Yeung Tak Shing Marco v. Ng Man Kwong

DCCJ 6543/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 6543 OF 2004

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BETWEEN

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Coram: Deputy District Judge K.W. Wong in Chambers

Date of Hearing: 5^th October, 2005

Date of Reasons for Decision: 14^th October, 2005

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REASONS FOR DECISION

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1.There are three applications:

i)	the Defendant’s appeal against the order of a  master dated 29th July 2005 ordering service of further and better particulars of the Defence and Counterclaim within 14 days;
ii)	the Defendant’s appeal against the order of the Registrar dated 19th August, 2005 dismissing the Defendant’s summons to stay the said master’s order and granting a time extension of 14 days to provide the particulars; and
iii)	the Plaintiff’s summons dated 3rd September,2005 for an unless order of 7 days compelling compliance with the said master’s order.

2.Mr. Wong, counsel for the Defendant and Mr. Lam for the Plaintiff both agreed that all the 3 matters boil down to one issue, namely, whether the Plaintiff is entitled to the particulars of pleadings sought by him. If particulars are ordered, Mr. Wong agrees to accept an unless order but with a deadline of 14 instead of 7 days .

Background

3.The proceedings concern an oral agreement for sale and purchase of shares in a company from the Plaintiff to the Defendant at a price of $400,000. Both parties were directors the company. Pursuant to the alleged agreement, the Plaintiff did resign from the board and transfer his shares to the Defendant but payment remained outstanding. The Plaintiff therefore issued the present proceedings and asked the Court for an order directing the Defendant to return the said shares to him and to re-appoint him to the board.

4.By his defence and counterclaim, the Defendant admitted the said agreement but alleged that the Plaintiff was in fact indebted to him for $500,000. The Plaintiff did sign a written acknowledgement for such loan. The Defendant pleaded a defence of set-off and counterclaimed for the balance of $100,000.

5.The Plaintiff denied the loan and put the Defendant to strict proof. He also pleaded that the acknowledgement allegedly signed by him was a forgery. He alleged that he had no knowledge of the existence of the acknowledgement prior to receipt of the defence.

6.Paragraph 3(a) of the defence and counterclaim states:

“on or before 28 February 2003, the Plaintiff had borrowed from the Defendant a sum of HK$500,000.00 (“the Loan”) and agreed to return and/or repay the Loan to the Defendant before 18 March 2003 as evidenced by an acknowledgement signed by the Plaintiff on 28 February 2003.”

It is this paragraph of the defence that triggers a series of applications.

The various applications

7.The first application was made on 29^th June 2005 by summons. The further and better particulars sought of the said paragraph 3(a) were:

i) Whether such sum of  HK$500,000 had been in fact advanced to the Plaintiff by the Defendant;

ii) If the answer is yes, when such sum of HK$500,000.00 was advanced, and by what means? Whether it was advanced by way of cash or cheque (if cheque, identity [sic] the cheque and the bank from which the cheque was drawn) or by other means (give full particulars what other means).

8.This summons was listed before me on 7^th July 2005 when I was acting as a master of the District Court. The Defendant ‘s solicitors did not show up and accordingly an order for service of the requested particulars was made.

9.Despite his absence the Defendant did provide the answers to the respective requests as follows:

i)	Yes.
ii)	The said sum of HK$500,000 was advanced to the Plaintiff in cash on 28th February 2003, for which the plaintiff signed a Written Acknowledgement on the same day signifying his receipt thereof

10.Dissatisfied with the answers, the Plaintiff issued a second summons and asked the Defendant to state the following further and better particulars of the answers:

i)	From which source of fund the Defendant was able to obtain the cash sum of HK$500,000;
ii)	If it was from a bank account, give full particulars of such bank account;
iii)	If it was from other source(s), identify clearly which source(s) with documentation support;
iv)	Who prepared the alleged Written Acknowledgement?

11.This summons was heard before another master on 29^th July, 2005. This time the Defendant’s solicitors did show up. An order directing service of the particulars within 14 days with gross sum assessed costs of $550 was made. It is this order which is the subject matter of the first appeal.

12.The Plaintiff compelled compliance by taking out a summons for unless order. The Defendant took out a cross summons to stay execution of the said master’s order pending appeal. Both summonses were heard before the Registrar on 19th August, 2005 who dismissed the staying summons but granted time extension of 14 days to the Defendant with adverse costs order. It is this order which is the subject matter of the second appeal.

13.Since the Defendant served no particulars before the extended deadline, the Plaintiff pressed ahead by issuing another summons dated 3^rd September, 2005 for an unless order. The learned Registrar adjourned the matter to be heard together with the appeals by me.

Further and Better Particulars

14.Before hearing the 3 matters, I have asked Mr. Wong and Mr. Lam whether they have any objection to my dealing with the appeal, as I was involved in the very first order for particulars. Both considered (and I think correctly) that I needed not recluse myself.

15.The requests of the Plaintiff repeated in paragraph 10 above can be divided in 2 groups. The first three ( stated in paragraph10(i) to (iii) ) concern with particulars of source of fund. The second ( paragraph 10(iv) ) relates to the identity of the drafter of the acknowledgement. The parties filed no affidavit evidence.

16.Mr. Lam for the Plaintiff submitted that it was important and essential for the Plaintiff to know the Defendant’s case regarding the source of the cash fund, given the size of the cash involved.  He asserted that there were strict laws in Hong Kong governing money laundering. By disclosing the source of fund in the pleadings, the Plaintiff might plead illegality, and therefore unenforceability of contract if such source was illegal. As for the identity of the author, he said since the Defendant denied having signed any acknowledgement, it was important for the Plaintiff to know the author. It might be the parties or their respective secretaries. If it was the later, effort would be made to locate witnesses so that they could testify at trial.

17.Mr. Wong for the Defendant submitted that the Plaintiff’s further requests amounted to asking for evidence which the Defendant would rely on at trial to prove the loan. It was a fishing exercise for evidence of illegality. Since the Plaintiff had pleaded a case of forgery, the request for author of the acknowledgement was in effect asking for evidence from the Defendant so as to relieve the Plaintiff’s burden of adducing sufficient evidence to raise an arguable case on forgery. Furthermore, the requests also amounted to cross-examining the Defendant before trial at which exchange of witness statements would have been completed and there would be opportunities for such cross-examination, if the need arose.

18.In Aktieselskabet Dansk Skibsfinansiering v Wheelock Marden [1994] 2 H.K.C. 264, Bokhary J.A. (as he then was) summarized the functions of properly particularized pleadings at 269E -270E as follows:

“(1)   inform the other side of the nature of the case they have to meet as distinguished from the mode in which that case is to be proved;

(2) prevent the other side from being taken by surprise at the trial;

(3) enable the other side to know what evidence they ought to be prepared with and to prepare for trial;

(4) limit the generality of the pleadings, the claim and the evidence;

(5) limit and define the issues to be tried, and as to which discovery is required; and

(6) to tie the hands of the party so that he cannot without leave go into any matters not included (although if the opponent omits to ask for particulars, evidence may be given which supports any material allegation in the pleadings).”

19.Both parties have in fact referred me to the above authority, though with emphasis on different paragraphs. Mr. Lam relied on the principle set out in paragraph 18(3) above in support of his argument while Mr. Wong referred to other paragraphs.

20.I consider the authority of  Aktieselskabet  provides a very useful guidelines as to the function and purpose of properly particularized pleadings. In practice, there is no hard-and-fast rule as to the degree of particularity which is required of the pleader and which an opponent may demand of him when formulating his claim or defence. It certainly depends on the circumstances of each case. However, in Mcphilemy v Times Newspapers Ltd [1999] All ER 775 at 792-3, Lord Woolf MR had the following comment:

“The need for extensive pleadings including particulars should be reduced by the requirement that witness statements are now exchanged. In the majority of proceedings identification of documents upon which a party relies, together with copies of that party’s witness statements will make the detail of the nature of the case the other side has to meet obvious. This reduces the need for particulars in order to avoid being taken by surprise. This does not mean that pleadings are now superfluous. Pleadings are still required to mark out the parameters of the case that is being advanced by each party. In particular they are still critical to identify the issues and the extent of the dispute between the parties. What is important is that pleadings should make clear the general nature of the case of the pleader. This is true both under the old rules and the new rules.”

21.Though not making any express reference toMcphilemy , the learned Deputy Judge Gill in Midland Realty International v Wise Surplus Ltd [2002] 3 HKC 318 seemed to have adopted a similar approach .The learned Deputy Judge considered that since a representative of the plaintiff in that case with full knowledge of the history was to give evidence and has filed a comprehensive witness statement setting out in some detail the evidence upon which that plaintiff intended to rely, the learned Deputy Judge took the view it was wrong to require the requested particulars to be incorporated into the pleadings, even in gist. 

22.Applying the above principles, I consider that the information sought by the Plaintiff in all the four requests are evidence and are not necessary for the purpose of pleadings.  The general nature of the Defendant’s case has already been made known to the Plaintiff. He knows what case he is going to meet: a case in which a sum of $500,000 cash was allegedly to have passed to him and he has acknowledged such payment by his own signature. The burden of proof of all these facts falls on the Defendant.

23.Furthermore, according to submission on behalf of the Plaintiff, it is obvious that the Plaintiff wants to know whether the money is from any illegal source or has offended any law relating to money laundering. The Plaintiff denied having received such payment. However, illegality of the source of fund is not the pleaded case of the Plaintiff nor is there any affidavit raising any evidential basis for such belief. By raising the first three requests the Plaintiff is obviously embarking on a fishing expedition with a view to obtaining favourable evidence for raising a possible defence of illegality. If the only object of the application is to obtain evidence of the other side or some clue to such evidence with a view to know whether certain defence is available, the application should be dismissed.

24.Regarding the request for author of the acknowledgement, the document has been identified and in fact has been discovered in the Defendant’s list of documents. In due course there will be exchange of witnesses statement. Following Mcphilemy, I do consider the Plaintiff’s request unnecessary.

25.I would like to add that the rule relating to particulars is a rule of pleadings.  It is not the purpose of particulars to obtain information which should otherwise be obtained by other interlocutory applications or will in due course be available in the pre-trial evidence disclosure. If after inspection of the acknowledgement the Plaintiff considers it necessary to make further query, it is up to the Plaintiff to take out whatever applications his legal advisors deem appropriate. Any attempt to administer interrogatories or make discovery or other interlocutory applications in the guise of seeking particulars should not be sanctioned.

Conclusion and Costs

26.For the reasons set out in the preceding paragraphs, I allow the two appeals and set aside the respective orders of the said master and the Registrar. The Plaintiff’s summons for unless order is accordingly dismissed.

27.At the conclusion of the hearing, I have invited Mr. Wong and Mr. Lam to address me on whether counsel’s certificate should be granted if the court finds in favour of the Defendant. Mr. Lam submitted, inter alia, that this was a simple interlocutory application and was unnecessary to instruct counsel. Mr. Wong, of course, submitted otherwise. With due respect to Mr. Wong, I agree that these are simple applications dealing with only four requests. Since costs are to follow the event I make a costs nisi that costs of and occasioned by the two appeals together with the costs below and this unless order summons (including the reserved costs before the Registrar) be paid by the Plaintiff in any event, to be taxed if not agreed. Such order nisi is made absolute after14 days.

Representation:

Mr. Philip Wong, instructed by Messrs. Lau Chan & Ko for the Defendant (Appellant)

Mr. P.C. Lam of Messrs. Andrew Lam & Co. for the Plaintiff (Respondent)