LUCKY FACT GARMENTS LTD AND ANOTHER v. KWOK CHI KUEN t/a GLOBAL INTERIOR DESIGN AND ANOTHER

HCA 1510/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1510 OF 2015

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D E C I S I O N

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The applications

1.  By summons, the Plaintiffs (“Ps”) have taken out two applications:

(a) On 4 October 2016, leave for both parties to adduce expert evidence, two experts from Ps, one building surveyor, the other a loss adjuster; and one from the Defendants (“Ds”) on water leakage at the premises in question, the quality of renovation and the estimated costs of rectifying the defects and uncompleted works of D1.

(b) On 11 November 2016, leave to amend the Statement of Claim.

2.  Before discussing further, I wish to bring out paragraph 4 of the summons for expert evidence.  It asks the Court to direct the parties to file a single joint expert report prepared by the experts for the parties.  I take that Ps mean a joint expert report instead of a single joint expert report because the parties had not agreed a single joint expert themselves.  Those who prepare the evidence and the proposed directions to the court should pay attention to the terms of the directions.

3.  Ps further clarify now that their application for expert evidence is in fact for leave to adduce the second expert report on liability because they have already obtained the first expert report, which can be adduced by consent of Ds.  Ds confirm that they have no objection to the first expert report referred to in the Statement of Claim, which they consider should cover both liability and quantum.  Ps therefore ask for leave to adduce a second expert report on liability, arguing that the first report only deals with quantum.

4.  The two applications are contested by Ds and the parties are legally represented.[1]

5.  Ds propose to deal with the application for expert evidence first as Ps rely upon them in support of their application for amendment of the Statement of Claim.  I disagree.  The pleadings must be the foundation of the action, which should be dealt with first.  The expert evidence is only to illustrate why the amendments should be allowed, which is subsidiary to the main issue of leave for the amendment.

The brief facts

6.  In this action, P1 is the corporate owner of the premises whereas P2 is its wholly owned shareholder, an occupier of the premises with his wife.  P1 and D1 had entered into a contract and a supplemental contract (“the contracts”) for the renovation of the premises whereas P1 alleges that D1 was in breach of the contracts for the poor quality of works and uncompleted works, for which Ps had incurred costs for rectifying the defective works and complete the uncompleted works.  Ps therefore claim for damages. Ds deny such allegations and counterclaim for the outstanding amounts due under the contracts.  It is therefore a matter of finding of the facts whether D1 was in breach of the contracts; and if so, how damages should be assessed at the end of the trial.

Paragraph 16A and paragraph 22A

7.  Ps’ application for amendment of the Statement of Claim is for adding two paragraphs, paragraph 16A and paragraph 22A.  Paragraph 16A is for clarification of the original paragraph 16 whereas paragraph 22A is a list of defective works or damages originally pleaded in paragraph 15.  However, they are latent defects only to be discovered after commencement of the proceedings.[2]  Those are the Ps’ reasons.

8.  Ds’ objection to paragraph 16A is that it adds nothing to paragraph 16.  Such amendment serves no purpose and it only delays the hearing and will cause prejudice to Ds.

9.  The difference between Ps and Ds is not easily seen from the amended paragraph 16A itself because it refers to paragraph 15 with a long table of defects under it.  It takes one’s close look to the details in order to appreciate the similarities and the differences.  Ds have not set out such details in the written submission.  It is only after Mr. Ho, the solicitor for Ds who has taken me through these paragraphs that I realize that the contents of paragraph 16A and paragraph 15 are in fact referring to the same location, the same leakages and Ps’ same allegation of negligence against Ds.  As such, they are duplications, which should not be allowed.

10.  I shall now consider paragraph 22A.

11.  It is trite law that the parties are allowed to amend the pleadings in order to show the full and true picture of their cases before the court for adjudication on the merits of their cases.  Ps rely upon the authority of Kwan Shiu Cheong Charles v Ferrari Spa & Anor [1994] 2 HKC 179.  This authority precedes CJR which commenced in 2009.  When counsel refers to authorities, they should pay attention to this important milestone change of our civil justice system.  There are a lot of similar cases after the CJR in support of their propositions.  The Court of Appeal has made the similar ruling in Zheng Chulin v Wo Kee Hong Kong Industrial Ltd (unreported, CACV 56/2012, 12 June 2012 per Kwan JA at §16).

12.  Of course, the above authority applies to cases where there are no other factors such as delay or prejudice which cannot be compensated by costs.  This case is far from being set down.  Ds oppose this new paragraph because P’s reason for putting it in the pleading is that there were defects which were seen even after the replacement contractor had carried out remedial works to the defective works done by Ds and after Ps had moved into the premises for more than two years.  In the application, Ps referred to the witness statement and the proposed second expert report.

13.  However, when I point out to Mr. Ho that paragraph 22A only refers to Ds’ liability under the contracts before the replacement contractors, Mr. Ho says that he would not object to this paragraph.  In my view, the pleadings are the foundation of the case.  If the evidence is not relevant to the pleaded case, the evidence is simply not admissible.

14.  I allow leave for Ps to amend the Statement of Claim as per the draft in red for paragraph 22A.

The second expert report

15.  On the application for leave to adduce a second expert report, Ps’ reasons are to support Ps’ case that the defects and damages to the premises were caused by poor workmanship and defective/substandard works performed by Ds and/or their employees or agent.[3]

16.  Ds oppose this application and have raised the grounds as follows:

(a) Ps rely upon the expert of this second report to find Ds’ liability, which must be the exclusive province of the trial judge.

(b) The second expert has not considered that some of the works were not done by Ds but by the replacement contractors employed by Ps.  Ds have set out those leakage areas D, F and H in the written submissions. There is no response from Ps.

(c) The first expert report has already dealt with the issue of water seepage.

17.  Both parties rely upon the authority of Lam Lai Ying v Choi Min & Anor [2006] HKLRD 572, in particular the following legal propositions:

(a) The test for allowing adducing second expert report is whether the applicant can fulfill the criteria of necessity, relevance and probative value; and

(b) It is not for an expert to decide on facts, which must be a matter for the trial judge, following the decision in Li Sau Keung v Maxcredit Engineering Ltd & Another (unrep., CACV 16/2003, [2003] HKEC 1397)

18.  On the issue of the second expert report, I have, in my previous Decision Charter Sense Ltd v Ng Kin Yan, also known as Patrick Ng Kin Yan (unrep., HCA 2082/2011, 18 September 2014, §9) set out the factors which the court should adopt.  See Daimler AG v Leiduck (re: expert evidence) [2014] 3 HKLRD 56.  The factors are:

(a) The nature of the dispute;

(b) The number of disputes on which the expert evidence is relevant;

(c) The reason for requiring the 2^nd report;

(d) The amount at stake or the nature of the issues at stake;

(e) The effect of permitting a second report on the conduct of the trial;

(f) The delay in making the application;

(g) The delay that might be caused in the conduct of the trial;

(h) Any other special features; and

(i) The overall justice to the parties.

19.  Ps have not even satisfied the fundamental question of providing the reason for requiring the 2^nd expert report.  The proposed 2^nd expert report is not in the bundle. There is no evidence to show how the 2^nd expert report can deal with the defects which had been remedied by the replacement contractors.  As such, they have not been able to discharge the burden for their application, which must be dismissed, with costs.

20.  As to the costs of these applications, there is no reason why the costs should not follow the event.  Ps ask for costs on the basis that paragraph 22A, which they succeed is the main amendment whereas paragraph 15A is the subsidiary.  I am afraid that I am unable to see such relationship between these two paragraphs.  Ds submit that there should be no order as to costs for the amendment application for this hearing.  I agree and so order. As to the application for the second expert report, Ds ask for costs, which Ps do not dispute.  I award costs to Ds for this application.  The costs are summarily assessed under O.62, r.9A for the application for the second expert report at $75,000.00 to be paid by Ps to Ds within 14 days from the date hereof.

21.  This Court now makes an order in terms as follows:

(a) Leave be granted to Ps to amend only paragraph 22A of the Statement of Claim as per draft; the application for the amendment of paragraph 16A is dismissed;

(b) Ds be at liberty to file and serve the Amended Defence and Counterclaim consequential upon the amended paragraph 22A of the Statement of Claim;

(c) Ps be at liberty to, within 14 days from the date hereof, file and serve the Amended Reply and Defence to Counterclaim within 14 days thereafter;

(d) The costs of and occasioned by the amendment of paragraph 22A be to Ds in any event, to be taxed if not agreed;

(e) The costs for the hearing of the summons for amendment be no order;

(f) Ps’ summons for the 2^nd expert report be dismissed;

(g) The costs of the summons for the 2^nd expert report be to Ds as per paragraph 20 above.

Case management directions

(h) The parties shall attend a Case Management summons hearing at 10:30 am on 19 July 2017 for them to obtain counsel’s advice on whether Ds would adduce expert evidence in response to Ps’ expert report and any other interlocutory applications.

(i) Counsel's advice are to be obtained within 28 days after close of the amended pleadings and the interlocutory applications are to be taken out within 14 days thereafter.

(j) Costs of this case management hearing (30 mins) be in the cause.