KWONG YUK HO HENRY v. TSANG LAI KEUNG AND ANOTHER

HCA 2446/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2446 OF 2009

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DECISION

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1. The trial is to start on 18 May 2012, in 18 days’ time. The plaintiff did not comply with a direction given at PTR. He changed his counsel. His counsel discovered new points in his client’s favour. The plaintiff wants to twice expand the scope of discovery and to file a supplemental witness statement. He also seeks specific discovery of audited financial statements for 2 years from the defendants.

Background

2. At the pre-trial review on 23 February 2012, parties informed me that the case was ready for trial subject to the plaintiff’s filing of a 2^nd supplemental list of documents disclosing the documents referred to in the expert’s report (“the uncontested documents”).  It was not opposed by the defendants.  The time for filing of the 2^nd supplemental list of documents fell due on 15 March 2012. The list was not filed.

3. Over a month after the PTR, on 28 March 2012, the plaintiff took out a summons (“the 1^st summons”) seeking:

(i)  extension of time to file the 2^nd supplemental list of documents which set out documents numbered 412-522.  Documents no. 509 to 520 were the uncontested documents; and

(ii)  (what now remains of a request for specific discovery) the audited financial statements of the 2^nd defendant for the years ended 31 December 2000 and 2001.

4. It is immediately apparent that the application for filing a 2^nd supplemental list of documents was not just for an extension of time.  Save in relation to the uncontested documents, the 1^st summons was opposed.

5. At the hearing of the 1^st summons on 13 April 2012, a different counsel, Mr Wu, appeared for the plaintiff.  Mr Wu frankly admitted that it was due to change of counsel that new points were considered and further discovery was needed.  Noting that a party had a continuing obligation on discovery, I asked him how it was intended to use the new documents, whereupon he said that it would be necessary to serve a further witness statement.  The 1^st summons was then adjourned for the plaintiff to produce a draft supplemental witness statement for consideration.

6. Ten days later, on 23 April, the plaintiff filed a summons seeking to serve a supplemental witness statement (“the 2^nd summons”). This time the number of documents were extended from 520 to 540.  Again this is opposed.  The total number of contested documents was accordingly increased to 117 items (“the contested documents”).

Plaintiff’s management of his case

7. At the CMCs, the plaintiff confirmed that there was no further interlocutory application necessary.  The defendants’ witness statements were filed 17 months before the 1^st Summons.  The plaintiff has failed to make use of the PTR to get his house in order.  Credit should be given to Mr Wu for being fair in not waiting until cross-examination to show his hands but to prepare a supplemental witness statement to avoid surprise.  However, that should be done well ahead of time, latest when the 1^st summons was taken out. As it turned out, the plaintiff took another 10 days to issue the 2^nd summons.  Such being the way the plaintiff conducts his case, he deserves no leniency from the court.  His late application should therefore not be entertained as a matter of principle.

8. I have nevertheless considered the relevance of the new evidence sought to be adduced.

Relevance of the contested documents

9. Broadly speaking, the contested documents from the plaintiff’s side fall into 3 categories:-

(i)  Financial transactions regarding the plaintiff’s employment and investment in a company called Transmarine;

(ii)  Various emails dating far back to 2001 to 2006;

(iii)  Documents in relation to a separate company called Top Brilliant Technology Ltd (“TBT”).

10. The contested documents are relevant not to a particular issue but to credibility generally.  Category (i) is background information.

11. With regard to category (ii), some emails were in existence 11 years ago.  Some of them emanated from the 1^st defendant or were cc to him.  One is not clear whether the defendants are still in possession of emails at that time.  Moreover, it is wholly unfair to the defendants to have to divert their attention at this late stage to study the emails in 2001 to 2006 for the context of the emails now produced by the plaintiff and answer the plaintiff’s supplemental witness statement instead of focusing on preparation for the trial.

12. With regard to category (iii), the original statement of claim had pleaded that the 1^st defendant set up TBT to compete with the plaintiff.  That plea has been deleted in the amended statement of claim.  The plaintiff is not at liberty to produce documents re TBT under the pretext that it is relevant to credibility when there is no issue on TBT.

Relevance of the supplemental witness statement

13. The present action concerns a break up in the business relationship between the plaintiff and the 1^st defendant such that it was agreed that the plaintiff would take up a factory in consideration of the plaintiff forgoing his interest in the 2^nd defendant.  It led to signing of the Head of Agreement in 2004 between the plaintiff and the 2^nd defendant.  The plaintiff alleges that he had an oral agreement with the 1^st defendant whereby the latter would cause the 2^nd defendant to transfer the factory with the benefit of a license to the factory to continue manufacturing CCFL Products and making use of CCFL Patents.  The defendants dispute the existence of this oral agreement. The plaintiff also alleges that, in breach of the Head of Agreement, the 2^nd defendant purported to insert unreasonable clauses in the share transfer agreement and license agreement.  The issues are whether the oral agreement existed and who was in breach of the Head of Agreement. Credibility is important.

14. The supplemental witness statement seeks to rebut the 2 witness statements from the defendants.  I am told by Mr Wu that the supplemental witness statement has purported to refer to all the contested documents.  I am also told that the supplemental witness statement deals not with particular issues but credibility and gives background information.

15. Specifically, there is an allegation as to misappropriation of the 2^nd defendant’s funds by the 1^st defendant in 2000.  It was referred to in paragraphs 16-18 of the plaintiff’s previous witness statement.  The new evidence largely repeats what was in paragraphs 16-18 but exhibiting various emails to persons whom the plaintiff had notified of the misappropriation and showing that those persons demanded for full audit.  The misappropriation was not pleaded.  I have alluded to the unfairness of having the defendants plough through years of email in order to answer this allegation which formed only background information as to why there was a breakup in relationship.

16. Mr Wu submits that the part of the supplemental witness statement that deals with TBT is relevant to the issue of whether the plaintiff should be given the license to sell products in North America, including USA, after the Head of Agreement was entered into.  The defendants say that in 2003, there was an agreement with Literonics restricting the 2^nd defendant from granting the license to the plaintiff.  In fact, at the time the parties entered into the Head of Agreement, the 2^nd defendant had a new agreement with Literonics which would have given it the authority to grant the license to the plaintiff.  The defendants later set up TBT to compete with the plaintiff.  However, there is no plea on, eg misrepresentation or breach of fiduciary/partnership duty.  The plea in relation to TBT has been abandoned and it is not permissible for the plaintiff to revive it through his new witness statement.

The request for specific discovery

17. The request for audited financial statements is related to the allegation of misappropriation of funds by the 1^st defendant.  Since I do not permit the plaintiff to adduce the supplemental witness statement, it is not necessary to order the defendants to produce these documents.

Conclusion

18. The plaintiff is late in his applications and change of counsel does not afford a good explanation.  Even considering the supplemental witness statement and contested documents, one can hardly see any relevance to a particular issue in the present case.  Accordingly, the defendants’ attention should not be diverted from their preparation for trial and be put to the expenses and effort of answering the new evidence.  I dismiss both summonses.

19. I thank counsel for their assistance.