ESQUIRE (ELECTRONICS) LTD v. THE HONG KONG AND SHANGHAI BANKING CORPORATION LTD AND ANOTHER

HCA11077/1994

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.11077 OF 1994

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J U D G M E N T

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1. This case has been troubling the court over some time and I have been case managing it for a number of years. What I have before me today are some additional disputes between the parties, some of them quite substantial and we are really only two weeks away from the trial. What started off as three disputes : one in relation to pleadings; one in relation to the witness statement, and one in relation to split trial has now been resolved into two disputes : one in relation to pleadings and the other in relation to the spilt trial.

2. So far as the pleading is concerned, I have an application before me by the defendants to further further amend (it has already gone through so many stages of amendment), to bring in two important points : one is in relation to what has been called the $30 million amendment and the other is in relation to laches, a plea of defence of laches.

3. It has been said firstly in relation to the $30 million point amendment that it is really an elaboration of the $30 million issue existing already in the pleadings. What is on the pleadings is an allegation by the plaintiff that there was an overcharge by the bank way back of some $30 million and the bank denies it. So this is a dispute basically whereby the plaintiff has to prove its case. The bank now seeks to rely on in its new form of pleadings three additional material facts to say why there has been no $30 million overcharge and that can be seen in proposed paragraph 6(ii) under (a), (b), (c), (d), (e) and (f). Mr Shum for the plaintiffs says that if one looks carefully at paragraphs (c), (d) and (f), they are three new matters, positive assertions relied on by the bank to say that there was no $30 million overcharge.

4. The plaintiff says that the proposed amendment defence is a new assertion of the defendants' case of the $30 million overchange. This matter has been ongoing for a long time. The $30 million amendment that is now sought to be relied upon could have been made, pleaded and supported by appropriate witness statements a long time ago this was obviously not done. We are now at the door of the trial, the question is : should I allow the amendment to be made at this late stage? I am, of course, aware of all the old authorities on amendment and how the court took the liberal view of allowing amendments. I suspect the modern approach has somewhat changed from the old law but, in any event, having regard to my case management duties, it seems to me that it would be quite wrong at this late stage and in all circumstances to allow this amendment to be made. Inevitably it would result in further pleadings from the plaintiff and I believe that there would be additional witness statements required from the plaintiff touching on these new points.

5. Mr Fok for the defendants said to me that the implication of this refusal could be very serious because there could be implication of his conduct of the trial in cross-examination and how his hand may be tied. We will just have to cross the bridge when we come to the point and I will hear parties on any objection to cross-examination if there should be any and I think it is premature to anticipate how we are going to go about the trial. But I rule that in relation to the $30 million amendment under paragraph 6(ii) that it should not be allowed.

6. In relation to the proposed laches defence, this is a defence amendment that has a somewhat unfortunate and tortured history because there was a form of a proposed amendment relying on laches two years ago but, unfortunately, there was no application thereafter made until today to rely on laches. It is a substantial defence which will require amendment to pleadings as well as further witness statement. It would have a tremendous impact on the trial I think in all the circumstances it is really too late in the day for this laches amendment to be allowed. So in my judgment, the application for the amendment on those two matters must be disallowed.

7. So far as the spilt trial is concerned that was first raised by me at the last hearing in December 2003 because I took the view that we have so much on our plate and that it may be sensible to split the trial into two parts the first part dealing with liability and the second part dealing with quantum. I have heard the submission of Mr Fok about the implication of the winding-up of the company and the statutory provision in relation to set off that would be applicable and there is also discussion about to what extent it need to be pleaded, the implication of it not being pleaded and also the proof of debt of the $200 million odd and to what extent it may be reduced if challenged.

8. It seems to me that having regard to the overall complexity of this case and the special unique feature of this case with the substantial claim of the defendants in the winding-up that it would be sensible to spilt the trial into two parts. There will be considerable savings in cost if the plaintiff should either fail to succeed in total or fail to succeed in any part of its various causes of action they may all have an impact on the quantum.

9. It seems to me therefore that notwithstanding what Mr Shum says as to the normal rule about the trial going forward covering both liability and quantum, I should spilt and hive off the trial of quantum from the trial of liability. So I order that the trial starting in February would be limited to liability only.

10. I will now hear the parties as to the costs of this hearing.