TOYOTA TSUSHO (H.K.) CORPORATION LTD v. CHIMEI INNOLUX CORPORATION AND ANOTHER

HCA 1173/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1173 OF 2011

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DECISION

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1.  This is a late application of the 1^st defendant by its summons dated 13 February 2015 (“the Summons”) for leave to adduce a witness statement of a new witness, namely, Ms Kristen Tsai, and to make further discovery by way of its 2^nd supplemental list of documents (“the List”). The plaintiff opposes this application save that certain documents included in the List are uncontroversial.

2.  The trial of this action will commence shortly (4 March 2015) and has been set down for 13 days.

3.  The parties have no argument about the applicable general principles relating to late discovery and inclusion of new witness evidence. I see little point setting them out here. Both Mr Yu, counsel for the 1^st defendant and Mr Chong together with Ms Wong, counsel for the plaintiff, helpfully refer to me some relevant authorities such as Hong Lok School v Chow Sai Yiu [2003] 2 HKLRD 782 and 成都中泰交通建設發展有限公司 v Neo-China Land Group, unreported, HCA 2196/2009, 7.1.2013. Suffice it to say, I accept Mr Chong’s submission that this court has to embark on a balancing exercise having particular regard to the reason for lateness (if any), the relevance and necessity of the new evidence to be adduced and any prejudice that the other side would suffer if such new evidence is to be allowed to be included. Certainly all these matters have to be considered in light of the specific circumstances of this case.

4.  Ms Tsai’s proposed witness statement is attached to the Summons. It is a 6-page Chinese document and it basically covers three main areas. She has been an in-house legal counsel of the 1^st defendant since May 2012.  She first explains the merger taking place in March 2010 resulting in the birth of the 1^st defendant. This matter is not in dispute. Mr Chong contends that the merger has already been brought up by another defence witness and so there is no need for Ms Tsai to repeat the same information. He relies on Parsad v Great Wealthy Engineering Co Ltd [2012] 3 HKLRD 705, §8 where Bharwaney J pointed out that the Court would be less inclined to accede to late applications where additional witness statements are produced that speak of the same facts that have already been mentioned by other witnesses whose witness statements have been served previously. 

5.  Ms Tsai’s explanation of the merger is made only by way of an introductory remark in her witness statement and this fact is actually common ground. I am not inclined to exclude the same.

Control Samples

6.  In the centre of the present debate is the proposed evidence of Ms Tsai relating to her submission of the two control samples of the signatures of Mr Fred Tsai.

7.  For the purpose of this Decision, it suffices to go straight to the core complaint of the plaintiff without setting out the entire background facts of this action. The plaintiff’s major allegation is that it was deceived by fraud and/or the fraudulent misrepresentation on the part of the 1^st defendant by way of, among other things, some documents which bore the signatures of Mr Fred Tsai. As a result, the 1^st defendant obtained US$2,499,319 from the plaintiff.

8.  The 1^st defendant raises the authenticity issue relating to such signatures of Mr Fred Tsai appearing on those documents. There are altogether 9 questioned signatures and to resolve the authenticity issues, leave was given to the parties to adduce expert evidence.

9.  The plaintiff engages Mr Sperry and the 1^st defendant commissions Mr Leung. Both experts examined the 9 questioned signatures and further examined 10 control samples of Mr Fred Tsai’s signatures (“the Control Samples”). In his first expert report dated 6 January 2015, served on the 1^st Defendant on 16 January 2015, Mr Sperry states that one or more of the Control Samples may have been altered on the basis that they were mere copies produced by cut and paste.

10.  In the Joint Expert Report dated 9 February 2015, the allegation became even clearer when Mr Sperry makes it clear that ‘cut-and-paste’ can be indicative of forgery in his experience and control writings could belong to an imposter too so as to sway the outcome of the laboratory examination.  

11.  Mr Yu submits that this assertion in the Joint Expert Report amounts to a serious allegation of forgery in regard to two of the Control Samples and prompted the 1^st defendant to make this application to adduce the evidence of Ms Tsai so as to explain how the Control Samples were selected and submitted to the parties’ experts for their examination.

12.  Mr Chong submits that the issue of authenticity relating to the two Control Samples was raised by Mr Sperry in his expert report and so the 1^st defendant is already about one month late in response.

13.  Next, Mr Chong complains that the evidence of Ms Tsai is of no probative value since she personally does not have the sight of the original signatures of Mr Fred Tsai which were subsequently copied to become the two Control Samples. She merely obtained the ‘cut-and-paste’ versions from the computer server. In other words, her evidence cannot rebut the allegation that the original copies had been doctored and were not the genuine signatures of Mr Fred Tsai.

14.  Mr Yu explains that the initial response of Mr Leung to the allegation of forgery in Mr Sperry’s expert report on the basis that the two Control Samples were mere ‘cut-and-paste’ is that it can be explained by way of his expert opinion at trial. When in the Joint Expert Report, Mr Sperry makes it clear that the two Control Samples could be the writing of an imposter, the 1^st defendant finds it necessary to deal with this serious allegation by this late application to adduce the evidence of Ms Tsai. I accept his explanation. In any event, I do not accept there is any culpable delay on the part of the 1^st defendant.

15.  Further, I do not agree that the evidence of Ms Tsai to prove the chain of evidence leading to the submission of the two Control Samples is of no probative value. I need to say no more than this before the conclusion of all the evidence at trial. In my view, her evidence is clearly relevant and Mr Chong does not argue otherwise.

16.  The allegation of forgery of the two Control Samples is grave and may lead to criminal liability. The 1^st defendant will be seriously prejudiced, and it cannot be just, if it is not allowed to respond to this late allegation at all.

17.  Further, as rightly pointed out by Mr Yu, section 17 of the Evidence Ordinance requires the proof of the authenticity of a control sample to the satisfaction of the Court before any comparison between the questioned sample and the control sample can be made. Since the plaintiff raises the challenge to the authenticity of the two Control Samples, this court must require proof of their authenticity. Ms Tsai’s evidence should be received in this regard.

18.  On the other hand, I am satisfied that the plaintiff should be able to handle the evidence of Ms Tsai without further investigation and the length of the trial would not be increased significantly.

19.  In the premises, I agree that insofar as those parts relating to the authenticity issue of the two Control Samples in the proposed witness statement of Ms Tsai are concerned, they should be allowed to be adduced.

Company Chop

20.  Lastly, I come to deal with the controversy about the purported company chop appearing in two commercial documents. The plaintiff’s case is that pursuant to these commercial documents of the 1^st defendant, a contractual relationship between the plaintiff and the 1^st defendant was formed. In its original defence filed in January 2012, the 1^st defendant denies the authenticity of these commercial documents and avers that they are merely forged documents made by the 2^nd defendant. In particular, the 1^st defendant avers that the company chop stamped in those two documents does not belong to the 1^st defendant.

21.  Now, Ms Tsai seeks to explain what the company chop genuinely used by the 1^st defendant was at the material time (in and before 2010). Certain documents bearing the said company chops are sought to be disclosed by way of the List. Mr Yu explains that it has only recently dawned on the 1^st defendant that it should produce its company chop used at the material time rather than its current company chop so as to prove the fakeness of the company chop appearing in the said two commercial documents.  

22.  Mr Chong submits that the said two commercial documents came into being long before the commencement of Ms Tsai’s employment with the 1^st defendant and so her evidence is just hearsay and of low probate value.

23.  Ms Tsai assumes a responsible position of the 1^st defendant and I find nothing untoward about her production of the obsolete company chop of the 1^st defendant. It must come from the 1^st defendant and the fact that she herself did not use it herself would not really undermine the value of such evidence.  

24.  However, I do not accept that there is a valid explanation for the lateness of such evidence. The 1^st defendant raised the challenge long time ago in its original defence and it is far too late to make good the omission now. Furthermore, in the balancing exercise, I am not persuaded that its relevance and probative value can sufficiently overcome the lateness issue. Lastly, the plaintiff would be prejudiced at trial if it is not afforded sufficient opportunity to carry out further investigation into the alleged use of the said company chop by the 1^st defendant in 2010 and 2011.

25.  In the circumstances, I disallow those parts of Ms Tsai’s evidence relating to the said company chop in paragraphs 17-20. These paragraphs have to be expunged before her proposed witness statement can be adduced as evidence.

26.  For the same reason, I disallow the inclusion of Items 69 to 72 in the List. Other than that, I allow the same to be filed and service of the same be dispensed with.

Conclusion and Order

27.  For the reasons given above, I accede to the application of the 1^st defendant save the foregoing exclusions have to be made in both the proposed witness statements of Ms Tsai and the List.

28.  As regards costs, the 1^st defendant in the Summons agrees to pay the costs of the plaintiff of this application. Mr Yu confirms that this is the position of the 1^st defendant on the basis that it asks for the indulgence of this court. Mr Chong agrees this proposal. Accordingly, I order that the 1^st defendant do pay the plaintiff’s costs of this application, to be taxed if not agreed.

29.  It remains for me to thank Mr Yu and Mr Chong (and Ms Wong) for their succinct and helpful submission.