REDLAND PRECAST CONCRETE PRODUCTS (CHINA) LTD v. PERMASTEELISA HONG KONG LTD

HCCT 35/2018

[2020] HKCFI 604

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 35 OF 2018

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D E C I S I O N

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Background

1.  Before the Court are 3 outstanding matters pending trial scheduled to take place on 5 May 2020. The first is the Plaintiff’s summons issued on 16 December 2019 for leave to amend the Statement of Claim and the Answer to the request for particulars of the Statement of Claim, and for leave to file a supplemental witness statement of Liu Hok Kwan (“Liu Supplemental”) for the Plaintiff. This was scheduled for hearing on 21 February 2020. The second is the Plaintiff’s summons served on the Defendant on 3 February 2020, and subsequently dated 9 March 2020, to strike out parts of the witness statements of Leung Kwong Hung (“Leung Statement”) and Andrew Turnbull (“Turnbull Statement”) of the Defendant. The third is the pre-trial review (“PTR”) originally scheduled for hearing on 3 March 2020. The hearings of the first summons and the PTR were both adjourned due to the general adjournment of court proceedings since February 2020 (“GAP”). The parties have agreed to paper disposal of all the matters at the same time.

2.  Bearing in mind that the trial of the action has been set down for 10 days and is scheduled to commence on 5 May 2020, the focus and priority should be to facilitate the trial and preparation therefor at this late and imminent stage, with the least disruption that can be achieved. Leaving aside GAP and the disruption caused, it cannot be ignored that the Plaintiff’s applications, and in particular its application for leave to file the Liu Supplemental and to strike out the Defendant’s statements came late in the day, the striking out application being less than 3 months before trial.

3.  As has been highlighted by the Defendant, and by the Court at the first hearing of the first summons, the onus is on the Plaintiff to justify its delay and to show good reason for leave to be granted for the amendment and for the filing of the substantial evidence contained in the Liu Supplemental, when trial is imminent. It should not be necessary to repeat the underlying objectives of the CJR, that there should be early preparation for trial, with emphases on procedural economy and expeditious disposal of cases in a cost-effective and proportionate manner.

4.  The Courts have consistently warned that delay itself is a ground to refuse an application. Whilst it is correct that delay is also weighed against the probative value and relevance of the pleadings and evidence sought to be introduced, it need not be emphasized further that the primary aim in the Court’s exercise of its powers is to secure the just resolution of disputes in accordance with the substantive rights of the parties. The just resolution of disputes requires due consideration of the time wasted or occasioned by last minute applications to introduce substantial amendments to the pleadings and/or evidence, on the eve of trial. Prejudice is inevitably caused, in the disruptions in the preparation for trial, the need to locate witnesses to respond to the new evidence and amendments, and the last minute distraction from the proper focus on the trial.

5.  In this case, directions were given as early as in July 2018 for discovery, the exchange of statements of factual witnesses and for expert evidence. The dates for trial were given in 7 August 2018. The statements of the factual witnesses were exchanged in January 2019. The PTR was scheduled for March 2020.

6.  It was only in mid-December 2019 that the Plaintiff sought leave to amend its Statement of Claim and its Answer to the request for particulars, and to file a lengthy supplemental statement, containing nearly paragraph to paragraph responses to the Leung Statement and the Turnbull Statement served in January 2019.

7.  The Plaintiff’s applications to amend and to adduce the Liu Supplemental were opposed by the Defendant, on the ground that no good reason has been shown by the Plaintiff to justify the delay in their application, and on the ground that it is inappropriate, unnecessary and a waste of time to allow the Liu Supplemental for rebuttal of the Defendant’s evidence.

Amendment of the Statement of Claim and Answer

8.  Having reviewed the pleadings and the proposed amendment, I accept that the amendments only set out the components of the Sub-Subcontract relied upon by the Plaintiff in chronology. The same documents referred to in the original Statement of Claim are relied upon. The proposed amendments should not cause any surprise to the Defendant as to the case it has to meet at trial. The amendments to the quantum are a matter of arithmetic, the difference is not substantial, and the expert should have enough time to make the calculations and adjustments to his report.

9.  The Defendant does not pursue its objections to the amendment of the Answer. It has confirmed it has time to file any consequential amendment to its Defence before trial.

10.  I therefore allow the application for amendment, notwithstanding the delay.

Striking out of the Defendant’s witness statements

11.  I will deal with the striking out application first, as it has impact on whether leave should be granted to the Plaintiff to adduce the Liu Supplemental.

12.  It is trite, that written statements of a witness should relate to matters of fact which are relevant to the pleaded issues for trial. They should only contain such material facts as the witness is able to prove of his own knowledge, should be full and complete, and will form the oral evidence-in-chief to be given by the witness if called at trial. The statement must not contain any inadmissible evidence, nor statement of information or belief. (Para 38/2A/6, Hong Kong Civil Procedure 2020).

13.  On behalf of the Plaintiff, it was argued that on the Defendant’s pleaded case (by reference to paragraphs 4 to 6 of the Defence), there was no Sub-Subcontract, and no Pre-Bid Agreement, as alleged by the Plaintiff, nor any agreement of any form, concluded between the parties for the work carried out by the Plaintiff (“Work”) and in respect of which payment is claimed in these proceedings. The parties had been in the process of negotiations, the Defendant was only evaluating the capability of the Plaintiff in undertaking the Work, and the Defendant had no obligation to enter into any contract with the Plaintiff at all.

14.  The Plaintiff therefore seeks to strike out the parts of the Leung Statement and the Turnbull Statement which the Plaintiff claims deal with unpleaded matters, such as claims of the Plaintiff’s “uncooperative attitude”, “unsatisfactory performance” and inability to fulfill the required standards, which are irrelevant, or matters of opinion which are inadmissible.

15.  Read as a whole, the matters pleaded in the Defence can be understood in this way. The Defendant claims that no Sub-Subcontract was entered into with the Plaintiff. The parties were undergoing preliminary discussions in June 2015 to explore and evaluate the possibility and suitability of having the Plaintiff as the Defendant’s subcontractor for the Work. A Confidentiality Agreement was made at this time, on 10 June 2015, which expressly provides for the absence of any obligation to enter into any contractual arrangement.

16.  Pertinently, paragraph 7.3 of the Defence pleads that “it is the Defendant’s practice to invite quotations and then evaluate tenderers (potential candidates) by way of assessments and due diligence before any award of contract” (“Defendant’s Practice”), and that there was “an internal tendering procedure and analysis for subcontractors and suppliers (“Tender Analysis”), at which potential candidates to be appointed as the Defendant’s subcontractors shall be subject to evaluation”. The Defendant’s Practice and Tender Analysis are apart from any claim of general, industry practice for which expert evidence may be required. The Defendant’s witnesses are perfectly entitled to give evidence on their own practice.

17.  It cannot be disputed that the Defendant does not plead any fact of the Plaintiff’s performance or standards. The Defendant only pleads (in paragraph 7) that no formal approval was given by the Employer of the Main Contract for the Plaintiff to conduct the Work, and that the Plaintiff had failed to deliver a sample for the Defendant’s approval which was one of the prerequisites for acceptance of the Plaintiff’s quotation for the Work.

18.  I do not intend to set out all the paragraphs sought to be struck out from the Leung Statement and the Turnbull statement. I have reviewed the statements with the principles set out in paragraph 12 above in mind. I have particularly given consideration to the matters which have been pleaded in the Defence.

19.  Since the Defendant has pleaded the Defendant’s Practice and the Tender Analysis, and its Defence is that the negotiations, discussions and meetings with the Plaintiff were still at the preliminary discussions and evaluation stage, it is not objectionable or irrelevant for the Defendant’s witnesses to explain the nature and content of the preliminary discussions, and in particular to explain the design of the Work to be carried out by the Plaintiff and for which the Plaintiff was being evaluated, in order to explain and give credence to its ultimate decision of not entering into a binding contract with the Plaintiff, and also to refute the Plaintiff’s allegation that the Work performed by the Plaintiff evidenced the existence of the Sub-Subcontract.

20.  Whilst the Court does not encourage the use of prolix witness statements, it is appreciated that on the facts as pleaded and with regard to the matters in dispute, the parts of the Leung Statement and the Turnbull Statement which deal with and explain their Tender Analysis, the Defendant’s Practice, and the designs affecting the Work, are relevant.

21.  Paragraph 20 of the Leung Statement deals with quotations and preliminary discussions and I can see nothing objectionable. Statements of Leung’s understanding, that the Defendant’s Practice is common in the industry, only concern the weight to be given to his witness statement.

22.  Paragraph 53 of the Turnbull Statement is within the permissible and relevant ambit described in paragraphs 19 and 20 above. Paragraph 54 seeks to explain the ultimate decision of not concluding an agreement with the Plaintiff. There should however be a limit to the extent of the evidence at trial on the Plaintiff’s performance or perceived inability to meet the Defendant’s evaluation process. To avoid unnecessary evidence and cross-examination, and so as not to enlarge the scope of the dispute, I will strike out the particulars set out in 54 (1) to (5) of the Turnbull Statement. For the same reason, I will strike out the unnecessary particulars of the design workshops in March 2016, set out in paragraphs 59 to 61 of the Turnbull Statement, and the details set out in paragraphs 74 and 75 of the Turnbull Statement. The focus of the evidence at trial should not be on these details.

23.  The Defendant’s discussions with another contractor, Hailong, are not relevant to the pleaded issues in dispute. Paragraphs 80 to 82 are struck out for that reason. Paragraphs 97, 98, 111, 112, the last sentence in paragraph 113 and 130 similarly deal with Hailong, and should be struck out as irrelevant.

24.  Paragraph 86 and the last sentence in paragraph 87 contain statements of belief and opinion, and are struck out.

25.  Paragraph 88 sets out opinion evidence which is inadmissible and in any event immaterial.

26.  Paragraphs 92 to 94 of the Turnbull Statement set out arguments and matters of opinion, and are struck out.

Leave to adduce supplemental statement

27.  The Liu Supplemental seeks to set out Liu’s comments on the allegations made and facts stated in the Leung Statement and the Turnbull Statement, refers to the contents of his own statement in January 2019 and also refers to documents produced by the parties.

28.  I wholeheartedly endorse the observations made by the Court in Million Decade Limited v Tung Fai, HCA 1062 of 2013, 20 April 2016:

“Even though the court has power to grant leave for supplemental witness statements to be served, proper conduct of litigation does not mean having rounds of witness statements for point by point ‘rebuttal’ of the opposing witness(es) statements. After all, it is not the function the witness statements as to fact to argue a party’s case or to argue with opposing witnesses. I agree with the observations in Hong Kong Civil Procedure 2016 that:

‘The written statement of a witness should not seek to anticipate the evidence of a witness of the opposite party and to contradict it or otherwise to deal with it. It is not the function of the written statement of a witness to answer questions that may be put in cross-examination, but only to answer such questions as would be asked in his examination in chief…’ ”

29.  There is no good reason why the Plaintiff has to wait 12 months to respond to the matters raised in the Leung Statement and Turnbull Statement served in January 2019, or to the documents disclosed in January and August 2019. If there are matters already contained in Liu’s 1^st statement of January 2019, they can simply be relied upon at trial without the need to have the Liu Supplemental.

30.  To the extent that the Defence has not pleaded any facts or particulars with regard to the Plaintiff’s performance which was relevant to the Defendant’s decision not to conclude an agreement with the Plaintiff, which are set out in paragraphs 54, 56, 58-59, 72, 73, 76-79, 90, 99-100, 114 and 132-134 of the Turnbull Statement, and which are not struck out, I will permit the Plaintiff to rely on the Liu Supplemental to respond to these matters, to that limited extent.

31.  In the limited time available between now and the trial, the Plaintiff should serve the Liu Supplemental with only the responses to the parts of the Turnbull Statement referred to in the preceding paragraph. This Court urges the parties to be sensible and cooperative in the limited time available, for the Liu Supplemental to be finalized by consent, for service within 7 days.

32.  The Defendant has confirmed that it is able to comply with the timetable originally set out in the Order of 2 January 2020 for the filing of a witness statement in reply, if any.

Orders made

33.  The orders I make on the Plaintiff’s summonses are:

(1)     The Plaintiff do file the Amended Statement of Claim and the amended Answer (in the form attached to the Summons of 16 December 2019) by 4 pm on 14 April 2020, and service be dispensed with;

(2)     The Defendant has leave to file and serve the Amended Defence in relation to the Plaintiff’s amendments by 4 pm on 16 April 2020;

(3)     The Plaintiff has leave to file an Amended Reply in relation to the consequential amendments in the Amended Defence by 4 pm on 23 April 2020;

(4)     The Plaintiff do file and serve the Liu Supplemental Statement for which leave has been granted by 4 pm on 16 April 2020;

(5)     The Defendant has leave to file and serve a witness statement in reply, if any, by 4 pm on 23 April 2020;

(6)     The costs of and occasioned by the application for amendment be paid by the Plaintiff to the Defendant, with certificate for Counsel (including the costs reserved of the hearing on 2 January 2020).

34.  I have only struck out limited parts of the Turnbull Statement of which objection is made by the Plaintiff. The order nisi that I make is that 90% of the costs of the striking out application are to be paid by the Plaintiff to the Defendant, with certificate for Counsel.

35.  Trial Bundles and the Scott Schedule referred to in the Court’s directions dated 31 December 2019 are to be lodged with the Court not less than 7 days before the trial date. The parties are to serve written opening submissions and agreed chronology on the Court and each other not less than 7 days before the trial date.