LIMING CAPITAL LTD v. CLSA LTD

HCA 2055/2008

[2018] HKCFI 6

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 2055 OF 2008

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DECISION ON LEAVE TO APPEAL

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Introduction

1.  The plaintiff took out this application for leave to appeal on 24 February 2017.  It is directed against an order made on 13 February 2017 when this court gave leave for the defendant to file and serve new witness statements respectively made by a Mr Tam (“Tam”) and a Mr Taylor (“Taylor”), both employees of the defendant.  The said witness statements are collectively called “the new witness statements” below.

2.  This application was taken out on the last of a 4-day trial of this action (from 21 to 24 February 2017).  At the end of the trial of this action, directions were given (later extended) for the parties’ respective closing submissions to be made in writing, and to be lodged with court and served in April 2017.  Naturally, outcome of this action was not yet decided (and thus unknown) at that stage.

3.  While it is understandable for the plaintiff to take out this application in February 2017 in order not to fall foul of the prescribed time limit imposed by RHC Ord 59 r 2B(1), it is not immediately apparent why the plaintiff should decide to proceed with having this application listed for a full hearing on 19 May 2017 (with an estimated hearing time of half an hour) (when the outcome of this action was still unknown).

4.  As things later turned out, judgment in this action was handed down on 27 December 2017 whereby judgment was entered in the plaintiff’s favour (and the counterclaim was dismissed).

Background

5.  The defendant, through the plaintiff’s introduction, was the placement agent of a share placement.  The plaintiff was engaged as the defendant’s consultant in such share placement.  The main dispute in this action concerned whether the defendant has paid the plaintiff’s consultancy fee in full.

6.  The defendant’s employee who was the main contact with the plaintiff was a Mr Wilson (“Wilson”).  Wilson has made witness statements intended for use during the trial of this action (“the Wilson witness statements”).  He was also scheduled to testify for the defendant.

7.  The relationship between Wilson and the defendant apparently turned bad at some stage, and this ended with Wilson leaving the defendant’s employment in June 2016.  By October 2016, the defendant’s legal representatives were made aware of the possibility of Wilson’s uncooperation with the defendant in this action.

8.  Wilson’s departure from the defendant (and his uncooperation) has the effect of leaving the defendant without the testimony of a witness who has had direct dealings with the plaintiff.  In an attempt to “fill the gap”, the defendant has prepared new witness statements, and sought leave to file and serve the new witness statements by way of a summons (taken out on 3 February 2017 ). 

The application for leave to adduce new witness statements

9.  The contents of the new witness statements are consistent with:

(a)   the factual account given in the Wilson witness statements;

(b)   contemporaneous documents already included in the trial bundles,

insofar as Tam and Taylor may be able to speak to the said matters.  Such being the case, (according to the defendant) there should not be anything mentioned in the new witness statements which would take the plaintiff by surprise.  Nor should the new witness statements disrupt or hinder the trial.

10.  The plaintiff, on the other hand, objected to leave being given to file and serve the new witness statements:

(1)   the application was made far too late, was in breach of Practice Direction 5.2, and did not comply with the directions given earlier;

(2)   in any event, it can be inferred the defendant knew of Wilson’s departure since October 2016 (or latest by the pre-trial review hearing in November 2016 (see also para 20 below)), or perhaps even June 2016.  There was no reason given by the defendant to explain why the defendant delayed for so long before taking out this application;

(3)   it can be inferred that the defendant’s delay was intended to ambush and to cause surprise.

11.  Further to the above, the plaintiff also complained that the new witness statements covered materials not earlier canvassed by Wilson, such as the need for Wilson to obtain internal approval before entering into an agreement with the plaintiff, inadmissible evidence regarding Wilson’s belief, and inadmissible legal submissions.

12.  The plaintiff alleged that it would be prejudiced by the introduction of the new witness statements because its trial preparation work would be disrupted (especially by the sudden need to prepare for cross-examining Tam and Taylor on short notice).

13.  The alleged new matters (para 11 above) are in truth matters already raised in the Wilson witness statements.  The most that can be said about the new witness statements is that some of the same matters have been given more prominence, but this is due more to the lack of personal knowledge on the part of Tam and Taylor as regards some of the other matters stated in the Wilson witness statements.

14.  The defendant’s said application for leave was only made at a very late stage, and that there was a period of unexplained delay (from June 2016, or October 2016, to February 2017), but in view of the (effectively) undisputed reasons which brought about the said application (that is, Wilson’s uncooperation), there is no valid basis to conclude that the application was purely a tactical move intended to sabotage or delay this action, or to cause prejudice to the plaintiff.

This application

15.  The plaintiff accepts that this application concerns an intended appeal against the exercise of a discretionary, case management, decision.  Such an appeal requires the presence of exceptional circumstances, and must cross a very high hurdle.

16.  But the plaintiff argues that the ruling of 13 February 2017 justifies leave to appeal to be granted because (i) it resulted in significant injustice, and (ii) it had erred in principle.

17.  The plaintiff is in substance the successful party in this action by virtue of the judgment handed down on 27 December 2017.  The plaintiff’s complaint of significant injustice therefore lacks substance.

18.  For this reason alone, at least since 27 December 2017, there is no practical need for this application to be proceeded with.  An appeal against the ruling of 13 February 2017 would be academic in that sense.

19.  For completeness, I also observe that I agree with the defendant’s arguments, which can be summarized as follows:

(a)   (contrary to the plaintiff’s assertions) the court did not overlook the defendant’s breach of the prescribed timetable for filing and serving witness statements.  In giving leave to file and serve the new witness statements, the court was attempting to ensure there would be a just resolution of the dispute based on merits (rather than a lack of evidence from one party due to a witness’s absence);

(b)   (contrary to the plaintiff’s assertions) no surprise or injustice has been caused to the plaintiff.  As stated above (para 9 and 13 above), the matters contained in the new witness statements were consistent with the contents of the Wilson witness statements and/or the contemporaneous documents in the trial bundles;

(c)   (contrary to the plaintiff’s assertions) the court has not misdirected itself as to contumelious conduct, or as to inordinate and inexcusable delay.  The court has properly weighed the factors for and against the grant of leave, such as the relevance of the new witness statements, the possibility of the trial being disrupted or hindered, and the likelihood of serious prejudice being caused to the innocent party;

(d)   (contrary to the plaintiff’s assertions) no inadmissible materials of substance were stated in the new witness statements;

(e)   (contrary to the plaintiff’s assertions) the court has properly taken into account the Wilson witness statements to determine the possibility and/or extent of prejudice or unfairness which may be caused to the plaintiff if leave was given to adduce the new witness statements.

20.  The plaintiff also criticizes the defendant for lack of candour: the defendant never intimated that Wilson would not be available to testify and that Tam and Taylor would be called as witnesses instead.  At the very least, the pre-trial review on 24 November 2016 would have been a convenient time to do so.

21.  The defendant maintains that, even at the time of the pre-trial review, it still intended to call Wilson as a witness.  But this contention does not sit well with Wilson’s indication in October 2016 that his availability as a witness would be linked to a satisfactory resolution of his dispute with the defendant (the defendant admits that it began to approach Tam and Taylor for the new witness statements in November and December 2016).

22.  The defendant’s failure to make a timely disclosure (alternatively, to proffer a good reason for the delay to disclose) is obviously nothing to be applauded, and should be discouraged (but this may be adequately dealt with by an appropriate costs order).

Conclusion

23.  The application for leave to appeal is refused.

Other matters

24.  The parties’ written submissions also mentioned various other points.  These have not been expressly set out or dealt with above.  This is so only because of the need to balance between the length of the decision on leave to appeal and its comprehension.  It does not mean those other points are thought to be irrelevant (or have been overlooked).  To avoid doubt, those other points have also been considered.

Costs order nisi

25.  Save for one matter (para 22 above), there is no apparent reason to depart from the usual rule that costs should follow the event.  As stated above, the defendant has not been entirely flawless as regards promoting the efficient progress of this action.  Their inadequate conduct should be discouraged by an appropriate reduction in the costs brought about as a result.  Although this application was commenced by the plaintiff, to an extent it was prompted (or encouraged) by the said conduct.

26.  There will accordingly be a costs order nisi pursuant to Ord 42 r 5B(6) that two-thirds of the costs of this application be paid by the plaintiff to the defendant to be taxed if not agreed.