TIERRA TRADING LTD AND ANOTHER v. LAND BASE LTD

HCMP 3074/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 3074 OF 2014

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D E C I S I O N

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1.  The originating summons was filed on 21 November 2014. Two affidavits were filed on behalf of the plaintiffs by Leung Mei Sze on 21 November 2014 and 9 April 2015. The defendant filed two affidavits of Li Kit Hung and Ng Ian on 10 February 2015.

2.  The notice of appointment to hear the originating summons was heard on 29 April 2015 where the court directed that the question of whether these proceedings should proceed as if begun by writ be adjourned for argument, which matter is now before this court.

3.  The question for this court is whether this originating summons proceedings should continue as if begun by writ, or whether there should simply be directions for oral evidence and cross‑examination. 

4.  The relevant provisions empowering the court to deal with such applications are set out in Order 28, rules 4 and 8, which provide:

“Directions, etc., by Court (O.28, r.4)

…

     (2) In any case where the Court does not dispose of any originating summons altogether at a hearing or order the cause or matter begun by it to be transferred to a District Court or some other court or makes an order under rule 8, the Court shall give such directions as to the further conduct of the proceedings as it thinks best adapted to secure the just, expeditious and economical disposal thereof.

     (3) Without prejudice to the generality of paragraph (2), the Court shall, at as early a stage of the proceedings on the summons as appears to it to be practicable, consider whether there is or may be a dispute as to fact and whether the just, expeditious and economical disposal of the proceedings can accordingly best be secured by hearing the summons on oral evidence or mainly on oral evidence and, if it thinks fit, may order that no further evidence shall be filed and that the summons shall be heard on oral evidence or partly on oral evidence and partly on affidavit evidence, with or without cross-examination of any of the deponents, as it may direct.

     (4) Without prejudice to the generality of paragraph (2), and subject to paragraph (3), the Court may give directions as to the filing of evidence and as to the attendance of deponents for cross-examination and any directions which it could give under Order 25 if the cause or matter had been begun by writ and the summons were a case management summons under that Order. (L.N. 152 of 2008)

     (5) The Court may at any stage of the proceedings order that any affidavit, or any particulars of any claim, defence or other matters stated in any affidavit, shall stand as pleadings or that points of claim, defence or reply be delivered and stand as pleadings. (L.N. 404 of 1991)

…

Continuation of proceedings as it cause or matter begun by writ (O.28, r.8)

     8.—(1) Where, in the case of a cause or matter begun by originating summons, it appears to the Court at any stage of the proceedings that the proceedings should for any reason be continued as if the cause or matter had been begun by writ, it may order the proceedings to continue as if the cause or matter had been so begun and may, in particular, order that any affidavits shall stand as pleadings, with or without liberty to any of the parties to add thereto or to apply for particulars thereof.

...”

5.  As this is a case management issue, the court should have regard to the objectives of the Civil Justice Reform set out in Order 1A, rule 1:

“1. Underlying objectives

The underlying objectives of these rules are-

(a) to increase the cost-effectiveness of any practice and procedure to be followed in relation to proceedings before the Court;

(b) to ensure that a case is dealt with as expeditiously as is reasonably practicable;

(c) to promote a sense of reasonable proportion and procedural economy in the conduct of proceedings;

(d) to ensure fairness between the parties;

(e) to facilitate the settlement of disputes; and

(f) to ensure that the resources of the Court are distributed fairly.

6.  Similar questions were considered in other proceedings and the courts have, depending on the circumstances of each case, made orders appropriate to the matter at hand.  The principle and practice adopted can be seen from the following decisions. 

7.  In Li Fung Kai v Fung Sau Lin, HCMP 919/2013, 3 September 2013, DHCJ M Ng held at paras 40 to 44:

“40. Under Order 28 rule 8 (1) of the RHC, the court has power to order originating summons proceedings to continue as if the cause or matter had been begun by writ where it appears to the court at any stage of the proceedings that the proceedings should be so continued. The onus is on the applicant to show it will be just and convenient to make the order.

41. The main reason for originating summons proceedings to be so continued as if begun by writ is that there can be shown on the available evidence genuine and/or substantial issues of fact. In Shum Wah Ming v The Estate of Chen King Ngo, deceased & anor, Cheung J reminded that originating summons procedure was not and was never intended to be a short-cut to resolve disputes which could only be properly dealt with in a writ action. Mayo JA accepted there was no hard and fast principle concerning what cases could properly come within the ambit of Order 28 of the RHC, it was nonetheless necessary to consider whether there were significant factual issues requiring determination, and if there was it would be inappropriate to resort to the originating summons procedure.

42. But continuing the originating summons procedure as if the cause or matter had been begun by writ is not the only way forward where there are factual issues. Order 28 rule 4 of the RHC provides as follows:

‘(2) In any case where the Court does not dispose of any originating summons altogether at a hearing or order the cause or matter begun by it to be transferred to a District Court or some other court or makes an order under rule 8, the Court shall give such directions as to the further conduct of the proceedings as it thinks best adapted to secure the just, expeditious and economical disposal thereof.

(3) Without prejudice to the generality of paragraph (2), the Court shall, at as early a stage of the proceedings on the summons as appears to it to be practicable, consider whether there is or may be a dispute as to fact and whether the just, expeditious and economical disposal of the proceedings can accordingly best be secured by hearing the summons on oral evidence or mainly on oral evidence and, if it thinks fit, may order that no further evidence shall be filed and that the summons shall be heard on oral evidence or partly on oral evidence and partly on affidavit evidence, with or without cross-examination of any of the deponents, as it may direct.

(4) Without prejudice to the generality of paragraph (2), and subject to paragraph (3), the Court may give directions as to the filing of evidence and as to the attendance of deponents for cross-examination and any directions which it could give under Order 25 if the cause or matter had been begun by writ and the summons were a case management summons under that Order.

(5) The Court may at any stage of the proceedings order that any affidavit, or any particulars of any claim, defence or other matters stated in any affidavit, shall stand as pleadings or that points of claim, defence or reply be delivered and stand as pleadings.’

43. It is plain from the above that it is permissible to receive oral evidence to resolve disputed issues of fact in originating summons proceedings. What the court has to consider is “whether the just, expeditious and economical disposal of the proceedings can … best be secured by hearing the summons on oral evidence or mainly on oral evidence”. Order 28 rule 4 (4) of the RHC enables the court to give directions for the attendance of deponents of affidavits/affirmations for cross-examination. In Ye Hong-ying v Chan Lup-ying, such procedure was adopted since it was not desirable in the context of that case to significantly delay the resolution of the dispute by ordering that the proceedings should continue as if they had been begun by writ under Order 28 rule 8 of the RHC.

44. Bearing in mind the above principles, in considering the Summons, the first question is whether there are conflicting affirmations from the parties that raise substantial factual disputes that require oral evidence or trial. The observations of Deputy Judge A To (as he then was) in Ip Kam Wah & anor v Fair City Group Ltd are pertinent to such question:

‘8. I accept that, unlike the plaintiff in an O.14 application, the plaintiff in an originating summons procedure bears the burden of proof. When faced with conflicting affidavits from both parties, the court will be failing in its duty if it should take the assertions in the affidavits on their face value in isolation and jump to the conclusion that there is a triable issue without first considering whether the assertions in the affidavits are believable. I bear in mind the test laid down by Bokhary JA (as he then was) in Re Safe Rich Industries Ltd (unrep., Civ App No 81 of 1994, [1994] HKLY 183) that whether the assertions are believable is a question to be answered not by taking the assertions in isolation but by taking them in the context of so much of the background as was either undisputed or beyond reasonable dispute. In an originating summons procedure, it is only when the court is satisfied after having undertaken that exercise that factual disputes could not be resolved on affidavit evidence that oral evidence or trial should be considered.’” (Original emphasis)

8.  In Empire Trend Enterprises Ltd v Double Mind Company Ltd, HCMP 2425/1998, 23 March 1999, Burrell J observed at page 4:

“… The trial Judge will hear the same witnesses and be apprised of the same issues and make the same judgement regardless of the procedure employed to get the matter before the Court. …”

9.  In Ye Hong-ying v Chan Lup-ying [1996] 1 HKLR 255 at page 258F‑I, the court held:

“Disputed Facts

     It is common ground that the outcome of the application for reasonable provision for maintenance depends on a number of facts which are in dispute. But that does not necessarily render the originating summons procedure inappropriate. Ord. 28 r. 4(3) permits the resolution of disputed issues of fact on the hearing of the originating summons. What the Court has to consider is

‘whether the just, expeditious and economical disposal of the proceedings can ... best be secured by hearing the summons on oral evidence or mainly on oral evidence,’

Indeed, Ord. 28 r. 4(4) enables the Court to give directions for the attendance of deponents of affidavits or affirmations for cross-examination.  As it is, on 8th January 1996, Patrick Chan J. ordered the deponents of all affirmations or affidavits to attend the hearing of the application for cross-examination, as well as making orders for mutual discovery and inspection, upon the assumption that the Court would eventually decide to permit the proceedings to continue by way of the originating summons procedure.”

10.  The court should first consider whether there are disputes on fact.  The defendant has prepared a list of factual issues in paragraph 12 of its submissions dated 11 August 2015.  The plaintiffs have also provided a list of factual and expert issues in its letter dated 12 August 2015.  Both parties agreed that the deponents should be cross-examined.

11.  It is noteworthy that the parties are able to discern the core issues in dispute in this matter from the affidavit evidence and they are not dissimilar.  Some may be better classified as issues of law, but these are matters that the trial judge will have to decide.  The main purpose and utility of any pleadings is to identify the issues that the court has to decide and to limit the parties to the pleaded issues in the case.  Given that the parties are able to list out the issues here, I am not persuaded that there is a need for a set of pleadings to be filed in this case. 

12.  It is true that originating summons procedures should not be adopted where there are serious disputes on fact.  However, in this case, the disputes on fact are comparatively narrow based on the evidence that have been filed.  It is the interpretation of such facts on the plea of adverse possession that is the main contention between the parties.  These are matters that can be dealt with by submissions.

13.  The defendant contends that one of the purposes of the pleadings is that general discovery would follow after the close of pleadings.  I have not been told what discovery the defendant is contemplating given the extent of evidence that have been filed.  In any event, Order 24, rule 3(1) allows discovery to take place in an originating summons procedure.  If and when an application is made, the court will have the power to deal with it. 

14.  The power to be exercised here is one of case management power.  The underlying objectives of the rules are set out in Order 1A.  The exercise of the case management power has to have these objectives in mind when considering the degree of difference in the factual disputes, the need for such affidavit evidence to be tested by cross‑examination (which is not in dispute here), the clarity of the issues that can be discerned from the evidence filed, and the just, expeditious and economical disposal of the proceedings before the court.

15.  Given the stage of the proceedings and that the evidence filed thus far have already crystallised the factual issues in dispute as identified by both parties, I am not persuaded that the action should continue as if begun by writ as contended by the defendant with directions for pleadings and discovery.  That would result in a wastage in costs and time which is not in line with the underlying objectives of the Rules of the High Court.  I would therefore give directions for the further conduct of this matter pursuant to the powers conferred on this court under Order 28, rule 4.

16.  Mr Mok SC, for the plaintiffs, submits that expert evidence is required and proposed three issues for the expert.  Mr Man SC, for the defendant, accepts that expert evidence would be required for the issue on the calculation of plot ratio but not the other two issues.  On balance, I am persuaded by the plaintiff to allow expert evidence for all three issues.  Whilst the interpretation of the Buildings Ordinance is a matter of law, the plaintiffs said that they would also like the experts to opine on the practice regarding consent for demolition works and erection of enclosures during such works.  The two other issues are very narrow and on balance I would allow expert evidence to be adduced on them.

17.  I have heard submissions of the parties on the use of a single joint expert under Order 38, rule 4A so as to reduce time and costs and to better assist the trial judge.  Given the narrow scope of the expert issues identified, I am satisfied that this is a case where a single joint expert should be appointed by both parties to provide an opinion on the three issues. The framework of the procedures to be adopted for the appointment and provision of expert evidence by the single joint expert is set out in rule 4A and the specific directions for this case are set out below. 

18.  As to the length of the hearing, and to err on the side of caution, I have directed that there should be a 5‑day hearing.  Subject to the directions to the contrary by the trial judge, it is expected that the 5‑day reserved would be adequate for the closing submissions to be made within that time frame. 

19.  I have given parties liberty to apply. 

20.  Costs should be in the cause as this is a case management hearing and I so order. 

21.  In the premises, I direct as follows:

(I) Factual evidence

(1) The defendant is given leave to file affirmation in reply within 28 days from the date of this Order to reply to two new allegations raised in paragraphs 7 and 13(a) of the 2^nd Affirmation of Leung Mei Sze.

(2) No further affirmation will be allowed except with leave of the court.

(3) The deponents of the affirmations shall attend the hearing for cross‑examination.

(4) The affirmations filed shall stand as evidence‑in‑chief of the deponents when they attend court to be cross‑examined.

(5) No supplemental oral evidence‑in‑chief will be permitted except with leave of the court.

(6) The affirmation evidence of deponents who do not attend court to be cross‑examined will not be admitted as evidence except by agreement of the parties or with leave of the court.

(II) Expert evidence

(7) There be leave for expert evidence to be adduced to deal with the following three issues:

(a) Whether Kyoto Plaza has used up the plot ratio referrable to the area of the Subsection 15 Staircases?

(b) Whether the defendant’s reinforcement and enclosure of the Subsection 15 Staircases during the period between 2006 and 2008 was for the purpose of compliance with building and construction practice and building regulations?

(c) Whether as a matter of building and construction practice, the Building Authority would require to obtain the consent of the plaintiffs before seeking to demolish the Subsection 15 Staircases situate on the plaintiffs’ land?

(III) Single joint expert

(8) The parties do try and agree a single joint expert to be appointed within 14 days of the date of this order.

(9) If no agreement can be reached for a single joint expert to be appointed:

(a) Within 7 days of the expiration of the 14 days set out in Direction (8) above, each party shall provide three names to the court together with their CV, terms of appointment, statement of willingness to accept appointment if made, and a declaration of impartiality and independence.

(b) Each party may within 3 days of receipt of the opposing party’s list make submissions on the suitability of the other side’s proposed experts and in particular whether there is any conflict of interest.

(c) This procedure shall be dealt with on paper only.

(d) The court shall appoint the single joint expert based on the lists and submissions of the parties.

(10) The parties shall prepare a Joint Instructions to be sent to the single joint expert setting out the three issues to be dealt with together with copies of the plans and documents necessary for him to provide his opinion.  The Joint Instructions shall be sent to the single joint expert as soon as he is appointed.

(11) There shall be no unilateral communication between the single joint expert and any party or legal representatives to the proceedings. 

(12) Any communications with the single joint expert must be copied simultaneously to the other party.

(13) The single joint expert shall provide a report on the three issues within 28 days of the date of his appointment, or such extended period as may be agreed by the parties and approved by the court.

(14) The single joint expert shall attend the hearing to answer questions that may be raised by the parties relating to his report. 

(15) The fees of the single joint expert shall initially be borne by both parties in equal share and will be dealt with as part of the costs of the proceedings in due course.

(V) Hearing dates

(16) The matter be set down for a hearing with 5 days reserved and to be fixed in consultation with counsel’s diary. 

(17) There be liberty to either party to apply.

(18) Costs of this application be in the cause.