galaxion and Psilink and other new products invented by the plaintiff were produced and sold for 10 years without access to venture capital and/or initial public offering, with an estimated loss of approximately US$70 million.

APPLICABLE PRINCIPLES

13.  The principles applicable for leave to adduce expert evidence are well established and not in dispute.  They are conveniently summarised by Bharwaney J in Fung Chun Man v Hospital Authority, HCPI 1113 of 2006 (24 June 2011) as follows:-

“ 9. The enactment of the CJR did not result in a change to O.38, r.36 of the Rules of the High Court (“RHC”).  However, after the enactment of the CJR, it is clear that the court’s discretion, whether or not to grant leave to a party to adduce expert evidence, is to be exercised within the ambit of the court’s management powers.  Those powers must be exercised in the light of the underlying objectives of the CJR, including the need to ensure the cost effectiveness of the proceedings; to ensure that the case is dealt with expeditiously; to ensure reasonable proportionality having regard to the amount of money involved, the importance of the case, the complexity of the issues, and the financial position of each party; to ensure procedural economy in the conduct of the proceedings; and to ensure fairness between the parties.

11. The expert evidence can only be adduced with leave of the court and, in deciding whether or not to grant leave, the court must ensure that such evidence is admitted only if it is likely to be of real assistance to the determination of the issues, and that it is adduced in the most effective and economic way consistent with the objectives of the CJR.

12. In this regard, I echo the observations of Evans-Lombe J in Barings PLC v Coopers & Lybrand (No.2) [2001] Lloyds Report Bank 85:

“45. Expert evidence is admissible …. in any case where the court accepts there exists a recognised expertise governed by recognised standards and rules of conduct capable of influencing the court’s decision on any of the issues which it has to decide and the witness to be called satisfies the court that he has a sufficient familiarity with and knowledge of the expertise in question to render his opinion potentially of value in resolving any of those issues. Evidence meeting this test can still be excluded by the court if the court takes the view that calling it will not be helpful to the court in resolving any issue in the case justly. Such evidence will not be helpful where the issue to be decided is one of law or is otherwise one on which the court is able to come to a fully informed decision without hearing such evidence.”

13. The Court of Appeal in Mann v Messrs. Chetty & Patel (a firm) [2000] EWCA CIV 267 proposed 3 questions that ought to be asked before deciding to allow expert evidence :

“(a) how cogent the proposed expert evidence will be;

(b) how helpful it will be in resolving any of the issues in the case; and

(c) how much it will cost and the relationship of that cost to the sums at stake.”

14. Chu J, as she then was, referred to Barings PLC v Coopers & Lybrand and concluded, in Wong Hoi Fung v. American Assurance Co. (Bermuda) Ltd. [2002] 3 HKLRD 507, that the expert evidence must be reasonably required to resolve the issues before the court before leave would be granted to adduce it.

15. In summary, the expert evidence must be in a recognised discipline, reasonably required to enable the court to resolve the issues in dispute, and proportionate.

16. However, even if a prima facie case is made out for the admission of expert evidence, in every case, the court must also have regard to other relevant circumstances, such as the potential disruption to the trial, the prejudice to the other parties, and the explanation offered by the applicant in cases where a late application is made for expert evidence to be adduced.  These matters have to be considered and weighed in the light of and against the underlying objectives of the CJR: to ensure cost effectiveness and economy, expedition, proportionality, and fairness between the parties.  Ultimately, the court strives to do justice between the parties and, in cases where the court permits the parties to call expert evidence, the court strives to ensure a level playing field with fair access to proper experts for all parties.”

DISCUSSION

14.  In the present case, a number of objections have been raised by Mr Leung on behalf of the defendant to the plaintiff’s application for leave to adduce the supplemental report of Mr Kwok.  In my view, the application can be disposed on a simple, and narrow, basis, namely, that the assessments or estimates of loss of profit made by Mr Kwok in his supplemental report are not of any real assistance to the court for the purpose of determining the plaintiff’s loss arising out of his injuries and disabilities.

15.  In relation to the 4 scenarios considered by Mr Kwok, Scenario 1 is based on the assumption that for each pair of products (ie Galaxion and Psilink), a gross profit of HK$29 could be achieved. Apparently, Mr Kwok then assumes that a particular quantity of the products would be produced and sold within the 10 year period and comes up with an estimated gross profits of HK$32,657,657 (equivalent to US$4,203,044), and treats that figure as being equal to the net loss (on the basis of “low overheads”).  Assuming for the moment that the various assumptions made by Mr Kwok can be justified, the resulting figure is simply a matter of arithmetic and does not, it seems to me, require any expert evidence to be adduced at the trial.

16.  In so far as Scenarios 2, 3 and 4 are concerned, it is not, I think, unfair to say that in Mr Kwok’s supplemental report, he has simply stated a figure as being the estimated net profit for 10 years for each scenario.  No methodology or computation is provided, and it is quite impossible for anyone reading the report to know how Mr Kwok has come up with his figures. If it is said that the figures could be derived from documents and information available to Mr Kwok, he has not explained his reasoning or how the figures have been derived. There is also no meaningful analysis and assessment of the underlying information and materials available to Mr Kwok on the basis of which he has expressed his opinions.

17.  Mr Hingorani argues that the defendant’s expert (Mr Yeo) will still have a chance to clarify the details of Mr Kwok’s methodology and computation at a meeting of the experts.  It seems to me that before the court should consider granting leave to the plaintiff to adduce a supplemental expert report at this late stage of the proceedings and impose on the defendant’s expert the burden of considering and responding to the same, the report must at least appear, on its face, to be cogent and of assistance to the court to resolve the issues in the action.  I regret to say that the supplemental report of Mr Kwok is quite obviously deficient in the respects mentioned above.

18.  I am not therefore prepared to exercise my discretion to grant leave to the plaintiff to file and serve the supplemental expert report of Mr Kwok.

DISPOSITION

19.  For the above reasons, I dismiss paragraph 1 of the plaintiff’s summons and make no order in respect of the paragraph 2 of the plaintiff’s summons.  I also order that the defendant shall have the costs of and occasioned by the supplemental expert report and the application, including the costs thrown away as a result of the abortive expert meetings originally scheduled to take place on 18 June and 17 September 2014, to be taxed if not agreed.  Lastly, the plaintiff’s own costs are to be taxed in accordance with legal aid regulations.