Hui Ki Ho v. Yeung Chun Fung

HCA 2942/2015

[2020] HKCFI 528

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2942 OF 2015

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Before: Deputy High Court Judge Leung in Chambers

Date of Hearing and Decision: 11 September 2018

Date of Reasons for Decision: 2 April 2020

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R E A S O N S   F O R   D E C I S I O N

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1.These are my reasons for the decision in respect of the defendant’s earlier application to strike out and expunge certain documents from the trial of this action. At the same time, I am handing down separately the judgment after trial. The background and dispute in the present action are set out in the judgment, which I will not repeat here. I adopt the same definitions and abbreviations used in the judgment for the present purpose.

Background

2.It is common ground that New Loyal and Jolly Concept were the two companies that founded the Mainland Company for the purpose of applying for a cross border vehicle licence.  The Licence was eventually issued to New Loyal. By January 2018, the parties have exchanged witness statements in this action.  Amongst others, Madam Kwok, the first registered proprietor of New Loyal, would testify as to how she came to act as Yeung’s nominee as the registered proprietor of New Loyal back in 2010.

3.By summons dated 18 January 2018, Hui, the plaintiff, applied for specific discovery from Yeung, the defendant, the following documents:

(1)  certified extracts of information on the business register of Jolly Concept with Yeung as the owner thereof;

(2)  communications between Yeung and the Business Registration Office (“BRO”) and the Hong Kong Police in respect of the complaint made by one Ma Kam Lung (“Ma”) in respect of dispute over the ownership of Jolly Concept;

(3)  communications between Yeung and Ma in respect of the dispute over the ownership of Jolly Concept; and

(4)  pleadings and witness statements in HCA 1725/2016 commenced by one Wong Ka Yiu (“Wong”) against Yeung.

4.The dispute involving Ma concerns the ownership of Jolly Concept and another cross border licence which it owns, but no legal action concerning that has been brought yet.  As to HCA 1725/2016, Wong commenced that action against Yeung in respect of the ownership of one Good Venture Development Limited (“Good Venture”) and the cross border licence which Good Venture owns and holds.  As of this moment, neither of these other disputes appears to have been resolved in court.

5.Hui claims to have been informed by the solicitors who advised Wong and Ma that their claims and complaints were similar in that they were all said to have been removed from their respective companies and replaced by Yeung without their prior knowledge and consent.  The basis for Hui’s specific discovery application was that those other disputes involving Yeung bore strong resemblance in facts to the present case.  It was obvious that Hui intended to rely on the documents sought for effectively similar fact evidence[1].

6.For the purpose of the specific discovery application, Hui also produced copies and photographs of documents which he had obtained from the solicitors for Ma and Wong, including those of the extracts of business registration information of Jolly Concept, communications between Ma and his solicitors with the Inland Revenue Department (“IRD”), company search of Good Venture, and some of the pleadings in HCA 1725/2016.

7.On 10 May 2018, the master dismissed Hui’s application with costs, after hearing the parties.  The transcript of that hearing reveals the master’s following reasoning:

“ The Mainland company was duly set up and Ah Chung successfully applied for and obtained a cross-border vehicle licence. This licence is said to have been applied for and on behalf of New Loyal in its capacity as a shareholder of the Mainland company. It appears to be common ground that this licence was issued to New Loyal.

The true owner of this licence is the subject matter of the dispute. Assuming that the background to the formation of the Mainland company which ground the eligibility to apply for the cross-border vehicle licence is relevant to the substantive factual and legal issues in dispute, or would at least enable the plaintiff to put into a train of enquiry, including the owners behind Jolly at the relevant time,the plaintiff is already in possession of such information prior to February 2015 and from September 2015 onwards.

The relevant period in relation to the formation of the Mainland company is in or around October 2010, and the plaintiff is already in possession of such information and therefore already has whatever information he may consider necessary to lead him on to a train of enquiry, including the transfer of interest from City Best to Hon Yiu-Kwan.

…

In contradistinction to class 1, class 2 is related to a complaint over his status as owner of Jolly and has nothing to do with the ownership of New Loyal and the licence, which are the real issues in this case.

I agree with Ms Law that unproven assertions which can in no way be substantiated at the trial of this action do not constitute similar fact evidence for the purpose of the plaintiff’s claim. The specific discovery related here is directly solely--directed solely to credit,namely to put the plaintiff in a position to say a similar complaint was made with Jolly [Concept], therefore, the complaint in respect of New Loyal here must be true.

This cannot be right. An unsubstantiated complaint remains an unsubstantiated complaint and is a far cry from being a fact of similar evidence.

I agree that the complaint have no material bearing on the issues to be decided in this action and that the prejudicial effect far outweighs the potential probative value of such evidence.

Class 2 is not necessary for the fair disposal of this action and I will disallow discovery in respect of this class of documents.

Class 3. Specific discovery requested here relates to a similar complaint made in respect of another company, Good Venture Development Limited, and another licence owned by this company,which again have nothing to do with the issues raised in this case.

I do not see how these similar substantiated complaints can be elevated to similar fact evidence and how it can have any material bearing to the issue raised.

…”

8.Hui did not appeal the master’s decision.

9.One week after the above decision, Hui filed his 2^nd supplemental list of documents, consisting of the following items numbered 21 to 29:

(1)  Copy of the electronic extract of information of Jolly Concept dated 2 March 2017 (Item No 21);

(2)  Copy of the certified extract of information of dated 7 October 2016 (Item No 22);

(3)  Documents obtained from the solicitors for Ma and Wong, namely:

(a)  Copy photograph of the letter from the IRD to Ma dated 3 November 2015 (Item No 23);

(b)  Copy photograph of the letter from the IRD to Ma dated 24 June 2016 (Item No 24);

(c)  Copy photograph of the letter from the solicitors to the IRD dated 27 October 2017 (Item No 25);

(d)  Copy photograph of the certified extract of information of Jolly Concept dated 2 February 2015 (Item No 26);

(e)  Copy photograph of the Defence and Counterclaim of Yeung as the 1^st defendant in HCA 1725/2016 (Item No 29);

(4)  Copy of company search of Good Venture (Item No 27);

(5)  Copy of the writ of summons with statement of claim in HCA 1725/2016 (Item No 28).

10.It was immediately apparent that what Hui now disclosed were most, if not all, of the documents relied on in support of the previous specific discovery application, which had been dismissed.

The application

11.By summons filed on 13 June 2018, Yeung applied to strike out and expunge from the trial items nos 21-25 and 27-29 of the documents disclosed by Hui as mentioned above.  The grounds were:

(1)  they did not relate to any matter in question between the parties in the present action;

(2)  they were not necessary for the fair disposal of the cause or matter or for saving costs; or

(3)  they were inadmissible as being scandalous, frivolous, vexatious or oppressive, or tending to prejudice, embarrass or delay the fair trial of the action.

The principles

12.There is no dispute as to the continuing obligation of the parties to an action to make discovery of documents relating to the questions in the cause or matter in the case: O24, r2(1). It should equally be undisputed that the court has the power and should exercise such power to regulate the process and scope of discovery to ensure that the underlying objectives of the rules of the court are observed.  The Registrar in Wong To Yick Wood Lock Ointment Limited v Bensunville Limited trading as Nanyang(Singapore) Medicine Co HCA 595/2014 (22 January 2016) said this (at §§11 – 14), and I agree with such observation.

13.The obligation to make discovery of documents should not be confused with the use of the documents at the trial[2]. Documents that are actually irrelevant or unnecessary, albeit disclosed, have no place in the trial.  Documents should not be allowed to remain merely for giving the court the often labelled whole picture of the case or to enable the party disclosing them to use them depending on how things go during the trial.  Apart from the costs consideration, there is the material concern of the party being faced with such documents about the need to prepare for rebuttal.

14.Relevance of the documents is defined by the pleadings and with reference to the witness statements that are adduced in line with the pleaded case: see Kwok Chin Wing v 21 Holdings Ltd (2013) 16 HKCFAR 663 at §21. So is the necessity for the documents for the purpose of the trial.

Item no 26

15.Yeung did not take issue as to item no 26.  This set of documents contained the particulars of the business registration of Jolly Concept during the period between 2010 and early 2015.

Items nos 23, 24 and 25

16.As confirmed by Mr Yip, appearing for Hui, his client no longer sought to rely on items nos 23, 24 and 25.  I would have expunged them.

Items nos 21 and 22

17.Items nos 21 and 22 contained the particulars of the business registration of Jolly Concept (under different registration numbers) in 2016 and 2017.  According to his affirmation in opposition of the application, Hui essentially referred to the documents being public records of factual information, and argued that they were not objectionable for disclosure.

18.In his written submissions, Mr Yip explained the relevance of Jolly Concept.  However, the involvement of Jolly Concept is not a matter of dispute.  Mr Yip further explained that both sets of record showed that Yeung became the proprietor of the company in 2015, and such information would cast light on the credibility of his answers to requests for further and better particulars of his pleading, where he stated that he had no (clear) recollection of the shareholders (or owners) of Jolly Concept.

19.I did not see how.  The answers referred to were given by Yeung to the requests by Hui for further and better particulars of Yeung’s plea about Jolly Concept being mentioned and introduced by Chung, the middleman who was entrusted to procure the acquisition of the Licence, as mentioned earlier in the background set out above.  As pleaded, that took place in late 2011 to 2012. Yeung’s answer was that he had no (clear) recollection about the proprietor(s) of Jolly Concept at the time[3]. He said so too in his witness statement[4].

20.For the particulars of the proprietors of Jolly Concept during the period between 2010 and early 2015 before Yeung joined, there is now item no 26 which, as mentioned, he did not object to.  Items nos 21 and 22 contained the record from 2015 to 2017, but it is not apparent how they could cast light on the credibility of Yeung’s answer in respect of his recollection, or the lack of it, about the identities of the proprietors of the company in 2011 to 2012.

21.I should also mention that such elaboration of the reason why Hui sought to rely on these two items of documents were originally put forward by him as the reason for seeking to rely on items nos 23, 24 and 25 instead[5].  However, as mentioned, Hui no longer relies on them.

Items nos 27, 28 and 29

22.Items nos 27, 28 and 29 relate to the complaint and action of third parties arising out of dispute in respect of other cross border licences involving Tsui/City Best and Yeung.

23.Insofar as these three documents were said to be evidence of similar facts, there was no pleading of reliance on those as facts.  Nor was here basis for doing so, because the statements contained in those documents at this stage were assertions instead of facts.  Further, it could not be legitimately expected that the court would adjudicate in the trial of the present case any aspects of the allegations contained in such other complaint and action.  I should also mention that Yeung was then represented by a different legal team in HCA 1725/2016.

24.Insofar as these documents would be relied on as evidence of the mere fact that there are such complaints and other action against Yeung, there was still no pleading of that fact and its relevance to the issues in dispute between the parties.  The fact that there were such other complaint and action against Yeung may not be disputed, but that is neither here nor there for the purpose of the present case: see EG Music v SF (Film Distributors) Ltd [1978] FSR 121 at 123 – 125.  If anything, they only tend to embarrass or prejudice Yeung at the trial: Thorpe v Chief Constable of Greater Manchester Police [1989] 1 WLR 665 at 668 – 670.

25.In court, Mr Yip confirmed that it was not his intention to rely on the documents as evidence of the factual allegations contained therein or similar fact evidence.  Nor was his intention to rely on the documents as evidence of the fact that there was such other complaint and legal action against Yeung.  In his written submissions, Mr Yip explained that Yeung’s pleaded case in HCA 1725/2016 gives an account of his relationship with Tsui/City Best, their dealings in relation to the licence and his state of knowledge in that case.  Mr Yip suggested that he might use those documents for cross-examining Yeung as to the scope of Tsui/City Best’s authority in the present case.

26.In court, Mr Yip elaborated that by cross examining Yeung with reference to his pleaded defence in the other action, he might seek to establish that Tsui/City Best was in fact authorized to do things on behalf of Yeung beyond what Yeung has pleaded in the present case, and that Yeung should be bound by those acts of Tsui/City Centre.

27.As far as the authority of Tsui/City Best is concerned, Hui has pleaded how he came to agree to engage Tsui/City Best to procure the acquisition of the Licence, and that in entering into such agreement, Tsui was acting on behalf of not only City Best but also Yeung.  In defence, Yeung pleaded that he engaged another agent, Chung, to acquire the licence, while Tsui entered the picture subsequently and was entrusted by Yeung to license out the use of the Licence to a driver.  Yeung further particularized the scope of Tsui/City Best’s authority in licensing out the use of the licence.  It was specifically pleaded that Yeung had no knowledge about the dealings between Hui and Tsui/City Best, and any such dealings and representation made by Tsui/City Best in that regard to Hui were not made with the consent or authority from Yeung.

28.The case of Yeung in HCA 1725/2016 in defence of the claim differs from the present case in that Yeung had admittedly entered into agreement with Tsui/City Best in 2014 for the latter’s service in procuring the acquisition of the licence in that case.  The scope of the authority of Tsui/City Best in that case must be considered in such context.  Even assuming that Mr Yip may intend to put to Yeung that what Yeung says about his engagement of Chung and Tsui/City Best were not true, that could not be based on the circumstances pleaded by Yeung in HCA 1725/2016 as they per se do not contradict his case in respect of Tsui/City Best’s role and authority in the present case.

29.A possible variation of Hui’s intended case on the authority of Tsui/City Best to bind Yeung would be that notwithstanding their authority prescribed by Yeung as alleged in the defence, Yeung was nevertheless bound by the acts of Tsui/City Best beyond such authority as if Tsui/City Best was put in a position enabling them to bind Yeung to the consequence of their conduct, albeit in breach of the prescribed authority. However, such has not been pleaded as an alternative case of Hui in the present case.

Conclusion

30.The intended reliance on these newly disclosed documents concerning the other complaint and action by third parties against Yeung lacks legitimate basis, in view of the current state of the pleaded cases of the parties.  In the absence of actual pleading to put in issue what Mr Yip might intend to suggest to Yeung in the course of the evidence, the inclusion of the documents in question for the purpose of such intended reliance was by nature a fishing attempt.  Such documents will only be prejudicial and embarrassing to Yeung, if allowed to remain at large during the trial,and such negative effect will outweigh their probative value for the fair determination of the issues in the present case.

31.For the above reasons, the discovery by Hui’s 2^nd supplemental list of documents for the purpose of the trial, in my view, was ill advised.  I therefore allowed Yeung’s application to expunge them, except for item no 26 (which was not disputed), with costs summarily assessed.  The trial subsequently commenced on 26 September 2018.  As mentioned, I am handing down the judgment after trial at the same time as these reasons for decision.

Mr Francis Yip, instructed by Fung Wong Ng & Lam LLP Solicitors, for the plaintiff

Ms Jacqueline Law, instructed by L&L Lawyers, for the defendant