Chan Wai Tak v. Chan Mau Ping and Others

Case No.HCA 2321/2009

Court

High Court CFI

Date25 Aug 2011

Judge—

Case Document

100%Judiciary

HCA2321/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2321 OF 2009

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BETWEEN
	CHAN WAI TAK	Plaintiff
and
	CHAN MAU PING alias CHAN MAU PING TANDY	1^st Defendant
	CHAN MAU WAI alias CHAN MAU WAI BRIAN	2^nd Defendant
	CHIU KWOK KUEN alias CHIU KWOK KUEN MIKE	3^rd Defendant
	江燕 alias AMY JIANG	4^th Defendant
	杜兆文	5^th Defendant
	ZAP BUSINESS CONSULTANTY LIMITED	6^th Defendant
	佛山巿富池貿易有限公司	7^th Defendant

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Before : Deputy High Court Judge Yan SC in Court

Date of Hearing : 25 August 2011

Date of Decision : 25 August 2011

Date of Reasons for Decision : 19 September 2011

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REASONS FOR DECISION

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1.The trial of this action was scheduled to be heard over 6 days from 23 to 30 August 2011. On the third day of the dates fixed, I ordered that the trial be adjourned on certain conditions and made consequential directions. I set out below the reasons for my decision.

2.By his order dated 22 January 2010 (“the Wong Order”), Master J. Wong gave leave to the plaintiff to issue a Concurrent Writ of Summons in this action against the 4^th, 5^th and 7^th defendants and to serve a copy of the said Concurrent Writ of Summons on the 4^th, 5^th and 7^th defendants out of the jurisdiction. He further ordered that the 4^th, 5^th and 7^th defendants should have 28 days from the date of service of the Writ of Summons to file an Acknowledgement of Service.

3.On 26 February 2010, the plaintiff’s solicitors wrote to the Senior Judicial Clerk of the High Court seeking the assistance of the High Court to effect service of the Concurrent Writ of Summons and the Wong Order (and Chinese translations thereof) on the 4^th, 5^th and 7^th defendants through the assistance of the judicial authorities of Mainland China. By a letter dated 7 July 2010, the Registrar of the High Court wrote to the plaintiff’s solicitors to inform them that service of the documents as requested had been effected on the 4^th defendant at “佛山市禅城區華遠東路13號第29樓E2b室” (“the 1^st Address”) but that service at “廣東省豐順縣湯坑鎮文武路12-6號” (“the 2^nd Address”) had been unsuccessful. Enclosed with the letter were the relevant certificates of service and non-service issued by the “佛山市禅城区人民法院” (“Foshan Court”). The certificate of service of the Foshan Court recorded that the relevant documents had been served on the 4^th defendant at the 1^st Address on 12 April 2010. It further recorded that the 4^th defendant was present at the 1^st Address at the relevant time but that after she had heard the explanation of the process servers, she had refused to sign to acknowledge receipt of the documents. The documents were accordingly simply left with her.

4.Despite the fact that the Foshan Court had confirmed that the Concurrent Writ of Summons and the Wong Order had been duly served on the 4^th defendant, the 4^th defendant has not filed any Acknowledgement of Service. Nor had the 4^th defendant taken any steps in these proceedings until the events I shall describe below.

5.In early August 2011, the 1^st defendant applied for leave to file a supplemental witness statement. That application was supported by an affirmation made by the 1^st defendant. In that affirmation, the 1^st defendant deposed to the fact that he had been tied up in defending a criminal prosecution against him and that the trial of that prosecution only came to an end on 13 June 2011. The 1^st defendant stated that he was acquitted of all charges. He then went on to explain that after being acquitted, he tried his best to locate the 4^th defendant. He stated that he met with the 4^th defendant in early July and that the 4^th defendant had told him that she had never received any document from the plaintiff. The 1^st defendant further stated in his affirmation that up to the date of that affirmation no document had been disclosed by the plaintiff about the service of the Writ on the 4^th defendant. The 1^st defendant was, at the time he made his affirmation, unaware of the letter dated 7 July 2010 from the Registrar of the High Court to the plaintiff’s solicitors and the documents attached thereto.

6.The 1^st defendant further stated in his affirmation that upon his request, the 4^th defendant had agreed to provide and had eventually provided new documents to him on or about 23 July 2011. The 1^st defendant explained that these new documents were mainly internal documents of the 7^th defendant.

7.A supplemental witness statement of the 1^st defendant was eventually filed in which reference was made to some of the documents which the 1^st defendant claimed had been provided to him by the 4^th defendant. Further, the 1^st, 2^nd and 6^th defendants subsequently filed a supplemental list of documents disclosing others of the documents which the 1^st defendant claimed had been provided by the 4^th defendant to him but which had not be referred to in the supplemental witness statement of the 1^st defendant.

8.The first one and a half days of the 6 days fixed for the trial of this action were taken up with dealing with certain procedural matters including, in particular, 2 summonses issued by the 1^st, 2^nd and 6^th defendants. On the second day, after I had heard arguments from counsel in relation to the second of these summonses, I reserved my decision until 2:30 p.m. that afternoon.

9.Shortly after 2 p.m., I was informed by my clerk that a fax had been received from the 4^th defendant. In her fax, the 4^th defendant stated that she had received a telephone call that same day informing her that the trial of the present action had commenced. She also stated that she had been engaged for the past 2 years in attending to her other businesses in Hua Dong. She claimed that she had not received any legal documents and was unclear about the progress of this action. She therefore requested to be allowed to appear at the trial in person and to testify. She claimed, however, that she would need 2 weeks to prepare the information and materials relating to the 7^th defendant. She also indicated that she would attend in person at the trial on the following day.

10.On the resumption of the hearing at 2:30 p.m., after I had delivered my decision on the outstanding summons and dealt with and ruled on certain arguments as to costs, I informed the parties of the fax which had been received and enquired if they had any knowledge of it. Mr Lee Tung Ming, counsel for the plaintiff, and Mr James Tze, who appeared with Mr Jeffrey Li for the 1^st, 2^nd and 6^th defendants, informed me that they had no prior knowledge of the fax before being informed of the same by me. Mr Tze, however, informed me that the 1^st defendant had indeed contacted the 4^th defendant by telephone. After hearing submissions from Mr Lee and Mr Tze, I adjourned the hearing until the following day.

11.On the resumption of the hearing on the following day, the 4^th defendant was present in court. Before I heard from her, I was informed by Mr Tze that the 1st defendant wished to act in person so that Mr Tze and Mr Li (and those instructing them) would henceforth only represent the 2^nd and 6^th defendants.

12.Mr Lee stated that the position of the plaintiff was that he would very much like to proceed with the trial. He submitted that the certificate of service of the Foshan Court clearly proved that the 4^th defendant knew very well of her having been made a defendant but had chosen not to file an Acknowledgement of Service. He further submitted that the 4^th defendant’s statement in her fax of the previous day that she had not received any documents relating to this Action must be untrue. Mr Lee further relied on the contents of the affirmation made by the 1^st defendant in support of his application for leave to file and serve a supplemental witness statement to demonstrate that the 4^th defendant not only knew of the present action against her but also knew of the upcoming trial of this action.

13.Mr Lee submitted that the whole purpose of the 4^th defendant suddenly appearing was to have the trial adjourned. He pointed out that there were a lot of outstanding matters on the part of the 4^th defendant and he submitted that as trial date is a milestone date, it should not be disturbed except under exceptional circumstances.

14.Mr Tze indicated that his clients’ position was neutral.

15.In addressing this court, the 4^th defendant claimed that she knew about this matter in early 2010 because people in the trade had heard about it and had received documents. She said that she knew that the plaintiff would file a lawsuit to get back the 7^th defendant. She claims to have taken advice from lawyers in Mainland China but she claimed that as she had not received the relevant legal documents, she had not paid attention to this matter. She stated that based on the legal advice she had received, one of the points she would be raising in defence against the plaintiff’s claim against her would be that if what the plaintiff said was true, that is to say, that the 7^th defendant was held on trust for him, this would be illegal under the law of Mainland China as the 7^th defendant is a private mainland enterprise but foreign investors are not allowed to have interests in private mainland enterprises but could only set up foreign invested companies. She admitted that she had indeed met the 1^st defendant in early July but she reiterated that she had checked but had found that she had not received any legal documents relating to this action. She stated that she had provided certain documents to the 1^st defendant at the end of July but she said that these were not all of the relevant documents. She repeatedly said that contrary to what had been stated in the certificate of service of the Foshan Court, no documents relating to this Action had ever been served on her. She therefore applied for leave to file a defence, a witness statement and a list of documents.

16.Mr Lee then submitted that what the 4^th defendant had said simply reinforced the point that she had long been familiar with the proceedings. He submitted that whilst the court could not stop the 4^th defendant from taking part in the trial, it should, in exercise of its discretion, debar the 4^th defendant from putting forward any evidence whether in the way of documents or testimony. When I asked Mr Lee how the court would know the parameters of the dispute between the plaintiff and the 4^th defendant if she were to take part in the trial without filing a defence, Mr Lee submitted that the parameters of the dispute would simply be that the 4^th defendant could dispute the plaintiff’s case but could not put forward a positive case.

17.The 1st defendant and Mr Tze indicated that they had no objection to the trial being adjourned.

18.Given Mr Lee’s submission that the 4^th defendant could not be stopped from taking part in the trial, and in view of the fact that only a possible 3 ½ days were left of the original 6 days allotted for the trial of this action, I asked the defendants how long they anticipated their cross-examination of the plaintiff’s witnesses would take. The 1^st defendant indicated that it would take him a day to cross-examine the plaintiff’s witnesses. For his part, Mr Tze estimated that his cross-examination would take about an hour. The 4^th defendant said that it was difficult for her to say how long her cross-examination would take as she had not yet read the documents in the case. However, she indicated that it would take her a long time to cross-examine the plaintiff’s witnesses.

19.I told the 4^th defendant that if I were to exercise my discretion in her favour, she would have to bear the costs of and occasioned by the adjournment. I added that I would also require her to pay the sum of $485,000 into court as security for such costs ordered to be paid by her. This figure was arrived at after Mr Lee and Mr Tze had provided estimates of the costs of and occasioned by the adjournment which they would be seeking from the 4^th defendant in the event that the trial had to be adjourned. I asked the 4^th defendant if she would be prepared to accept these conditions. She said she would.

20.I then gave an indication to the parties as to the directions which I would give if I were to adjourn the trial of the action and invited their comments and submissions. Having heard the parties’ comments and submissions, and having given the matter further consideration, I ordered that the trial of this action be adjourned for a trial de novo before another bilingual judge and that the costs of and occasioned by the adjournment be borne by the 4^th defendant. I also gave the 4^th defendant leave to file her defence, list of documents and witness statement(s) but such leave was conditional upon the 4^th defendant paying the sum of $485,000 into court as security for the costs of and occasioned by the adjournment would she had been ordered to pay. I also gave other consequential directions.

21.I set out below the reasons for my decision:

(a)  By the time I gave my decision, there were only just over 3 of the original 6 days allotted for the trial of this action left. Whilst this may, on an optimistic estimate, have been sufficient for the completion of the evidence (but not final submissions) without the participation of the 4^th defendant, with the participation of the 4^th defendant, and even assuming that she would not be allowed to adduce evidence, it would have been impossible for even the evidence stage of the trial to be completed within the time left (especially given the 4^th defendant’s lack of preparation). My assessment of the situation was confirmed to be correct because after I told the parties that I was minded to adjourn the trial, Mr Lee told me he estimated that the length of the adjourned trial would be 8 days and the other parties did not disagree with this estimate.

(b)  I am of the view that it is desirable that the 4^th defendant should participate in the trial of this action. On the plaintiff’s case, she is one of the two parties (the other being the 5^th defendant upon whom the plaintiff has, up until now, been unable to effect service) holding the shares in the 7^th defendant on behalf of the plaintiff.

(c)  From a case management perspective, it would be highly undesirable for the issues between the plaintiff and the 4^th defendant not be properly crystallised in pleadings filed. In this regard, I was particularly concerned that the plaintiff should be given a clear idea of the case which the 4^th defendant proposes to put forward in relation to the allegedly illegality under Mainland Chinese law of the arrangements which the plaintiff had to put in place in relation to the beneficial ownership of the 7^th defendant. It was for this reason that I decided to give leave to the 4^th defendant to file a defence.

(d)  Since the trial has in any event to be adjourned for the reasons set out in (a) above, I am of the view that in the interests of enabling this court to arrive at a just and correct determination of the dispute between the parties, the 4^th defendant should be allowed to put forward evidence both in the form of documents and the testimony of witnesses. I therefore gave her leave to file her list of documents and witness statement(s).

(e)  I do not accept the 4^th defendant’s explanation that she had not taken any steps in these proceedings because she had not been served with any of the documents and, in particular, that what is set out in the certificate of service of the Foshan Court is untrue. I find that the Concurrent Writ of Summons and the Wong Order had in fact been served on the 4^th defendant as stated in the certificate of service. For reasons best known to herself, she chose not to take any steps in these proceedings until the third day of the trial. It is therefore due to the fault of the 4^th defendant that this trial has had to be adjourned. In the circumstances, it is only just and proper that she should bear the costs of and occasioned by the adjournment. Furthermore, as the 4^th defendant is resident in Mainland China, she can just as easily return to Mainland China as she has suddenly appeared. That may make it extremely difficult if not impossible, for the parties seeking to recover such costs to recover them from her. Accordingly, I decided that she should provide security for such costs as a condition for leave to be granted to her to file her defence, list of documents and witness statement(s).