YU QUAN LI AND ANOTHER v. SUEN KIN WING

HCA1671/2018 & HCA2975/2018

[2022] HKCFI1364

HCA1671/2018

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1671 OF 2018

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and

HCA2975/2018

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2975 OF 2018

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DECISION

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A. INTRODUCTION

1.  This is the hearing of two summonses taken out by UBS AG (“UBS”) in HCA1671/2018 (“HCA1671”) and HCA2975/2018 (“HCA2975”) respectively for the two actions to be tried together. In respect of these two actions:

(a)  in HCA1671, Yu Quanli and Lou Xiaojie (“Mr and Mrs Yu”) are the plaintiffs and Suen Kin Wing (“Suen”) is the defendant; and

(b)  in HCA2975, Mr and Mrs Yu are the plaintiffs whereas UBS is the defendant.

2.  UBS’s primary position is that the two actions should be tried together before the same judge; or alternatively (which is not its preferred option), HCA2975 be tried immediately after HCA1671 before the same judge. Mr and Mrs Yu oppose UBS’s summonses, but they have no objection that HCA2975 may be tried after HCA1671, and that the evidence of HCA1671 (insofar as relevant) to stand as evidence in HCA2975.  Suen is acting in person. He was absent at the hearing of UBS’s summonses and had indicated that he takes a neutral stance.

B.   THE APPLICABLE PRINCIPLES

3.  UBS’s summonses concern how the Court’s case management discretionary power under Order 4, rule 9(1), Rules of the High Court, should be exercised in this particular case. The said rule provides that:

“Where two or more causes or matters are pending, then, if it appears to the Court—

(a) that some common question of law or fact arises in both or all of them, or

(b) that the rights to relief claimed therein are in respect of or arise out of the same transaction or series of transactions, or

(c) that for some other reason it is desirable to make an order under this rule,

the Court may order those causes or matters to be consolidated on such terms as it thinks just or may order them to be tried at the same time, or one immediately after another, or may order any of them to be stayed until after the determination of any other of them.”

4.  The principles which guide the Court in exercising its power under the said rule have been set out extensively in Komal Patel and others v Chris Au and others, HCA183/2014, 2063/2015 (14 January 2016, unreported), §§13-17; Chan Shing Lam v Winscore International Ltd [2021] HKCFI 3563, §12; China Health Group Ltd (formerly China Healthcare Holdings Ltd) & others v Li Zhong Yuan and others [2021] HKCFI 3806, §§11-14. The Court has a wide and unfettered discretion; there is no hard and fast rule how the discretion should be exercised but it should take a practical and common sense approach. It is important to bear in mind that the main objectives of the rule are to save time and costs, and to avoid the risk of inconsistent findings when there is an overlapping of issues. Ultimately, the power should be exercised to achieve the overall objective of ensuring the efficient and just resolution of disputes.

C.   THE TWO ACTIONS: WHAT THEY ARE ABOUT AND THEIR PROGRESS

5.  Mr and Mrs Yu are the joint owners of the account number 373750 at UBS (“the Account”). The Account was and is a wealth management account opened for their investment purposes. At the material time, Suen was an associate director of UBS and was assigned as the account manager of the Account.

6.  In HCA1671, Mr and Mrs Yu claim that Suen had misappropriated a total sum of about HK$118,000,000 (“the Misappropriated Sum”) pursuant to a fraudulent scheme (“the Fraudulent Scheme”). In short, they allege that Suen induced them by various misrepresentations to deposit funds in RMB into an HSBC account for onward transfer to the Account; in fact, Suen was in control of the HSBC account and the Misappropriated Sum had not been transferred to the Account and had been taken by Suen instead. They rely on the following causes of action: breach of fiduciary duties, breach of contractual duties, the tort of deceit, and restitution for unjust enrichment. Suen denies the allegations made against him.

7.  In HCA2975, Mr and Mrs Yu refer to the same Fraudulent Scheme. They claim that UBS is liable for the Misappropriated Sum on the basis of vicarious liability for deceit, primary liability for breach of contract and negligence, and/or vicarious liability breach of trust. UBS denies the claims made against it on various grounds.

8.  Although Mr and Mrs Yu are the plaintiffs in both actions, the defendants in those two actions are different. UBS is not a defendant in HCA1671 whereas Suen is not a defendant in HCA 2975.

9.  Factual witness statements have been filed and served in both actions. Mr and Mrs Yu will give factual evidence in both actions. In HCA1671, only Suen will give factual evidence for himself. In HCA2975, three former or current employees of UBS will give factual evidence.

10.  No expert evidence will be adduced in HCA1671. On the other hand, PRC law experts will give expert evidence in HCA2975. They have filed and exchanged their individual reports on 26 April 2022; and they need to file their joint report by 12 July 2022. In HCA2975, the Court has also directed that any further interlocutory application shall be made before 15 September 2022.

11.  HCA1671 is ready to be set down for trial. On the other hand, in HCA2975, there will be a CMC on 28 November 2022.

D.   ANALYSIS

12.  Mr and Mrs Yu oppose UBS’s summonses on two grounds: first, the overlapping issues in the actions are not substantial; second, having the two actions tried together would result in gross delay to the progress of HCA1671.

13.  As to the first ground, they point out that the two actions concern different causes of action and issues to be tried. As the defendants in the two actions are different, it is not surprising that the causes of action are different. I also agree that different issues are involved. That said, it is clear that the two actions involve common questions of fact i.e. whether Mr and Mrs Yu were victims of the Fraudulent Scheme and had suffered loss of the Misappropriated Sum as a result as pleaded. These identical factual issues must be resolved first before the Court can consider the legal consequences and the legal liabilities of Suen and UBS.

14.  Mr and Mrs Yu highlight the fact that, apparently, UBS merely puts them to strict proof on those factual issues and has not pleaded any positive case. At the same time, Suen’s case is, in substance, a bare denial. Be that as it may, they are still lives issues that the Court needs to resolve in both actions: Mr and Mrs Yu will have to discharge their burden of proof in proving the relevant facts, and UBS will be entitled to test their evidence.

15.  It seems that Mr and Mrs Yu have accepted previously that there are common issues in the two actions, and that they should be tried together. In §D2 of the Plaintiffs’ Timetabling Questionnaire in HCA2975 dated 27 October 2020, they stated that they “will take out a summons and make an application for the 2 proceedings (HCA1671/2018 and HCA2975/2018) to be tried together after parties attempt the 1^st mediation”. In §14 of the “Summary of the brief factual background and the issue(s) to be tried” attached to the same document, they stated that:

“the central issues to be tried are as below:-

(i)  Whether the Defendant’s Employee failed to transfer the HKD or USD equivalent of the Investment Funds in the sum of the Misappropriated Sum into the UBS Account and/or otherwise misappropriated the said Misappropriated Sum.

(ii)  Whether the Defendant’s Employee made the Funds Transfer Account Misrepresentation, Transaction Slips Misrepresentation and the Forged Bank Statements Misrepresentations fraudulently.

...

(vii)  Alternatively, whether the Defendant’s Employee acted in breach of a Quistclose trust…”

It does not matter why Mr and Mrs Yu have changed their mind (which is not entirely clear to me).

16.  In view of the common questions of fact, which are fundamental to both actions, it is undesirable to try the two actions separately (i.e. by hearing HCA1671 first) even by the same judge:

(a)  The Court hearing HCA2975 will not be bound by the factual findings made by the Court in HCA1671 irrespective of whether the two actions are to be heard by the same judge. It is difficult to assess the degree of risk that there will be inconsistent findings. One should perhaps note that, in HCA1671, Mr and Mrs Yu will be cross examined by Suen, who is acting in person, whereas, in HCA2975, they will be cross examined by a team of skillful and experienced lawyers. I bear in mind that, if Suen is convicted of criminal offences in the criminal trial to be held in November 2022, the conviction and the relevant facts will be admissible in the civil trials of these two actions, which will likely reduce the chance of inconsistent findings. However, I have no information about the criminal proceedings and it is unclear what the outcome thereof will be.  Even if the risk of inconsistent findings is low as submitted by Mr and Mrs Yu, this is a real risk that cannot be ignored.

(b)  Mr and Mrs Yu’s suggestion of ordering the evidence in HCA1671 to stand as evidence in HCA2975 would and should simply mean that the evidence in HCA1671 shall be admissible in HCA2975. But the point is, even if that be the case, UBS cannot and will not be bound by the findings made in HCA1671 when it is not a party thereto and has not taken part in the trial thereof.

(c)  It is undesirable to ask Mr and Mrs Yu to give evidence (and be cross examined) twice on the same matters in two different trials when there may be a substantial time gap between the two, even if they do not mind. This will also waste time and costs.

(d)  As a matter of practical common sense, it appears to be preferable to resolve all issues arising out of the Fraudulent Scheme in one go.

17.  Turning to Mr and Mrs Yu’s second ground of opposition, they claim that trying the two actions together will delay HCA1671 and is tantamount to a de facto stay thereof; and they will suffer irremediable prejudice as a result. They state that the trial is bound to be lengthened considerably if the two actions are tried together. They also claim that there is a real likelihood of further delay in HCA2975 given UBS’s delay in various procedural steps (such as filing its defence, disclosing its list of documents, etc.) in the past.

18.  I appreciate that HCA1671 is now ready to be set down for trial but HCA2975 is not; and hence, to allow UBS’s summonses will inevitably delay the trial of HCA1671. I also appreciate the concerns raised by Mr and Mrs Yu. However:

(a)  The delay should not be significant. In HCA2975, there will be a CMC on 28 November 2022. Provided that the parties comply with the directions already given by the Court on various matters, HCA2975 should be ready to be set down for trial by then. The only outstanding matters in HCA2975 seem to be the filing of a joint expert report and seeking counsel’s advice on the whole matter. It will be open to Mr and Mrs Yu to take steps to ensure that UBS will comply with the directions on those outstanding matters on time. Mr and Mrs Yu have no intention to take out any further interlocutory application in HCA2975. They, however, fear that UBS might apply to amend the pleadings, or seek further discovery, etc., upon seeing the papers in HCA1671.  Such fear seems speculative. Mr and Mrs Yu will give the same evidence and rely on the same documents in both actions. Suen has not disclosed any document in his list of documents. It appears to be unlikely that UBS will need to amend its pleadings or seek further discovery after seeing the papers in HCA1671. In any event, assuming that UBS takes out any such interlocutory application, they will not be allowed as a matter of course. As the matter stands, it seems to me that, in practice, the setting down of the trial of HCA1671 will likely to be delayed by about 6-7 months only (i.e. the period from today to late November 2022).

(b)  Mr and Mrs Yu believe that, the trial of HCA1671 should only take 2-3 days, and if it is set down for trial now, it is likely that the trial may take place at the end of this year. On the other hand, even if HCA2975 can be set down for trial in November 2022, it is likely that the trial can only take place in late 2023 or even some time in 2024. Assuming that their estimates are accurate, there will be a delay of about one year. While I would not say one year is a short period of time, this is not a case where trial dates for one of the actions have already been fixed, and no reasonable estimate can be made as to when the other action may be tried.

(c)  The time for trying the two actions together will be longer than trying HCA2975 only. However, it is likely that the total length of the two trials (if held separately) will be more than the length of trying both actions together at the same time. Although there will be some delay in HCA1671, overall speaking, some time and, hence, costs can likely be saved by trying the two actions together.

(d)  There is no suggestion that the delay to be caused by trying the two actions together would result in any real or serious difficulties on the part of Mr and Mrs Yu to recall the material facts and give evidence accordingly. In any event, they have already made witness statements with the assistance of documentary evidence.

(e)  A mareva injunction has been granted against Suen. Such injunction will continue to safeguard Mr and Mrs Yu’s position pending the trial of HCA1671 irrespective of when it will be held. I am aware the Suen has apparently committed a contempt of court by failing to comply with a disclosure order about his assets. However, there is no evidence that, if Mr and Mrs Yu can succeed in their claim against Suen sooner, there will indeed be a better and higher chance that that they can enforce the judgment against Suen more effectively.

(f)  Assuming that Mr and Mrs Yu succeed in the two actions, they should in principle be entitled to claim interests on the amount that the Court finds Suen and/or UBS liable; and the amount of interests will correspond to the length of the legal proceedings.

19.  For the above reasons, notwithstanding the objections raised by Mr and Mrs Yu, and after considering and balancing all relevant factors as submitted by the parties, I have come to the conclusion that I should exercise my discretion to order the two actions to be tried together by the same judge.

E.   CONCLUSION AND ORDER

20.  As stated in Hong Kong Civil Procedure 2022, vol., 1, §4/9/7 at p. 80:

“If two actions are to be tried together or one after another before the same judge, they remain to be two separate actions, which should include directions that the evidence of these two actions are to be mutually admissible or on the order of trial of any consequential directions. Inappropriate directions will not save costs and time for the trial. Quite the contrary, the proceedings will be unduly lengthened and time and costs will be wasted.”

21.  In the circumstances, it appears that, at least, further directions along the following line should be given:

(a)  the evidence of the two actions shall be mutually admissible;

(b)  the plaintiffs in the two actions (i.e. Mr and Mrs Yu) shall give evidence once at the trial for both actions, to be followed by Suen in HCA1671, and then witnesses for UBS in HCA2975;

(c)  the plaintiffs in the two actions shall open and close their case in both actions at the same time whereas Suen and UBS shall open and close their respective case in the action in which they are the defendant in the usual way.

I shall, however, give the parties the chance to agree on a set of further directions.

22.  For the above reasons, I shall make an order in the following terms:

(a)  HCA1671 and HCA2975 be tried together before the same judge;

(b)  The plaintiffs in both actions (i.e. Mr and Mrs Yu) shall give the defendant in HCA1671 (i.e. Suen) full access to the pleadings, court orders, disclosed documents and witness statements in HCA2975 within 14 days hereof;

(c)  The plaintiffs in both actions (i.e. Mr and Mrs Yu) shall give the defendant in HCA2975 (i.e. UBS) full access to the pleadings, court orders, disclosed documents and witness statements in HCA 1671 within 14 days hereof;

(d)  The parties shall submit an agreed set of further directions to give effect to the order made under paragraph (a) above within 14 days thereafter; in the absence of agreement, each party shall submit its own proposed further directions and the Court shall decide on the further directions on paper;

(e)  A case management conference in HCA1671 shall be fixed at the same time as the case management conference for HCA2975 scheduled for 10:30am on 28 November 2022;

(f)  Liberty to apply.

23.  As to costs, UBS is the successful party. That said, I bear in mind the nature of the application; the fact that both parties have apparently taken different views on the matter at different stages; and that the grounds of objection raised by Mr and Mrs Yu cannot be said to be unreasonable. As a matter of discretion, I take the view that it is fair and proper to order that the costs of UBS’s summonses (including any cost reserved) shall be in the cause of the two actions (with a certificate for one counsel). I shall make a costs order nisi accordingly. Any party who intends to apply to vary the order shall submit a written submission (not more than 3 pages) within 14 days hereof; and the other party shall submit a written submission in reply (not more than 3 pages) within 14 days thereafter; and I shall then deal with the application on paper.