FUNG SHING CHUNG v. CHOI KING HUNG

HCA 2860/2018

[2023] HKCFI 100

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2860 OF 2018

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DECISION

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1.  This is the Defendant’s appeal against the Order of Master D Ho dated 15 September 2022 by which his Summons filed on 14 September 2022 (“Summons”) for leave to file and serve the witness statement of Mr Poon Kwok Wai (“Poon”) was dismissed with costs to the Plaintiff in any event.

2.  The Defendant contends that this appeal should be allowed, and he be granted leave to adduce Poon’s witness statement because it is admissible, relevant and probative.

Pleaded cases

3.  The parties’ cases are dictated by the pleadings and by which the relevance of evidence should be judged.

4.  The Plaintiff’s claim is straightforward.  His case is that on or about 12 September 2013 he made a loan of RMB 8 million to the Defendant at an interest rate of 5% per annum repayable on demand by the Plaintiff (“Loan”).

5.  As evidenced by a Memorandum signed by the parties on 3 August 2018, the Defendant acknowledged that, inter alia, the outstanding amount calculated up to 31 August 2018 was US$1,014,983.32 (“Memorandum”).  The Defendant failed to make any repayment thereafter, and by this action the Plaintiff sues for the balance of the Loan plus interest.

6.  The Defendant’s case is that the Loan never existed and he never received the sum of RMB 8 million.  In respect of the Memorandum, the Defendant was intoxicated at the time of the signing and thus lacked the capacity to agree the contents thereof.

7.  The Defendant denies that the payments he made to the Plaintiff on 4 May 2017 (US$50,000), 10 May 2017 (US$77,220) and 8 February 2018 (US$500,000) were repayments of the Loan.  His case is that the first sum was a cash payment (no purpose was pleaded); the second was a set-off of the debts between the parties; and the third was a payment to the Plaintiff’s girlfriend (no purpose pleaded).

8.  In the Amended Reply and Defendant to Counterclaim, the Plaintiff pleaded that the Loan was sought by the Defendant for repaying one Mr Gatot.  The Plaintiff arranged his elder brother, Feng Ke Wei (“FKE”), to transfer the RMB 8 million from the bank account of FKE to the account of a female cousin of Mr Gatot.

9.  The Plaintiff further pleaded that since April 2016, at his requests, the Defendant had repeatedly acknowledged the Loan and outstanding interest as evidenced in documents signed by him, including the Memorandum. 

10.  As for the Counterclaim, the Defendant alleged that he made various payments totalling HK$6,805,817 on behalf of the Plaintiff to his girlfriends.

11.  In defence to the Counterclaim, the Plaintiff averred that those payments were proceeds of sale of shares beneficially belonged to him.

Issues in this case

12.  I agree with Mr Tse, who appeared for the Plaintiff, that the main issues in this case are :

(1)  The existence of the Loan;

(2)  Whether the various payments made by the Defendant to the Plaintiff on 4 May 2017, 10 May 2017 and 8 February 2018 were repayments of the Loan;

(3)  Whether the Memorandum (and 3 other written acknowledgments dated 13 April 2016, 4 May 2017 and     4 July 2017) were signed by the Defendant as acknowledgments of the outstanding balance and interest of the Loan; and

(4)  As for the Counterclaim, the nature of the payments made by the Defendant to the Plaintiff amounting to HK$6,805,817.

Applicable principles

13.  In Liu Wai Keung v Liu Wai Man, unrep, HCA 1106/2011, 22 March 2013, per G Lam J (as he then was) at [12]-[13], the court declined the admission of supplemental witness statements which relevance to the matters in issue in the action was tangential.

14.  In Parsad v Great Wealthy Engineering Co Ltd [2012] 3 HKLRD 705, Bharwaney J held that :

“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 the 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 the Civil Justice Reform to ensure cost effectiveness and economy, expedition, proportionality, and fairness between the parties.

…

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 a 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.”

The Summons

15.  The Summons was supported by a short affirmation of the Defendant in which basically two points were made.  First, it was alleged that he had been looking for Poon to be his witness since 2015 without success until September 2022.  There was no explanation as to what effort was made during those years, nor why the Defendant managed to find Poon in September 2022. 

16.  Second, the Defendant said that when he spoke to Poon over the phone in September 2022, Poon learned from him that the Plaintiff had impersonated FKE to open an account with Standard Chartered Bank (“Bank”), Mongkok branch, in May 2009.  Poon then knew that he had been cheated by the Plaintiff and agreed to be the Defendant’s witness.  

17.  Poon’s witness statement consisted of 4 short paragraphs.  He said that in about May 2009 the Plaintiff and the Defendant went to the Mongkok branch of the Bank where he was working to open an account.  The Plaintiff gave him a copy of the Mainland identify card of FKE for verification.  Based on the production of the identify card, Poon believed that the Plaintiff was FKE.  A copy of the identify card was exhibited by Poon but there was no explanation as to where the document came from or why he would have access to the Bank’s records, if that was the source of the document.  

18.  Poon also said that the Plaintiff then signed the name of FKE on various Bank documents, and some such documents apparently signed by FKE were exhibited.  Again, there was no explanation on the provenance of the documents.  It is possible that the exhibits originated from the Plaintiff’s discovery, but the court should not be left to speculate.   

19.  Finally, Poon said that he emigrated to the UK in May 2022.  There was no real explanation on how the Defendant managed to get in touch with him.  He was asked by the Defendant whether the person who opened the account at the Mongkok branch many years ago was the Plaintiff.  Poon said that at the time he had only seen the person whose photograph was exhibited to his statement.  There was no explanation as to where the exhibit came from or why he remembered the person in the photograph after so many years.  He was told by the Defendant that it was a photograph of the Plaintiff.  Poon then realised that he was cheated by the Plaintiff.

20.  Before dealing with the relevance of Poon’s evidence, it should be pointed out that, prior to the issuance of the Summons, there had been 4 rounds of exchange of witness statements.  Given the simple nature of this case, it was an extraordinary proliferation of evidence, and it will be seen below that the proliferation had delayed the progress of this action. 

Relevance and probative value

21.  First and foremost, Poon’s evidence did not relate to any of the main issues in this case, and I struggle to see any real relevance of his evidence. 

22.  The fact that there were various allegations and counter-allegations made in the existing witness statements which might have touched upon the opening of the account at the Bank would not make such allegations an issue in this action.  One way to test the proposition is that, taking the Defendant’s case at the highest and assuming that the Plaintiff did impersonate FKE in opening the account, which took place more than 4 years before the Loan was made, it would at most impact upon the credibility of the Plaintiff and would not by itself inform the court whether the Loan was made. 

23.  Another way to look at the matter, assuming that the Plaintiff did not have the money to lend to the Defendant as he suggested in his evidence.  Instead, the Plaintiff borrowed the RMB 8 million from FKE. That would not impact upon the Plaintiff’s entitlement to have the Loan repaid.

24.  In my view Poon’s evidence was little more than an attempt to cast the Plaintiff in bad light.  Typically, such evidence is adduced to discourage the other side from pursuing the action. 

25.  Further, it is self-evident from Poon’s witness statement and the Defendant’s supporting affirmation that Poon’s allegation of impersonation was almost entirely based upon the allegation of the Defendant. Clearly, such evidence (probably including the exhibits to Poon’s statement) was orchestrated by the Defendant.  It is highly doubtful whether Poon had any reliable recollection relevant to whether the person who opened the account in question in May 2009 was or was not FKE.  Plainly, Poon must have believed at the time that it was FKE who opened the account.

26.  In the premises, I take the view that Poon’s statement was neither relevant, nor of probative value.

Reason for delay

27.  As indicated above, the delay in obtaining Poon’s evidence had not been properly explained at all.  Given the 4 rounds of evidence, this was itself a valid reason for dismissing the Summons.

28.  Further, I accept the submission of Mr Tse that the Defendant had been making use of late applications for further evidence to delay the setting down of this action :

(1)  A Case Management Conference (“CMC”) was scheduled on 8 December 2021 by the Order of Master Hui dated 13 May 2021.  On 29 November 2021, the Defendant indicated in his Listing Questionnaire that he would apply for leave to file supplemental witness statement.  Consequently, the CMC was adjourned and reverted to a Case Management Summons to be heard on 16 March 2022;

(2)  On 20 April 2022, the CMC was again reverted to a Case Management Summons which was adjourned to 15 September 2022 in light of the indication in the Defendant’s Listing Questionnaire dated 29 March 2022 that he would apply for leave to file another supplemental witness statement;

(3)  One day before the hearing on 15 September 2022, the Defendant filed a Summons to apply for leave to file Poon’s witness statement. There was no indication in his Listing Questionnaire filed on 9 September 2022 of such application;

(4)  After filing the present appeal, the Defendant applied to the court by way of letter to postpone the fixing of the trial date, which was rejected by Madam Justice Au-Yeung on 17 October 2022.

29.  These events and the lack of relevance or probative value in Poon’s evidence lend considerable force to the proposition that the Defendant is playing a delaying tactic. 

30.  I do not believe that the fact that the trial is fixed to be heard in January 2024 is, in the present circumstances, a point in favour of allowing this appeal.  The court does not abdicate its responsibility to manage cases to further the Overriding Objectives under O 1A, r 1. Irrelevant or tangentially relevant evidence should not be admitted for the trial. 

Disposition

31.  For these reasons, this appeal is dismissed with costs to the Plaintiff, to be summarily assessed if not agreed.  For the purpose of the assessment, a statement of costs is to be lodged and served by the Plaintiff within 3 days from today.  Comments thereon by the Defendant, limited to 2 pages in font size 13 with 1.5 line spacing and normal margins, are to be lodged and served by the Defendant within 3 days thereafter.  Any reply comments, with the same limitations as aforesaid, are to be lodged and served by the Plaintiff within 2 days thereafter.