TIN LIK v. DEUTCHE BANK AG AND OTHERS

HCCL 17/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO 17 OF 2011

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BETWEEN

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REASONS FOR DECISION

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1.  On 19 July 2013, I made an order in terms of §§1 and 2 of the summons of the 1^st and 2^nd defendants issued on 10 July 2013 by which they applied to adduce additional evidence at the trial of this action which is to take place before me starting on 16 September 2013. I also made an order in terms of §3 of the summons provided, however, that the supplemental witness statement in question be amended to remove any statements containing the inadmissible opinion of its maker, Mr Paul Thomas Keogh. I also made an order in terms of §4 of the summons and granted leave for the affirmation of Mr Lawrence Chu to be adduced into evidence at trial, provided that he was available for cross-examination, if so required by the plaintiff.

2.  I also made an order that the costs of and occasioned by the application and of the hearing on 11 July 2013 be paid, in any event, by the 1^st and 2^nd defendants to the plaintiff, to be taxed if not agreed.  I made the further order that the costs of the hearing on 19 July 2013, incurred in connection with this application, be paid, in any event, by the plaintiff to the 1^st and 2^nd defendants, to be taxed if not agreed, with certificate for two counsel.  Both costs orders are to be taxed at the conclusion of the trial of the action. 

3.  These are my reasons for making these orders.

4.  These applications, for additional evidence to be adduced at trial, are late applications.  Witness statements were exchanged in December 2012 and the trial is to commence in two months’ time.  But these applications to adduce additional evidence, particularly of Mr Ruoyu Jiang and Mr Eric Lee, were only made by summons issued on 10 July 2013.  The 2^nd affidavit of Mr James Wadham in support of the application was only sworn on 15 July 2013. 

5.  I had occasion to reiterate the principles to be applied in determining such applications in Parsad v Great Wealthy Engineering Co Ltd [2012] 3 HKLRD 705, a personal injury case, where I said :

“5. Whilst parties are generally free to call factual witnesses of their choice and leave is invariably given at the checklist review hearing to the parties to serve or exchange witness statements, the court’s discretion, whether or not to accede to a party’s late application to rely on a witness statement deposing to relevant and admissible facts, must be exercised within the ambit of the Court’s management powers and in the light of the objectives of Civil Justice Reform, 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.

6. Whilst the primary aim is to secure the just resolution of the dispute in accordance with the substantive rights of the parties, and which must include the right of a party to rely on admissible, relevant and probative factual evidence, 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 for the late application. These matters have to be considered and weighed in the light of and against the underlying objectives of Civil Justice Reform to ensure cost effectiveness and economy, expedition, proportionality, and fairness between the parties.

7. It is not possible to lay down guidelines to cover and cater for every possible situation that may give rise to a late application for leave to rely on a witness statement; however, the Court would have to carefully weigh, in each case, the relevance and probative value of such a witness statement against the potential disruption to trial, prejudice to other parties, and the objectives of civil justice reform. … Finally, a late application for leave to rely on additional witness statements, that is to say, an application made after the case has been, or is ready to be, set down for trial, will not be considered without signed witness statements containing a statement of truth being furnished.

8. Chung Hiu Bun v Yeung Yiu Sing (unrep., HCPI 123/2010, [2011] HKLRD (Yrbk) 62, [2011] HKEC 1115) is an example of a case where a party, after the case was set down for trial, sought to present new evidence and a new case. The plaintiff was not to blame for not adducing this evidence earlier because the new evidence had only been discovered recently and rather fortuitously. In this case, the defendants could see that the witness statements that were sought to be adduced and the amendments that were sought to be introduced were very relevant to the claim so they very sensibly consented to the plaintiff’s application. However, there are many other cases where strong opposition can be made to any such late application, particularly where the probative value of the new evidence is low and of marginal relevance. Further, the Court would also be less inclined to accede to such late applications where additional witness statements are produced that speak of the same facts that have already been mentioned in previously served witness statements.

9. Very strong grounds would be required to move a court to accede to such applications if doing so would result in trial dates being vacated.”

6.  I am satisfied that acceding to the present applications would not been derail the trial dates.  The state of my diary has permitted me to reserve two further days for the trial of this action, in order to cater for this additional evidence, and which I have done.

7.  The applications must be viewed in the context of this action in which the plaintiff claims very substantial sums, amounting to almost HKD300m; and in which very serious allegations are laid against the 1^st and 2^nd defendants of devising and instigating a complex fraud to be perpetrated whereby the rental income of a property in Beijing called Gateway Plaza was falsely inflated.  The additional evidence consisted of:

(1) MrLawrence Chu'saffirmation which verifiedtheauthenticityand provenanceofthedocumentsdisclosed by HSBC pursuantto the discovery order of Reyes J. dated 12 February2012.  These were described as the ‘Legacy Transaction Documents” which, it was submitted, revealed that the fraudulent scheme (involving concurrent high and low lease agreements) was implemented before January 2006.  This affirmation was sought to be adduced because the plaintiff had indicated that he did not accept the authenticity of those documents.  The production of this affirmation was not opposed, provided that Mr Chu was made available for cross examination, and I so ordered.

(2) Mr Paul Thomas Keogh's supplemental statement explained why it has not been possible to locate and obtain a statement from a person named Mr Benson Lai, in order to rebut the plaintiff’s allegations that Mr Lai knew about the fraudulent scheme.  Communications with Mr Lai at the relevant time have been produced to rebut the allegation of knowledge.  Mr Keogh also briefly supplemented the evidence in his statement dated 10 December 2012 in response to specific aspects of the plaintiff’s evidence. No new factual issues have been raised in the supplemental statement and, being a supplemental statement containing admissible, relevant, and probative factual evidence, it is entirely right that it should be allowed into evidence, provided, of course, that the inadmissible opinion of Mr Keogh was removed from it.

(3) Mr Ruoyu Jiang's statement dealt with the limited matter of the 1^st defendant's initial involvement in January 2006 when it was requested to provide a bridging loan to support the Legacy Transaction.  The information provided for that purpose confirmed the implementation of the fraudulent scheme prior to January 2006.  The relevant factual issues were pleaded in the defence and was touched on by another witness, Mr Wang Zhonghe.  Mr Jiang's evidence added corroboration to the defence case and answered the contrary evidence from the plaintiff’s witnesses.

(4) Mr Eric Lee of Jones Lang Lasalle (“JLL”) refuted the plaintiff’s allegation that JLL knew about and was involved in the fraudulent scheme.  Mr Lee provided some background information of JLL and how JLL discovered the fraudulent scheme after their appointment as Property Manager.  Mr Lee also confirmed Mr Zhang Kai’s prior association with the plaintiff’s Bestride Group.  The evidence contained in this was supported the case pleaded in the defence.

8.  I am satisfied that the additional evidence sought to be introduced did not raise a new case by way of defence to these claims. They constitute additional evidence which supported the evidence already adduced to establish the defence already pleaded that the 1^st and 2^nd defendants were not aware of, and did not participate in this wrong doing but, on the contrary, acted entirely properly when the wrong doing was discovered.  The additional evidence sought to be adduced is admissible, relevant to and probative of the defence case.  It is not marginally relevant, but primarily relevant to the defence case and, if believed, would constitute strong and cogent evidence in support of the defence case.  The extra costs incurred in receiving this additional evidence is entirely proportionate to the substantial amount claimed by plaintiff in this action and to the very serious allegations raised by the plaintiff. To deny the 1^st and 2^nd defendants their substantive rights to adduce this admissible, and highly relevant and probative, evidence would be unjust.

9.  Not only did the additional evidence not introduce a new case, I also accept the submission of Mr Wong Yan Lung SC, who appeared on behalf of the 1^st and 2^nd defendants, that the additional evidence responded to the evidence relied upon by the plaintiff.  But why was the response so late?  The explanation that I received from Mr Wadham is only a partial explanation.  He explained that it took some time for JLL and for Mr Eric Lee, who were not parties to these proceedings, to consider, internally, the request to give evidence in these proceedings, to review the witness statements already exchanged, and then to consider afresh and address events that occurred some six years ago.  Because of the serious nature of the allegations raised against JLL, Mr Lee and JLL understandably wished to ensure that the statement was closely referenced to contemporaneous documentation.  All of this added to the time required for the preparation of Mr Lee’s statement.  I accept that Mr Wadham has provided some, but not full, justification for the lateness of the applications.  He has not condescended to giving me any dates as to when the approach was made to JLL, and to the other witnesses, and how long it actually took to prepare the additional witness statements in question.  However, the lateness of the application is only one of the factors that I must weigh in the balance, albeit an important one in the exercise of my discretion in this matter.  In this instance, the lateness of the applications does not cause me to deny the substantive rights of the 1^st and 2^nd defendants to adduce this highly relevant evidence which is likely to be highly probative if the witnesses concerned are believed.

10.  On the question of the lateness, I do not accept the submission of Mr Barrie Barlow SC, who appeared for the plaintiff and submitted that the 1^st and 2^nd defendants were aware that the plaintiff would be serving the witness statements of Mr Yuan Lijun, Mr Chen Jian and Mr Zhang Kai because statements in Chinese of these individuals had been exhibited in the plaintiff’s affirmation that had been deployed to resist the striking-out application in July 2012.  I cannot fault the 1^st and 2^nd defendants for failing to anticipate that these individuals would actually make witness statements for the present proceedings, particularly as it appeared from the interview record of the Securities and Finance Commission (“SFC”), disclosed by the plaintiff in the same strike-out application, that Mr Yuan had always avoided contact by the SFC.  In any event, as I have already ruled, lateness on the part of the 1^st and 2^nd defendants ought not to deprive them of their substantive rights to call this additional evidence unless, of course, serious prejudice is caused thereby to the plaintiff.

11.  I do not find that serious prejudice would be caused to the plaintiff by my decision to permit this additional evidence to be adduced at the trial.  I have already found that no new case was raised by the additional evidence.  There are still two months to go before trial and whilst this additional evidence needs to be addressed by the plaintiff’s witnesses, the plaintiff has sufficient time to ask them to do so.  I do not accept the submission of Mr Barlow that Mr Zhang is not willing to devote too much personal time on the plaintiff’s case, which is not supported by any evidence filed by the plaintiff in opposition to these applications and is contrary to the evidence contained to the 3^rd and 4^th affidavits of Ms Tso Yi Lee, Elizabez, which suggested a far closer association between the plaintiff and Mr Zhang than would appear from the contents of the plaintiff’s 2^nd affirmation.

12.  Finally, it was suggested that the substantial additional discovery that has been made of previously undiscovered documents, which have been attached to the additional witness statements sought to be adduced, would disrupt the forthcoming trial because applications for specific discovery of further documents would follow this new and substantial disclosure.  I have reviewed the additional documents and agree with the submission of Mr Wong that basically they comprised of e‑mails confined to specific periods or specific issues and that it was the attachments to those e-mails, comprising of rentals and other office records, which added to the volume of the documents attached to the additional witness statements.  Some of these office records have already been disclosed previously. I am unable to see any controversy arising from these mundane business records.  Indeed, Mr Barlow was unable to identify any class or classes of further documents that would be sought by way of specific discovery.  Of course I will deal with any such applications as and when they arise.  However, I cannot conclude, at this point of time, that these anticipated applications for further discovery must necessarily disrupt the forthcoming trial.

13.  For these reasons, I acceded to the applications of the 1^st and 2^nd defendants to adduce additional factual evidence at the forthcoming trial.  It is right that the 1^st and 2^nd defendants ought to pay for the costs of the indulgence they have sought.  However, the applications were contested and the costs of the contest must follow the event.