RAJ KUMAR MAHAJAN v. HCL TECHNOLOGIES (HONG KONG) LTD AND OTHERS

HCA 1510/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1510 OF 2004

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HCA 954/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 954 OF 2005

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(Consolidated by Order of Master Ko dated the 9^th day of January 2009)

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D E C I S I O N

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1.  There are two applications by the three defendants. The first one was made on 22 July 2010 for security for costs. The trial of this action is scheduled to commence on 18 October 2010 and to last for eight days. The second one was made on 27 August 2010 for leave to have the evidence of the 3rd defendant and another defence witness to be taken by a videoconferencing system or a live video link from India or elsewhere abroad and for that part of the trial to be conducted in the Technology Court. The application in relation to the evidence of the other defence witness was abandoned at the hearing. It is now restricted to the evidence of the 3rd defendant only. The plaintiff opposes both applications.

Application for security for costs

2.  The application is based on O. 23 r. 1(1) (a) and (c) of the Rules of the High Court.

3.  O. 23 r. 1(1) (a), (c) and (2) provide:

“(1) Where, on the application of a defendant to an action or other proceeding in the Court of First Instance, it appears to the Court-

(a) that the plaintiff is ordinarily resident out of the jurisdiction or

(c) subject to paragraph (2), that the plaintiff’s address is not stated in the writ or other originating process or is incorrectly stated therein.

then if, having regard to all the circumstances of the case, the Court thinks it just to do so, it may order the plaintiff to give such security for the defendant’s costs of the action or other proceeding as it thinks just.

(2) The Court shall not require a plaintiff to give security by reason only of paragraph (1) (c) if he satisfies the Court that the failure to state his address or the mis-statement thereof was made innocently and without intention to deceive.”

The defendants’ case on security

4.  The defendants’ primarily rely on rule 1(1) (a) that the plaintiff is ordinarily resident out of the jurisdiction.  The burden is on the defendants to prove this.  The defendants filed an affidavit by a Ms Ng, a solicitor of the defendants’ solicitors to support this application.  She said the plaintiff is a citizen of Australia and not ordinarily resident in Hong Kong.  She relied on a number of documents. 

5.  The 1st document is the plaintiff’s résumé attached to an e-mail dated 25 June 1998 which stated that he was a permanent resident of Australia.  This document was disclosed by the plaintiff in these proceedings in a list of documents dated 30 December 2004. 

6.  The 2nd document is a report dated 22 June 2010 by an Australian investigator engaged by the defendants who said that the plaintiff and his wife were enrolled as electors and residing at 66 Willowie Road, Castle Cove, New South Wales on the records of the Australian Electoral Commission. 

7.  The 3rd document is a copy of an Indian Passport of the plaintiff issued in Sydney, Australia on 28 October 1999.  This passport was retrieved by the 1st defendant from its records.  This was probably given by the plaintiff to the 1st defendant when he was in the 1st defendant’s employ. 

8.  The next document is a copy Australian passport of the plaintiff’s wife dated 27 September 1994 which stated that she was an Australian.

9.  The 5th document is a title search dated 20 June 2010 showing that the plaintiff’s wife is the registered owner of the property at 66 Willowie Road, Castle Cove, New South Wales. 

10.  The next document is another title search also dated 20 June 2010 showing that the plaintiff and his wife are the registered joint tenants of a property at 2 Colbarra Place, West Pennant Hills, New South Wales.

11.  Ms Ng therefore believed that the plaintiff and his wife were residing at 66 Willowie Road and have a close connection to Australia.

12.  In respect of the ground under rule 1(1) (c), Ms Ng referred to the plaintiff’s address at Flat J, 14/F, Hennessey Apartments, 488 Hennessey Road, Hong Kong as stated in the writ of summons dated 25 June 2004 and his witness statement dated 28 August 2009.  She produced a land search result dated 11 June 2010 showing that the property had been assigned to a Hanson Property Group Limited on 29 April 2010.  A clerk of the defendants’ solicitors also visited this flat twice on 11 May 2010 and was told by the caretaker that a new owner had moved into the flat in early May 2010.

The plaintiff’s opposition

13.  The plaintiff made an affirmation to dispute the defendants’ grounds.  He also complained the inordinate delay in the defendants’ bringing of the application.  He referred to the defendants’ Timetabling Questionnaire dated 30 April 2009 which said that they did not intend to apply for security for costs.  He said that it would be grossly unjust to him if he should be asked to provide security now.  He said that this is just one of the defendants’ tactical moves as the defendants have made repeated interlocutory applications to thwart the claims against the 2nd and 3rd defendants and they even took the matter to the Court of Appeal where they lost.  He then dealt with the documents used by the plaintiff to support the ground under rule 1(1) (a).

14.  Regarding his résumé, he agreed that he had been a permanent resident of Australia in 1998 as he then had a permanent resident visa of Australia.  But he was no longer of that status.  Furthermore, being a permanent resident of Australia only entitled him to stay and work there without the need to apply for an employment visa and he could enter and leave Australia repeatedly during the period of the visa.  The visa had nothing to do with whether one was residing ordinarily in Australia. He had this status when he was employed by the defendants from 1 November 1996 to 28 February 1999.  Whilst in this employment, he was taxed by the Australian Tax Authorities on non-resident basis.  This was known to the defendants’ as the tax was deducted by them from his salary.  When he was transferred by the defendants on 1 March 1999 to work in Hong Kong, he ceased to have any employment in Australian.  He also continued to be a non-resident of Australia ever since.  He also produced the notices of assessment for the years ending 30 June 1997, 30 June 1998 and 30 June 1999 issued by the Australian Tax Office to confirm his non-resident status.

15.  He then referred to the defendants’ investigation report which merely said that he was an Australian citizen by virtue of the fact that he was enrolled as an elector.  But the Australian investigator did not say that he was a permanent resident of Australia.  He also referred to the website of Australian Electoral Commission which does not say that residency in Australia is required for enrolling as an elector.  One only needs to be an Australian citizen and over 18.  An Australian citizen however is not necessarily a person who resides in Australia ordinarily. 

16.  Regarding his passport dated 28 October 1999 and issued by the Indian Embassy in Sydney, he said he was then working for the defendants.  He refused to comment on the passport of his wife as he said that had nothing to do with him.

17.  Regarding the property at 2 Colbarra Place, West Pennant Hills owned by him and his wife, he said they owned the property since 1990 as an investment and with no building or erection thereon.  He thus denied of having a close connection with Australia.

18.  For the ground under Rule 1(1) (c), his solicitors had in fact explained the situation in a letter dated 24 June 2010 that he was a tenant of the flat in Hennessy Apartments at the issue of the writ on 19 June 2004 and he continued to be so when he made the witness statement on 28 August 2009.  He further said that he remained the tenant of the properties until 18 March 2010 when the tenancy was terminated. He then rented new premises on Prince Edward Road on 1 July 2010.

19.  He then referred to the defendants’ delay in making the application.  His claim was made in June 2004.  The defendants’ Timetabling Questionnaire dated 30 April 2009 confirmed that they had no intention to apply for security for costs.  Furthermore, some of the documents relied on by the defendants were in their custody all along.  They are the plaintiff’s résumé and the copy passports of the plaintiff and his wife.  The Australian citizenship of the plaintiff’s wife was also known to the defendants as demonstrated by a letter dated 9 March 1999 from the 1st defendant to the Director of Immigration of Hong Kong in relation to the plaintiff.  The defendants were also aware of the plaintiff’s address at 66 Willowie Road as proved by a letter sent by the 2nd defendant to the plaintiff at that address and dated 10 February 2004. 

20.  The defendants’ solicitors also learnt on 11 May 2010 that the plaintiff was not living in Hennessy Apartments, but they only wrote and asked for security of costs on 17 June 2010 and applied for the same on 17 July 2010.

21.  The plaintiff also said that the defendants had falsely alleged that there were some recent discussions between the parties in which he said he had relocated to Australia.  His solicitors had asked the defendants’ solicitors to provide the particulars of when and where of such discussions, but the defendants’ solicitors did not even reply to the request.

22.  The defendants are seeking security at HK$4.6 million.  The plaintiff said that if he should be asked to provide security of such a large sum within a short period, he would have to liquidate or charge some of his assets and he will suffer substantial losses.  The delay in the making of the application also deprived him of the choice of not pursuing the defendants and not to have incurred substantial legal costs.

23.  He also said that he had to defend the 1st defendant’s counterclaim which arose out of the same facts.  It would be unfair if his claim should be stayed for security for costs but he still has to face the counterclaim.  He also said his claims have strong merits.  He also challenged the amount of security requested at HK$4.6 million.

The defendants’ reply

24.  Ms Ng made a reply affirmation.  She produced a copy e-mail dated 20 August 2009 by a person having the same name as the plaintiff and written on behalf of one Able Accounting and Taxation Services to a Mr Pereira of HCL Australia.  The e-mail attached an invoice from Forum of Indian IT Companies in Australia for payment of membership and other fees.  Ms Ng relied on this e-mail and the attached invoice to dispute the plaintiff’s assertion that he had no employment in Australia since 1 March 1999.  She said she believed the plaintiff had an employment in Australia at least in August 2009.

25.  She also found from the internet, a document of an Indian court dated 28 July 2008 which referred to a witness statement by the plaintiff made in his daughter’s legal proceedings.  The address he gave in the statement was 66 Willowie Road, Castle Cove, New South Wales.  I however note that this address was known to the defendants since February 2004 and was referred to in the report of the defendants’ Australian investigator dated 22 June 2010. 

26.  The defendants’ instruction to the Australian investigator was to enquire about the plaintiff especially with respect to his status as an Australian citizen or permanent resident (Bundle B141).  The report referred to 66 Willowie Road and 2 Colbarra Place.  It also stated that the plaintiff was not listed as a registered Tax Agent and he was not the nominee of Able Accounting and Taxation Services.  The investigator then concluded that the plaintiff was an Australian citizen by virtue of the fact that he was enrolled as an elector.  The investigator did not mention any other fact to support his conclusions.  He also did not give any view on whether the plaintiff was a permanent resident of Australia despite the defendants’ express instruction.

27.  I think it is more likely than not that the investigator should have visited 66 Willowie Road and 2 Colbarra Place to see if the plaintiff was living at either address.  If he could have found anything which might have shown the presence of the plaintiff there, he would have said so.  His failure to express any view on whether the plaintiff was a permanent resident of Australia weighs heavily against the defendants in their discharge of the burden of proof.

Discussion

28.  Counsel for the defendants referred to the facts given by Ms Ng in her affirmations and submitted that the plaintiff is not ordinarily resident in Hong Kong.  Counsel further submitted that the plaintiff now lives in Hong Kong in a rented flat under a 6-month tenancy.  He does not work in Hong Kong and never asserted positively that he ordinarily resides in Hong Kong, and if so, how.  I do not find these submissions attractive.  The burden of proof is on the defendants but not on the plaintiff.  The résumé and copy passport of the plaintiff are historical documents.  They only prove an undisputed fact, namely, the plaintiff was a permanent resident of Australia back in the late 1990s when he was working for one or more of the defendants in Australia until March 1999 when he was relocated by them to Hong Kong.  These documents do not support this application which is on the plaintiff’s present residency.

29.  Regarding the fact that the plaintiff only lives under a 6-month tenancy, this is only a misleading half-truth.  The other half of the truth is that the plaintiff has always been living under a tenancy in Hong Kong since the commencement of this action in 2004. 

30.  The issues of the plaintiff being an elector of Australia and his joint ownership with his wife of 2 Colbarra Place have been properly explained by the plaintiff too.  I also repeat what I have said above on the report by the defendants’ Australian investigator and his failure to opine on whether the plaintiff is currently a permanent resident of Australia.  I therefore hold that the defendants have failed to prove that the plaintiff is ordinarily resident out of this jurisdiction.

31.  Regarding the other limb of the application under rule (1) (c), the plaintiff had given the correct address in the writ at the time of its issue.  He was still living at that address when he made the witness statement in 2009.  He only moved out in March this year when his landlord sold the property to another company.  He then moved to another rented accommodation.  I think he should have applied to amend his address at or shortly after his removal.  However, this is not a case where the plaintiff sold his own flat and moved to rented accommodation shortly before the trial. That kind of situation may require different consideration.  I do not think the plaintiff’s failure to amend the address in the writ herein would warrant any order for security for costs.

32.  The defendants therefore fail under both limbs.

33.  I would go further to find that there has been inordinate and unexplained delay in the part of the application based on rule 1(1) (a).  All the documents produced and information relied on by the defendants under this limb are either in the defendants’ possession or in the public domain for a long time.  There is no explanation on why the application was not made until 23 July 2010 when the eight-day trial will commence on 18 October 2010. 

34.  Furthermore, if an order should be made in favour of the defendants, the plaintiff will have very little time to raise a substantial sum as both sides will be represented by senior counsel at the trial.  Such an order would no doubt prejudice the plaintiff in his preparation for the trial. 

35.  The defendants have also not explained why they should have confirmed in their Timetabling Questionnaire filed on 30 April 2009 that they did not intend to seek security for costs but then made an about turn in July 2010.  On delay and the questionnaire, I would refer to the judgment of A Cheung J in Senior Honor Ltd v Lee Ki Luk & Ors, HCA 4043/2001 at paras. 4, 5 and 10 to 12 where the learned Judge opined on the need of a reasonable explanation for delay and the court’s reliance on the answers given in checklists for use in pre-trial reviews or case management conferences.

Quantum of Security

36.  The defendants have also failed to properly justify the quantum of security sought at HK$4.6 million.  Of this sum, about HK$3 million is in respect of the legal costs paid to the defendants’ previous solicitors for work done since the commencement of the action.  The sum paid was double of this sum.  However, there is no breakdown for this substantial sum or the actual sum paid.  There is no dispute that part of the sum paid was spent on interlocutory applications in which the plaintiff succeeded.  The defendants just took half of the actual sum charged by the previous solicitors and added it to the HK$1.6 million to be incurred as the total quantum of the application.  I do not think this a proper approach.  The proper approach is to provide a breakdown of how the sums are arrived at including those paid to the former solicitors.

Decision on security for costs

37.  For the above reasons, I dismiss the defendants’ application for security for costs.  I also make a costs order nisi that the defendants do pay the plaintiff’s costs of this application with certificate for counsel.

38.  In the light of my analysis above, I take a dim view of this application.  I further provide in my costs order nisi that the costs be assessed by summary assessment by me at a 9:30 a.m. hearing to be fixed by the parties unless an application should be made within the next 14 days for variation of the order nisi.  The assessed costs shall be paid forthwith.

39.  I also direct the plaintiff to amend his address in the writ of summons within seven days (see para. 6/5/5 of Hong Kong Civil Procedure 2010).

Application for Video Link

40.  This application is restricted to the evidence of the 3rd defendant.  It is supported by the 3rd affirmation of Ms Ng.  She said the 3rd defendant is the key figure of the HCL Group which is a multi-billion multi-national corporation listed in India.  The group has more than 70 companies, trusts and foundations and is present in more than 26 countries with more than 64,000 employees of 72 nationalities.  The annual revenue is more than US$5 billion. The 3rd defendant is a vital figure in the decision making process of the group which he controls by chairing and attending meetings.

41.  One of the companies controlled by him is the 2nd defendant, a company listed in India.  Its board meetings are fixed in consideration of the availability of all the directors as the laws of India require physical presence of the directors and videoconferencing is insufficient.  There are eight directors of the 2nd defendant and they are also directors of other companies and have many commitments to these companies.  One of the directors is an American who has to travel to India for the meetings. It is absolutely necessary for the board to meet in October to approve the quarterly financial results for the quarter ending in September.  The audit committee has to meet together with the board and the availability of the statutory auditors has also to be considered.  The investment public expects the board meeting to be held between 15th and the end of October.  The 3rd defendant’s presence at such meeting is essential.  He also has to sign the approved financial results and other corporate papers.

42.  I must say that the environment in which the 2nd and 3rd defendants do business as depicted by Ms Ng appears to be that before the computer and optic fiber have been invented.  Furthermore, the authority on the laws of India as relied on by Ms Ng which says that a director has to be physically present in a board meeting is doubtful.  There is no reference to the name of the publication and its publisher.  It does not appear to be an up to date publication as it refers to some proposed liberalizing measures announced by the Indian Government in some press releases in April 2002 but does not give the update position of such proposals.

43.  Ms Ng then stated that the 3rd defendant had to attend a board meeting of the 2nd defendant on 19 and 20 October and the 2nd defendant’s AGM on 28 October.  He also has to attend meetings of other companies and philanthropic trusts under his control on 22, 25 and 26 October.  But Ms Ng did not say what efforts had been made by the 3rd defendant and his companies to arrange the dates of the meetings so that they would not conflict with the trial dates which were fixed in January 2010.

44.  Ms Ng then referred to the 3rd defendant’s medical condition as a further ground for the application.  She briefly said that the 3rd defendant was recovering from a recent fall and was admitted to a leading hospital in Delhi.  She produced a medical report dated 28 August which merely said that the 3rd defendant had a fall on 17 August 2010 and sustained injuries.  For this reason and a pre-existing medical condition, the 3rd defendant was medically advised not to travel overseas for six to eight weeks.

45.  At the hearing, the defendants produced a fuller medical report also dated 28 August 2010.  The report said that the 3rd defendant had some heart problems since 1993 and had been under the care of physicians since then.  But counsel for the plaintiff immediately pointed out that such problems did not appear to have affected the 3rd defendant’s mobility as he had been travelling round the world since then for business and other purposes.

46.  The report then said that the 3rd defendant had angiography and angioplasty on 1 May 2010 and has since been under observation and close periodic follow up.  But again this did not seem to pose a serious problem as no application was made for him to give evidence via video link until 27 August 2010. 

47.  The report then said that he suffered a fall at home on 17 August 2010 and sustained injuries to his right knee and mouth.  He was admitted to hospital for treatment and investigation.  No other detail was given on the nature and extent of these injuries.  I therefore cannot take them as something serious.

48.  Then the report then said that whilst staying in hospital in August 2010, the 3rd defendant was diagnosed to have new onset diabetes mellitus with fluctuating sugar levels and his sugar level has to be controlled.  This is a new rather than an advanced illness for him.  Diabetes is also a fairly prevalent illness and diabetic patients do travel by plane and mostly in economy class.  If the 3rd defendant is flying in from Delhi, I suppose he would fly first class.

49.  The report finally concluded by saying that the 3rd defendant might get into serious health conditions if an accelerated hypertension, syncope or a hypoglycaemic episode happens unattended outside his home in any stressful or non-stressful situation.  It opined that he needed medical supervision for at least six to eight weeks in order to be considered medically fit.  He was also advised not to travel abroad and not to place himself in a position of extreme stress such as a courtroom environment.

50.  Reading between the lines, the conclusion of the report is simply that he should not travel from Delhi to Hong Kong and to give evidence in a Hong Kong courtroom.  But there is no objection for him to give evidence from home.  However, this conclusion is not justified by the medical condition of the 3rd defendant as discussed above.  His conditions are not serious enough to prevent him from coming to Hong Kong in a plane journey lasting some 5½ hours.  In any case, he at present does not need to stay in a hospital for convalescence.  There is no suggestion that he has suspended his duties because of his health.  On his case, he will also have to attend many meetings at least between 22 and 28 October 2010.

51.  The plaintiff has made an affidavit to oppose the application.  He said the flight from Delhi to Hong Kong only takes 5½ hours and there are at least four flights a day. 

52.  He also produced the annual reports of the 2nd defendant showing that the 3rd defendant did not attend all directors’ meeting of the 2nd defendant and the 2nd defendant also uses teleconferencing facility to enable the participation of directors including the 3rd defendant when they could not be physically present at the meetings.  The statements of Ms Ng that all directors must be present and be physically present at board meetings are thus contradicted by clear statements of the 2nd defendant in its annual reports.  I therefore see no reason why the 3rd defendant cannot come to Hong Kong to attend the trial and to take part in the meetings by teleconferencing or videoconferencing facilities.

53.  Regarding the AGM of the 2nd defendant to be held on 28 October 2010, which is after the last day of the trial on 27 October, his evidence should conclude before the 27th and he need not be present when counsel make their submissions.  He can therefore fly back to Delhi in the evening of 25 or 26 October. 

54.  I have also observed above that nothing has been said on what efforts have been made to arrange the dates of the meetings to avoid their conflict with the trial.  There is also no reason advanced to suggest why the AGM of the 2nd defendant could not be changed to another date.

55.  The plaintiff also criticised the delay in making of this application.

56.  Counsel for the defendants submitted that the threshold to overcome for evidence to be given via video link is not a high one (see Sun Legend Investments Ltd v Ho Yuk Wah [2008] 4 HKLRD 239 at p.243 (para.6).  Counsel for the plaintiff, however, referred to Re Chow Kam Fai ex parte Rambas Marketing Co. LLC [2004] 1 HKLRD 161 at 174 (para. 28) per Deputy High Court Judge To (as he then was):

“The starting point is the fundamental basis that justice is dispensed by the Court of Justice and as a rule the parties have to come to the court to obtain justice. Secondly, justice is dispensed in open court accessible to the public so that any member of the public can watch the administration of justice in action. Justice has to be openly seen to be done. Within the court building and its precincts, the parties, their witnesses and their legal representatives are protected by law. They are free to prosecute their claim or their defence without fear. On the other hand, witnesses are obliged by law, the solemnity of the court atmosphere and the threat of immediate sanction to give evidence on oath or under affirmation and to tell the truth. They are subject to the sanction of the court if they should refuse to answer questions on oath or disobey an order of the court or otherwise behaves disrespectfully. Likewise, the judge can watch the witnesses giving evidence under the solemnity of the court atmosphere. Without exaggerating the notion of the dignity of the court and its authority, proper administration of justice must be conducted and seen to be conducted by proceedings within the courtroom. Hence, giving evidence outside the courtroom via video link is an exception rather than the rule. It is a privilege and not a right. This is my starting point.”

The views of Deputy Judge To on the whole were approved by Rogers VP when the case went on appeal.  Rogers VP said in Re Chow Kam Fai David [2004] 2 HKC 645 at 652, paras.16-19:

“16. The next question addressed by the judge was as to whether the cross-examination could be conducted whilst the respondent was in Macau using VCF. The judge approached this question on the basis that 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.

17.       In my view the judge was quite correct in this approach.  The starting point must be that proceedings are conducted in court.  Mr Kat, who appeared on behalf of the respondent, took issue with the approach of the judge where it was said in paragraph 28 of the judgment that “On the other hand, witnesses are obliged by law, the solemnity of the court atmosphere and the threat of immediate sanction to give evidence on oath or under affirmation and to tell the truth.”

18. Whether or not the threat of immediate sanction is something that weighs heavily on witnesses is, perhaps, a matter of conjecture. Nevertheless, I have no doubt that 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.

19.    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 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.”

57.  It is thus clear that the giving of the evidence via video link is an exception rather than the rule.  It is for the party wishing to use video link to justify why he should be accorded with this exceptional treatment.

Decision on video link

58.  From the discussion above, I am not satisfied that there are no other appropriate dates for the meetings other than the dates as fixed which are in conflict with the trial days.  I am also not satisfied that the 3rd defendant cannot come here to attend the trial and to take part in the meetings via teleconferencing/videoconferencing facilities.

59.  Regarding the medical advice, I have already dealt with it above.  I am not satisfied that the 3rd defendant by reason of his medical conditions as stated in the two medical reports should stay at home to give evidence via video link rather than coming to this court to give evidence.

60.  In the premises, I dismiss this application too.

61.  I further make a costs order nisi that the defendants do pay the plaintiff the costs of this action with certificate for counsel.  I also provide in the order nisi that the amount of costs be assessed by summary assessment and be paid forthwith as provided in the costs order nisi for the application for security for costs.