Falcon Insurance Co (Hong Kong) Ltd v. Flagship Underwriting Management Ltd

HCA 312/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 312 OF 2010

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BETWEEN

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Before : Hon Sakhrani J in Chambers

Date of Hearing : 13 December 2010

Date of Judgment : 13 December 2010

Date of Handing Down Reasons for Judgment : 22 December 2010

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1.By summons dated 7 December 2010 the defendant applied for leave to rely on the evidence set out and in the documents attached to the 3^rd affirmation of Yong Yiu Tung (“Yong”) dated 1 December 2010. I dismissed the application at the hearing on 13 December 2010 with costs to the plaintiff. I indicated at the time that reasons would be given later. This I now do.

2.The plaintiff obtained summary judgment on its claim against the defendant at the hearing before Master de Souza on 14 October 2010. By the notice of appeal dated 26 October 2010, the defendant gave notice of its intention to appeal against the master’s judgment.

3.The appeal came before me on 18 November 2010.  At that hearing the defendant sought an adjournment which was granted to enable the defendant to make an application with supporting evidence for leave to adduce further evidence for hearing at the appeal if so advised.  That application was made by the summons dated 7 December 2010.

4.By its amended statement of claim the plaintiff claimed the sum of USD624,005.52 with interest and costs.  The claim is for breach of the January 2010 agreement between the plaintiff and the defendant as pleaded and particularized at paragraph 18 of the amended statement of claim.  

5.The defendant does not deny that it entered into the January 2010 agreement.  However, as is pleaded at paragraph 18 of the defence and counterclaim, the defendant denies that it was a legally binding agreement and further avers that there was no consideration provided.  It further pleaded in the alternative at paragraph 19 that the defendant had a set-off in respect of what has been referred to as the Chin Hsing payment and the Shun De payment in the pleadings and that the set-off extinguishes the plaintiff’s claim.  There is also a counterclaim in respect of the sums paid by the defendant to assured parties on behalf of the plaintiff for the Chin Hsing payment and the Shun De payment.

6.The master entered judgment in favour of the plaintiff on 14 October 2010.  At the hearing before the master the plaintiff relied on the 1^st and 2^nd affirmations of Gobinath Arving Athappan.  The defendant had relied on the 1^st and 2^nd affirmations of Yong. 

7.The defendant’s application for leave to adduce further evidence is contained in the 3^rd affirmation of Yong.  The evidence consists of two parts.  The first part deals with the documents exhibited as exhibit YYT-3(a).  Paragraphs 1 to 22 of the 3^rd affirmation of Yong deals with this.  The second part deals with the criticism and the submissions made on behalf of the plaintiff as to the insufficiency of the defendant’s evidence on certain matters.  Paragraphs 23 to 40 deals with this.

8.Mr Kwok, for the defendant, submitted that the further evidence in the first part of the 3^rd affirmation of Yong in particular, the documents exhibited as YYT-3(a) simply confirms what the defendant has been saying all along namely, that it had made the Chin Hsing and the Shin De payments on behalf of the plaintiff.  He submitted that the defendant was not seeking to rely on a new case at the hearing of the appeal.  

9.The applicable principles are in my view clear.  No further evidence may be received on the hearing of an appeal except on special grounds (O. 58; r. 1(5) RHC).  It is for the defendant to show that special grounds exist.  It is well established that the conditions in Ladd v Marshall [1964] 1 WLR 1489 are applicable.  These are

(1)             that the evidence would not have been obtained with reasonable diligence for use at the hearing below;

(2)             that the evidence must be such that, if given , it would probably have an important influence on the result of the case, though it need not be decisive; and

(3)             the evidence must be such as is presumably to be believed.

10.It has been held that the application of these conditions will require some modification where there is an appeal from a summary judgment.  Kwan JA in Fortis Insurance Company (Asia) Ltd v Lam Hau Wah Inneo (Civil Appeal No. 86 of 2010; 28 October 2010) said at paragraph 18 of her judgment, with which I agreed in that case

“………the proper approach to be adopted in the context of Order 14 proceedings had been stated by Lord Bridge in Langdale v. Danby [1982] 1 WLR 1123 at 1133B to F:

‘The classic statement of what amounts to ‘special grounds’ within the meaning of Ord. 59, r 10(2) comes from the judgment of Denning L.J. (as he then was) in Ladd v. Marshall [1954] 1 WLR 1489, and was expressly approved by your Lordships’ House in Skone v. Skone [1971] 1 WLR 812 in the speech of Lord Hodson, at p. 815, with which all the other members of the Appellate Committee agreed. The statement reads, at p. 1491:

‘To justify the reception of fresh evidence or a new trial, three conditions must be fulfilled: first, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; secondly, the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; thirdly, the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, though it need not be incontrovertible.’

In the situation arising on an appeal to the Court of Appeal from a summary judgment, the application of these conditions and perhaps the conditions themselves will require some modification.  It may well be the standard of diligence required of a defendant preparing his case in opposition to a summons for summary judgment, especially if under pressure of time, will not be so high as that required in preparing for trial.  The second and third conditions will no doubt be satisfied if the further evidence tendered is sufficient, according to the ordinary principles applied on applications for summary judgment, to raise a triable issue.”

11.On the evidence before me it is abundantly clear that the evidence contained in the first part of the 3^rd affirmation and the documents exhibited as YYT-3(a) were indeed available at the time of the hearing before the master.  This is demonstrated by the transcript of the hearing before the master where Mr Kwok, for the defendant, said

“ So it’s clear evidence, we say, that payment had in fact been made. I think one other - - or before I do that, my solicitors actually have told me they have brought over the original bank statements today as well. I don’t know if anyone wants to look at that, but that is available.

MR RAMANATHAN : You should have adduced it.

MR KWOK : Yes, I should perhaps have exhibited it, but I think the evidence of the claimant is always sufficient here, but if anyone does want to, Master or my learned friend, of course that’s available.  The original bank statements are here to show that the payments did go out of the bank account.”

12.The position therefore is that despite having the evidence available at the hearing before the master the defendant and his legal representatives made a deliberate decision not to adduce the same at the hearing.  It was their position that the evidence of the defendant was already sufficient.  Having failed to persuade the master that there was a triable issue on the plaintiff’s claim, they still did not make the application to adduce the further evidence for the hearing of the appeal on 18 November 2010.  It was only at that hearing the adjournment was sought to make the application by summons dated 7 December 2010.

13.The case of Halifax Plc v Gould & Swayne & Others [1999] PNLR 184 relied on by Mr Kwok does not assist the defendant.  As is clear from the judgment of Auld LJ at pages 190 and 191, the court was of the view that the interest of justice required the admission of the further evidence in that case notwithstanding that it could have been obtained and put before the lower court.  But it is clear from that case that the solicitors’ representatives could have obtained the additional material for the purpose of the hearing below but they did not do so because they were of the view that they already had sufficient to demonstrate that there was a triable defence.  In this case the further evidence contained in the first part of Yong’s 3^rd affirmation had already been obtained and was available at the hearing before the master but the defendant and his legal representatives made a deliberate decision not to adduce it before the master.  Halifax is clearly distinguishable and affords no assistance to the defendant.

14.As Lord Bridge said in Langby as adopted in Fortis Insurance at paragraph 18

“ But I can see no injustice at all in requiring a defendant to use such diligence as is reasonable in the circumstances to put before the judge on the hearing of the summons, albeit in summary form, all the evidence he relies on in defence, whereas it would be a great injustice to the plaintiff to allow the defendant to introduce for the first time on appeal evidence which was readily available at the hearing of the summons but was not produced.”

15.I would also observe that in Bank of China (Hong Kong) Ltd v Certain Aim Limited (HCMP 1272/2007; 4^th October 2010) Deputy Judge Au-Yeung said at paragraph 17 of her judgment:

“ Order 58, rule 1(5) was introduced to curb the undesirable practice before the Civil Justice Reform when parties sought to adduce a further rounds(s) of evidence on appeal after an unfavourable decision from a Master. Rule 1(5) aims at effecting a change of culture so that parties should prepare their application properly at the earliest possible opportunity and lay all cards on the table prior to the hearing before a Master. The spirit of this rule will be defeated if a party is allowed to revert to the pre-CJR practice.”

16.I respectfully agree.

17.The second part of the 3^rd affirmation of Yong deals with additional points and were, as paragraph 23 states, put in to deal with the points raised by the plaintiff’s counsel at the hearing before the master.  In my view the defendant should not be allowed to answer by way of additional evidence the arguments of counsel at the hearing below if such evidence was obviously available and no attempt was made to place the same before the master.

18.Mr Kwok submitted that the evidence in the second part was put in as an afterthought after the plaintiff’s solicitors asked for explanations to be given on the matters stated in their letter dated 27 November 2010. 

19.I am unable to accept this submission.  

20.The letter dated 27 November 2010 asked for the supporting affirmation to be filed in support of the application for leave to adduce further evidence before the plaintiff’s solicitors could properly advise the plaintiff on the defendant’s application.  It was not an invitation to the defendant to file further evidence for use at the appeal.  In my view it would be a misconception to regard that letter as an invitation to the defendant to file further evidence for use at the hearing of the appeal.

21.In my view the defendant has failed to satisfy the first condition in Ladd v Marshall even though the standard of diligence is not as high as that required in preparing for a trial.  Where, as here, a deliberate decision was made not to place before the matter at the hearing below the evidence which had already been obtained and was available, the interests of justice do not, in my view, require that the defendant be allowed to put in the evidence contained in the 3^rd affirmation of Yong and the exhibits thereto.

22.In the exercise of my discretion I dismissed the application with costs.

Mr Kumar Ramanathan, SC and Ms Leung Mei Wah, instructed by Messrs Henry H. C. Wong & Co., for the Plaintiff

Mr Eugene Kwok, instructed by Messrs Richards Butler, for the Defendant