Skyrun Light Industry (Hong Kong) Co Ltd and Another v. Swift Resources Ltd and Others

HCA 1278 /2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1278 OF 2014

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REASONS FOR DECISION

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I. INTRODUCTION

1.The 1^st plaintiff Skyrun Light Industry (Hong Kong) Company Limited (“P1”) was/is a Hong Kong company, and the 2^nd plaintiff Guo Ming Fu (“P2”) was/is its director. The 1^st defendant Swift Resources Limited (“D1”) was/is a Hong Kong company, and the 2^nd defendant Ma Muk Ying (“D2”) and her husband Wong Yiu Ming (“Wong”) were/are its directors and ultimate owners.

2.P1 and P2 (collectively, “Ps”) claimed (but D1 and D2 (collectively, “Ds”) did not admit) D1 owned/controlled a number of overseas companies. But there was no dispute D1 wholly owned and/or was in control of 2 Cambodian companies known as Swift Resources (Cambodia) Limited and Swift Rubber Limited (collectively, “Cambodian Companies”).

3.In the present action, Ps sued Ds for breach of contract, undertaking and/or guarantee in the sum US$17,918,769.33 and interest at the rate of US$9,928.78/day from 20 November 2014 until full payment or at such rate/period as the court deemed fit.

4.The trial of the present action was scheduled to be tried and heard before DHCJ Saunders on 21 June 2017 with 5 days reserved (“Trial”).

5.On 31 May 2017, Ds filed a summons (“Summons”) pursuant to Order 25 rule 1B(2)-(3) of the Rules of the High Court (“RHC”) for leave to vacate the Trial and adjourn the case to a date (in consultation with counsel’s diaries) for a 2^nd pre-trial review (“PTR”) hearing with 30 minutes reserved for Ds to report on progress as to certain criminal proceedings regarding D2 in Cambodia (“Cambodian Proceedings”) with costs reserved (save that costs of the Summons be to Ps).

6.On the same day, Ds filed D2’s affirmation in support of the Summons (“D2 1^st Aff”) to the effect that (a) D2 as Ds’ sole/key witness was not allowed to leave Cambodia to attend the Trial due to the ongoing Cambodian Proceedings and the prohibition order that restrained her from leaving Cambodia (“Prohibition Order”), which matters D2 claimed were beyond her control, and (b) she had considered giving evidence by videolink but took the view it was inappropriate means to do so, and further claimed it could not be arranged in any event.

7.Ps did not file any affirmation, but opposed the Summons. Mr Hon, counsel for Ps, submitted Ps had reservations as to the truthfulness of the allegations in the D2 1^st Aff, and Ps should not be taken to have admitted the same.

8.The Summons was returnable on 13 June 2017 (Tuesday) before me (“Hearing”). Mr Hui (and Ms Chung with him), counsel for Ds, lodged his written submissions on 8 June 2017 (Thursday). Mr Hon lodged his on 9 June 2017 (Friday). On 12 June 2017 (Monday), ie the day before the Hearing and immediately after the intervening weekend, Ds filed the 2^nd affirmation of their solicitor Yeung Adrian Ho Yi (“Yeung”) exhibiting a draft 2^nd affirmation of D2 (undated and unsigned) (“D2 2^nd Draft Aff”) and an affirmation by Wong (“Wong Aff”) that purported to address some points made in Mr Hon’s written submissions.

9.Yeung claimed D2 undertook she would file the notarised D2 2^nd Draft Aff as soon as practicable. It was plain that on/after 8 June 2017 Ds’ solicitors were (a) in communication with D2 in order to prepare the D2 2^nd Draft Aff and (b) able to receive documents by email, fax, courier or other means from Cambodia as evident from the certificate dated 9 June 2017 by D2’s Cambodian lawyers exhibited to the D2 2^nd Draft Aff. No explanation was forthcoming as to why D2 did not give her personal confirmation under her own hand/signature that she agreed to the contents of the D2 2^nd Draft Aff. It was unsurprising that Ps had reservations about the same.

10.At the Hearing, notwithstanding the terms of the Summons referred to in paragraph 5 above, and assuming the Trial was to be adjourned Mr Hui conceded as follows:

(a) The Summons proposed to adjourn the present action for a 2^nd PTR on a date to be fixed in consultation with counsel’s diaries, which in practical terms meant there was no firm time period proposed for such 2^nd PTR and there were no trial dates to be fixed as yet (presumably because it was unknown whether and when D2 would be able to return to Hong Kong). Mr Hui conceded, as he must, the present action had been ready for trial for quite some time, so it was rather pointless to have another PTR without scheduled trial dates. At the Hearing, Mr Hui toyed with the idea of scheduling a case management conference (“CMC”) instead of the PTR, but could not explain why it would be fair and just for Ps who through no fault of their own would thereby suffer regression of the present litigation from an imminent trial back to a PTR or (even worse) a CMC with no rescheduled trial dates in sight. In the end, Mr Hui conceded that if the Trial was to be adjourned to give Ds an opportunity to have D2 attend trial as witness (if they could), then to be fair to the “innocent” Ps who would be turned away from the doors of the trial court at the 11^th hour, the trial should be re-fixed as soon as practicable.

(b) The Summons proposed that if the Trial was to be adjourned Ps should have costs of the Summons but all other costs be reserved. At the Hearing, Mr Hui readily conceded Ps should have costs thrown away by the adjournment of the Trial on indemnity basis. Mr Hui also sensibly conceded Ps’ costs of the Summons should include costs of the Hearing. After all, Ds still filed/served affirmations in support of the Summons on the day before the Hearing, and Ps plainly had a right to be heard on the same. At one stage, Mr Hui suggested Ps’ costs of the Summons should be on party and party basis, but it was not easy to see the logic why only the “consequence” (costs thrown away by adjournment of the Trial) but not the “cause” of such consequence (costs of the Summons that sought such adjournment) should be on indemnity basis. In the end, Mr Hui conceded all costs were payable on indemnity basis.

11.At the Hearing, after hearing submissions from Mr Hui and Mr Hon, I granted the following orders:

(a) the Trial scheduled to be tried and heard by DHCJ Saunders on 21 June 2017 at 10:00am with 5 days reserved be vacated and adjourned;

(b) Ps shall arrange to attend before the Listing Clerk within 14 days from today to re-fix the Trial with 5 days reserved before any judge at the earliest possible dates (and time to run during summer vacation) without accommodating counsel’s diaries or D2’s availability or otherwise for the re-fixed trial dates;

(c) at the same time as re-fixing the trial dates pursuant to (b) above, Ps shall also fix a date for the 2^nd PTR with 30 minutes reserved no later than 8 weeks before the re-fixed trial;

(d) the re-fixed trial once fixed and scheduled by the Listing Clerk pursuant to (b) above shall proceed as scheduled irrespective of any unavailability of D2 to attend such re-fixed trial due to legal proceedings and/or Prohibition Order involving her in Cambodia and/or any inability by D2 to depart/leave Cambodia;

(e) unless Ds do on or before 4:00pm on 4 July 2017 pay into court a sum of US$1,800,000 (or its equivalent in HK$ at the time of payment into court), D2 shall be debarred from giving oral evidence and Ds shall be debarred from adducing D2’s witness statements as hearsay evidence at the re-fixed trial;

(f) Ds shall pay Ps costs of and occasioned by the Summons (including costs of the Hearing) and costs of and occasioned and thrown away by vacating and adjourning the Trial all on indemnity basis, such costs to be summarily assessed and paid forthwith;

(g) Ps shall within 7 days after the Hearing lodge with court and serve statement of costs not exceeding 1 page pursuant to Practice Direction 14.3;

(h) leave to Ds to lodge and serve within 7 days thereafter succinct summary of objections of not more than 1 page in respect of Ps’ statement of costs;

(i) the summary assessment of costs will be by paper disposal (unless otherwise directed).

I have reserved my reasons for decision which I now give.

II.  PARTIES’ RESPECTIVE CLAIMS

12.Ps’ case  Ps claimed that since the end of 2009 D1 (through the Cambodian Companies) negotiated with Ps to acquire/invest in a rubber plantation in Cambodia (“Plantation”), and as a result P1 and D1 entered into an agreement dated 26 January 2010 (“26/1/10 Agreement”) whereby it was agreed each party would invest/pay US$9,000,000. The 26/1/10 Agreement was subsequently varied so P1 was only required to invest/pay US$5,508,000 (which sum was paid between 3 February and 26 October 2010). On 30 July 2010, P2 and D1 agreed to allow P2 to jointly manage the Plantation’s business (“30/7/10 Agreement”). Pursuant to the 30/7/10 Agreement, P2 sent P1’s/his staff to station and work at the Plantation.

13.Subsequently, disputes arose between Ps and Ds as a result of (a) Ds’ misrepresentation over the size of the Plantation as warranted under the 26/1/10 Agreement, (b) D1’s failure to perform its contractual duties under the 30/7/10 Agreement, and (c) D1’s breach of the 30/7/10 Agreement by demanding P1’s withdrawal from the management of the Plantation. To fully settle such disputes and to vary the terms of the 26/1/10 Agreement, 30/7/10 Agreement and another agreement dated 27 June 2011 between Ps and Ds (“27/6/11 Agreement”), (i) Ps and Ds entered into a written agreement dated 8 August 2011 (“8/8/11 Agreement”), (ii) Ds gave a written undertaking dated 8 August 2011 in favour of Ps (“Undertaking”), and (iii) D2 gave a written guarantee dated 8 August 2011 in favour of Ps (“Guarantee”).

14.Under the 8/8/11 Agreement, Ds jointly/severally agreed inter alia (a) to pay Ps a total sum of US$12,000,000 by 5 instalments,[1] and (b) in the event of default in paying any instalment or part thereof D1 agreed to pay P1 interest at a daily rate of 0.1% (ie 36.5% pa) on all outstanding amounts. Ps claimed all parties under the 8/8/11 Agreement confirmed D1’s payment of the sum of US$12,000,000 to P1 was:

(a) to refund US$5,508,000 being the total sum invested/paid by P1 to D1;

(b) to pay investment return of US$5,508,000 equivalent to 100% of all monies P1 invested in the Plantation;

(c) to settle the parties’ disputes and/or Ps’ intended claims for loss/damage as a result of, arising from and/or caused by D1’s
breaches of the 26/1/10, 30/7/10 and/or 27/6/11 Agreements;

(d) consideration for Ps’ withdrawal from management of the Plantation.

15.The Undertaking provided inter alia (a) Ds shall jointly/ severally and unconditionally guarantee their timely payment to be made to Ps’ prescribed bank account pursuant to the 8/8/11 Agreement, (b) in the event of Ds’ default they shall bear legal responsibility arising therefrom and pay Ps interest at a daily rate of 0.1% (ie 36.5% pa) on all outstanding amounts.

16.The Guarantee provided inter alia that upon default in payment under the 8/8/11 Agreement, D2 shall bear Ds’ legal responsibilities and guarantee the same out of her own personal assets.

17.Up to 20 November 2014, D1 paid Ps a total sum of US$2,071,222.67 under the 8/8/11 Agreement, but Ds in breach of the 8/8/11 Agreement and Undertaking and D2 in breach of the Guarantee failed to pay the balance of US$9,928,777.33 and outstanding interest of US$7,989,992 totalling US$17,918,769.33 with continuing interest on the sum of US$9,928,777.23 at the rate of US$9,928.78/day.

18.Ps therefore claimed against Ds for US$17,918,769.33 for breach of the 8/8/11 Agreement and/or Undertaking with interest at the rate of US$9,928.78/day from 20 November 2014 until full payment (or alternatively at such rate and for such period as the court deemed fit). Ps also claimed against D2 for the same reliefs for breach of the Guarantee.

19.Ds’ case  Ds admitted that on/about 26 January 2010 P1 and D1 entered into the 26/1/10 Agreement (ie a business venture to invest in the 3,200-hectares Plantation) whereby each of P1 and D1 was required to invest US$9,000,000, and D1 began to perform its duties under such agreement. Ds denied the 26/1/10 Agreement was subsequently varied and/or P1 was only required to contribute US$5,508,000 for the Plantation. Rather, Ds alleged Ps repudiated the 26/1/10 Agreement due to their failure to pay the balance of US$3,492,000 for investing in the Plantation.

20.Ds (a) admitted (i) P2 and D2 signed the 30/7/10 Agreement for establishing 廣通有限公司, (ii) P2 sent his representative to be stationed at the Plantation and (iii) the parties had disputes over the management of the Plantation, (b) denied D2 misrepresented the size of the Plantation (which was 3,200 hectares) and (c) claimed there was never any representation/warranty that all rubber trees within the Plantation would be productive. For the 27/6/11 Agreement made by Ps and Ds, Ds denied they misrepresented to Ps about the productivity of the Plantation.

21.Ds claimed (a) the 30/7/10 and 27/6/11 Agreements were signed on the understanding Ps would make up the outstanding investment sum of US$3,492,000, and (b) Ps and Ds made the 8/8/11 Agreement, Ds gave the Undertaking to Ps and D2 gave the Guarantee in favour of Ps, but (c) the 8/8/11 Agreement was not for settling disputes between the parties and/or for resolving matters arising from the 26/1/10, 30/7/10 and 27/6/11 Agreements.

22.Ds claimed (a) the payment of US$12,000,000 under the 8/8/11 Agreement was subject to conditions that (i) Ps shall fully pay their share of investment in the Plantation under the 26/1/10 Agreement and (ii) the Plantation business “got listed successfully” (collectively, “Conditions”), which Conditions had not been fulfilled (“Unfulfilled Conditions Defence”), and (b) the sole purpose of signing the 8/8/11 Agreement was to comfort Ps’ “joint investors” but the parties did not mean to enforce such agreement until the Conditions were satisfied (“Non‑enforceability Defence”). As a result, Ds averred (1) P1 had/has no ownership/control over the Plantation business, (2) P1 did not provide or adequately provide consideration for the alleged obligation to pay US$12,000,000 under the 8/8/11 Agreement, and (3) Ds did not owe Ps any money (including the sum of US$12,000,000 and/or interest as alleged) under the 8/8/11 Agreement.

23.Even though the Undertaking and Guarantee contained the terms as set out in paragraphs 15-16 above, Ds claimed they had been discharged for reasons set out above, and Ds were not liable to Ps under the 8/8/11 Agreement.

24.Ds claimed that in view of Ps’ repudiatory breach of the 26/1/10 Agreement, their position with respect to the 8/8/11 Agreement, Undertaking and Guarantee was as follows:

(a) for the 8/8/11 Agreement, Ds denied they were liable to pay Ps US$12,000,000 with interest as alleged since Ps had not satisfied the Conditions;

(b) for the Undertaking, Ds claimed they were neither jointly nor jointly/severally liable to Ps under the 8/8/11 Agreement, and in any event the Undertaking had been discharged;

(c) for the Guarantee, Ds averred D2’s payment obligation under the 8/8/11 Agreement had not been triggered, and in any event the Guarantee had been discharged.

25.D1 denied its payment of US$2,071,222.67 to Ps on/before 20 November 2014 was made pursuant to the 8/8/11 Agreement, and claimed it was made under the following circumstances:

(a) US$790,000 was partial payment for settling part of the present action against Ds in relation to 3 other loans owed to P1, and consequently P1 discontinued its claims in relation to these 3 other loans;

(b) upon the request of P2 who claimed to be in financial difficulties at the material time, the remaining balance was an advancement to P2 as deduction of the investment money Ps had paid for the Plantation.

26.Ps’ reply  Ps denied they repudiated the 26/1/10 Agreement as a result of their failure to invest US$3,492,000 in the Plantation business, and further averred that (a) under the 26/1/10 Agreement P1 was required to pay half of 10% of the total investment sum (ie which investment sum was equivalent to the purchase price of the Plantation) as deposit by end of January 2010, (b) upon signing the 26/1/10 Agreement Ds represented the total investment sum was US$17,600,000 so P1 had to (and did on/before 3 February 2010) pay US$880,000 (US$17,600,000 x 10% x ½) as deposit, (c) in/about February/March 2010 P1 indicated it was considering to withdraw from the 26/1/10 Agreement and let the paid sum of US$880,000 be forfeited but P1 eventually agreed to continue with the 26/1/10 Agreement, (d) in/about early 2011 Ps discovered from the vendor the Plantation’s actual sale price (ie the investment sum) was US$9,189,000 (not US$17,600,000 as Ds previously misrepresented), (e) Ds denied such misrepresentation when confronted but could not produce evidence of payment of US$17,600,000 to the vendor, (f) the profit generated by the Plantation business was not distributed to Ps, (g) Ps eventually paid a total sum of US$5,508,000 which exceeded their 50% contribution for the actual investment sum under the 26/1/10 Agreement, and (h) despite repeated demands Ds failed/refused to refund to Ps such excess payment.

27.Ps denied (a) the 30/7/10 and 27/6/11 Agreements were signed on the understanding Ps would make up any outstanding sum of US$3,492,000, (b) the payment of US$12,000,000 was conditional upon any matter under the 8/8/11 Agreement, and (c) the Undertaking and/or Guarantee were discharged as Ds alleged. Further, even if Ps repudiated the 26/1/10, 30/7/10 and 27/6/11 Agreements, all disputes arising therefrom were settled/resolved by the 8/8/11 Agreement, Undertaking and Guarantee.

28.Ps claimed Ds paid US$2,071,222.67 in partial settlement of the sum of US$12,000,000 with interest accrued thereon under the 8/8/11 Agreement, Undertaking and Guarantee so there was partial performance by Ds: (a) the 1^st payment of US$90,138.67 was made on/about 21 July 2011 pursuant to the 27/6/11 Agreement, and (b) subsequent payments totalling US$1,981,084 were made by Ds in partial payment of the sum of US$12,000,000 with interest accrued thereon.

III.  ISSUES

29.Mr Hui distilled the following issues from the parties’ pleadings for the purpose of the Trial:

(a) whether the 26/1/10 Agreement was varied so P1 was only required to invest/pay US$5,508,000;

(b) whether P2 was allowed to jointly manage the Plantation business;

(c) whether P1 had repudiated the 26/1/10 Agreement;

(d) whether Ds had made any misrepresentation to Ps;

(e) whether D1 had breached the 30/7/10 Agreement;

(f) whether the 8/8/11 Agreement was in nature a settlement agreement to settle the parties’ disputes or an agreement for Ds to pay Ps a sum of US$12,000,000 subject to the Conditions (and if so, whether Ps had duly satisfied the Conditions);

(g) whether the Undertaking and/or Guarantee had been discharged;

(h) whether the sum of US$2,071,222.67 D1 paid to Ps was made pursuant to 8/8/11 Agreement as a settlement agreement as Ps alleged.

But Mr Hon took the view that only (f)-(h) above were relevant to the Trial.

30.At the Hearing, Mr Hui confirmed it was common ground that there were previous disputes between the parties, and Ds did make the 8/8/11 Agreement, Undertaking and Guarantee that Ps relied for their claims. On such basis, Ds carried the burden to raise/establish the Unfulfilled Conditions Defence and Non-enforceability Defence (collectively, “Defences”) to resist Ps’ claims on the 8/8/11 Agreement (and for that purpose Ds possibly also had to cross the hurdle of the parol evidence rule). Further, Mr Hui agreed Ds’ denial of liability under the Undertaking and Guarantee on the basis that they had been discharged rested on the vitality of the Defences that Ds had to establish. Still further, since (a) Ds accepted D1 did pay US$2,071,222,67 to P1 even though Ps were allegedly in breach of the 26/1/10 Agreement and (b) Ds claimed the payment obligation under the 8/8/11 Agreement, Undertaking and Guarantee had not been triggered given the Defences, it was Ds’ case that they did not owe Ps any monies under the 26/1/10 and 8/8/11 Agreements, Undertaking and/or Guarantee. In my view, it was for Ds to demonstrate such payment was for other unrelated purpose as they alleged.

IV.  PROCEDURAL HISTORY

31.On 15 April and 3 May 2016, Ps and Ds respectively made P2’s witness statement and D2’s witness statement.

32.On 30 June 2016, Registrar Lung granted leave for P1 to set the case down for trial before a judge alone in the fixture list with 5 days reserved. On 3 August 2016, P1 filed Notice of Setting a Case Down for Trial and Application to Set a Case Down for Trial. As explained above, the Trial was scheduled to be heard on 21 June 2017 with 5 days reserved.

33.On 23 February 2017, L Chan J granted leave for P1 to add P2 as a co-plaintiff and for consequent amendment of the parties’ pleadings. At the PTR on 22 March 2017, L Chan J gave usual case management directions for preparation of English translations of documents, trial bundles and opening submissions.

34.On 22 May 2017, the parties filed a Consent Summons for exchanging supplemental witness statement(s) as to fact on the amended pleadings on or before 31 May 2017. On 24 May 2017, DHCJ Saunders granted order in terms accordingly.    On 31 May 2017, Ds filed D2’s supplemental witness statement and Ps filed P2’s 1^st supplemental witness statement. On the same day, Ds filed the Summons and D2 1^st Aff.

V.  LEGAL PRINCIPLES

35.As Mr Hui accepted, the Trial was a milestone date. Order 25 rule 1B(2)-(3) of the RHC provides that a party may apply to vary a milestone date, but the court shall not grant such application unless there are exceptional circumstances justifying the variation.

36.The leading authority on the exercise of discretion under Order 25 rule 1B(2)-(3) of the RHC is Arko Ship Leasing Ltd v Winsmart International Shipping Ltd in which G Lam J set out the factors for consideration as follows:[2]

(a) What is the nature of the proceedings? What is at stake to the parties, in particular to the party who seeks the adjournment? (“Factor A”)

(b) Would the relevant witnesses definitely not be available to give evidence in any manner – for example, if a witness is unable to come to Hong Kong, is it possible nevertheless to receive his evidence via videolink? (“Factor B”)

(c) What is the nature of the difficulty preventing the witnesses from attending, and is the applicant responsible for creating that difficulty and if so to what extent? (“Factor C”)

(d) What is the nature of the evidence each relevant witness is intended to be called to give? Is he the only possible source of such evidence? (“Factor D”)

(e) Has the party seeking the adjournment made efforts to locate other persons who may be able to stand in to give similar evidence? (“Factor E”)

(f) Will the adjournment be likely to address the problem faced by the applicant? (“Factor F”)

(g) What is the risk of prejudice or other disadvantage to other parties if the adjournment is granted? (“Factor G”)

(h) The application must also be viewed in terms of the wider implications on the administration of justice, including the public interest in the efficient dispatch of the court’s business, and the effect on the interests of future litigants of vacating a hearing close to the date and possibly leaving the court empty, and in this context the court should take into account the timing of the application for adjournment. (“Factor H”)

37.In Arko Ship Leasing Ltd, 4 out of 5 of the plaintiff’s intended witnesses had been arrested in Mainland China for matters unrelated to the action, and they were prevented from giving evidence in any manner in Hong Kong including via videolink. The learned judge considered there were exceptional circumstances which engaged the court’s discretion, and upon balancing the various factors decided “albeit with reluctance” to grant the adjournment sought.[3] It was, as the learned judge said, ultimately “a balancing exercise, a choice between unattractive options and a balance between the underlying objectives”.[4] Noting that the application was nevertheless a late one, which necessarily invited criticism from the court, the learned judge in that case held the delay should be reflected in an appropriate order for costs, ie that the plaintiff do pay the defendant costs of the application and costs thrown away by the adjournment on indemnity and forthwith basis, but no order as to costs for the hearing of the summons.

38.In Velatel Global Communications Inc & anor v Chinacomm Limited & ors,[5] not cited by Mr Hui or Mr Hon, the 6^th defendant (who alleged he was charged with fraud and detained in Mainland China but documentary evidence to such effect was thin) applied in mid‑February 2016 to vacate the trial scheduled in mid-May 2016. The application was heard at the PTR in late February 2016 but had to be adjourned for proper evidence to be filed. At the 2^nd PTR in late March 2016, Au-Yeung J dismissed the summons with costs to the plaintiff.

39.The learned judge was unimpressed by the 6^th defendant’s delay in informing his Hong Kong lawyers that he was detained since late October 2015 and charged in mid-January 2016. Au-Yeung J considered the factors mentioned in Arko Ship Leasing Ltd. She accepted it was a substantial claim and although the 6^th defendant was a crucial witness, there was little credible proof of his unavailability, and no attempt was made to apply for giving evidence by videolink or letter of request. Further, there was no credible evidence the adjournment would address the problem he faced since he could attend trial if acquitted but could be sentenced for a long period if convicted. In that case, the prejudice to the plaintiff was considered to be severe as the 6^th defendant appeared to be evading judgment with minimum security afforded by the Mareva injunction.

VI.  DISCUSSION

40.Mr Hui submitted but Mr Hon disagreed the Trial should be vacated/adjourned. Both counsel addressed the factors outlined in Arko Ship Leasing Ltd to which I now turn.

(a) Factor A

41.Both parties accepted Ps’ claim being a contractual claim for US$17,918,769.33 with daily interest at US$9,928.78 from 20 November 2014 until payment was a substantial claim.

42.Mr Hui submitted the parties’ respective case was factually different so the determination of whether or not Ds had to pay the claimed sums essentially turned on witnesses’ oral evidence and their credibility, and it would be vitally important for D2 as Ds’ sole factual witness to testify/demonstrate her demeanour/credibility in the courtroom to facilitate the court in resolving the underlying factual disputes and issues of mixed fact and law. Mr Hui submitted it would not be in the interest of justice for the Trial to proceed without allowing Ds to present their most accurate, reliable and helpful evidence via D2 testifying in the courtroom.

43.In my view, Mr Hui overstated the complexity of the present action. Even though Mr Hon in exemplary fairness did not seek to challenge the disputed issues were fact-sensitive in the sense the court’s findings on the Defences would have a bearing on the final outcome, as explained in paragraph 30 above, Ps based their claims on the written 8/8/11 Agreement, Undertaking and Guarantee that Ds accepted they made/signed, so it was for Ds to raise/establish the Defences. The certificate of estimated length of trial signed by Ms Chung and filed on 28 June 2016 was given on the premise that D2’s witness statement shall stand as evidence-in-chief. On such basis, D2 would have adopted at the Trial her statement evidence in relation to the contextual background and the Defences. Any complexity would fall on Ps who would have to deconstruct such evidence by cross‑examination (if they were able), a task which Mr Hon submitted Ps were ready to take on whether D2 gave evidence in the courtroom or via videolink. I also bear in mind that given the common ground that Ds did sign the various agreements, undertaking and guarantee, and that D1 did make various payments to P1, any complexity arising from documentary evidence on these matters would be reduced.

(b) Factors B, C and H

44.Mr Hui submitted there was sufficient/adequate evidence showing D2 was prohibited from leaving Cambodia and would be unable to give evidence in the Hong Kong courtroom if the Trial were to take place as scheduled. According to the D2 1^st Aff,

(a) D2 was/is in Cambodia facing criminal Cambodian Proceedings against her on a charge concerning “董事特別背信”. Such charge essentially concerned a complaint by a Chen Chu Zhuang (陳楚壯, “Chen”) that D2 as director of Swift Resources (Cambodia) Limited defrauded him of a sum of US$28,000,000 by not paying him his share of sale proceeds in relation to certain rubber plantation business in Cambodia.

(b) On 8 July 2016, a Cambodian court (東埔寨特本克蒙省法院) formally accepted (正式受理) the Cambodian Proceedings. On 11 July 2016, a Cambodian prosecutor (柬埔寨特本克蒙省檢察官) considered that D2 was a foreigner and there was insufficient evidence to secure a conviction, so the Cambodian Proceedings were transferred to “國家警察總署司法警察中央局長”. On the same day, Chen’s lawyers applied to the Cambodian “司法部長” for “特本克蒙省初級法院檢察院” to hear the Cambodian Proceedings, setting out Chen’s accusations against D2, ie that D2 tricked Chen into investing US$28,000,000 in Cambodia by purchasing 2 state rubber plantations totalling 8,000 hectares, but after D2 sold about 4,000 hectares of such rubber plantations she avoided Chen and did not pay him his share of the sale proceeds.

(c) D2 denied such allegations, and claimed part of the sale proceeds in the total sum of US$14,700,000 were used to repay bank loans, suppliers’ debts and outstanding salaries for plantation workers, which sums were deducted by the plantation’s purchaser from the sale proceeds before the remaining balance of US$690,000 was given to D2 who then deposited US$128,000 and US$150,000 into Chen’s designated bank accounts. D2 claimed she would defend the Cambodian Proceedings on the basis there was no fraud and she had duly paid Chen his share of the sale proceeds after discharging existing bank/trade debts of the rubber plantation business.

(d) On 28 July 2016, “司法部長” wrote to allow “特本克蒙省檢察官” to investigate/handle the Cambodian Proceedings in accordance with legal procedure. On 30 July 2016, Cambodian Presiding Judge Loch Lao (調查法官, “Presiding Judge”) issued a warrant of arrest (拘留令) and detained D2 in prison. On 2 August 2016, the Presiding Judge granted an order to restrain D2 and Wong from transferring their shares in the Cambodian Companies to third parties.

(e) On 10 August 2016, D2 pledged with the court the title deeds in respect of 2,000 hectares of rubber plantation owned by Swift Resources (Cambodia) Limited, so the Presiding Judge made an order that D2 be temporarily released from prison (暫時釋放獄外之指令). On the same day, the Presiding Judge also granted the Prohibition Order (將被告置於法院調查程序之指令) that prohibited D2 from leaving Cambodia without leave of the Presiding Judge. Further, D2 was mandated to report to the Presiding Judge of the Cambodian Tbaung Khmun Provincial Court of First Instance on the 10^th day of each month.

(f) On 15 August 2016, “三洲府省初級法院主審法官” issued a judgment for temporary forfeiture (暫時沒收裁定書), “決定暫時充公湖邊酒店所在的土地所具有的不動產權狀, 及暫時凍結[D2] 、Swift Resources (Cambodia) Limited公司及Swift Rubber Limited公司(下稱「被執行人」)在中國銀行的賬戶, 禁止被執行人收集債權或進行其他處理, 及禁止中國銀行償還被執行人的債務”. On 16 August 2016, “特本克蒙省初級法院Chhit Vinea法官根據上述的暫時沒收裁定書出具保存執行法院之沒收裁定書, 凍結被執行人於中國銀行的不同貨幣賬戶”.

(g) Since the date of the Prohibition Order, D2 could not and did not leave Cambodia. In fact, on 5 January 2017, the Presiding Judge rejected D2’s oral application to leave Cambodia for Hong Kong.

(h) At the request of Chen’s representative, in/about mid‑December 2016, D2 applied to “特本克蒙省初級法院 …… 把被禁止買賣的百份之十的橡膠園股份進行解封, 好讓[D2]可以進行股份買賣。而[Chen]指[D2]提出解封申請及並曾要求離開柬埔寨, 不合理地要求[D2]把2,800萬美元提交法庭作擔保。於2017年1月17日, 柬埔寨的中級法院根據[Chen]一方的要求, 判令[D2]繳交2,800萬美元作擔保。直至2017年2月14日, 上訴法院才把2017年1 日17日的判決撤銷”.

(i) The trial of the Cambodian Proceedings was scheduled to commence on 20 April 2017. But Chen’s lawyers unexpectedly applied for an adjournment so the trial did not commence as scheduled. On 8 May 2017, D2 finally received a summons requiring her to attend trial in the Cambodian Proceedings on 8 June 2017. D2’s Cambodian lawyers advised that the verdict was expected to be handed down about 1 month after commencement of the trial in the Cambodian Proceedings.

(j) The Prohibition Order would remain in force at least until the verdict was handed down in the Cambodian Proceedings, so D2 would not be able to leave Cambodia to attend the Trial in Hong Kong scheduled to commence on 21 June 2017.

45.According to the unverified D2 2^nd Draft Aff, D2 claimed that on 8 June 2017 Chen’s lawyers again unilaterally applied to adjourn the trial in the Cambodian Proceedings on the basis that Chen could not be located, and succeeded in doing so. D2 had no idea when the trial in the Cambodian Proceedings would take place in future. The certificate by D2’s Cambodian lawyers dated 9 June 2017 asserted that in the meantime D2 could not leave Cambodia.

46.Mr Hui submitted D2’s inability to come to Hong Kong to give evidence at the Trial was beyond her control. Mr Hon in his written submissions conceded it would be difficult for D2 to attend the Trial in Hong Kong on the scheduled trial dates if the Prohibition Order was genuine, but he complained D2 did not point out which part of the Prohibition Order issued on 10 August 2016 prohibited her from leaving Cambodia.

47.According to the Chinese translation of the Prohibition Order exhibited to the D2 1^st Aff, it was stated:

“因此, 玆決定

1. 將被告人[D2], 女, 60歲, 中國人(背景如上), 處於法院之調查程序中, 以便要求其完成以下義務:

甲/ 在無調查法官之批准下, 不得離開柬埔寨王國領土;

乙/ 必須響應調查法官指定的所有人之傳喚。

丙/ 必須在每月初的10號在本特克蒙省初級法院調查法官前面出席。

若故意逃避法院之調查義務, 則將被調查法官監禁。”

In the absence of countervailing evidence, I am prepared to deal with the Summons on the basis that D2 was/is subject to the Prohibition Order and could not leave Cambodia without leave of the Presiding Judge, and no such leave had been granted pending trial involving D2 in the Cambodian Proceedings.

48.By the D2 1^st Aff, D2 went on to claim she had reasonably and duly explored the possibility of giving evidence via videolink from Cambodia but it was not a viable option since (a) no or no reliable videolink facility was accessible to her in Cambodia, and (b) in any event it would not be appropriate to receive her evidence via videolink at trial in the present action.

49.In relation to D2’s contention that no videolink facility was accessible to her in Cambodia, she explained in D2 1^st Aff as follows:

(a) D2’s current residence at Dirt Road, Sangkat Kracheh, Banlung City, Ratanakiri Province, Cambodia (柬埔寨皇國，拉達那基里省，幫隆市，卡占分區，土路) was in a remote and underdeveloped area 8 hours’ drive away from Phnom Penh (金邊). D2 claimed internet access and electricity supplies were unstable there, and power failure was a common and frequent occurrence. Although D2 had endeavoured to search for videolink facilities nearby, neither the courts nor law firms had such facilities.

(b) D2 also explored the possibility of travelling to more developed cities such as Phnom Penh, but it was not a feasible option since it would take around 8 hours for D2 to travel to Phnom Penh and D2 would also face difficulties in locating suitable places/facilities for giving evidence via videolink there.

On such basis, Ds argued D2 had no reasonable access to any or any reliable videolink facilities in Cambodia.

50.Although D2 indicated it was not feasible to give evidence via videolink in the area near her residence in Cambodia by citing reasons such as poor internet connection and unstable electricity supply, it was quite evident D2 was not prohibited from travelling within Cambodia. Other than a bare assertion that she would face difficulties in locating suitable places/facilities for giving evidence via videolink in larger and more developed cities such as Phnom Penh (Cambodia’s capital city), D2 had not condescended upon particulars as to what steps she had taken to locate such facilities, whom she contacted, when she did so, and what precisely was the result of her enquiries. The certificate by D2’s Cambodian lawyers dated 19 May 2017 was careful in saying Cambodian courts did not provide videolink facilities, but there was no evidence that other government, voluntary or commercial institutions did not have such facilities. Mr Hon submitted it was inconceivable D2 could not find a suitable venue in Phnom Penh (such as 5-star or even 6-star hotels) that could provide stable internet connection, stable electricity supply and appropriate equipment for giving evidence via videolink. In making the application by the Summons, Ds came to court to seek an indulgence, and it was incumbent upon them to provide clear and cogent evidence to show they had taken all reasonable steps to overcome such difficulty. This, in my view, they had not done, and there was force in Mr Hon’s submission.

51.But that was not all. Ds suggested giving evidence by videolink facilities in Phnom Penh was not feasible because it would take around 8 hours to travel from her residence. I reject such reason. D2 was not prohibited from travel within Cambodia, and there was no reason why, if videolink facilities were available in Phnom Penh, she could not have travelled to Phnom Penh ahead of the arranged time to give evidence and stayed, say, in a hotel in Phnom Penh for at best 1-2 nights. There was no suggestion that she could not so travel and stay, say, in a hotel in Phnom Penh or she could not afford the cost of such travel and stay.

52.That left Mr Hui’s other contention that it would not be appropriate to receive D2’s evidence via videolink at trial in the present action. I should note at the outset Mr Hon made clear Ps did not object to D2 giving evidence via videolink, but acknowledged Ps could not force D2 to do so.

53.Mr Hui submitted that giving evidence outside the courtroom via videolink is an exception rather than the rule, and the present action was not an appropriate one for receiving oral evidence via videolink since D2’s credibility would be the core issue for resolving the factual issues and/or issues of mixed law and fact.

54.In Re Chow Kam Fai, ex p Rambas Marketing Co LLC, DHCJ To (as he then was) stated as follows:[6]

“28. …… The starting point is the fundamental basis that justice is dispensed by the Court of Justice and as a rule the parties have to come to the court to obtain justice. Secondly, justice is dispensed in open court accessible to the public so that any member of the public can watch the administration of justice in action. Justice has to be openly seen to be done. Within the court building and its precincts, the parties, their witnesses and their legal representatives are protected by law. They are free to prosecute their claim or their defence without fear. On the other hand, witnesses are obliged by law, the solemnity of the court atmosphere and the threat of immediate sanction to give evidence on oath or under affirmation and to tell the truth. They are subject to the sanction of the court if they should refuse to answer questions on oath or disobey an order of the court or otherwise behaves disrespectfully. Likewise, the judge can watch the witnesses giving evidence under the solemnity of the court atmosphere. Without exaggerating the notion of the dignity of the court and its authority, proper administration of justice must be conducted and seen to be conducted by proceedings within the courtroom. Hence, giving evidence outside the courtroom via video link is an exception rather than the rule. It is a privilege and not a right. This is my starting point.”

55.But Re Chow Kam Fai concerned a judgment debtor against whom a warrant for arrest had been issued after he refused to comply with an order issued under Order 49 of the RHC requiring him to attend court for cross-examination. The judgment creditor subsequently petitioned for his bankruptcy which the judgment debtor opposed. The hearing was the petitioner’s application under Order 38 rule 2(3) of the RHC requiring him to attend court for cross-examination on his affidavits. It was in such context that the judgment debtor suggested giving evidence from overseas by videolink. DHCJ To was unimpressed by the judgment debtor’s reasons for refusing to give evidence in court, and found he was seeking a collateral advantage by asking the court to protect him from the consequence of disobeying the court order which resulted in the warrant of arrest.

56.On appeal to the Court of Appeal in Re Chow Kam Fai David,[7] Rogers VP said as follows:

“17. In my view the judge was quite correct in this approach. The starting point must be that proceedings are conducted in court ……

18. …… I have no doubt that the atmosphere of a court is highly important as regards the taking of evidence. The solemnity of court proceedings and its atmosphere is something which, I have no doubt, plays an important role in the way justice is administered.

19. There is no doubt that VCF is a highly useful tool. It must be a question of judgment in each case as to whether VCF should be used for the taking of evidence. No doubt, on those occasions when the witness is giving evidence that is technical or purely factual, without important issues as to credibility, a court may be more disposed to allow evidence to be given by the use VCF. Questions of cost and convenience are no doubt also important considerations that the court will have to weigh in deciding whether to allow evidence to be given using VCF. But, first and foremost, it seems to me that the judge was correct in his approach that a party wishing to give evidence using VCF should establish a sound reason why that privilege should be accorded.”

57.In Mahajan v HCL Technologies (Hong Kong) Ltd, Rogers VP again said as follows:[8]

“7. As far as I am concerned the solemnity of the court is most important. In Hong Kong it is important that the members of the court, both the judges and counsel appearing, are properly attired. It is important that the court proceedings are carried on in court in the way that we do. It does give a solemnity to the occasion. One only has to observe parties and witnesses coming to court to observe their demeanour. It does have an impact. Giving evidence via a television link, in my view, dispels part of that. The place for a judge to sit, for witnesses to give evidence and for submissions to be made, is in court.”

58.In that case, the defendants sought leave for the 3^rd defendant to give evidence from India via video conferencing facilities on the ground that he was a very busy and successful businessman who was required to attend board meetings and had a medical condition. The trial judge refused the application, and held that giving evidence by videolink was an exception rather than the rule, and it was for the witness to justify why he should be accorded the privilege. I note this is another case in which the applicant’s own reasons for giving evidence by videolink were unattractive.

59.Similar principles were discussed and adopted in Asia-Pac Infrastructure Development Ltd v Ing Yim Leung Alexander[9] (but this again was a case in which the sole witness for the plaintiff applied to give evidence by videolink because he wished to positively avoid coming to Hong Kong due to an unsatisfied judgment debt against him in unrelated litigation) and in Daimler AG (formerly Mercedes-Benz AG) v Leiduck, Herbert Heinz Horst & anor[10] (another case in which the applicant sought to avoid coming to the courtroom in Hong Kong and to give evidence by videolink). Mr Hui cited the latter case but failed to inform court it was overturned on appeal to the Court of Appeal in Daimler AG v Leiduck (No 2).[11] Barma JA (Fok JA agreeing) accepted but distinguished the earlier authorities, and allowed the applicant to give evidence by videolink from Germany as uncontradicted medical evidence showed it would be life-threatening for the 80-year-old 1^st defendant to travel to Hong Kong.

60.More recently, Ng J in In the matter of James Henry Ting ex p Akai Holdings Limited,[12] not cited by either Mr Hui or Mr Hon, declined the debtor’s application for leave to be cross-examined on his affidavit evidence by videolink due to alleged ill-health. Although the intention to make such application was alluded to previously, the summons was not issued until 18 days before the hearing of the petition and returnable 7 days before such hearing. Ng J held there was no good reason for the late application, and found force in the petitioner’s criticism that the last minute application was “characteristically tactical”. The learned judge was unconvinced the debtor was unable to come to Hong Kong, and held he failed to make out a valid case it would be just for him to testify by videolink. Ng J referred to the above authorities, and his decision was upheld on appeal by the Court of Appeal:[13]

“4. The judge has certainly not misunderstood the law. Nor, in our view, has this court’s recent decision in Daimler AG v Leiduck (No 2) [2013] 2 HKLRD 822 established anything new in terms of the proper approach to a request for giving evidence via video link. As for its actual decision, like all other decisions, the case was decided on its own facts. All we need say is that the debtor’s alleged condition, even taken into account Dr Chen’s report, is far removed from the condition of the 1^st defendant in Daimler AG, and the facts of these two cases cannot be more dissimilar. The judge made a similar point below.

5. The judge was fully entitled to take into account the factors that he mentioned in his reasons. In particular, he was entitled to take a very dim view, particularly in this post‑CJR era, of the delay involved in the present case and the lack of adequate and satisfactory explanation for the same. This applies …… to the application for taking evidence via video link ……” (my emphasis)

61.Mr Hui submitted that here D2 was Ds’ only factual witness so it would be in the interests of justice for the trial judge “to hear [her] testimony “live”, and be in a position to see/scrutinise [her] some 10 feet away in the witness box, and not allow [her] to be “shielded” through the medium of a plasma screen”.[14] Even if Ps were satisfied with cross‑examining D2 via videolink, it was said Ds (and the court) had a legitimate interest to see D2 give evidence in the courtroom so she could fully demonstrate her demeanour/credibility to facilitate resolution of the factual issues and/or issues of mixed fact and law that depended on her testimony and credibility. On such basis, Mr Hui argued the present action was unsuitable for receiving D2’s evidence via videolink which in any event should be the exception rather than the rule, and hence it would be necessary to adjourn the Trial in order to secure the fair and just resolution of disputes in accordance with the parties’ substantive rights.

62.In my view, although traditionally the adjudication of civil disputes usually requires the attendance of witnesses at a trial for adducing their evidence by the conventional mechanism of examination-in-chief and cross-examination, there is in contemporary litigation a greater willingness to receive certain evidence by other media, eg via videolink, in furtherance of the interests of promoting efficiency and expedition and avoiding unnecessary time, costs and complexity. The existence of Practice Direction 29 on Use of the Technology Court speaks of such development.

63.Indeed, the authorities are clear that in cases where other permitted methods of receiving evidence (eg via videolink) are canvassed, the court is invested with a broad discretion, and such discretion is informed by the court’s assessment of the interests of justice (as between the immediate parties and in the wider sense of the expeditious and efficient management of litigation) in a particular case. This may entitle the court to consider a broad range of factors including the underlying objectives of saving expense and fairness to both parties. Plainly, the court’s approach in coming to an evaluative judgment on such issue (especially when the application is made at the brink of a scheduled trial) is not confined to bilateral inter partes considerations as the court will also be alert to material considerations on the administration of justice, ie the court’s ability to determine any claim in accordance with the interests of justice and fairness to both parties. How that discretion is to be exercised in any particular case will depend on the circumstances of the case as a whole and the court’s assessment of the justice of the matter. Save for the above, there is no defined limit or set of circumstances placed upon the exercise of discretion to permit videolink evidence.

64.That said, I must emphasise there is nothing inherently unfair in permitting evidence to be given via videolink. In appropriate cases, it is possible for cross-examination to be conducted via videolink with little impairment of effectiveness. In contemporary post-CJR litigation, litigants and courts should not be afraid to embrace positive and, may I say, welcome benefits of technological developments. The relevant consideration is whether the case in question is an appropriate case for receiving evidence in such manner.

65.I also bear in mind that most of the authorities discussed above concerned applicants who were reluctant to travel to court to give evidence in person and it was their opponents who objected to the applicants’ wish to give evidence via videolink on the basis inter alia that evidence by videolink was not the same as having the witnesses in court, particularly when the applicants’ reasons for not coming to court were unattractive and when it comes to cross-examination in the particular circumstances of those cases its force and effect might be weakened by “the medium of a plasma screen”.

66.Whilst I accept, as Mr Hon fairly recognised, (a) receiving evidence of a witness via videolink would introduce additional layer of logistics that was less than ideal and would carry some risk of technical glitches of one kind or another, and (b) requiring interpreters meant the process of giving evidence would be more protracted than it might otherwise be, I find Mr Hui overstated the extent to which the appearance of D2 as witness via videolink was likely to prove to be substantial impediment to effective taking of evidence (the bulk of it would be cross‑examination since it was expected D2 would adopt her statement evidence as her evidence-in-chief) or to operate to Ds’ disadvantage.

67.First, I have found there was insufficient evidence before this court to demonstrate that reliable videolink facilities were unavailable in Phnom Penh, a place where D2 could have travelled to and stayed for 1‑2 days. Secondly, Ps were prepared to bravely take on the “disadvantage” of cross-examination via videolink. Thirdly, I have also found that the issues were less complex than what Mr Hui would have this court believe, and I am not persuaded that in a case of this kind where there was little dispute over the objective evidence of having entered into the written agreements, undertaking and guarantee and having made the various pleaded payments, there was likely to be great difficulty as regards assessment of witness demeanour. In the context of the present action, upon balancing the requirement for fairness to both parties, I find assessment of witness evidence received in such manner would be something that could be left for the trial court to judge and, if necessary, to make allowance for accordingly.      Fourthly, D2 pointed out the trial would be conducted in English, and she would need interpreter service as her mother tongue was Mandarin and she did not know English. D2 expressed concern as to whether or not she and the court interpreter could communicate efficiently, effectively and accurately via videolink given the instability of internet and electricity in Cambodia, which Mr Hui submitted would add to the risk for findings to miscarry. But as pointed out by Mr Hon, interpreter would still be necessary if D2 was to attend court in Hong Kong. And I have found there was insufficient evidence before this court that stable/reliable internet and electricity facilities in Phnom Penh were unavailable.

68.Here, whilst Ps accepted that in an ideal world every witness would be examined and cross-examined in person in court, for D2 to give evidence via videolink would be a less unattractive option compared to adjourning the Trial. But by the time of the Hearing there was grave concern over whether receiving evidence via videolink would be feasible at all given there was just 1 remaining week until the Trial.

69.First, as Mr Hon submitted, neither Ps nor the court were in no position to compel D2 to give evidence whether via videolink or otherwise. But the D2 1^st Aff and D2 2^nd Draft Aff indicated D2’s reluctance to give evidence via videolink. Secondly, although Mr Hon boldly stated from the bar table videolink arrangements could be arranged in time, there was no evidence before this court that any available venue with satisfactory quality of videolink had been seriously explored as yet. Thirdly, the availability of the Technology Court for the scheduled trial dates was unknown. Fourthly, application had to be made to the trial judge for case management directions on use of the Technology Court and videolink facilities to receive witness evidence. Fifthly, it was likely the trial judge might have to impose (and see to the implementation of) suitable and proportionate conditions to the videolink evidence order in the interests of fairness to both parties and in order to avert any possible misuse of the court’s process, and such conditions might include, say, (a) requiring D2 to testify under affirmation in an isolated room unaccompanied, (b) requiring D2 to be in communicado from beginning to end of her evidence, (c) allowing Ps to have a legal representative present for oversight of these matters, (d) requiring clean hearing bundle to be placed before D2, and (e) D2 agreeing to be strictly bound by all procedural and practical directions given by the trial judge. In my view, it was wholly unrealistic to say all of the above matters would be resolved and tidily put in place in/about 5 working days.

70.This nicely brings the discussion to why Ps and the court were left in such procedural quandary. Mr Hon submitted in this respect the court should also take into account the timing of the Summons. Ps complained Ds waited until less than a month before the Trial to inform Ps of the Cambodian Proceedings and Prohibition Order and to file the Summons (with a return day that was just a week before the Trial), and suggested Ds’ real intention and tactic were to adjourn the Trial.

71.D2 claimed she had a reasonable explanation for the delay in that she thought the Cambodian Proceedings would have an adverse and/or negative impact on the present action, so she was reluctant to and did not disclose the existence of the Cambodian Proceedings to her Hong Kong lawyers. Before D2’s application to leave Cambodia was rejected by the Presiding Judge in January 2017, she thought she would be allowed to leave Cambodia for attending the Trial in Hong Kong so long as she duly made an application to the Cambodian courts, but it turned out her application was rejected by the Cambodian court. Further, the trial of the Cambodian Proceedings was originally scheduled to commence on 20 April 2017 with the verdict expected to be handed down before commencement of the Trial in Hong Kong, so D2 originally thought the Trial would not be affected by the Cambodian Proceedings. But Chen unexpectedly applied to adjourn the trial of the Cambodian Proceedings to 8 June 2017, thus making it impossible for D2 to give evidence in the courtroom in Hong Kong at the Trial.

72.I must say Ds’ reticence in informing Ps of the developments in Cambodia were, quite simply, unattractive. The Prohibition Order came into existence at about the time when Ps applied to set down the present action for trial in August 2016. D2’s main reason (主要原因) was that she subjectively considered “面對刑事起訴一事並不光彩”, but when viewed objectively (as I must in balancing the interests of both parties) this was necessarily a poor excuse for being silent for about 9 months.

73.In the post-CJR era, parties are expected to adopt a cards‑on‑the-table approach to litigation. The Prohibition Order was plainly a matter that had potential impact of the Trial, and Ps being immediate parties to the litigation had a right to know of matters that might affect the Trial. Likewise, the Hong Kong courts with their limited resources also expected litigants to be frank about matters that might affect court time, which time should be deployed effectively. D2 claimed she orally applied to the Cambodian court in January 2017 for permission to leave Cambodia and was refused, and even then there was no intimation to her own Hong Kong lawyers let alone Ps and/or the Hong Kong court of the possibility that she might not be able to attend the Trial in Hong Kong. The reason Ds offered for such “non-disclosure” was D2 thought the Cambodian Proceedings would have an adverse and/or negative impact on the present action, which went a long way to show D2 was quite prepared to keep material matters up her sleeve. To make matters worse, Ds remained silent even when parties attended court for amendment of pleadings in February 2017 and, more significantly, for PTR in March 2017 (when the parties must have been expected to apprise the court of any factor that might affect the Trial), and also when parties made a consent summons in May 2017 (less than 10 days before the Summons was filed) for further statement evidence.

74.Mr Hui submitted it would have been premature for D2 to apply for an adjournment of the Trial before 20 April 2017. But it is not lost on this court that D2 only presented a picture of potential acquittal at the trial of the Cambodian Proceedings, and both she and her Cambodian lawyers were silent as to the potential consequences of a verdict against her, whether in terms of her physical liberty and/or impact on her financial position. In my view, she was duty bound to tell her Hong Kong lawyers, Ps and the Hong Kong court about the Cambodian Proceedings, Prohibition Order and the possible or likely consequences of success or failure in her defence of the Cambodian Proceedings. Indeed, in Velatel Global Communications Inc & anor, the 6^th defendant owned up that sentence upon conviction of the relevant charge in Mainland China would be 10 or more years’ imprisonment. Of course, the 6^th defendant in that case could potentially be acquitted, but the court nevertheless found there was unexplained delay in him telling his Hong Kong lawyers only 4 months after he was detained and a month after he was charged. In my view, there was no good reason/excuse for D2’s delay in informing her own Hong Kong lawyers, Ps and the Hong Kong court of the developments in Cambodia. Had Ps been informed, it would have been open to Ps (if they saw fit) to apply to court for directions on timely and effective alternative arrangements (if D2 was willing) for D2’s evidence to be received via videolink or to apply for earlier re-fixing of the trial dates, so that unnecessary time and costs could have been avoided. I am afraid Ds were the author of the lateness of Summons which made it impossible to arrange videolink facilities for receiving D2’s evidence in the shortness of time to the Trial (assuming D2 was willing to give evidence in such manner).      But that said, the present case was different from Velatel Global Communications Inc & anor in that there was some credible evidence (ie the Prohibition Order) of D2’s unavailability for trial in Hong Kong.

(c)  Factors D and E

75.Mr Hui submitted D2 was the key/sole witness who could testify for Ds, and it was not feasible to call other persons (eg Wong) to give evidence in her place since most, if not all, matters crucial to Ds’ case could only be dealt with by D2:

(a)  Although Wong was also a director and ultimate owner of D1, it was apparent even from Ps’ case that most if not all of the transactions and/or dealings between Ps and Ds that were relevant to the present action involved D2 acting on D1’s behalf. P2 in his witness statement dated 15 April 2016 stated that “[Wong and the 3^rd defendant]沒有直接參與[D1]與[P1] 之間就該橡膠園的協議。主要是由[D2]代表[D1]及[P2]代表[P1]洽談就該橡膠園的協議”.

(b)  Ds claimed Wong’s involvement was de minimis or even nil. Ds filed the Wong Aff to the effect that as D1’s director he was responsible for “貨運管理”, and D2 was solely responsible for the rubber plantation business that was the subject matter of the present action. Although Wong was aware P2 and D2 signed some agreements and D1 suffered hardship in operating the rubber plantation business since P1 did not pay the full amount of its promised investment, Wong claimed he was not involved in the discussions between P2 and D2 over the rubber plantation business venture or the terms of the agreements. He was not present when the 8/8/11 Agreement, Undertaking and Guarantee were signed, and claimed to be unaware of the oral agreement/discussion between P2 and D2 on that occasion. He further claimed D2 did not discuss with him beforehand.

Mr Hui therefore submitted D2 (and not Wong and/or others) was the one most involved in the transactions/dealings relevant to the present action, and only D2 could present the most relevant, accurate and helpful evidence to the court for resolution of the issues in dispute.

76.For the present purpose, in light of the Wong Aff that was filed in answer to the complaint in Mr Hon’s written submissions that there was insufficient evidence of efforts to locate other persons (such as Wong) who might stand in to give similar evidence at the Trial, I am prepared to assume for the purpose of the present application that D2 was a key witness with material evidence to give at the trial of the present action.

(d)  Factor F

77.Mr Hui submitted that although it was uncertain whether or not D2 would be further prevented by the progress and/or outcome of the Cambodian Proceedings from appearing at the adjourned trial in Hong Kong, it was not appropriate for Hong Kong courts to “guess the outcome of the criminal investigation and trial [in Cambodia]”.[15] Mr Hui argued this court should not speculate and/or take into account the merits of D2’s defence to and the possible outcome of the Cambodian Proceedings.

78.Whilst I accept the court should not speculate on the merits of the Cambodian Proceedings, D2 who had the assistance of Cambodian lawyers was silent on the potential consequences of a verdict against her, and even on whether and when (if at all) the Prohibition Order would be lifted upon acquittal. D2 did not even depose she would be able to return to Hong Kong after verdict is handed down in the Cambodian Proceedings. It is open for this court to note that even if the Trial were to be adjourned, there was no certainty D2 could return to Hong Kong to give evidence within a reasonable time. Mr Hon feared that if D2 were convicted upon conclusion of the Cambodian Proceedings, she could be incarcerated and unable to give evidence via videolink. But there was simply no evidence before this court of the likely penalties upon conviction of the charge in the Cambodian Proceedings although I accept the outcome of such proceedings was plainly uncertain.

(e)  Factors G and H

79.Mr Hui submitted Ps did not put forward any specific factual circumstances to suggest their witness P2 would become unwilling or unavailable to testify at the adjourned trial.[16] Mr Hui reminded that as in Arko Ship Leasing Ltd[17] delay in taking out an adjournment application would not be fatal and could be reflected in an appropriate order for costs. It was said Ps would be appropriately compensated by costs orders in their favour in relation to (a) the aborted trial if the Trial was vacated and adjourned and (b) the Summons (including costs of the Hearing).

80.Mr Hon complained that Ps commenced the present action 3 years ago in 2014, and their claim for breach of contract at the end of November 2014 amounted to nearly US$18,000,000 with interest accruing at US$9,928.78/day. Even with inevitable provision against Ds for costs thrown away and costs of the Summons (which Ds conceded at the Hearing), such costs paled into insignificance when compared with the amounts claimed by Ps (including outstanding interest) in the present action. Ps claimed there was also the worrying circumstance that D2 was facing lawsuit in Cambodia, and further delay might diminish Ps’ likelihood in securing the fruits of their claims in the present litigation.

81.In my view, there was some force in Mr Hon’s submissions. Whilst appropriate costs orders might compensate Ps for having incurred unnecessary costs, such costs orders would not offer any protection for the financial risks of postponing the present litigation. This is particularly so here when the burden largely fell on Ds to establish the Defences and when D2 faced another lawsuit involving a significant claim. It was not a situation in which it could be said Ds had a robust stance. Moreover, not only was this state of affairs not of Ps’ making, Ds by delaying proper notice to their Hong Kong lawyers, Ps and the Hong Kong court had contributed to this unfortunate state of not being able to attend court in person and not having sufficient time and opportunity to arrange videolink facilities for receiving evidence by other means.

82.On a wider consideration, vacating a trial is also undesirable in wasting the court’s time, and it is especially so in this case when the Summons was filed so late that the possibility of leaving the court empty and unable to provide service to other litigants was quite real.

(f)  Summary

83.Here, the court had to face imperfect or, more correctly, unsatisfactory alternatives. The choice in reality was between, on one hand, refusing to adjourn the Trial in which case Ds would have no witness (since D2 could not leave Cambodia and videolink facilities could not be properly set up in time) and would not be able to raise the Defences to Ps’ claim, and on the other, vacating and adjourning the Trial in which case Ps through no fault of their own would be postponed from judgment (if they were to succeed at the end of the day) with increased risk of diminished enforcement and recovery.

84.The dominant consideration would be the interests of justice as between both parties. In my view, the interests of justice would be better served by adopting the latter course for the former course spelled certain failure for Ds in the present litigation as there was no prospect of D2 giving evidence in any manner at the Trial. If the latter course was adopted, Ds would be afforded an opportunity to call D2 as their witness at the re‑fixed trial either in person at the courtroom or (if D2 would agree) by receiving her evidence via videolink, and measures could be put in place for Ps’ protection (a) to ensure the trial would be re-fixed as soon as practicable (see paragraph 11 (b)-(d) above) and (b) to cover Ps’ exposure to financial risks due to deferral of the Trial (see paragraph 11(e)-(i) above). I agree with Mr Hon that in the exercise of my discretion to vacate and adjourn the Trial on the basis of exceptional circumstances in the present context, it would be appropriate and even necessary to impose conditions as part of the balancing exercise. Indeed, Mr Hui accepted this court has power to impose conditions upon granting an order to vacate/adjourn the Trial, and to specify the consequences of the failure to comply with the order or a condition.[18]

85.I come to the above conclusion with the greatest reluctance, and must emphasise that based on the circumstances of the present action Ds could not hope or expect they would be entitled to an indefinite adjournment until D2 would be available. The measures in paragraph 11(b)-(d) above were put in place to reflect a balance approach to afford Ds a chance to call D2 as witness by traditional or alternative means, and to be fair to Ps who were innocent of any fault by ensuring the derailed trial would be rescheduled as soon as practicable.

86.Ds conceded costs in paragraph 11(f)-(i) above and, in my view, they could hardly complain about the protective measure for Ps under paragraph 11(e) above. I have found D2 was the author of the late Summons that put Ps in the unenviable position of losing the Trial scheduled next week even when they were prepared to cross-examine D2 via videolink. Arko Ship Leasing Ltd was quite different in that it was clear the witnesses detained in Mainland China could not give evidence in any manner in Hong Kong including via videolink. But here I was not satisfied that videolink facilities were unavailable in Phnom Penh, that D2 could not stay for a day or so in Phnom Penh to give evidence in such manner, and that the present case was not amenable to receiving D2’s evidence via videolink. D2’s reticence until a late stage had the signs of a tactical move and must therefore draw censure from the court. It is only fair that condition be imposed to protect Ps as part of the balancing exercise, and that the consequences of failure to comply with such condition be specified.

87.That said, I do not agree with Mr Hon’s proposal that Ds shall pay into Court an amount of US$13,600,000[19] as security on/before 3:00pm on 19 June 2017, failing which judgment shall be entered against Ds with costs of this action be to Ps to be taxed if not agreed. I do not see why Ps should have security of such payment in advance of the trial of the present action nor do I see any justification for Ps entering default judgment on failure of the condition. After all, if the Trial were to proceed on 21 June 2017 and D2 did not give evidence, Ps would still have to prove their case to the satisfaction of the trial judge.

88.Both Mr Hui and Mr Hon accepted that in light of the court diaries it would be overly optimistic to believe the trial could be re-fixed within 6 months even if the earliest dates were to be given. That being the case, I do not see why condition should not be imposed for Ds to make payment into court a sum in the broad range of the additional interest on the principal amount claimed by Ps for a 6-month period that would not have been incurred but for the adjournment of the Trial. In broad terms, Ps’ claim for interest over a period of 6 months would be US$9,928.78/day x 365 days ÷ 2 = US$1,812,002.35. In doing so, I also bear in mind the nature of Ds’ defence, which could not be said to be one of the more robust ones seen by this court, and the fact D2’s inability to leave Cambodia should have been canvassed with Ps and the Hong Kong court at a much earlier stage in these proceedings. Whilst it would be disproportionate on the ground of delay alone to refuse adjournment of the Trial in the particular context of the present case, such delay had forced the court’s hand to adjourn the Trial before compliance of the proposed condition could be ascertained. It was therefore appropriate to specify the consequences of non-compliance, and the only appropriate sanction in the circumstances was the one set out in paragraph 11(e) above.

VII.  CONCLUSION

89.For all of the above reasons, I granted the orders at paragraph 11 above at the Hearing. I should add as a final caveat that these reasons for decision should serve as a reminder to all litigants and practitioners that courts take a dim view of late applications to move milestone dates. In the post-CJR culture, parties and their lawyers should be frank and upfront on any matter that may potentially affect milestone events so that the court seized of the matter can evaluate the situation and decide how best to balance the parties’ interests as well the deployment of court’s resources. The prism is triangular, and it is not for a party to dictate the outcome by withholding information. In future, litigants should not expect the courts to smile with like kindness as in the present case, and they may have to suffer the consequences of their own tactical manoeuvres. In a slightly different context (but also in the exercise of the court’s broad discretion on case management, Ng J (as approved by the Court of Appeal) in In the matter of James Henry Ting made clear unsatisfactory and tactical delay is a material factor that may sway the exercise of discretion against the applicant.

VIII. POSTSCRIPT

90.On 16 June 2017, Ps’ solicitors wrote to the court to request inter alia for (a) the trial to be re-fixed in consultation with the diary of Ps’ existing counsel, and (b) extension of time to submit Ps’ statement of costs. It was said that if it is possible to re-fix the trial in consultation with the diary of Ps’ existing counsel, then some costs thrown away may be saved. In my view, this proposal would not cause Ds any prejudice since (i) it would be Ps who may suffer some delay if the re-fixed trial is to accommodate the diary of Ps’ existing counsel, and (ii) saving some costs thrown away will only benefit Ds who are liable to pay such costs. It is also appropriate to extend time for Ps to lodge their statement of costs since they cannot prepare their statement of costs until it is known whether Ps are able to retain their existing counsel upon re-fixing the trial and thereby save some costs.

91.In the circumstances, on 16 June 2017, I granted the following directions on paper as follows:

(a)   the order in paragraph 11(b) above be varied to the extent that the words “without accommodating counsel’s diaries or” with “in consultation with the diary of Ps’ existing counsel only and without accommodating the diary of Ds’ counsel and/or”;

(b)   there be extension of time until 27 June 2017 for Ps to comply with the order in paragraph 11(g) above.

Mr Kevin Hon, instructed by Christine M Koo & Ip, for the 1^st and 2^nd plaintiffs

Mr John Hui and Ms Wallis Chung, instructed by Michael Li & Co, for the 1^st and 2^nd defendants