Rise Tall Developments Ltd v. Yeuk Man Co Ltd

HCA 1953/2019 and
HCA 2399/2019
(Consolidated)

[2023] HKCFI 1237

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS. 1953 AND 2399 OF 2019

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BETWEEN

(Consolidated by Order of Master Winnie Tsui dated 10^th July 2020)

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D E C I S I O N

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A. INTRODUCTION

1.By a notice of appeal of 28th December 2022, the Defendant appeals against the order of Master Kent Yee of 15th December 2022, by which it was ordered that:

1.1 the assessment of quantum of the Defendant’s counterclaim as pleaded in paragraphs 50.1, 51 and 52 of the Defendant’s Amended Consolidated Defence and Counterclaim filed on 12th July 2022 be tried separately and only after the trial of (1) the Plaintiff’s claim and (2) the issues of the Plaintiff’s liability on the counterclaim, causation and the proper basis for the assessment of damages for the counterclaim. The order was made pursuant to the Plaintiff’s summons filed on 15th June 2022 for directions for a split trial (“the Split Trial Summons”);

1.2 the Defendant’s amended summons of 11th May 2022 seeking directions for expert evidence be adjourned sine die with liberty to restore after determination of the trial in relation to the aforesaid matters (“the Expert Directions Summons”).

2.In addition to the aforesaid two summonses, there is a third summons which arises for consideration, and that is the Defendant’s summons filed on the 21st April 2023, seeking leave to file the 2nd Affirmation of Fenn Kar Bak Lily (“Fenn 2nd”) which exhibits the expert report (“the Expert Report”) of the Defendant’s proposed valuation surveyor, Mr Charles Chan of Savills Valuation and Professional Services Ltd (“the New Evidence Summons”).

3.The Plaintiff submitted that the New Evidence Summons should be dismissed, but indicated that it was content for the court to consider Fenn 2nd and the Expert Report on a de bene esse basis for the purpose of the hearing.

B. THE BACKGROUND

4.The Plaintiff, the Defendant and Team Glory Company Limited (“Team Glory”) are co-owners of Li Yuen Building, 5 and 7 Li Yuen Street West, Central (“the Building”). A total of 24 shares have been allocated to the Building. The Plaintiff owns 12 shares, the Defendant owns 11 shares, and Team Glory owns 1 share.

5.The Deed of Mutual Covenant and Grant in respect of the Building provides that:

5.1 (in clause 5(A)) “…the parties hereto shall bear and pay in equal shares all costs, charges and expenses which may be or become payable for and in connection with the maintenance and repair of the common parts, services and facilities of the said Land and Building…”;

5.2 (in clause 5(B)) “If any party hereto shall fail to pay any amount or contributions payable hereunder within seven days from the date it falls due or from the date of demand by the other party hereto, such amount or contribution may be paid by the other owner(s) on the defaulting owner’s behalf to 3rd parties and such amount or contribution so paid and all expenses incurred … shall be recoverable by civil actions against the defaulting owner.”

6.It is common ground that no owners’ corporation of the Building has been formed. The Plaintiff also says that capital DMC Manager or building manager has been appointed in respect of the Building; the Defendant says that the Plaintiff unilaterally assumed the role of building manager.

7.The Plaintiff’s case is that since it became a co-owner of the Building, it has been paying all the operation costs of the Building (such as for cleaning services, legal and professional services, electricity, repairs and maintenance for common parts, and insurance) (“Operation Costs”) and seeking reimbursement from the Defendant and Team Glory in proportion to their respective ownership shares. The Plaintiff says that the Defendant and Team Glory were unwilling to be involved in the management of the common areas and facilities of the Building, so the plaintiff had no choice but to pay the Operation Costs in advance and then seek reimbursement from the Defendant and Team Glory in proportion to their shares in the Building (without charging any “management” or “administrative” fee on top). There was no problem about this from 1994 to 2014, in that the Defendant and Team Glory both reimbursed the Plaintiff for their share of the Operation Costs. Team Glory continues to do so.

8.However, the Plaintiff says that since April 2014, save for a partial payment of $264,731.28 made in December 2017, the Defendant has refused to reimburse the Plaintiff for its share of the Operation Costs. The total outstanding amount payable by the Defendant currently stands at around $1.2 million. This is the subject of the Plaintiff’s claim. The Plaintiff had initially commenced proceedings in the Lands Tribunal in June 2018, at which point in time the outstanding share due from the Defendant was some $500,000. However, in October 2019, the Defendant brought a counterclaim in HCA 1953/2019. Subsequently, the Plaintiff’s claim was transferred to the Court of First Instance in HCA 2399/2019, and the two actions were consolidated.

9.The Defendant’s case is that the Plaintiff unilaterally assumed the role of building manager and therefore has taken on duties of managing the common parts of the Building (“the Common Parts”). In particular, it is said that the Plaintiff owed the Defendant a duty to maintain the Common Parts in a state of good and serviceable repair which is “up to the standard of a properly managed and maintained premises of a commercial building in Central District which is comparable to the Building”.

10.The Defendant says that the Plaintiff has failed to discharge such duties, causing loss and damage to the Defendant, including (1) the loss or diminution of rental income on the basis as if the Common Parts had been properly managed and maintained from 1st April 2014 to 28th February 2022, (2) the loss of an opportunity to earn rental income and (3) the diminution in market value of the Defendant’s Premises on the basis as if the Common Parts had been properly managed and maintained as at 28th February 2022. This is the subject of the Defendant’s counterclaim.

11.The state of the proceedings is that the parties exchanged their witness statements in February 2022. In April 2022, the Defendant applied (16 days out of time) for leave to adduce expert evidence. In May 2022, the Defendant applied to amend its application for leave to adduce expert evidence, introducing paragraph 1(a) of the Expert Directions Summons, to which I now turn.

C. THE EXPERT DIRECTIONS SUMMONS INSOFAR AS IT RELATES TO WHAT ARE “PROPERLY MANAGED AND MAINTAINED PREMISES”

C1. The Expert Directions Summons

12.The Plaintiff points out that paragraph 1 of the Expert Directions Summons can be divided into two parts.

12.1 Paragraph 1(a) of the summons seeks leave to adduce expert evidence as to “the parameters constituting, and the objective reasonable standard which is expected of, a “properly managed and maintained premises” of a commercial building in Central District, Hong Kong”.

12.2 Paragraphs 1(b) to 1(e) of the summons seek to adduce expert evidence as to the valuation (rental and capital value) of the Defendant’s parts of the Building (“the Defendant’s Premises”).

13.The Plaintiff does not dispute that expert evidence is necessary on the issue of valuation of the Defendant’s Premises. I return to this below.

14.As to paragraph 1(a) of the Expert Directions Summons, the Plaintiff says that this should be dismissed, as the proposed expert evidence is not, in fact, expert evidence; and in any event it would not be helpful to the court.

C2. Principles relating to the admission of expert evidence

15.The relevant principles were set out in Man King Chuen v Hong Lok Yuen International School Association Ltd [2018] 4 HKLRD 294 at [17]:

(1) In deciding whether proposed expert evidence should be received, there is a two-stage test (the Barings^[1] test).

(a) First, the evidence has to be admissible as “expert evidence” for the purpose of s.58 of the Evidence Ordinance (Cap.8). It will be so admissible in any case where the court accepts that there exists a recognised expertise governed by recognised standards and rules of conduct capable of influencing the court’s decision on any of the issues which it has to decide and the witness to be called satisfies the court that he has a sufficient familiarity with, and knowledge of, the expertise in question, to render his opinion potentially of value in resolving any of those issues.

(b) Second, evidence meeting this test can still be excluded by the court if the court takes the view that calling it will not be helpful to the court in resolving any issue in the case justly. Such evidence will not be helpful where the issue to be decided is one of law or is otherwise one on which the court is able to come to a fully informed decision without hearing such evidence.

See Re Ocean Time Development Ltd [2008] 2 HKLRD 393 at [13], per Barma J (as he then was), citing Barings Plc v Coopers & Lybrand [2001] Lloyd’s Rep Bank 85. The Barings test was also applied in Wong Hoi Fung v American International Assurance Co (Bermuda) Ltd [2002] 3 HKLRD 507 at [12].

(2) It is for the party seeking to call expert evidence to satisfy the court that expert evidence is available which would have a bearing on the issues which the court has to decide and would be helpful to the court in coming to a conclusion on those issues: Phipson on Evidence, (19th ed.), para.33–36.

(3) The court’s discretion as to whether to grant leave to a party to adduce expert evidence is to be exercised within the ambit of the court’s case management powers, exercised in the light of the underlying objectives of the CJR: Fung Chun Man v Hospital Authority (HCPI 1113/2006, [2011] HKEC 854, 24 June 2011) at [9] and [11].

(4) Where the proposed expert evidence is plainly inadmissible or irrelevant, the court ought to exercise its discretion to refuse the admission of such evidence. But where the court cannot form a clear view of the relevance of the proposed expert evidence or where it considers that the proposed evidence is clearly relevant, then it should grant leave for the evidence to be adduced at trial: Wong Hoi Fung at [11].

C3. Whether leave should be given for the admission of expert evidence under paragraph 1(a) of the Expert Directions Summons

16.The Defendant submits that its expert has “distilled 5 major elements in setting an objective yardstick for ‘properly managed and maintained premises’”, namely:

16.1 the employment of a security guard;

16.2 the installation of CCTV at the entrance and/or lifts;

16.3 there being a properly maintained lighting system in the staircases;

16.4 there being good hygiene and cleanliness; and

16.5 there being no blockage within the staircases.

17.I am not satisfied that the Defendant shows that the proposed evidence to be given under paragraph 1(a) of the Expert Directions Summons constitutes expert evidence. In particular, I do not agree that there is any recognised expertise governed by recognised standards and rules of conduct capable of influencing the court’s decision on the issue of what constitutes “‘properly managed and maintained premises’ of a commercial building in Central District, Hong Kong”. The mere fact that the Defendant’s intended expert has familiarity with many commercial buildings in Hong Kong does not turn the question of what are “properly managed and maintained premises” into a subject of recognised expertise. Furthermore, it is not denied that the Defendant’s intended expert, a surveyor with expertise in valuation, does not have any particular expertise in the management and maintenance of buildings or the assessment of the adequacy of such management and maintenance.

18.In any event, I do not consider that the proposed evidence would be helpful to the court. The court would be able to resolve the issue of whether the Plaintiff owes a duty to the Defendant to maintain the Common Parts in a state of good and serviceable repair (Amended Consolidated Defence and Counterclaim paragraph 18.1), and whether the Plaintiff was in breach of such a duty, without hearing such “expert” evidence. Insofar as it may be necessary to have regard to the state of buildings in Central other than the Building itself (including whether they employ a security guard, have CCTV installed, have a lighting system installed in the staircases, are hygienic and clean, and do not have blocked staircases), this issue can be addressed by factual witnesses. As the Plaintiff points out, this is demonstrated by the proposed expert evidence itself: section 6 of the Expert Report simply sets out photos of seven other commercial buildings and readily observable factual observations regarding such buildings. No “expertise” is involved.

19.The Defendant cites Sun Cheong Construction Co Ltd v Incorporated Owners of King Fu, Ho Fu, Ki Fu & Ka Fu Buildings [2019] 5 HKC 210^[2] at [18] to [20] to say that expert evidence is not confined to opinion evidence, and can include evidence of fact which is used to support or contradict the opinion evidence.

19.1 That case cited The Torenia [1983] 2 Lloyd’s Rep 210, which concerned evidence from a captain of a merchant ship as to observations he had made over a number of years of damage to deep tanks or deep tank structures and bulkheads in cargo service, and of his experience of not using deep tanks while sailing in ballast conditions.

19.2 As Mimmie Chan J observed, Hobhouse J held that this was properly described as expert evidence before he went on to analyse such evidence as consisting of three categories: (1) direct factual evidence bearing directly on the facts of the case, (2) opinion evidence given with regard to those facts, and (3) evidence which might be described as factual, which is used to support or contradict the opinion evidence. The latter category was evidence commonly given by experts drawing upon their expertise and experience, such as what they have observed in, and learnt from, other cases; the experiments they have carried out in the past; and the experiments they have carried out for the purposes of their evidence in the particular case in question. Hobhouse J concluded that expert evidence includes both the second and third such categories of evidence.

20.In the present case, I do not agree that the issue of what constitutes “‘properly managed and maintained premises’ of a commercial building in Central District, Hong Kong” can properly be a matter for expert evidence in the first place. The fact that the “expert evidence” sought to be adduced to answer this issue includes factual evidence (such as photographs of buildings in Central) is nothing to the point.

21.The Plaintiff submits that the expert’s valuation of the Defendant’s Premises will involve his observation as to the state of the Building. Even if that be the case, this does not turn the question of what are “‘properly managed and maintained premises’ of a commercial building in Central District, Hong Kong” into a question of expert evidence. Even if, in the course of, and as part of, the valuation exercise (which the Defendant accepts is appropriate to be dealt with by way of expert evidence), the expert valuer includes some observations regarding the Building, this would not give rise to a separate “expert” discipline as to what are “properly managed and maintained premises”.

22.I therefore agree with the Plaintiff that paragraph 1(a) of the Expert Directions Summons should be dismissed.

D. THE SPLIT TRIAL SUMMONS

D1. Principles applicable to exercise of discretion to split trial

23.RHC O.33 r.4(2) provides, inter alia, that in respect of any action begun by writ, one or more questions or issues may be ordered to be tried before the others.

24.The general rule is that all the issues in a case are to be tried at one and the same time. There is power to order that different issues in a case be tried at different times. But that departure from the general rule is ordered only if it is just and convenient. It is for the party who seeks such a departure to demonstrate that it is indeed just and convenient to do so. See Telford Development Limited v Shui On Construction Co Ltd [1990] 2 HKC 110 at 117A-F (Bokhary J, giving the judgment of the Court of Appeal).

25.In Mai Gou v Mak Chik Lim [2001] 3 HKLRD 248 at 251B-H Le Pichon JA reiterated that an order for the separate trial of separate issues should generally only be made in exceptional circumstances or on special grounds.

26.Both of those cases concerned applications for trial of preliminary issues, but the general principle is that unless it is clear that it is just and convenient for a specific matter to be “hived off” from the general issue (in the preliminary issue context), or for the question of liability to be separated from issues of consequential loss/damage (in the split trial context), the court ought not to accede to such applications: Pagoda Ventures Ltd v Je Fulfilment Ltd, unreported, HCCL 39/2007, 13th June 2008 at [19] (Stone J). See also Zhang Xiuhong v Liu Wenchen, unreported, HCA 2118/2012, 20th July 2017, where Au-Yeung J, citing the two decisions of the Court of Appeal, went on at [16] to summarise the principles on ordering a split trial as follows:

“(a) The general rule is that all the issues in a case should be tried together.

(b) An order for split trial should only be made in “exceptional circumstances or on special grounds”. The Court should be “extremely cautious” before ordering a split trial.

(c) The party who seeks a split trial has the burden of demonstrating exceptional circumstances which justify a split trial.

(d) That party must inter alia provide information that enables the Court to estimate, with a reasonable degree of accuracy, how much time and costs would be saved by a split trial. A failure to provide such information could, by itself, justify the Court in rejecting the application.

(e) The Court would take into account, amongst others, the duplication of calling witnesses in the first trial and again in the second trial; and the delay to the second trial if the decision reached in the first trial is appealed against.

(f) A split trial may be ordered where there is clear demarcation between the issues on liability and quantum or the issue of damages itself is detailed and complicated.”

27.“Just” means fair to both sides, without one side or the other gaining an undue advantage by a separation. “Convenient” means convenient to both sides and advantageous from the point of view of costs. See Tao, Soh Ngun v HSBC International Trustee Ltd [2018] HKCFI 380 at [21] to [22] (Wilson Chan J). Convenience to the court, for the fair and efficient determination of all the contested issues, is also a consideration: Shing Ho Wa v Really Super Limited [2019] HKCFI 1751 at [10].

28.In Shing Ho Wa at [11] to [12], Bharwaney J cited Electrical Waste Recycling Group Ltd & Anor v Philips Electronics UK Ltd & Ors (Rev 1) [2012] EWHC 38 (Ch) at [5] in referring to the considerations to be taken into account, which include:

28.1 whether the prospective advantage of saving the costs of an investigation of quantum if liability is not established outweighs the likelihood of increased aggregate costs if liability is established and a further trial becomes necessary;

28.2 what the advantages and disadvantages in terms of trial preparation and management are likely to be;

28.3 whether a split trial will impose unnecessary inconvenience and strain on witnesses who may be required in both trials;

28.4 whether a single trial to deal with both liability and quantum will lead to excessive complexity and diffusion of issues, or place an undue burden on the judge hearing the case;

28.5 whether a split may cause particular prejudice to one or other of the parties (for example by delaying any ultimate award of compensation or damages);

28.6 whether there are difficulties of defining an appropriate split or whether a clean split is possible;

28.7 what weight is to be given to the risk of duplication, delay and the disadvantage of a bifurcated appellate process; and

28.8 generally, what is perceived to offer the best course to ensure that the whole matter is adjudicated as fairly, quickly and efficiently as possible.

D2. Whether there should be a split trial

29.The following considerations seem to me to be material.

30.Whether clean split of issues can be made. The Defendant says that no clear line of demarcation can be drawn between the evidence adduced for the issues of the Plaintiff’s liability on the counterclaim and the quantum of the counterclaim. However, this submission is to a large extent made on the basis that what are “properly managed and maintained premises” is a matter for expert evidence, going to the question of the Plaintiff’s liability for breach of duty to maintain the Common Parts in a state of good and serviceable repair. As explained above, I do not consider this to be a matter of expert evidence in the first place.

31.The main issue arising in relation to the quantum of the Defendant’s counterclaim is the valuation of the Defendant’s Premises. This would by and large not involve evidence relevant to the Plaintiff’s claim or the liability of the Plaintiff on the Defendant’s counterclaim, although to a certain extent the valuers may have to take into account some of the evidence in relation to the state of the Building if they are to value the Defendant’s Premises “on the basis as if the Common Parts were properly managed and maintained” (which is accepted by the Plaintiff to be an appropriate subject of expert evidence).

32.The Defendant says that there would also be overlapping factual evidence between the trial of liability and the trial of quantum, as it would want to give evidence that it has had difficulty in letting its units out. I note from paragraph 50.1 of the Consolidated Amended Defence and Counterclaim that it is said that an estate agent told the Defendant that some potential tenants were put off by the condition of the Common Parts, and that ultimately, the Defendant only managed to let out a few units for a rent below market rate. I further note that in the Amended Consolidated Reply and Defence to Counterclaim, the Plaintiff denies that the Defendant had always wanted to let out its units, and positively avers that the only reason why the Defendant’s premises were left vacant was because it had not sought to let them out. It seems to me that the factual evidence addressing these pleas would go to both the issue of causation and the issue of quantum. Factual witnesses speaking to these matters would have to attend two trials.

33.Whether prospective advantage of saving costs through a split trial outweigh likelihood of increased aggregate costs of a split trial. A split trial would mean that no expert evidence needs to be prepared at this stage. As calculated in paragraph 14 of the Plaintiff’s skeleton, the costs of the experts’ evidence, including attendance at trial, would likely exceed $800,000. If liability on the counterclaim is not established, the costs nevertheless incurred in relation to quantum would be disproportionate to the Plaintiff’s claim, which is currently in the region of $1.2m.

34.On the other hand, the scope of the experts’ evidence is relatively self-contained and will consist of providing market rental and capital valuations of the Defendant’s premises as provided for in paragraphs 1(b) to (e) of the Expert Evidence Summons. If liability on the counterclaim is established and a further trial of quantum becomes necessary,^[3] there would be additional costs caused by the inevitable delay in fixing a second trial (which would not have been necessary if liability and quantum are tried together) and for the legal teams to read into the case again. No estimates have been put before me, but I note that both parties have instructed both leading and junior counsel. It is not immediately apparent to me that a split trial would necessarily be advantageous from a costs perspective.

35.Advantages and disadvantages in terms of trial preparation. The Plaintiff says that the expert evidence relating to the quantum of the Defendant’s claim cannot be reasonably and sensibly prepared until the court has determined the appropriate basis of damages. The Defendant claims damages “on the basis as if the Common Parts were properly managed and maintained” (Amended Consolidated Defence and Counterclaim paragraph 50.1, 52). Its case is that certain things should have been done – for example, security guards should have been employed, CCTV devices should have been installed, and cleaning services should have been procured. It is said that it would be a waste of costs to value the Defendant’s Premises on various bases as to what should have been done, in anticipation of what the court might eventually find, only for most of these not to eventually be of use. For example, it would be a waste of costs to value the Defendant’s Premises on the basis that the Building had a particular number of security guards and CCTV devices at particular locations if the court were later to find that these were not features necessary for the Common Parts to be “properly managed and maintained”.

36.The Defendant says that even if some of its complaints may not be established at trial, this is no different from a typical claim for damages for negligence where some complaints may not be established at trial; this does not justify an order to split the trial.

37.I accept that it would be possible, as the Expert Report shows, for a valuation to be prepared on the basis that a general discount should be given for the state of disrepair and mismanagement of the Building, rather than for multiple valuations to be prepared on different assumptions as to which of the Defendant’s complaints are established.

38.Delay. Preparing expert evidence at this stage would entail delay, as the Plaintiff’s claim is ready to be set down for trial. Even though the Defendant has already prepared its expert report, compliance with the remainder of the proposed expert directions would involve a delay of about six months.

39.On the other hand, there is room for some reduction in the timetable. In the context of the overall progress of the actions, the degree of delay is not excessive. The Plaintiff says that the Defendant’s repeated interlocutory applications have caused a considerable degree of delay already. However, as Mr Chan has pointed out, the chronology would appear to indicate that the Plaintiff itself has not proceeded with dispatch in prosecuting its claim.

40.Whether bifurcated appellate process disadvantageous. If the Plaintiff were to prevail on the issue of liability in the first instance, but the Defendant were to succeed on appeal, there would be even more delay in resolving the issues of quantum (than if the Defendant were to succeed on the issue of liability in the first instance). This would not be ideal from the point of view of case management (and also cause some prejudice to the Defendant if it were ultimately to be found to be the successful party). If, however, the trial of both liability and quantum were to be conducted in one go, then even if there were to be a successful appeal by the Defendant on liability, there would not be the need to have a second trial to determine quantum.

41.The best course to ensure whole matter is adjudicated fairly, quickly and efficiently. I note that the costs of the expert evidence for the quantum of the counterclaim are relatively large compared to the amount of the claim, but that is not so much because the issues of quantum are particularly complicated, but rather, because the amount of the Plaintiff’s claim is relatively small. The scope of the expert evidence is well defined and within a relatively narrow compass. Overall, it should not be overly complicated or costly for such evidence and other issues relating to quantum of the counterclaim to be considered together with the issues of liability on the counterclaim.

42.It would also not be ideal for the trial judge to have to revisit the issues in the case after the inevitable lapse of time between the trial of liability and quantum. As mentioned above, the duration of this period would be particularly lengthy if it turned out that an appeal on liability were to be held in between the two trials.

43.Taking all the above into account, I do not consider that the Plaintiff establishes that there are exceptional grounds or special reasons to justify a split trial, hiving off the issue of quantum of the counterclaim.

E. THE EXPERT DIRECTION SUMMONS INSOFAR AS IT RELATES TO THE ISSUE OF VALUATION

44.As mentioned above, the Plaintiff does not dispute that expert evidence is necessary on the issue of the valuation of the Defendant’s Premises. The Plaintiff simply says that since the trial of the quantum of the Defendant’s counterclaim should be tried separately, paragraphs 1(b) to 1(e) (which seek various valuations), and paragraphs 2 to 7 (which deal with the timetable for and mode of adducing expert evidence), of the Expert Directions Summons should be adjourned until after the determination of the first trial.

45.Since there is not to be a split trial, there will be no need for such an adjournment.

46.However, as canvassed at the hearing, adjustments to the timetabling of the expert evidence may need to be made, in the light of the fact that the Defendant’s expert evidence has essentially been prepared and that the Plaintiff seeks to reduce delay.

F. THE NEW EVIDENCE SUMMONS

47.The Defendant submits that the court has a discretion to admit further evidence on appeal from a master’s decision. It says that whilst RHC O.58 r.1(5) provides that no further evidence (other than evidence as to matters which have occurred after the date on which the judgment, order or decision was given or made) may be received on the hearing of an appeal under this rule except on special grounds, no special grounds need to be shown in the present case as the Defendant’s expert carried out his inspection, and prepared the Expert Report, only after the decision of the Master; the only consideration as to admissibility is the probative value of the report.

48.However, it is only evidence as to “matters which have occurred after the date” of the master’s judgment, order or decision which is not the subject of the requirement to show special grounds. As the Plaintiff points out, in the context of O.59 r.10, the words “matters which have occurred after the date of the trial or hearing” do not cover evidence coming into being after the trial but relating to matters occurring before trial: Wong To Yick Wood Lock Ointment Ltd v Kin Lam Medicine Co Ltd, unreported, CACV 82/2017, 20th October 2017 at [30] (Kwan JA, as she then was). The same interpretation must apply in respect of O.58 r.1(5), and indeed this is plain from the wording of the rule: the exception applies in respect of matters occurring after the date of the master’s judgment, order or decision, not evidence coming into being after such a date.

49.The Defendant submits in the alternative that in any event, it can show special grounds to justify admission of the evidence. In this context, “special grounds” refers to the criteria for admission of evidence in Ladd v Marshall [1954] 1 WLR 1489: see Hong Kong Civil Procedure 2023 at note 58/1/23.

50.I do not agree that the Defendant shows special grounds. The Expert Report could have been obtained for use at the hearing before the Master in December 2022. The Defendant says that by the time of the Expert Evidence Summons, there was no reason to believe that the Plaintiff wanted to delay the directions for expert evidence until after the trial of liability of the counterclaim. However, even by that yardstick, it would have been clear by the time that the Plaintiff issued the Split Trial Summons in June 2022 that it sought to postpone all issues relating to quantum of the counterclaim until after the trial of liability.

G. DISPOSITION

51.I therefore:

51.1 allow the Defendant’s appeal under the Notice of Appeal save that I dismiss paragraph 1(a) of the Expert Evidence Summons;

51.2 dismiss the New Evidence Summons.

52.As referred to above, adjustments to the timetabling of the expert evidence may need to be made. The parties should seek to agree the terms of the order consequent upon the allowing of the Defendant’s appeal as aforesaid, and submit a joint letter to the court within 14 days setting out an agreed draft order. In the event that any part of the order cannot be agreed, the joint letter should set out the parties’ respective positions, with reasons.

53.The Defendant has succeeded in its appeal as regards the issue of splitting of the trial. On the other hand, it has failed as regards its application to introduce expert evidence pursuant to paragraph 1(a) of the Expert Evidence Summons, and the Plaintiff has all along accepted that paragraphs 1(b) to (e) are appropriate for expert evidence. The Defendant has also failed to admit evidence pursuant to the New Evidence Summons. In the circumstances, I make a costs order nisi that the Defendant should have 70% of the costs of and occasioned by the appeal (that is, the costs relating to the Expert Evidence Summons and the Split Trial Summons), and the application before the Master, but that the Plaintiff should have the costs of and occasioned by the New Evidence Summons, with certificate for counsel for both hearings, to be taxed if not agreed.

Mr Daniel R Fung SC leading Mr Henry Cheng and Mr David Chen, instructed by C.W. Chan & Co., for the Plaintiff

Mr Edward Chan SC leading Ms Christine Leung, instructed by Lily Fenn & Partners, for the Defendant