NG LEUNG MING t/a MING KEE ENG CONSTRUCTION CO v. HANKI CONTRACTORS (HONG KONG) & ASSOCIATES LTD

HCA 295/2020

[2023] HKCFI 1071

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 295 OF 2020

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R E A S O N S    F O R    D E C I S I O N

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1.  This is an application at a pre-trial review for leave to adduce new evidence.

A.  Undisputed Facts

2.  The Plaintiff was and is a sole proprietor running a business of construction works and the Defendant was and is a limited company incorporated under Hong Kong laws carrying out a business as a contractor of construction works.

3.  In 2017, the Defendant was engaged to perform construction works on a site known as Lot 70, Tsing Lung Tau (the “Site”).

4.  By a written subcontract agreement signed by the Defendant and Homeland Civil Engineering Company (“Homeland”) in 2017, the Defendant subcontracted the entire works to Homeland (the “Subcontract”) and subsequently, Homeland subcontracted some of the Works to the Plaintiff.

5.  In early April 2019, with the Works not yet fully completed, the Defendant terminated the Subcontract and asked Homeland to exit the Site.

6.  In broad terms, the Plaintiff brings two heads of claims against the Defendant. The first head of claim relates to construction fees allegedly unpaid by Homeland for the Plaintiff’s performance prior to April 2019. The second head of claim relates to the Plaintiff’s alleged performance of work after April 2019.

7.  In respect of works prior to April 2019, the Plaintiff’s case is that one Mr Alfred Wong (“Mr Wong”), acting on behalf of the Defendant, entered into a tripartite written agreement dated 4 April 2019 (“Agreement”) with the Plaintiff and Homeland. By the Agreement, the Defendant allegedly agreed to pay HK$2,702,702 to the Plaintiff for outstanding unpaid invoices owed to the Plaintiff by Homeland.

8.  The Defendant denies and asserts that the agreement was to keep the Plaintiff on the site to complete outstanding works and that the defendant will pay the Plaintiff to finish all outstanding works on similar terms as agreed between Homeland and the Plaintiff in their contract. However, the Defendant would not pay for the Plaintiff’s completed works which the Plaintiff had already invoiced to Homeland.

9.  The Defendant further asserts that Mr Wong was an independent engineer hired by the Defendant to manage the Site and to complete the works after ousting Homeland. No authority had been given to Mr Wong to enter into contracts with external parties on behalf of the Defendant, as a result of discussions prior to April 2019.

10.  According to the Defendant, the Plaintiff had knowledge that only Mr Ng Kwok Hei and Ms Ling Kin Ying (the directors and members of the Defendant) could cause the Defendant to enter into contracts and that Mr Wong had no authority to act for the Defendant. The Agreement was fake and/or doctored and the Plaintiff gained illegal access to the stamps of the Defendant.

11.  The Defendant had already paid Homeland for construction works completed prior to April 2019 and it was irrational to allege that it had agreed to make a double payment to the Plaintiff (“double payment argument”).

12.  The Defendant only offered to pay the Plaintiff on similar terms as the contract between Homeland and the Plaintiff for them to stay at the Site to complete the remaining tasks of the Works.

13.  In respect of works subsequent to April 2019, the Plaintiff was directly instructed by the Defendant. There is dispute as to what those instructions were that were carried out by the Plaintiffs and the value of those works.

14.  The trial is to take place on 24 to 28 July 2023. This hearing was for pre-trial review.

B.  The Summons

15.  Before me was a summons taken out by the Defendant on 29 March 2023 for leave to file (i) a 2^nd supplemental list of documents containing 3 items; and (ii) a supplemental witness statement of Ng Kwok Hei (“Ng-WS”).

16.  The Plaintiff had agreed to 2 of the 3 items, ie photos of the site and a copy of the Subcontract. The disputed item was the undated internal records of the Defendant. Ng‑SWS was to explain the internal records which showed that the Defendant had paid Homeland HK$23.9 million, about 90% of the Subcontract price, and hence support the double payment argument.

17.  After hearing the parties, I gave leave to the Defendant to file a 2^nd supplemental list of documents as regards the 2 non-contested items but dismissed the rest of the summons. Here are my reasons.

18.  There is no dispute that this was a late summons. Its scope was narrow and focused on one matter which was said to have flowed from the 2^nd supplemental witness statement of the Plaintiff (“P-SWS2”).

(1)  It was to support the double payment argument.

(2)  It was to contradict the Plaintiff’s evidence in §4(2) of P‑SWS2 that “from the Defendant’s perspective, [the Defendant’s] agreement that to bear the debts of Homeland had a hundred benefits and nil loss, because (1) he could smoothly take back the Site, (2) he had to pay such money anyway [ie the money owed to Homeland], but just that he paid me directly now. Therefore, I am not surprised by the Defendant’s agreement to bear the debts of Homeland.” It was the Defendant’s case that §4(2) meant that the Plaintiff knew that the Defendant owed Homeland money, when the converse was true. Ng‑SWS was to contradict the Plaintiff on this aspect.

C.  Legal Principles

19.  Late discovery of documents may be dismissed on the basis of delay alone: PD 5.2, §34.

20.  The applicant must provide a good and credible explanation, by way of affidavit, as to why the documents were not disclosed earlier. Absent such explanation, the application may be dismissed on the ground of lateness alone. The applicant must show that the document is relevant to the issues. He must state the provenance or identity of the maker of the document and indicate if he is available to attend court for cross‑examination or not and, if not, why not. It must be shown that no prejudice will be caused to the other side, and that the trial will not be disrupted or adjourned if the document were admitted. See Big Island Construction (HK) Ltd v Wu Yi Development Co Ltd, HCA 1957/2005, Reasons for Decision dated 22 February 2010, §§2-7.

21.  For the following reasons, I refused the application but only gave leave to the Defendant to file a supplemental list of documents containing the 2 non-contested items.

22.  Firstly, delay alone was prima facie enough to dismiss the application. The last timetabling questionnaire dated 5 August 2022 confirmed that there would be no further interlocutory applications. This application arose 7 months later due to the Defendant’s change of counsel and new advice given in February 2023. Delay and change of counsel have never been good reasons for granting leave to adduce new evidence.

23.  Secondly, the disputed evidence should have been adduced earlier. Mr Lam submitted that the Defendant was seeking to adduce evidence on an unpleaded issue. I disagree. In my view, it was more a matter of intention to show that the Defendant could not have agreed to enter into the Agreement to make a double payment to the Plaintiff. Accordingly, it should have been dealt with in the prior witness statements of the Defendant, supported by the disputed evidence which have always been available to the Defendant.

24.  Thirdly, the new evidence was self-serving, irrelevant or of little probative value. Whether the Defendant had paid Homeland 90% of the Subcontract fees was irrelevant. The issue surrounding the pre-April 2019 outstanding payments was whether or not Mr Wong had the authority (actual or apparent) of the Defendant to sign the Agreement.

25.  Fourthly, the source of the disputed documents was not clear. Contrary to the principle in Big Island, the Defendant had failed to state the provenance and the identity of the maker of the internal records, whether that maker would attend court for cross-examination and if not, why not.

26.  Fifthly, the disputed documents were not contemporaneous documents in existence at the time of the Agreement but only internal accounting records compiled for the purpose of litigation, even on the Defendant’s own case.

27.  Sixthly, the disputed documents were secondary evidence because the primary evidence, like bank statements, audited financial statements were not produced. The Defendant explained that audited financial statements would not break down the Defendant’s financial records by a particular contractor or project. The line items of the internal records had been marked with references to external documents and could be easily traceable. It would not make sense for the Defendant to adduce bundles of bank records or invoices instead of preparing a summary table for good organization. In my view, the fact that the Defendant had acted out of good faith to prepare the internal records to facilitate the Court and the Plaintiff’s understanding of the vast amount of payments made to Homeland was no answer to the secondary nature of the new evidence.

28.  The Defendant said that if the Plaintiff would like to have the supporting documents, the latter could seek discovery. With respect, that was putting the cart before the horse. The trial was heading near. It lay ill in the Defendant’s mouth to adduce evidence of dubious source and say that it was up to the Plaintiff to ask for more probative evidence. The Defendant’s own house was not in order.

29.  Seventhly, the fact that Homeland had not commenced any litigation against the Defendant (as pointed out by the Defendant) was equivocal. It was also consistent with the Plaintiff’s case that the Agreement had caused the Defendant to pay the Plaintiff as substitute in respect of amounts due, and owing by the Defendant to Homeland.

30.  Eighthly, needless to say, this late application prejudiced the Plaintiff. Even on the Defendant’s case, the Plaintiff would have to ask for the supporting documents for the internal records. Discovery would take time. It may derail the trial. Even 3 months before the trial, the Plaintiff’s attention should not be diverted from the preparation of the trial to contest a late interlocutory application. The further discovery may lengthen the trial as the Plaintiff would be entitled to challenge the authenticity of the internal records and cross-examine the maker.

31.  For the reasons given, I have therefore dismissed the summons as regards the disputed evidence.

32.  Ng-WS falls away for the same reasons. The costs of the summons should be borne by the Defendant with certificate for counsel. Due to failure of the Plaintiff’s solicitors to comply with PD 14.3, §8 to submit a costs statement together with counsel’s submission, I reduce the profit costs to mark the disapproval of the Court and the failure of the solicitors to attain the appropriate standard to justify the hourly rate. I summarily assess the costs at $55,000.