Lok Wai Yee v. Man Koon Hung

HCA 1181/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1181 OF 2014

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REASONS FOR DECISION
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I. INTRODUCTION

1.The plaintiff (“P”) and the defendant (“D”) were married on 23 September 2010. P petitioned for divorce in FCMC10210/2013 on 19 July 2013. A decree absolute was granted on 29 January 2014. At the material time, D was the sole shareholder/director of Ronis Project Management Limited (“Ronis”).

2.On 25 June 2014 (ie about 5 months after the decree absolute), P commenced the present action against D for the outstanding balance of various alleged loans granted to P in the total sum of $1,498,998.46 (but according to the written opening submissions of Ms Lau, counsel for P, it should be adjusted to $1,435,638.74) and further/alternatively damages with interest and cost. D denied such claim.

3.25 May 2016 was the day of trial (“Hearing”). On 19 May 2016, ie about a week before the Hearing, D filed a summons for leave to (a) amend his Defence in the manner shown in the draft annexed thereto (“Draft AD”), and (b) serve/adduce at trial his own witness statement as per the draft annexed thereto (“Draft Statement”) with costs to P (“Summons”). On the same day, D filed his own affirmation in support of the application (“D’s Aff”).

4.The Draft Statement (a) was not signed and/or verified by Statement of Truth, and (b) referred to 2 exhibits that were not annexed to the Summons. Despite the lateness of the application, it transpired that copies of the 2 exhibits were not even served on P’s solicitors (“P’s Solicitors”). Those copies were only served after office hours on the day before the Hearing at the request of P’s Solicitors.  Ms Lau complained that this development aggravated the already unsatisfactory situation wrought by the late Summons. Mr Cheung (and Mr Lam with him), counsel briefed only to deal with the Summons, submitted D would sign/verify his witness statement and serve the same with the exhibits if leave were granted by the court.

5.This flied in face of the guidance by Bharwaney J in Parsad v Great Wealthy Engineering Co Ltd in respect of late application to serve additional witness statements:[1]

“3. …… when the case has progressed to the stage where it has been or is ready to be set down for trial, a late application for leave to file additional witness statements will only be entertained if the signed witness statement containing a statement of truth is furnished to the [court] in order to enable the [court] to consider the admissibility of its contents, and their relevance and probative value, and to exercise [its] discretion, either to grant or to refuse leave to rely on the statement, after having regard to its admissibility, relevance, probative value and the underlying objectives of the Civil Justice Reform.”

6.Regrettably, D’s approach, which was akin to treating the Summons as an interlocutory application in the ordinary course of litigation, was wholly inappropriate for a late application made a few days before trial for indulgence to file/serve and rely on fresh witness statement. In such circumstances, the applicant (D in this case) should be anxious to produce the fullness of the material sought to be adduced for consideration by the other side and by the court rather than keep some material up his sleeve in the hope that if indulgence is granted the undisclosed material will be presented. Given the rationale explained in Parsad, ie that the witness should confirm/verify the fullness of the witness statement to be adduced, it must be apposite that the exhibits should be properly annexed to the witness statement for the witness to confirm/verify the fullness of such statement.

7.When this was pointed out to Mr Cheung, he asked for the Hearing to be stood down for remedial action to be taken. When the Hearing resumed, Mr Cheung handed up D’s signed witness statement dated 25 May 2016 with 2 exhibits annexed thereto (“D’s Statement”).

8.The trial was scheduled for 1 day. Realistically, should this court decide to accede to the reliefs sought in the Summons, the trial would have to be aborted. Given the inevitable disturbance to the milestone date, D had to demonstrate exceptional circumstances to justify a favourable outcome for the Summons. Not surprisingly, P opposed the application.

9.After hearing submissions at the Hearing, I granted the following orders, and reserved my reasons for decision which I now give:

(a) leave for D to amend the Defence in the manner marked in red as per the Draft AD;

(b) D shall file/serve Amended Defence within 7 days from the date thereof;

(c) leave for P to file/serve Amended Reply (if so advised) within 14 days thereafter;

(d) leave for D to file/serve D’s Statement on or before 26 May 2016;

(e) leave for P to file/serve witness statement in reply within 28 days thereafter;

(f) trial scheduled on the date of the Hearing be vacated;

(g) all case management conferences (“CMCs”), direction hearings and interlocutory applications in the present action be docketed to be heard and/or dealt with by Master S Kwang who shall be at liberty, where appropriate, to refer any matter or application to be heard by any judge;

(h) the present action be adjourned for CMC before Master S Kwang on a date to be fixed with 1 hour reserved (“Next CMC”);

(i) within 7 days from the date of this order, P (failing whom D) shall attend before the listing clerk to fix the date for the Next CMC;

(j) subject to paragraphs (k) and/or (q) below, the Next CMC shall be heard after 49 days but before 70 days from today;

(k) where appropriate, both P and D may by consent summons or either party may by summons apply to Master S Kwang to expedite the hearing of the Next CMC with reasons on affidavit;

(l) any eventual re-fixing of the trial date(s) shall be made in consultation with counsel’s diaries;

(m) D do pay P (i) costs of the Summons and costs thrown away by the adjournment of the trial to be summarily assessed if not agreed and be paid within 7 days of assessment by the court or agreement between the parties, and (ii) costs occasioned by the Summons to be taxed if not agreed;

(n) P do within 7 days from the date hereof lodge and serve statement of costs not exceeding 1 page pursuant to Practice Direction 14.3 in respect of costs under (m)(i) above;

(o) D do within 7 days thereafter lodge and serve succinct summary of objections of not more than 1 page in respect of P’s statement of costs;

(p) summary assessment of costs will be by paper disposal (unless otherwise directed);

(q) should D fail to pay the full amount of the assessed/agreed costs within the prescribed time, P may unilaterally apply in writing to Master S Kwang (with copy to D) to expedite the hearing of the Next CMC without reasons on affidavit;

(r) time to run during court vacation.

II. PROCEDURAL HISTORY

10.Given the lateness of the Summons, I start with an account of the procedural history of the present action to put the Summons in context.

11.On 25 June 2014, P commenced the present action against D. On 22 July 2014, P by her former solicitors filed acknowledgement of service giving notice of intention to defend. On 11 September 2014, Master S Lo granted an unless order that required D to file/serve his Defence and Counterclaim (if any) by 4pm on 10 October 2014. On 16 October 2014, D by his former solicitors filed his Defence. On 13 November 2014, P filed her Reply. On 23 February and 9 October 2015 respectively, P filed her List of Documents and Supplemental List of Documents. Mediation took place on 15 June 2015.

12.On 21 April 2015, D’s present solicitors (“D’s Solicitors”) filed Notice of Change of Solicitors. On 22 April 2015, D’s Solicitors filed a Listing Questionnaire stating that D (a) did not intend to amend his pleadings, (b) intended to file/serve List of Documents within 21 days, (c) intended to be a defence witness at trial but no witness statement had been filed, and (d) wanted to have mediation.

13.By the order of Registrar Lung dated 23 April 2015, timetable/ directions were given inter alia for filing/serving List of Documents, exchanging witness statements and making interlocutory applications. On 15 May 2015, D filed his List of Documents.

14.On 15 October 2015, P filed Notice to Act in Person. On 22 October 2015, P filed a summons for an unless order requiring D to file/serve witness statements. D did not appear at the hearing of such summons on 6 November 2015 when Master Chow granted the following order (“Chow Order”):

“Unless [D] do exchange his witness statement(s) with [P] on or before 17 November 2015, [D] be barred from adducing evidence in the trial hearing without leave of the court.” (my emphasis)

15.On 10 November 2015, P filed her Listing Questionnaire. D did not file/serve any witness statement within the court-imposed deadline or at all. D was also absent at the case management conference on 18 November 2015 when Registrar Lung granted leave for P to set the case down for trial within 14 days for a 1-day trial before a bilingual judge. The case was set down for trial before this court to be heard on 25 May 2016.

16.On 23 February 2016, P acting in person filed a summons to adjourn the trial. On the same day, he filed a brief supporting affirmation stating he only received the court’s notice of hearing in January 2016, and he was then seeking legal representation and legal advice.

17.D appeared in person at the pre-trial review on 25 February 2016. This court was not satisfied on the thin information then before the court that the trial should be adjourned, and dismissed D’s summons with costs. This court also granted usual pre-trial directions for lodging/serving trial bundle, written opening submissions and list of authorities.

18.On 4 March 2016, Master Hui granted leave for P to amend various court documents to correct a clerical error in respect of D’s name therein. On 15 March 2016, P filed her Amended Statement of Claim (“ASoC”) and Amended Reply.

19.On 27 April 2016, D’s present solicitors filed Notice to Act. On 19 May 2016, D by his solicitors filed the Summons and D’s Aff.

III.  D’s AFF

20.D’s Aff stated that in August 2015 his laundry business fell into difficulties as the landlord refused to further lease the premises (“Premises”) for his business. When P’s Solicitors wrote to D’s Solicitors on 8 October 2015 to propose exchange of witness statements on 15 October 2015, his witness statement was not ready because he was concentrating on resolving his business difficulties. On 14 October 2015, he gave Notice to Act in Person. On 19 October 2015, he came into contact with Quality Laundry Limited (“Quality”) that expressed willingness to purchase his laundry business. On 4 November 2015, D and Quality entered into an agreement whereby he sold his laundry business to Quality for $148,000. On 25 November 2015, the landlord repossessed the Premises. On 31 December 2015, D was laid off with effect on 31 January 2016 by his employer for whom he had worked for 3 years. D only secured a new job on 14 March 2016 with a salary of $38,000/month (subject to probation review after 3 months).

21.D said he was tied up by his grave personal problems from August 2015 to mid-March 2016, but when he had sufficient funds again, he retained D’s Solicitors on 26 April 2016 to represent him and to prepare his draft witness statement and draft amended pleadings. He claimed to have a meritorious defence as P was trying to enforce domestic arrangements made between cohabitees and between married couple that were not legally enforceable.

IV. PARTIES’ RESPECTIVE CASE

22.P’s claim covered several heads of claim which D disputed.

23.First, P claimed $68,100 for payments she made on D’s behalf to Ronis’ contractors. P claimed that by an agreement made partly orally and partly by conduct between P and D in/about June 2008 as evidenced by various bank transfers, D orally requested her to pay Ronis’ debts to its contractors (“Ronis Loan Agreement”), and she made 11 bank transfers in a total sum of $73,600 between 3 June and 10 November 2008 (as particularised in Appendix A to the ASoC). But despite demands made orally and by telephone text messages (collectively, “Messages”) since/about 2011, D only repaid $5,500 and failed to repay the balance sum of $68,100 to P.

24.D denied the Ronis Loan Agreement, and further or alternatively claimed P could not enforce any promise he made in the Messages because any monies P expended for D (which was denied) were before D’s such promise and amounted to past consideration.

25.P disagreed, and averred she was not involved in Ronis which D established to subcontract decoration business, but as D’s then girlfriend she gave some secretarial/clerical assistance to him. P claimed D was well aware he was liable to repay the loans under the Ronis Loan Agreement, and denied such loans were made before D’s promise to repay. P also said she merely reiterated/confirmed in the Messages the previous loan agreements she had made with D, and there was no past consideration.

26.Secondly, P claimed $393,954.66 being payment of D’s credit card bills on his behalf. P averred that in/about June 2008 D orally requested her to apply for a Citibank credit card for him to use as an Octopus card. She secured a Citibank Premiermiles card with supplementary card for him. In/about September 2008 D requested P to settle the monthly Citibank credit card bill for him and promised to repay P on demand (“Citibank Credit Card Loan Agreement”), which she did in the total sum of $393,954.66 between 28 September 2008 and 18 August 2013 (as particularised in Appendix B to the ASoC) with her own money. Despite repeated demands by the Messages since/about 2011, D failed to repay P.

27.D agreed P secured a Citibank Premiermiles card with a supplementary card for him, but denied any Citibank Credit Card Loan Agreement. Further or alternatively, D claimed P could not enforce any promise he made in the Messages because any monies P expended for him (which was denied) were before D’s such promise and amounted to past consideration. D claimed that in fact pursuant to an oral agreement with P, he made contributions of about $10,000-$15,000/month to P for housekeeping expenses (“Housekeeping Monies”), and P was to utilise (and D believed P did so utilise) the same for settling household expenses (“Housekeeping Agreement”). D further averred he was not obliged to pay for bills from, say, the vet and pet shop for P’s pet dog, and for P’s own grooming expenses, personal expenses, out-of-home meals that P settled with the Citibank credit card. Further, D denied the Housekeeping Monies should cover P’s personal expenses.

28.P disagreed. She claimed that all along D was in financial difficulties and his credit record was poor, so he could not obtain any credit card from any bank and requested P to apply for the Citibank supplementary credit card which was initially intended to be used as an Octopus card. Later D used such credit card to pay for his daily expenses, and agreed to repay Citibank himself. Further, the Citibank Credit Card Loan Agreement was formed at the time when D requested P to apply for the Citibank supplementary credit card for his use and when he agreed to pay all expenses incurred by such card. P merely reiterated/confirmed in the Messages the previous loan agreements she had made with D, and there was no past consideration.

29.P admitted D agreed to pay $10,000/month to her for household expenses, but claimed the Housekeeping Monies were unrelated to the Citibank credit card bills. Since D at that time expended $5,000/month, so he had to pay her $10,000/month as Household Monies and $5,000/month as repayment for expenses incurred under the Citibank supplementary credit card, but D subsequently refused/failed to pay P.

30.P admitted she kept 2 pet dogs, but denied she used the Citibank Premiermiles card herself. P claimed all expenses under the Citibank supplementary credit card were incurred by D, and in fact D used such credit card to pay the expenses of his ex-girlfriend’s pet dogs.

31.Thirdly, it was common ground that in/about October 2008 P and D decided to get married. P claimed $47,944 being wedding expenses that D promised to pay. P averred D requested her to pay for wedding expenses (eg wedding photographs, wedding ceremony and wedding celebration, “Wedding Expenses”) and promised to repay her on demand (“Wedding Loan Agreement”), and pursuant to such agreement P paid for the Wedding Expenses of $188,944 between 3 November 2008 and 20 September 2010. Due to D’s poor credit with banks, the parties agreed P would apply for personal loans from Hang Seng Bank Ltd (“Hang Seng”) to pay the Wedding Expenses, and D would repay the incurred loans to P. Pursuant thereto, P successfully applied for 3 loans from Hang Seng to cover part of the Wedding Expenses leaving a balance of $47,944. Despite demands made by the Messages since/about 2011, D failed to repay P (as particularised in Appendix C to the ASoC).

32.D denied P’s claim and any Wedding Loan Agreement. Further or alternatively, D claimed P could not enforce any promise he made in the Messages because any monies P expended for him (which was denied) were before D’s such promise and amounted to past consideration. D averred he also paid for costs/expenses of the marriage by borrowing $140,000 from his mother, and the parties also agreed to apply gift monies from relatives/ friends (“Gift Money”) towards the Wedding Expenses. It was agreed that P would (and D believed P did) collect and apply the Gift Money ($144,000) for such purpose, and the respective parties would bear any outstanding balance.

33.P claimed that at the material time the parties agreed D would sell his futures to pay for all Wedding Expenses and down payment of their matrimonial home, but during preparation for the wedding celebrations D told her the monies had to be used to help his mother who suffered loss in the stock market (but P had no knowledge of any loan to D by his mother), so D asked her to pay the Wedding Expenses by promising to repay her. P was reluctant but eventually agreed to the Wedding Loan Agreement as their marriage had been announced to relatives/friends. P denied any oral agreement that the respective parties would bear the difference between the Wedding Expenses and Gift Money. P’s mother only received the Gift Money from her relatives/friends (which was in a modest sum) for 2 out of 18 tables for the wedding dinner, and D received the rest of the Gift Money. P also said she merely reiterated/confirmed in the Messages the previous loan agreements she had made with D, and there was no past consideration.

34.However, I note from Ms Lau’s written opening submissions that P no longer maintained a claim for $47,944 under this head, and in fact would give credit for the sum of $405.

35.Fourthly, P claimed that by 3 oral agreements made between the parties in/about late February 2009, August/September 2010 and August/ September 2010, P agreed to lend to D $57,000, $46,000 and $38,000 respectively that were sourced from loans by Hang Seng, and D agreed to repay such loans (with bank interest and handling fees) on demand (“1^st, 2^nd and 3^rd Hang Seng Bank Loan Agreements”). Pursuant thereto, P entered into written agreements with Hang Seng for personal loans respectively repayable by 24, 36 and 36 monthly instalments bearing interest at 6.77% pa, and advanced such loan sums to D by using them to partly repay the Wedding Expenses. P incurred $153,302.62 being principal and interest under her loan agreements with Hang Seng. Despite repeated demands by the Messages since/about 2011, D failed to repay (as particularised in Appendix D to the ASoC).

36.D denied such claim, and the 1^st, 2^nd and 3^rd Hang Seng Bank Loan Agreements. Further or alternatively, D claimed P could not enforce any promise he made in the Messages because any monies P expended for him (which was denied) were before D’s such promise and amounted to past consideration.

37.P claimed D used to live extravagantly and was all along in financial difficulties. He used to pay his expenses by credit card and to repay only the minimum amount, so he had poor credit with banks due to ever-increasing loan liability, and he was constrained to apply for loans from finance company by using a real property left to him by his grandfather/ father as collateral. On the other hand, P had no need to borrow bank loans but for the 1^st, 2^nd and 3^rd Hang Seng Bank Loan Agreements, and D was well aware of his liability to repay her under such agreements. P also said she merely reiterated/confirmed in the Messages the previous loan agreements she had made with D, and there was no past consideration.

38.Fifthly, P claimed $254,602.58 (adjusted to $255,091.86 according to Ms Lau’s written opening submissions) for expenses in respect of utilities and other household services. In/about March/April 2010, D orally requested her to pay on his behalf services/products he subscribed, used and/or agreed, eg instalment payments for electric appliances, payments for telephone bills, internet services, utility services and cable television services, D’s credit card payments etc, and D orally promised to repay her on demand (“D’s Expenses Loan Agreement”). Pursuant thereto, P settled such bills/expenses between 12 April 2010 and 25 February 2013 (as particularised in Appendix E to the ASoC). Despite repeated demands by the Messages since/about 2011, D failed to repay P.

39.D denied such claim, and D’s Expenses Loan Agreement. Further or alternatively, D claimed P could not enforce any promise he made in the Messages because any monies P expended for him (which was denied) were before D’s such promise and amounted to past consideration. D averred that between March 2010 and February 2013 his monthly salary was about $35,000/month, and between March 2010 and February 2013 his monthly salary was about $21,000/month. Apart from the Housekeeping Agreement, D and P orally agreed to share rental payment for the matrimonial home of $8,800/month (later increased to $9,800/month). Further, P also used household utilities and services for which D paid his share by the Household Monies, so P had no claim against him. D further averred P double-claimed a total sum of $89,240.74 being certain alleged loans D borrowed from her shown in item D of Appendix D and item E of Appendix E to the ASoC (as particularised in Appendix (i) to the Defence).

40.P claimed she earned $13,000/month between October 2010 and February 2013, and had no knowledge of D’s monthly salary. She further claimed the parties agreed that (a) D would pay $10,000/month to P for household expenses but in the end she had to pay the household expenses herself as D defaulted such payment, and (b) D would pay the monthly rental on top of the household expenses ($10,000) and credit card repayments ($5,000). Further, cable TV and internet services were subscribed at D’s request as he watched football matches via such services. P also said she merely reiterated/confirmed in the Messages the previous loan agreements she had made with D, and there was no past consideration. P denied Appendix (i) annexed to the Defence, and also denied she double-claimed $89,240.74 as D alleged for she had deducted the loans by Hang Seng from the Wedding Expenses.

41.Sixthly, P claimed $22,600 for D’s living expenses which D promised to repay. P claimed that despite the parties’ oral agreement in/about May 2009 that D would pay her $10,000/month for household expenses, D defaulted payment of $22,600 for the period from 1 May 2009 to 31 March 2012 (ie day D left the matrimonial home) (“Living Expenses Loan Agreement”). Despite repeated demands made by the Messages since/about April 2014, D failed to repay P (as particularised in Appendix F to the ASoC).

42.D denied such claim, and the Living Expenses Loan Agreement. Further or alternatively, D claimed P could not enforce any promise he made in the Messages because any monies P expended for him (which was denied) were before D’s such promise and amounted to past consideration. P also said she merely reiterated/confirmed in the Messages the previous loan agreements she had made with D, and there was no past consideration.

43.Seventhly, P claimed $548,494.60 for repayment of personal loans that P granted to D. P claimed that since/about 10 May 2008 until 25 August 2011 D had orally requested P to lend him monies which he agreed to repay on demand (“Personal Loan Agreement”). Pursuant thereto, P lent D $692,994.60 (now adjusted to $687,494.60 according to Ms Lau’s written opening submissions), but between 15 October 2008 and 25 August 2011 D repaid $144,500 (being loans incurred between 10 May and 24 July 2008) leaving an outstanding balance of $548,494.60 (now adjusted to $542,994.60 according to Ms Lau’s written opening submissions) (being loans incurred between 8 August to 25 August 2011). Despite repeated demands made by the Messages since/about 2011, D failed to repay P (as particularised in Appendix G to the ASoC).

44.D denied such claim, and the Personal Loan Agreement. Further or alternatively, D claimed P could not enforce any promise he made in the Messages because any monies P expended for him (which was denied) were before D’s such promise and amounted to past consideration.

45.P claimed D would request P to lend money whenever he was in need of money. The parties agreed D would repay such personal loans to P, and he was well aware of his liability to repay P. P also said she merely reiterated/confirmed in the Messages the previous loan agreements she had made with D, and there was no past consideration.

46.Eighthly, P claimed $10,000 being legal costs payable by D. On/about 22 May 2014, D offered to pay P $10,000 for costs of the divorce proceedings FCMC10210/2013. On/about 27 May 2014, P accepted such offer on the basis D would pay $10,000 within 7 days. Despite repeated demands, D failed to repay the sum of $10,000.

47.D claimed (and P in the Amended Reply agreed) that he settled the sum of $10,000 on 2 July 2014 after commencement of the present action.

48.P claimed that on/about 30 September 2013 D acknowledged he roughly owed her over a million dollars, so by the Messages he offered to make repayment by 80 monthly instalments of $10,000 each and to defer payment of the outstanding balance to a later stage to be mutually agreed. P averred that D discussed repayment with her because he was well aware of his liability to repay all loans he borrowed from her, but she turned down such offer because she knew D had no intention to repay her and was adopting delaying tactics. P said she merely reiterated/confirmed in the Messages the previous loan agreements she had made with D, which was not related to any maintenance payment in FCMC10210/2013. P denied she threatened to sue for variation of maintenance payment as she had not contacted D except for the Messages, and noted D did not raise such complaint until his Defence even though he was legally represented in FCMC10201/2013. P said she merely reiterated/confirmed in the Messages the previous loan agreements she had made with D, and there was no past consideration.

49.D denied P’s assertions. He agreed he had sent some Messages to P on/about 30 September 2013 as he was negotiating amicable maintenance settlement with her in FCMC10210/2013 on without prejudice basis, and there was never any loan agreement with P. Further or alternatively, D claimed P could not enforce any promise he made in the Messages because any monies P expended for him (which was denied) were before D’s such promise and amounted to past consideration. D further agreed he exchanged Messages with P on/about 23-24 April 2014 because P requested him for maintenance payment notwithstanding the nominal maintenance of $1 awarded by the court. Since P threatened to seek variation of maintenance payment, D offered to pay her monies to get rid of her unreasonable threats/demands in order to save time/money, but in the end no agreement was reached. There was never any loan agreement between the parties.

V. LATENESS

50.Mr Cheung did not shy from the fact that the Summons was made very late. Although D’s Aff explained D’s personal circumstances, I am not persuaded they amounted to good reasons for the delay. D knew he had to prepare, file and serve his witness statement, and yet no attempt was made either to approach P’s Solicitors or the court to ascertain what to do after his solicitors ceased to act. He also chose not to attend court hearings since then. Whilst the court sympathised with his financial plight, each litigant would have his own personal concerns and/or difficulties. Litigation cannot be properly pursued/defended if parties choose to ignore case management directions and proceed according to their own personal timetable. If there were any sound basis for extension of time or adjournment of hearing arising from his personal circumstances or for any other reason, it was incumbent upon D to make proper application to the court for indulgence instead of simply ignoring the proceedings. Whilst I accept D had given an explanation for the delay, I am not satisfied it offered good or satisfactory excuse. However, in the balancing exercise called for by the Summons, I take note that D was self-represented since October 2015, and that the present action moved rather swiftly since then to the trial scheduled on 25 May 2016.

VI.  AMENDMENT OF PLEADINGS

51.D proposed to amend the Defence by adding the following:

“50A. Defendant Loan Agreements Not Enforceable

Further or alternatively, the Defendant Loan Agreements were domestic arrangements made between [D] and [P] as cohabitees or, after 23^rd September 2010, as husband and wife, and they did not intend thereby to create legal relations.

……

57A. Further or alternatively, [D’s] enrichment by the monies to him as P’s cohabitee or husband (after 23^rd September 2010) is not unjust. The monies were advanced to him as P’s cohabitee or husband (after 23^rd September 2010) in exchange of his love and affection. Counter-restitution of his love and affection is impossible and [P’s] claim is thereby barred.”

52.The principles for late amendment of pleadings have been discussed in Li Xiao Yun & anor v China Gas Holdings Limited,[2] DBS Bank (Hong Kong) Limited v Sit Pan Jit,[3] and Lam Sik Ying, administrator for the Estate of Lam Tim alias Stan Lam Tim, deceased v Lam Sik Shi & anor,[4] which principles I shall adopt but not repeat here.

53.Mr Cheung submitted the court has wide powers to allow amendment of pleadings at any stage of the proceedings as may be just, and mere delay is not sufficient to bar an application to amend. He argued that generally all such amendments that ought to be made for the purpose of determining the real question in controversy between the parties or for correcting any defect or error in any pleadings should be allowed, and the court is not to punish a party for his error or mistake if such amendment can be made without injustice to the other side. Mr Cheung contended there is no injustice if the other side can be compensated by costs. 

54.But as explained in Lam Sik Ying, in a late application, these broad principles are tempered by the following considerations:

(a) It is clear the court will not order a pleading to be amended unless it is of the opinion the order is necessary for disposing fairly of the cause or matter or for saving costs, and the onus lies on the party seeking the amendment to so satisfy the court.

(b) An amendment will not be allowed if it causes injustice or prejudice to the other party that cannot be compensated by costs. There is also a clear difference between allowing amendments to clarify issues in dispute and those that provide a distinct defence/claim to be raised for the first time. Much depends on the nature of the proposed amendment and the pleaded defence in the particular case.

(c) As explained in DBS Bank (Hong Kong) Limited, such broad principles must be viewed through the prism of delay (especially when it is unexplained and/or unjustified) in the case of a late application, which brings into focus (i) the underlying objectives in Order 1A rule 1 of the Rules of the High Court (“RHC”), including the need to increase cost-effectiveness, ensure expedition, promote reasonable proportion, and ensure fairness between the parties, and (b) the necessary recognition that the later an application is made to shift the litigation goalposts in terms of pleadings, the more likely it is to cause real prejudice to the other party.

55.The first consideration is whether the proposed amendments are necessary for fairly disposing of the cause or matter or for saving costs. Here, the proposed amendments concern a single line of defence, ie that the financial arrangements between P and D at the time when they were cohabitees as well as man and wife were domestic arrangements not intended to form legal relations with enforceable obligations. This also underpins the further challenge to the restitutionary claim on the basis that counter-restitution will be impossible in such circumstances.

56.Mr Cheung submitted that in light of the material facts pleaded in the Defence, this line of defence contention based on the trite principles in Balfour v Balfour[5] should have been obvious to the pleader, and was plainly an omission.  He also referred to Tsoi Yiu Chung v ING Life Insurance Co (Bermuda) Ltd[6]which concerned a post-CJR late application to amend pleadings, file further witness statement and make further discovery that would result in vacation of the trial dates, and in that case the court considered it would be an intolerable outcome if a party personally blameless for the way in which his case had been pleaded by inexperienced counsel was forced to go to trial on defective pleadings. The learned judge was unimpressed by the alternative open to that party, ie to start another expensive and risky action against his former legal advisors “to get what he says are his just desserts”.

57.Ms Lau fairly and rightly accepted that the Balfour defence now proposed to be advanced by D is arguable. As seen in Part IV above, given the nature and breadth of P’s claim that covered a whole spectrum of expenses from business-related expenses to wedding, household, utilities and miscellaneous expenses during her cohabitation/marriage with D, and further given D’s denial of such claims, I am of the view that such contextual background plainly suggests the Balfour defence is not unarguable even on P’s own case.

58.As evident from Ms Lau’s written opening submissions, the issues are whether D owes P the alleged debts and whether D has agreed to repay P the same. Quite irrespective of any positive defence case, P has to discharge her burden of proof to satisfy the court she has a viable claim (based on legally binding contracts) that is legally enforceable. The establishment of an intention to create legal relations is a matter of inference to be drawn from primary findings of fact. In the cases cited by Ms Lau,[7] the courts plainly accepted that intention of the parties was a question of fact usually to be inferred from the terms of the agreement, and depending on the surrounding facts and circumstances, the parties could have entered into a legally binding agreement or an unenforceable family arrangement.

59.Thus, even without express pleading of the Balfour defence, the matter of legal relations would have been a necessary hurdle that P has to cross in order to succeed in her claim. So P should not be surprised by the proposed amendments, which do not seek to go on any new tangent or direction. I am satisfied the Balfour defence is a relevant and necessary argument that can be raised even without witness evidence from D. Indeed, at the pre-trial review, this court asked Ms Lau to address on such issue at trial, and quite fairly Ms Lau canvassed such matter in her written opening submissions.

60.That leaves the question of the lateness of the application. Taking in account the whole of the circumstances, I am persuaded that notwithstanding the lateness (and bearing in mind that P previously acted in person and may not be familiar with the nuances of the legal issues that give rise to this additional point), fairness and justice dictate that the proposed amendments be allowed.

VII. WITNESS STATEMENT

61.D has sought to bolster his case by his proposed witness statement.

An initial issue is whether the Chow Order is a proper unless order with an automatic sanction such that it debars further application for leave to file/serve witness statement unless proper application is made for relief against sanction under Order 2 rule 5 of the RHC.

62.At first blush, the Chow Order appears to be an unless order. However, on careful scrutiny, it does not carry an automatic sanction in that if D fails to comply with the order within the prescribed time, he will be barred from adducing evidence in the trial hearing “without leave of the court”. This proviso means that if the court grants leave for D to adduce witness evidence then the sanction becomes inapplicable. So the relevant application is not so much as for relief against a sanction that has become effective automatically upon default, but for leave of the court to file, serve and adduce witness statement which if granted will render the sanction inapplicable. Hence, the general principles for relief against sanction discussed in Lee Sai Nam v Li Shu Chung & anor[8] and Li Oi Hung v Famoso Company Limited[9] are not applicable.

63.The principles for a late application to serve witness statement, supplemental witness statement or witness statement of a substitute/ replacement witness have been set out in Civic Limited v 余綺妙 & ors,[10] Nam Ching Wan v Tsun Un Pawn Shop also known as Tsun Yun Pawn Shop with Tang Yam Wan as trustee by Yeung Fook Mui ad Tang Ying Ip as administrators of the estate of Tang Pui King alias Tang Yum (or Yam) Wan alias Tang Kin Cheung, deceased & ors,[11] and Liu Chen v Chan Poon Wing & anor,[12] which principles I shall adopt but not repeat here.

64.Here, D has filed a Defence. Even without the proposed amendments, it raises various strands of defence contentions against the allegations in the ASoC, including denial of the loan agreements as alleged by P, and the defence of past consideration. Witness evidence is necessary to give such defence contentions substance. At the very least, it is necessary and relevant to set out the personal and business (if any) relationships between P and D in order to put P’s claim and D’s denial in context from the defence’s perspective. In my view, it affronts the court’s sense of fairness and justice that having mounted arguable lines of defence D should be constrained to proceed to trial with both of his hands tied, ie he will be left without any witness evidence at all to support his case, unless any such permission for D to adduce witness evidence will cause irreparable prejudice to P.

65.Ms Lau raised the spectre of inevitable delay caused by the adjournment of the trial if D were allowed to adduce witness evidence. Mr Cheung assured me D is willing to compensate P by way of costs. I have no doubt that any adjournment of the trial is against the CJR objectives, but Order 1A rule 2(2) of the RHC requires this court to recognise the primary aim in exercising the powers of case management is to secure the just resolution of disputes in accordance with the substantive rights of the parties. Hence, the inevitable delay must be tempered by the injustice of disallowing D’s application.  In my view, the consequences of abortion of the trial can be ameliorated by tightened case management that will ensure the present action will move steadily forward again with all due speed towards a fresh trial.

66.Ms Lau raised another concern. She pointed out that according to land search records in respect of a property jointly owned by D and 2 other parties, such property was mortgaged to a finance company in August 2015 for all monies up to a maximum amount of $600,000, and in February 2016 (ie a few months before the trial) it was mortgaged for all monies up to a maximum amount of $1,200,000. Ms Lau feared this might be a dissipation exercise, and expressed concern that any delay might leave P with an empty judgment. But the further charge on the jointly-owned property in February 2016 of itself and without more is not cogent evidence of dissipation by D, especially bearing in mind that the property is jointly owned by 2 other parties. Further, D has been frank that his financial embarrassments reached a low point at the end of January 2016 when he sold his laundry business and lost his job. It would not be surprising if he needed funds at that point to support himself and/or to search for legal representation. On the materials before me, I am unable to read the land search records in the sinister light cast by Ms Lau.

67.In light of all the above matters, bearing in mind the length and reason for the delay, the merits of the proposed application, the primary aim of securing the just resolution of the dispute, the likely prejudice caused to P by the delay, and the amelioration of such prejudice by costs and other case management measures, I am satisfied that fairness and justice require that D be allowed to file/serve and rely on his witness statement.

68.Ms Lau submitted that the contents of D’s Statement travelled beyond his Defence, and reserved P’s right to object to the same. First, a witness statement is not intended to be a copybook replication of a pleading. Secondly, whist material facts are asserted in a pleading, the witness statement sets out the relevant evidence. This means that witness statements are normally fuller than pleadings as factual evidence that give context to the pleaded issues are often included. Thirdly, Ms Lau complained about the depth D had gone into about Ronis in his witness statement. But such complaint must be viewed not just from P’s perspective but also D’s perspective that the Ronis Loan Agreement did not exist, hence P’s and D’s roles at Ronis are arguably relevant. Fourthly, it is unnecessary for me to form any definitive view at this stage as the trial will be adjourned as a result of a favourable outcome of the Summons for D.

VIII.  POSTSCRIPT

69.In all the circumstances, I find there are exceptional circumstances in the present case to grant the reliefs sought in the Summons notwithstanding their adverse impact on the trial, which must now be adjourned. However, this is an exceptional case-specific situation and does not set any precedent. Litigants generally should not expect the court to smile kindly on late applications that may impact on milestone events.

70.To assist the parties and the docketed master in the further conduct of the proceedings, I should add a few words. First, I note that D’s List of Documents only disclosed a handful of Ronis’ documents. D should carefully consider whether he has already made proper discovery or whether some more documents in his possession, custody or control that are relevant to the disputed issues will need to be further disclosed in light of the Amended Defence to be filed and the contents of D’s Statement. If there is such need, D should consider filing and serving Supplemental List of Documents as soon as possible. It must be remembered that if a further round of amendment of pleadings and/or additional witness statement becomes necessary due to any belated discovery after P has filed witness statement in reply, it may have implications in costs.

71.Secondly, the parties should give careful attention to the preparation of comprehensive Scott Schedules to assist the trial judge. Time should not be spent at trial to trawl through bundles of individual invoices, receipts, credit card slips, etc. These documents should be carefully analysed by both parties to elicit the disputed items with cross-reference to the original records. Thus, the Scott Schedules should contain itemised breakdown of P’s various heads of claim, the parties’ respective stance on such items, the reasons therefor, and cross-reference to paginated pages of the primary documents bundle. These steps should be completed well before the present action is to be set down for trial again. The docketed master should seize of this matter and give specific case management guidance on the proper preparation of such Scott Schedules that will be helpful to the trial judge for appreciation of the scope of the dispute and the parties’ respective contentions.

72.Thirdly, given (a) the amount of P’s claim (which is less than $1,500,000) and legal costs incurred and to be incurred in bringing the matter to trial, and (b) the parties have chosen not to avail themselves of provisions in section 44 of the District Court Ordinance Cap 336, I urge the parties to proactively reconsider further attempt at mediation when the dispute is more clearly drawn after completion of the current round of revised pleadings and witness statements (ie when parties are more attuned to real issues and their likely exposure in respect of the present litigation).

73.Fourthly, in light of the adjustments to P’s claim as explained in Ms Lau’s written opening submissions, P should also consider whether the ASoC needs to be further re-amended to reflect such adjustments.

74.The parties should be ready to address the docketed master in respect of the above matters at the Next CMC.

Ms Lorinda Lau, instructed by Eva Wong & Co, for the plaintiff

Mr Adonis Cheung and Mr Ryan Law, instructed by John C H Suen & Co, for the defendant