ALLINGTON INVESTMENTS CORPORATION AND OTHERS v. FIRST PACIFIC BANCSHARES HOLDINGS LTD AND ANOTHER

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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REASONS FOR JUDGMENT

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1. The defendants are applying by way of summons to strike out certain parts of the witness statement of two of the plaintiffs' witnesses on the ground they offended the rules against hearsay. The plaintiffs applied by cross summons to stand over the application to the trial judge, or alternatively for leave to amend their witness statements to expunge the offending parts.

2. The relevant evidence relates to certain telephone conversations made in the presence of the said witnesses. The witnesses were only personally able to hear one end of the telephone conversations. In their witness statements they referred to a mixture of what they were given to understand to be words spoken by the person on the other end of the telephone, and inferences or assumptions they have drawn from such conversations. It is not in dispute that evidence of this nature is not admissible as evidence of truth of contents. The plaintiffs submit, however, that the matter ought to be left to the trial judge as he alone is the best arbiter. It is further suggested by the plaintiffs that it would be obvious to the trial judge, when he hears the evidence, which part of the witness' evidence is admissible, and admissible for what purpose. It is submitted, in the premises, the matter should be stood over to the trial judge.

3. Witness statements are exchanged pursuant to Order 38 rule 2A of the Rules of the Supreme Court. The reasons for giving such a direction are clearly set out in para. 38/2A/2 at page 649 of Volume I of the 1995 Supreme Court Practice. In general, such process serves to facilitate cost-effective and fair disposal of the proceedings. It is a step in the preparation for trial, and would become evidence in the trial only if the court makes an order that such statement stands as the evidence in chief of the witness, or if the other side puts it in for cross-examination of the witness. Disclosure of contents of the evidence of a witness in his witness statement is thus of interlocutory nature similar to the disclosure of documents in a list of documents. The propriety of the contents of such documents, be it a witness statement or a list of documents, is a matter that can be dealt with as an interlocutory matter prior to trial. The contents of a list of documents, i.e. the extent of discovery, must be dealt with as an interlocutory matter. However, as the contents of a witness statement can become evidence in the trial, it is, in this respect, to be distinguished from a list of documents. In the premises, it is open to the party to deal with disputes over the propriety of a witness statement or parts thereof either as an interlocutory matter before trial, or as a matter of evidence for the trial judge's discretion at the trial. There can be no hard and fast rule when should be the proper time to deal with such a dispute. It would depend on a variety of circumstances, including how far down the line the case has progressed, how close is it to the trial, whether it is necessary to have the dispute resolved in sufficient time before trial to avoid any unnecessary adjournment of trial, whether it is fair and just to have an early resolution of such dispute? If the dispute arose only shortly before trial, it may be that there is little justification for not leaving it to be resolved by the trial judge, as little can be gained from a slightly earlier resolution of the dispute. However, if the dispute relates to an important part of the case, an early resolution of the dispute might be necessary to enable the objecting party to know what evidence he will have to face, and to call in reply at the trial.

4. Rule 2A(6) provides that "where any statement served is one to which the Evidence Ordinance (Cap. 8) applies, paragraphs (4) and (5) shall take effect subject to the provisions of that Ordinance and Parts III and IV of this Order. The service of a statement pursuant to a direction given under paragraph (2) shall not, unless expressly so stated by the party serving the same, be treated as a notice under the said Ordinance." Clearly any hearsay evidence contained in a witness statement will have to comply with the hearsay rules prior to becoming admissible. The time for serving a hearsay notice under r.21 of the Order is of particular significance in this respect. It would appear directions under r.21(1) would be required to grant leave to serve out of time a hearsay notice included, pursuant to r.2A(6), in the body of a witness statement if such witness statement is exchanged after the time stipulated under r.21(1) for service of hearsay notices. It is thus open to a party to apply prior to trial to expunge an offending witness statement or part thereof for a failure to comply with the relevant hearsay rules.

5. It is a matter for the court's discretion whether the dispute should be decided as an interlocutory matter or to leave the dispute to the trial judge.

6. It is important to bear in mind though the reason for expunging a witness statement or a part thereof may often be the inadmissibility of such evidence, it is not impossible for the matter to be decided on other grounds. In the premises, it is not inevitable that an order expunging a witness statement or a part thereof would render the evidence wholly inadmissible for all purposes at the trial. It is still open in some circumstances for the trial judge to exercise his discretion to allow the evidence, whether for a limited purpose or otherwise, notwithstanding that it is not contained in a witness statement. When the trial judge's attention is drawn to the order expunging that part of the evidence from the witness statement, it is almost inconceivable that he would not grant leave under Order 38 rule 2A(7) if the evidence should otherwise be admitted. It can hardly be reasonable for an opposing party to object to such evidence on the ground that there had been non-compliance with r.2A if such a failure to comply was a result of that opposing party's doing.

7. The witness statements ought, in the usual course, be mutually exchanged so that no unfair advantage would be conferred on any one party. In the premises, it is not unusual for parties to seek leave to supplement their witness statements by further statements from their witnesses to deal with matters arising from the other side's statements. However, there must be an end to such process and usually no more than one supplemental statement from a witness is necessary. In the premises, from the practical point of view, it may be necessary for a party to know at an earlier stage if any particular part of a witness statement is admissible evidence at the trial. The need to prepare supplemental witness statement may wholly depend on this.

8. In the case before me, the only ground of objection relied on by the plaintiffs against the application is that it ought to be dealt with by the trial judge. Leave to set down has been granted, and trial dates have been set in mid-September 1995. A date for review has been set at the end of July 1995. The plaintiffs have conceded that the portions of the witness statements in question offended the hearsay rules; and are thus seeking as an alternative order leave to amend the witness statements to remove the offending parts. There is no doubt in my mind those parts of the witness statements being complained against offended the rules against hearsay. The plaintiffs have not sought to show any ground for the admissibility of such evidence for any limited purpose. There is no statement contained in the witness statements that service of such witness statements shall be treated as a hearsay notice pursuant to r.2A(6). In the premises, there is no justification at all for the offending parts to be included in the witness statements. I am satisfied that there exists no reasonable ground for standing the application over to the trial judge. It is suitable and convenient that the application should be dealt with at this stage prior to trial. In the premises, I refused the plaintiffs' request to stand over the application to the trial judge.

9. In view of the concession of the plaintiffs on the offending parts of the witness statements, an order was made to require the plaintiffs to amend the witness statements in the manner shown in the draft annexed to their summons for leave to amend. Costs of both summons were awarded to the defendant in any event.