BEIJING HANTONG YUZHI CONVENTION CENTRE LIMITED v. LAO YUAN YI

HCA 1208/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1208 OF 2010

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D E C I S I O N

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1.  The parties are unable to agree on whether or not Mainland law experts should undergo cross-examination at the trial.

2.  The facts of this case have been set out in my decision dated 1 February 2013.  There will be a trial on a preliminary issue as to whether or not the plaintiff has the locus standi to sue, for which expert evidence is required.  Each party’s expert has prepared 2 reports and they have produced 2 joint statements.  The plaintiff seeks to cross-examine the defendant’s expert on various issues.

The principles

3.  A party’s right to cross-examine witnesses should not be lightly taken away.  Accordingly, whilst Order 35 gives power to the court to give directions, before trial, to limit the time to be taken in cross-examining a witness, the court must not detract from the principles, amongst others, that each party is entitled to a fair trial and must be given a reasonable opportunity to lead evidence and cross-examine witnesses: Order 35, rules 3A(1)(a), 2(b) and 2(c).

4.  In exercise of its case management powers, whether before or during a trial, the court can deter a party from wasting time on useless cross-examination.  This power must, of course, be exercised judiciously and in clear cases.

5.  Not every case involving expert evidence justifies cross-examination.  In Wynn Resorts v Mong Henry, HCA192/2009, 12 February 2010, Chu J (as she then was), the core issue was the construction of an Article in Ordinance No. 5/2004 of Macau.  There was as yet no conclusive or binding interpretation of the general scope and particular meaning of that Article: para 31 of the judgment. In dealing with an application for summary judgment, Chu J was of the opinion that it was for the court to come to a view as to whether the Article covered the credit agreement in issue in that case.  The court held that it was in as good a position as it would be at trial to decide on the dispute between the parties without the need for cross-examination of the experts.

6.  Mr Chiu acting for the plaintiff relies on various authorities in support of the plaintiff’s application.  They establish the principle that a judge ought to give a reasoned judgment.  Where there are disputes as to expert evidence, the judge has a duty to resolve the dispute with adequate reasons.  See Welltus Ltd v Fornton Knitting Co Ltd, CACV268/2011, 14 March 2013, para 19-23, following the English Court of Appeal in English v Emery Reimbold & Strick Ltd [2002] 1 WLR 2409; Flannery & anr v Halifax Estate Agencies Ltd [2000] 1 WLR 377.

7.  These are perfectly sound principles but, without disrespect, they are not relevant to the plaintiff’s application.  The decision of Chu J in Welltus illustrates the relevant principles.

Application of the principles

8.  The present case concerns Mainland law.  I have perused the various expert reports.  Many legal provisions and legal literature have been referred to, the applicability of some of which is in dispute. Ultimately it is a question of interpretation by the court as to which legal provision with the relevant judicial interpretation by the Mainland court that will apply to the present case.  The experts have been given ample opportunity to state their views, highlight their differences and state their reasons.  It is quite different from the situation where, eg 2 surveyors hold different views as to the source of leakage from premises or 2 medical experts give different diagnoses, when it will be essential to have the experts attend for cross-examination to resolve the differences.

9.  In addition, I agree with Mr Shiu for the defendant that specific points on which cross-examination of the defendant’s expert is allegedly required are not matters for cross-examination of experts.  I set out the questions which the plaintiff seeks cross-examination and my views below:

(i)     Question 1: the basis for the defendant expert’s assertion that various procedures had not been performed by the winding up committee of VTI China.  The rules did not specify that such procedures, if carried out, had to be made public.  The defendant has failed to answer the distinction drawn by the plaintiff’s expert between “administrative rules and regulations” (管理性行政法規) and “legal effect rules and regulations” (效力性行政法規).

         This is not the plaintiff’s case.  The plaintiff’s case is that such procedures only govern non-financial state-owned enterprises but not a financial enterprise like VTI China.  It is also not the plaintiff’s case that it had duly complied with these procedures.  The rest of the question is a matter of interpretation of Mainland law already referred to in the expert reports.  Question 1 does not require cross-examination of the defendant’s expert.

(ii)     Question 2: the relevance of a particular regulation and whether it had retrospective effect on a transaction. 

          Each party has asserted a different date on which the sale and purchase agreement took effect, one before the regulation took effect and one after. This is an issue of fact.  The issue of whether or not a legal provision had retrospective effect does not even arise, as neither expert ever assert that it does. 

(iii)    Questions 3 and 4: why certain legislative provisions apply to the present case. 

         This is a matter for submission.

(iv)    Questions 5 and 6: who would be entitled to commence legal proceedings in certain situations and where no such entity can be found, whether the plaintiff as 清算責任人or shareholder or beneficial owner of the shares of VTI Shanghai would have been accepted by the Chinese court as the appropriate party to commence proceedings. The plaintiff also wants to cross-examine on the distinction between 出資人和股東and 出資額和股權. 

          These are matters that have been canvassed in the reports.  The question is for the court to answer having regard to the legal provisions and literature laid before it.

10.  I can see no ground for allowing cross-examination of experts in this case.  The plaintiff’s application is dismissed. 

Other matters

11.  The rest of the directions are not in dispute and I shall make an order in terms.  However, there has been breach of previous directions.  By the order dated 1 February 2013, I have directed the parties to provided a joint memorandum for any further directions needed for trial of the preliminary issues.  The parties failed to comply with this but sent in pages of correspondence to the court to argue on those directions.  In fact what was required was that the joint memorandum should set out succinctly in the form of a checklist all matters that require directions on, stating the respective proposal of each party where there is dispute, eg “there be lodging of trial bundles 14 days (P’s proposal) / 28 days (D’s proposal) before trial”, etc.  For failure to comply, I am minded to disallow all costs arising therefrom, save as to the issue of cross-examination of experts.

12.  I direct as follows:

(i)      Time for setting down for trial of preliminary issue be extended to 14 May 2013.

(ii)     Two days be reserved for the trial.

(iii)    A pre-trial review is to be fixed 4 weeks before trial of the preliminary issue.  A joint memorandum of outstanding matters is to be lodged with the court at least 7 days before the pre-trial review.  The court may give paper directions and dispense with an oral hearing.

(v)     Bundles used for the hearing on 22 January 2013 are to be updated by the plaintiff, served and lodged with the court at least 42 days before trial.

(vi)    There be double sided printing for updating documents, submissions and authorities.

(vii)    On a nisi basis, there will be no order as to costs save that costs of the hearing concerning cross-examination of experts be to the defendant to be summarily assessed on 21 May 2013 at 3 pm on the papers without attendance.  The defendant shall file and serve his statement of costs by 14 May 2013.  The plaintiff shall file and serve its grounds in opposition by 20 May 2013.

13.  I thank Mr Chin and Mr Shiu for their assistance.