GUANGDONG YINGGAO SHIPPING LTD (SUBSTITUTED BY ORDER OF MASTER HUI DATED 20 JANUARY 2021) v. SECRETARY FOR JUSTICE

CAMP 368/2023, [2024] HKCA 492

On Appeal From [2023] HKCFI 2851

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 368 OF 2023

(ON AN INTENDED APPEAL FROM HCA NO. 1677 OF 2015)

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DECISION

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Hon Cheung JA (giving the Decision of the Court) :

I.  Leave to Appeal

1.  This is the plaintiff’s renewed application for leave to appeal from the decision of Deputy High Court Judge   Le   Pichon   (‘the   Judge’) dated 26 October 2023 (‘Decision’), who dismissed the plaintiff’s appeal from the order of Registrar Kwang dated 7 July 2023.  Registrar Kwang dismissed the plaintiff’s summons filed on 23 June 2023 (‘the Summons’) to expunge the witness statement of Lui Siu Fai (‘Lui’) and to strike out the defendant’s amended defence for breach of an unless order dated 4 May 2023 (‘the Unless Order’).  The Judge had already refused the plaintiff’s application for leave to appeal on 24 November 2023.

2.  We will deal with the plaintiff’s application on paper.

II.  The facts

3.  The background facts and the procedural history have been set out in [2-3] of the Judge’s Reasons for Decision dated 6 November 2023 (‘the Reasons’) for dismissing the Summons.

4.  Briefly stated, the case has a long history.  It was commenced in July 2015 against the Department of Justice for damages for 1) trespass to land and/or chattels; 2) conversion and 3) violations of constitutional rights.  The claim arose out of an operation conducted by officers of the Customs and Excise Department (‘CED’) who, between the late night of 11 January 2012 and the early morning of 12 January 2012, boarded two vessels owned by the original plaintiff at the River Trade Terminal and seized 10 containers.

5.  Between February and September 2016, there were Court orders directing the parties to exchange witness statements.  It was the defendant’s case that the parties had exchanged witness statements on 9 November 2016.  The defendant exchanged the witnesses statements of 4 CED officers, namely, Chow, Wong, Tsang and Lau with the plaintiff’s then solicitors, Ho Tse Wai & Partners (‘HTW’).

6.  The plaintiff did not proceed with its claim expeditiously. It amended its statement of claim on 12 July 2021 and the amended defence was filed on 20 October 2021.  Between November 2022 and March 2023 orders were made by the Court for the parties to exchange ‘witness statements and/or supplemental witness statements’.  On 4 May 2023, Master Ho by consent of the parties made the Unless Order :

‘ Unless the Defendant do exchange its witness statement(s) and/or supplemental witness statement(s) with the Plaintiff by 5:00pm on 9^th May 2023, the Defendant be debarred from adducing witness evidence at trial in this action and the Plaintiff do serve its witness statements on the Defendant forthwith;’

7.  On 9 May 2023, the defendant complied with the Unless Order and filed and exchanged with the plaintiff the witness statement of Lui.

8.  The Summons sought, among other things, the following reliefs :

‘1)   The witness statement of Lui filed on 9 May 2023 be expunged on the ground that :

1.1)    Lui is not competent as a witness under section 50(1) and 50(4) of the Evidence Ordinance (Cap. 8) on the ground of lack of understanding;

1.2)    The said statement is frivolous and may prejudice, embarrass fair trial of the present proceedings; and

1.3)    It was lodged without leave of Court.

2)      The whole of the amended defence filed herein on 20 October 2021 (and the whole of the defence filed herein on 30 October 2015) be struck out on the ground that the defendant fails to comply with the Unless Order dated 4 May 2023 and/or Order 25, rule 6(1); and further and/or in the alternatively, there is no evidence to support the defendant’s case in the amended defence.’

9.  The defendant disputes the plaintiff’s assertion that it has not adduced any other witness statements, as well as the plaintiff’s contention that Lui is not a competent witness.

III.  The decision

10.  The Judge dismissed the plaintiff’s appeal for the following reasons :

1)  For the plaintiff to succeed in striking out the amended defence, it must satisfy the Court that it is plain and obvious that the defendant never exchanged its witness statements and Lui is not a competent witness.

2)  The Court was not in a position to resolve the conflict of evidence as to what had transpired on 9 November 2016 (i.e. the date scheduled for the exchange of witness statements), nor would further evidence on that issue assist.  The plaintiff, who is the applicant for striking-out of the amended defence, was unable to discharge the burden of demonstrating that it is plain and obvious that the defendant never exchanged its witness statements on 9 November 2016. For that reason alone, the plaintiff could not succeed in striking out the amended defence.

3)  As to Lui’s alleged incompetence to give evidence  the Judge stated that the central issues then relied upon by the plaintiff against the defendant, namely, fraudulent, conduct, fabrication of manifest and malicious prosecution were not pleaded in the amended statement of claim.  She noted that the plaintiff’s objection to Lui’s competence rests solely on the fact that he was not physically present on the vessel at the time of the operation and so does not have personal knowledge of the alleged misconduct which had occurred.  The Judge held that Lui is competent to testify as to how the entire operation was carried out.  Since it is accepted by the plaintiff that he was the person in charge of the entire operation, he would have, in that capacity, received reports from his subordinates throughout the operation.

IV.  Proposed grounds of appeal

11.  The plaintiff relies on three proposed grounds of appeal (the first of which was not raised before the Judge) :

1)  The Judge erred in failing to require the defendant to prove that it had exchanged its witness statements with the plaintiff on 9 November 2016, a new fact asserted by the defendant in the Court below for which the defendant bore the burden of proof.

2)  In relation to the issue of whether it was plain and obvious the defendant never exchanged its witness statements, the Judge erred :

(1)  In failing to take into account the absence of direct evidence that such witness statements had been exchanged;

(2)  In giving no weight to the fact that the witness statements had not been filed with the Court, when such fact was highly probative of the plaintiff’s position that the witness statements had not been exchanged; and

(3)  In rejecting Chin’s 4^th affirmation on the ground of having ‘serious misgivings’ with the veracity of matters stated therein, when the reasons stated do not substantiate such ground.

3)  In relation to the competence point, the Judge erred :

(1)  In finding that certain issues were not pleaded in the amended statement of claim when in fact they had been (i.e. issues relating to the lawfulness and bona fides of actions taken by officers of the CED during the operation on 11 and 12 January 2012);

(2)  In misapprehending the materiality of the evidence from the three CED officers in question and erroneously assuming their evidence was material only to claims of ‘fraudulent conduct, fabrication of the manifests, malicious prosecution’; and

(3)  In failing to recognise that Lui would only have inadmissible hearsay evidence to provide on material and determinative issues in the claim.

V.  Applicable legal principles

12.  Leave to appeal from an interlocutory order shall not be granted unless the Court is satisfied that the intended appeal has a reasonable prospect of success; or there is some other reason in the interests of justice why the matter should be heard by the Court of Appeal : section 14AA of the High Court Ordinance (Cap. 4).

13.  The power to strike out a pleading is exercised only in plain and obvious cases; and if the Court does not think the matter to be plain and obvious, striking‑out will not be ordered.  It is well-established that there should be no trial upon affidavit. 

14.  Judicial discretion is involved in determining whether a pleading should be struck out.  Generally, an appellate court will not interfere with a judge’s exercise of discretion unless the judge misunderstood the law or the evidence or the exercise of the discretion was plainly wrong, i.e. that it was outside the generous ambit within which reasonable disagreement is possible.

VI.  Our view

15.  In terms of the striking‑out of the Amended Defence by reason of the alleged non‑compliance of the Unless Order on the exchange of witness statements, it is clear from the second relief sought by the plaintiff that the application is misconceived because the Unless Order merely provided that, in fault of exchange of witness statements, the defendant was barred from adducing further witness evidence at the trial.  The Unless Order did not provide for striking‑out of the Amended Defence.  The real issue in respect of the second relief is whether the Amended Defence should be struck out because ‘there is no evidence to support the Defendant’s case in the Amended Defence’ in the event Lui’s witness statement is expunged.  The plaintiff’s case on the Summons is that Lui’s witness statement should be expunged because he is not a competent witness, since he was not physically present on the vessel at the time of the operation on 11 and 12 January 2012 and so does not have personal knowledge of the alleged misconduct that occurred.

16.  It is logical to first deal with the second ground before addressing the first and third grounds.

1) Ground 2

17.  In our view, there is no merit to the plaintiff’s suggestion in Ground 2(a) that the Judge had failed to take into account the absence of direct evidence that the four witness statements had been exchanged.  The Judge was plainly aware of the absence of such direct evidence.  But it is clear from the Reasons that the Judge was of the view that the defendant’s contention that the four witness statements had been exchanged could not be dismissed summarily by reason of the following matters :

(1)  The defendant had written two letters dated 15 August 2016 and 7 September 2016 to HTW in relation to the exchange of witness statements which demonstrated the defendant’s anxiousness and readiness to comply with the Court’s orders, both of which were ignored by the plaintiff.  In this light, it was inherently implausible that the defendant had, according to the plaintiff by Chin’s 4^th affirmation, agreed to the exchange of witness statements on 9 November 2016 only for its representative to attend on that day to collect the plaintiff’s witness statement without exchanging the witness statements of the 4 CED officers ([20-21] of the Reasons);

(2)  There is also no correspondence complaining of the defendant’s alleged failure to exchange the witness statements of the 4 CED officers on 9 November 2016 ([3(xii)] and [22(iii)] of the Reasons);

(3)  The defendant’s revision of the template wording in its TQ filed on 27 October 2022 so as to refer to ‘supplemental witness statements’, and its proposed directions for ‘supplemental witness statements’, were consistent only with the fact that it had already provided the witness statements earlier ([3(xv)] of the Reasons); and

(4)  The words ‘supplemental witness statements’ which appear in the orders dated 15 November 2022, 11 April 2023, and the Unless Order, as well as the Summons, were consistent only with the fact that the witness statements of the 4 CED officers had been produced earlier ([3(xvi)-(xx)] of the Reasons).

18.  As for the plaintiff’s argument in Ground 2(b) that the Judge had given no weight to the fact that the witness statements had not been filed, when such fact was said to be highly probative of the plaintiff’s position that the witness statements had not been exchanged, we agree with the Judge’s view in [10] of the Reasons that the Unless Order did not require the filing of witness statements, which were only ordered to be exchanged; filing is not required absent an order to that effect; and the fact that the filing of such statements is not recorded in the Court Index did not mean they have not been exchanged.  In fact none of the orders leading up to the exchange of witness statements scheduled for 9 November 2016 (namely, the orders dated 29 February 2016 and 19 September 2016), required the four witness statements to be filed with the Court.

19.  The plaintiff argued that the witness statements were, by necessary implication, required to be filed with the Court since they were ordered to serve as the evidence-in-chief of the witness.  We disagree. As the Judge held, this would amount to a re‑casting of Order 38, rule 2A of the Rules of the High Court (Cap. 4A) (‘RHC’) (which only requires for such statements to be served or exchanged); as well as the Court orders dealing with exchange of witness statements and not their filing.  While it is common to file in Court witness statements that had been exchanged, the absence of having them filed would not preclude them from being used at the trial. 

20.  In relation to Ground 2(c), having regard to the procedural history, the Judge was clearly justified to take the view that Chin’s 4^th affirmation was unable to demonstrate that it was plain and obvious that the defendant had failed to exchange the four witness statements on 9 November 2016 for the reasons stated in [22(i)-(v)] of the Reasons.  As there should be no trial upon affidavit in an application for striking‑out, the Judge had, in our view, rightly held that she was not in a position to resolve the conflicts of evidence.

21.  Bearing in mind the threshold for challenging a discretionary decision, we do not see any basis to interfere with the Judge’s conclusion that it was not plain and obvious that the defendant had not exchanged the witness statements of the 4 CED officers on 9 November 2016.  Ground 2 of the intended appeal has no reasonable prospects of success.

2)  Ground 2

22.  It is clear that the Judge did not decide the case solely on the burden of proof.  As shown above the Judge was of the view that there was evidence in support of the defendant’s contention that the witness statements had been exchanged and she could not resolve the dispute by way of affidavit evidence.  The statement by the Judge that ‘the plaintiff bears the burden of proof in striking out pleadings that the defendant never exchanged the witness statements’ must be viewed in this context.  In any event the plaintiff had not argued before Registrar Kwang that the four witness statements had not been exchanged and only raised this issue in his appeal to the Judge.  Hence the defendant had to respond to the allegation before the Judge.  There is no question of the defendant ‘asserting a new fact before the Judge’.

3)   Ground 3

23.  It is now plain from the written submission of Mr Young for the plaintiff that the plaintiff’s substantive argument on Ground 3 proceeds on the basis that the defendant has only exchanged the witness statement of Lui but no other witness statements and no further witness statement can now be served.  On this basis, the plaintiff submits that Lui’s witness statement which consists of hearsay evidence should not be accepted as evidence on material issues raised in the amended statement of claim.   He submitted that only the evidence of the frontline CED officers and not Lui could resolve the material issues, such as whether the plaintiff’s two vessels gave the frontline officers an export of goods manifest and whether CED had lawful authority to carry out their entry, search and seizure operation pursuant to section 21(1)(b) of the Import and Export Ordinance (Cap. 60).  He submitted that the Judge was wrong in her Leave Decision to distinguish Yeung May Wah v HKSAR (2005) 8 HKCFAR 137 which held that it is the mind of the arresting officers and not that of the commanding officers that matters on the issue of power of arrest. He submitted that neither of these material issues relate to allegations of ‘fraudulent conduct, fabrication of the manifests, malicious prosecution’ and the Judge was wrong to characterise them as such and treat them as outwith the claim.   

24.  In our view the plaintiff proceeded on the assumption that Lui is the only witness for the defendant, but in view of the Judge’s decision, it is still an open question on the issue of the evidence of the four CED officers.  Hence the arguments now advanced by the plaintiff are academic.  It is sufficient for us to say that it is only in a plain and obvious case that the Court should exercise its discretion of expunging a witness statement on the ground that the witness is not competent and the statement is frivolous and may prejudice and embarrass a fair trial.  Even assuming, for the purpose of argument, that the evidence of Lui consists of hearsay evidence, this only goes to the issue of weight in the Court’s evaluation of the evidence and not admissibility.  Bearing in mind that the operation plan and enforcement action were devised by Lui, who had manned the Command Centre and kept the entire operation in view, we are not satisfied that it is reasonably arguable that the Judge’s exercise of discretion on this issue is plainly wrong so as to call for appellate intervention.

VII.   Conclusion

25.  For the reasons set out above, we refuse to grant leave to the plaintiff to appeal against the decision.  The Summons is accordingly dismissed with costs to the defendant which we will summarily assess at $39,500.

26.  As this application is entirely without merit, pursuant to Order 59, rule 2A(8) of the RHC, we further order that no party may under rule 2A(7) request the determination to be reconsidered at an oral hearing inter partes.