HONG KONG TOY CENTRE LTD. AND ANOTHER v. CHAN KAN KWONG MARGARET AND OTHERS

HCA9971/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 9971 OF 1998

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REASONS FOR DECISION

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This action came before me for trial with 14 days reserved. However, from day one, I was advised by Mr. Bleach, leading counsel for the Plaintiffs, that it will take at least double the time originally allocated to run the trial. This is further complicated by applications to amend the Statement of Claim out of time and to allow two late hearsay notices to stand. Miss Eu, leading counsel for the Defendants, on the other hand believed that trial should not grossly over-run but she objects to the twelveth hour amendment of the Statement of Claim and to one of the late hearsay notices.

2. Since one of the late hearsay notices, what may be conveniently called the Oral Hearsay Notice, was sorted out by consent, I only had to consider the other hearsay notice - the Computer Hearsay Notice and the proposed amendments to the Statement of Claim.

The Computer Hearsay Notice

3. The Computer Hearsay Notice covers an assortment of materials produced by computer. These materials occupy three medium sized lever-arch files. Mr. Bleach said quite frankly that it was an oversight on the part of Plaintiffs in not serving the Computer Hearsay Notice earlier.

4. True to form, Miss Eu for the Defendants argued very persuasively that a large chunk of the computer materials is either of little probitive value or questionable. Although I was inclined to agree with her, Mr. Bleach on the other hand referred me to the case of Technalloy Chemical Corp v. International Merona Ltd. [1993] 2 HKC 94. There our Court of Appeal held that in deciding whether to allow the plaintiff to adduce hearsay evidence by late notice, the court ought not to have any regard to the weight of the evidence nor, at least as a general rule, to whether any part of the evidence might be inadmissible as hearsay or on any other ground. Since there is no suggestion that the grounds for introducing the hearsay evidence, viz. the individuals concerned are either beyond the seas or cannot reasonably be expected to recall details, are untenable, I could not see how in the circumstances the evidence can be ruled out. The Computer Hearsay Notice was accordingly allowed to stand.

Amendments to the Statement of Claim

5. The massive technical details involved are meaningless except to the trial judge who will no doubt know in due course. Hence I shall not even attempt to summarize them. Mr. Bleach submitted that the proposed amendments do not add any new cause of action. They do, counsel conceded, multiply by quantum leaps the amount of details and factual issues. Frankly too, the proposed amendments were late in the day but any resulting prejudice can be compensated for by costs and additional security for costs.

6. Miss Eu objected most vigorously to all the amendments. She said that there was inexcusable delay. Indeed I thought the delay can only be explained by change of leading counsel for the Plaintiffs. Miss Eu also complained that the amendments added vast quantities of details and factual issues which the Defendants cannot possibly be expected to deal with in a matter of days. Indeed, it will be seen that the Defendants required Further and Better Particulars of the proposed Amended Statement of Claim and upto four weeks after getting them to settle an Amended Defence. In other words, the Defendants having a formidable team of lawyers are able to deal with the proposed amendments to the Statement of Claim; it was a matter of time, extra costs and postponement of trial which would have to be compensated for.

7. Counsel for the Defendants also had very powerful arguments on some ambivalent features in the proposed Amended Statement of Claim. For instance, it emerged during submissions by Mr. Bleach that the Plaintiffs' case is only concerned with the so-called "regular items" - types of goods or products which a customer had previously placed order with the Plaintiffs but the customer is now ordering from the Fourth Defendant. If transpired that there can be different classes of regular items. Unless the Plaintiffs make it clear in the Amended Statement of Claim which class or classes of "regular items" are really in question the Defendants cannot possibly plead or prepare their defence. For another instance, the Plaintiffs pray for damages for loss. But the particulars given in the proposed Amended Statement of Claim do not identify how loss can be calculated.

8. I was minded at one stage to disallow the questionable parts in the proposed amendment. However, the team of lawyers for the Plaintiffs led by Mr. Bleach took heed of the criticisms and immediately modified the proposed amendments. I do not think Miss Eu is entirely happy with the "final" version of the proposed Amended Statement of Claim. I am not either. To say the least, I think the Amended Statement of Claim introduced far too many details which may very well turn out to be irrelevant. Mr. Bleach seemed to acknowledge that too; but he indicated, cautiously, that the parties will make use of the time from now to the re-fixed trial to pick out the real bones of contention so that the re-fixed trial will be kept within manageable scale. I believed it was in the Plaintiffs' interest to keep costs down and they would be anxious to do so. On that basis, and on the basis that the Defendants would be compensated for by costs thrown away by adjournment of trial, the Plaintiffs should be allowed to mount its desired case with latitude.

9. I had not forgotten the point made by Miss Eu for the Defendants that the Defendants were entitled to their day in court as scheduled. However, the principles governing amendments are well-known and set out in Supreme Court Practice (1999) 20/8/6. In particular:-

(1) Generally all such amendments ought to be made "for the purpose of determining the real question in controversy between the parties to any proceedings or of correcting any defect or error in any proceedings": per Jenkins LJ in GL Baker Ltd v Medway Building & Supplies Ltd. [1958] 1 WLR 1216 at 1231

(2) "However negligent or careless may have been the first omission, and however late the proposed amendment, the amendment should be allowed if it can be made without injustice to the other side. There is no injustice if the other side can be compensated by costs.": per Brett MR in Clarapede v Commercial Union Association (1883) 32 WR 262 at 263.

One has to balance the interests of justice. It is not in the interest of justice to forge ahead with a trial when the real issues and the totally of issues cannot be fully and fairly canvassed.

10. In the premises, the Plaintiffs were allowed to amend their Statement of Claim in terms approved.

Costs

11. It was properly conceded that the Plaintiffs should bear the costs thrown away by adjournment of the trial. Miss Eu, however, contended that the Plaintiffs should pay all the Defendants' costs incurred up to date and that costs thrown away by adjournment of the trial should be taxed on indemnify basis if not agreed.

12. In the Supreme Court Practice (1999) 20/8/12, it is stated that

"Where the amendment asked for is a substantial one , such that the Plaintiff could not succeed without it, he will in a proper case be only allowed to amend at the trial on payment of all costs incurred up to date, and any costs thrown away by reason of the amendment."

Indeed the amendments in this case are substantial but not so fundamental such that the Plaintiffs cannot succeed without them. In any event, I thought the basic rule of costs to follow the event would do justice on the question of costs generally; if the Plaintiffs do not come up to proof of the amendments or if the amendments do not really assist the Plaintiffs' cause, the Defendants will get order for costs of the action in due course. Hence, I did not see fit to order payment of all costs incurred up to date.

13. Regarding costs thrown away to be paid on indemnity basis, Miss Eu suggested that that would be the only way by which the Defendants may be compensated for adjournment of the trial. My attention was drawn to the case of Sung Fook Kee Ltd v. Pak Lik Co. [1996] 3 HKC 570 where the Court of Appeal held that Hong Kong judges have discretionary power to direct taxation of costs on the basis they consider appropriate, including indemnity basis. This is not a discretion fettered by indications in previous cases as to the sort of special or unusual features which could justify an award of indemnity costs. When judges consider it appropriate, they should not be slow to make orders for costs to be taxed on an indemnity basis. In the instant case, I was moved by the facts that (1) the Plaintiffs had executed an Anton-Pillar order and seized all the Defendants' documents they considered relevant in the middle of 1998, (2) the Plaintiffs have also at all times been in possession of all their own documents, and (3) the Plaintiffs made no indication to the Court or to the Defendants until less than two weeks before trial that they would throw in massive factual issues. Moreover, I would have thought that as a general rule, the obligation to compensate costs thrown away should be real rather than notional. In the premises, I ordered the Plaintiffs to bear the Defendants' costs for the applications for late hearsay notices and amendment of the Statement of Claim on party and party basis and to pay forthwith the Defendants' costs thrown away by adjournment of the trial to be taxed on indemnity basis if not agreed.