Big Island Construction (HK) Ltd v. Wu Yi Development Co Ltd and Another

HCA1957/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1957 OF 2005

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BETWEEN

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Before : Hon Poon J in Chambers

Date of Written Submissions : 24 February, 4, 5 and 9 March 2009

Date of Decision : 11 March 2009

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D E C I S I O N

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Introduction

1.The following contested applications taken out by the defendants (“the Wu Yi Parties”) are before the court :

(1)  for leave to file a notice under Order 27, rule 4(2), Rules of the High Court, challenging the authenticity of the audited accounts of the plaintiff (“BIC”) between 2001 and 2005 disclosed in its 10^th supplemental list of documents filed on 19 June 2008;

(2)  for leave under Order 26, rule 4 to serve on BIC the interrogatories annexed to summons dated 9 February 2009; and

(3)  for leave to file the supplemental witness statements of Mr Lian Mingshun and Mr Huang Limin and the witness statement of Mr Choi King Hung.

2.These applications were all made returnable on 25 February 2009 for a 30 minutes hearing.  Plainly, they could not be disposed of there and then.  The parties then agreed with the court’s suggestion that they should file further submissions (which they have already done) and the applications could be disposed of on paper without any further hearing in order to save costs and time.

3.I will consider the applications in turn.

Notice to challenge authenticity

4.As I understand the parties’ case, the authenticity of the various accounts prepared by the parties between 2001 and 2005 are hotly in dispute.  Indeed, BIC had already challenged the authenticity of the audited accounts of the Wu Yi Parties for the same period by notice filed under Order 27, rule 4(2).  It is therefore hardly surprising that the Wu Yi Parties now wish to do the same.  They contend that the accounts in question are neither authentic nor contemporaneous but had been fabricated for the purpose of the present proceedings.  In the circumstances, I think leave ought to be given to the Wu Yi Parties to dispute their authenticity.  I will allow the application accordingly and make an order nisi that the Wu Yi Parties shall have the costs, to be taxed if not agreed.

Interrogatories

5.I next turn to the application for serving the interrogatories.  The interrogatories that the Wu Yi Parties wish to serve arose from their challenge mounted against the authenticity of various trial balances in BIC’s audited accounts as at 31 March 2001, 2002, 2003, 2004 and 2005.  In my view, there are two reasons why they are proper and should be answered.

6.First, at the hearing on 12 January 2009, I ordered Nationbuild Pacific Limited, the plaintiff in HCA2196/2005, to answer interrogatories served by Fu Yin Financial Investment Company Limited, the defendant, relating to the audited accounts of FBC Construction Company Limited (“FBC”) for the period between 1 April and 31 December 1999 and for the years ended 31 December 2000 to 2003.  According to those audited accounts, BIC owed FBC amounts as stated therein and the outstanding balances had not been repaid.  Previously, Nationbuild refused to confirm the accuracy of the balances despite the fact that some of the accounts were signed and approved by its director, Ben Lee.  Hence the interrogatories.  The present interrogatories basically take the matter further by asking BIC to confirm the accuracy of the relevant trial balances which indicated that BIC was indebted to FBC for various sums.

7.Second, the purported admission of debts as stated in the aforesaid trial balances did not appear in the audited accounts of BIC for the years between 2001 and 2005, the authenticity of which is now open to challenge by the Wu Yi Parties.  This clearly cries out for an explanation.

8.BIC opposed the application on the ground that the interrogatories would be highly prejudicial to its defence in HCA1363/2008 commenced by FBC against BIC for the alleged indebtedness.  For the purpose of the interrogatories is to elicit an admission from BIC of the loans so as to overcome FBC’s difficulties in overcoming limitation.  I disagree because it is too early to say one way or the other if the answers to be provided by BIC would amount to an admission of the debts.  Further, as rightly pointed out by Mr Ng, for the Wu Yi Parties, FBC has already sought to rely on the contents of the accounts concerned to defeat the limitation defence.  The answers to the interrogatories will not take the matter any further.

9.I will allow the application and order BIC to answer them within 14 days from the handing down of this Decision.  I also make an order nisi that the Wu Yi Parties shall have the costs, to be taxed if not agreed.

Witness statements

10.I finally come to the applications for the filing of the witness statements.

11.The supplemental witness statements of Mr Lian and Mr Huang expanded on the loans of HK$500,000 BIC borrowed from Wu Yi Development Limited.  Mr Choi’s witness statement also dealt with the same matter.  BIC opposed them on the primary ground that the loans are irrelevant.

12.I do not think it is necessary for me to consider in length the parties’ submissions.  Having considered them carefully, I agree with Mr Ng, who referred me to several observations made by Chu J in dealing with other interlocutory applications in these proceedings, that the loans are relevant and the witness statements are proper.

13.I will allow the applications and make an order nisi that the Wu Yi Parties shall have the costs, to be taxed if not agreed.

Mr Malcolm Kemp of Messrs Stephenson Harwood & Lo, for the Plaintiff

Mr Lawrence Ng, instructed by Messrs Ford Kwan & Co., for the Defendants