Lee Sai Nam v. Li Shu Chung and Another

Case No.HCA 1711/2009

Court

High Court CFI

Date31 May 2013

Judge—

Case Document

100%Judiciary

HCA 1711/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1711 OF 2009

_____________

BETWEEN

	LEE SAI NAM	Plaintiff
	and
	LI SHU CHUNG	1^st Defendant
	LI JOSEPH SEE SUN	2^nd Defendant
	(By Original Action)

BETWEEN

	LI SHU CHUNG	Plaintiff
	and
	LEE SAI NAM	1^st Defendant
	ALLIED EVER HOLDINGS LTD	2^nd Defendant (withdrawn)
	LEE SIN MAN SELINE	3^rd Defendant
	YUEN HING ENTERPRISE MACAO COMMERCIAL OFFSHORE LIMITED	4^th Defendant

(By Counterclaim)

____________

Before: Deputy High Court Judge Marlene Ng in Chambers

Dates of Hearing: 21 March, 9 and 19 April 2013

Date of Handing Down Decision: 31 May 2013

___________________

DECISION NO 2

___________________

I. INTRODUCTION

1.On 15 May 2013, I handed down the first tranche of my decision in respect of the Amendment Summons in the present action that was heard before me on 21 March and 9 and 19 April 2013 (“Decision No.1”). This is the second tranche of my decision in respect of the Statements, Relief and Ken’s 1^st Statement Summonses, which must be read together with Decision No.1. For easy reference, in this decision I adopt the abbreviations in Decision No.1.

2.By the Statements Summons filed on 3 August 2012, Ken and Joseph applied for leave to serve Ken’s supplemental witness statement (“Ken’s Draft Statement”), Joseph’s witness statement (“Joseph’s Draft Statement”), and five other additional witness statements by Cho Yee Chun, Lai Yuk Wah, Tsang Kam Ping, Chan Tsz Lok and Giovanni Sordi as per the Draft Statements annexed to the Statements Summons.

3.On 3 August and 31 October 2012, Ken and Joseph (collectively, “KJ”) filed Ken’s 4^th and 7^th affirmations in support of the Statements Summons. On 5 October 2012, the Father and Seline (collectively, “FS”) filed Seline’s 4^th affirmation in opposition.

4.By Ken’s 1^st Statement Summons filed on 14 March 2013 (ie a week before the 1^st Hearing Day), FS applied to strike out Ken’s witness statement dated and exchanged on 20 March 2012 (“Ken’s 1^st Statement”).

5.On 14 March 2013, FS filed the affirmation of their solicitor Ching Wing Yin in support of Ken’s 1^st Statement Summons.

6.By the Relief Summons filed on 2 April 2013 (ie after the 1^st Hearing Day and before the 2^nd Hearing Day), KJ applied under Order 2 rules 4 and 5 of the RHC for leave to apply out of time for relief from sanction in respect of the Unless Order, and if so granted, for leave to serve the supplemental and/or further witness statements as to facts as per the Draft Statements.

7.On 2 April 2013, KJ filed the 4^th affirmation of their solicitor Hui Yee Osbert (“Mr Hui”) in support of the application.

8.A summary of the background in respect of the Statements, Relief and Ken’s 1^st Statement Summonses can be found at paragraphs 51-62 of Decision No.1. The preliminary issues for determination in respect of such summonses are summarised as follows:[1]

(a) whether Ken’s 1^st Statement should be struck out;

(b) whether KJ had complied with the Unless Order;

(c) if not, whether extension of time should be granted for KJ to issue the Relief Summons;

(d) if so, whether relief should be granted under the Relief Summons.

Should relief from sanction be granted under the Relief Summons, then the Remaining Statements Issue will have to be adjourned to be heard before me or the trial judge.[2]

9.Summaries of FS’ case, KJ’s case and Yuen Hing’s case can be found in paragraphs 69-90, 91-113 and 114-115 of Decision No.1. I now turn to the procedural history for proper understanding of the Statements, Relief and Ken’s 1^st Statement Summonses.

II. PROCEDURAL HISTORY

10.On 3 November 2010, Seline filed her Defence to Ken’s counterclaim against her in the RAD&RAC.

11.As at the hearing of the case management summons (“CMS”) before Master KK Pang on 7 September 2011, Ken had not yet served the RAD&RAC on Yuen Hing, and there was discussion as to whether FS and KJ should only exchange witness statements as to facts after Ken’s counterclaim was served on Yuen Hing. But ultimately Master KK Pang directed FS and KJ (but not Yuen Hing) to serve and exchange signed witness statements as to facts on or before 23 November 2011 (“Pang Order”), and indicated they could revisit this after Ken served the RAD&RAC on Yuen Hing. The witness statements to be exchanged pursuant to the Pang Order (“Pang Order Statements”) were FS’ and KJ’s respective signed witness statements as to facts in respect of the main action between the Father and KJ and Ken’s counterclaim against FS (collectively, “Statement Proceedings”).

12.The RAD&RAC was eventually served on Yuen Hing. On 19 September 2011, Yuen Hing filed their acknowledgment of service giving notice of intention to defend.

13.On 4 October 2011, FS filed their List of Documents.

14.On 19 October 2011, Yuen Hing issued a summons for extension of time to file and serve their Defence to the RAD&RAC (“YH Defence”) within 28 days. On 24 October 2011, Master J Wong granted an order in terms.

15.On 3 November 2011, KJ’s solicitors (“KJ Solicitors”) proposed to FS’ solicitors (“FS Solicitors”) to postpone filing and exchange of the Pang Order Statements for 7 weeks from the deadline imposed in the Pang Order to enable (a) Yuen Hing to file and serve the YH Defence, and (b) FS and KJ to seek appropriate directions before they would prepare their Pang Order Statements. It was suggested that “[this] way, all issues of the action can be vented out at once and the parties can deal with them in one go. Further, all parties can operate in accordance with one synchronized timetable”.

16.On 8 November 2011, Yuen Hing issued a summons to strike out Ken’s counterclaim against them on the ground that it disclosed no reasonable cause of action (“Yuen Hing Strike Out Summons”), and to seek extension of time to file and serve the YH Defence. On the same day, Seline issued a summons to strike out Ken’s counterclaim against her also on the ground that it disclosed no reasonable cause of action (“Seline Strike Out Summons”).

17.On 11 November 2011, FS Solicitors replied to KJ Solicitors that in view of the Yuen Hing Strike Out Summons, the “parties herein should proceed in accordance with [the Pang Order] to avoid further delay to these proceedings”.

18.On 14 November 2011, KJ issued a summons inter alia for an order that the parties do serve and exchange the Pang Order Statements on or before 11 January 2012 (“1^st Extension Application”).

19.On 15 November 2011, FS Solicitors wrote to advise KJ Solicitors that FS were prepared not to oppose the 1^st Extension Application.

20.On the same day, KJ Solicitors wrote to FS Solicitors and Yuen Hing’s solicitors in respect of the 1^st Extension Application (which KJ Solicitors said was not for extension of time but for variation of the Pang Order) with draft consent summons annexed thereto:

(a) The purpose of the 1^st Extension Application was “to postpone the time for the parties to exchange their witness statements such that the timetable for all parties could be synchronized and parties could consider all pleadings and documents (including those to be relied by [Yuen Hing]) in one go before preparing their witness statements”.

(b) No prejudice would be caused to any party if an order in terms was made since no milestone date would be affected, but the parties would be better positioned in preparing their witness statements.

21.By a consent summons filed on 16 November 2011, all parties sought an order inter alia that FS and KJ shall serve and exchange the Pang Order Statements on or before 11 January 2012 (“1^st Consent Summons”). On the same day, Master Roy Yu granted an order in terms of the 1^st Consent Summons.

22.Pursuant to a consent summons dated 22 November 2011, Master Levy on the same day ordered inter alia that the time for Yuen Hing to file the YH Defence be extended pending the determination of the Seline and Yuen Hing Strike Out Summonses.

23.On 3 January 2012, KJ issued a summons for an order inter alia that parties do serve and exchange the Pang Order Statements on or before 6 March 2012 (“2^nd Extension Application”).

24.On 4 January 2012, KJ Solicitors wrote to remind FS Solicitors and Yuen Hing’s solicitors that the “parties agreed to [extend time until 11 January 2012 to serve and exchange the Pang Order Statements] such that the timetable for all parties to file their witness statements could be synchronized and parties could consider all pleadings and documents (including those to be relied on by [Yuen Hing]) in one go before preparing their witness statements”. KJ Solicitors explained that the Seline and Yuen Hing Strike Out Summonses were due to be heard on 28 February 2012, so KJ had taken out the 2^nd Extension Application to further extend time for the parties to file their witness statements 7 days after such hearing. KJ Solicitors claimed there had been no change of circumstances since the 1^st Extension Application, so no prejudice would be caused to any party and no milestone date would be affected. They invited FS and Yuen Hing to dispose of the 2^nd Extension Application by way of consent summons as per the draft annexed thereto.

25.On the same day, Yuen Hing’s solicitors replied it was too early for Yuen Hing to consider witness statements, so Yuen Hing should be excluded from the proposed extension of time to serve and exchange witness statements as to facts.

26.FS claimed that with a view to save time and costs they would not oppose the 2^nd Extension Application and instructed FS Solicitors to endorse the consent summons. So on the same day, KJ Solicitors sent to FS Solicitors and Yuen Hing’s solicitors a draft consent summons that incorporated the observations by Yuen Hing’s solicitors. The consent summons was filed on 5 January 2012 (“2^nd Consent Summons”).

27.On 5 January 2012, pursuant to the 2^nd Consent Summons, Master Ko ordered FS and KJ to exchange the Pang Order Statements on or before 6 March 2012.

28.The Seline and Yuen Hing Strike Out Summonses were heard on 28 February 2012, and DHCJ Burrell reserved his decision. According to Seline, DHCJ Burrell indicated that his reserved decision would be handed down shortly.

29.By a consent summons filed on 5 March 2012, FS and KJ applied for an order inter alia that they do serve and exchange the Pang Order Statements on or before 20 March 2012 (“3^rd Extension Application”).

30.On 8 March 2012, DHCJ Burrell handed down his decision dismissing the Seline and Yuen Hing Strike Out Summonses (“Burrell Decision”). On 12 March 2012, Yuen Hing’s solicitors wrote to inform KJ Solicitors that they expected the YH Defence to be ready by 10 April 2012.

31.On 16 March 2012, KJ Solicitors received a note from Master Ho’s clerk notifying them that on 15 March 2012 Master Ho granted the following order (“Ho Clerk Note”):

“By Consent, OIT as amended of paragraph 1:-

Unless by 4:00 p.m. on 20^th March 2012 [the Father] …… do exchange the signed statements of witnesses as to facts, failing which the party in default shall be debarred from adducing evidence at the trial and the other party shall forthwith serve the witness statements on the default party.”

32.The order of Master Ho dated 15 March 2012 (being the Unless Order) and sealed on 12 April 2012 read inter alia as follows:

“UPON the joint application by [FS] and [KJ] by way of [the 3^rd Extension Application]

IT IS BY CONSENT ORDERED THAT:

1. Unless by 4:00 p.m. on 20 March 2012 [FS] and [KJ] do exchange the signed statements of witnesses as to facts, failing which the party in default shall be debarred from adducing evidence at the trial and the other party shall forthwith serve the witness statements on the default party. ……”

I have no doubt that the reference to “signed statements of witnesses as to facts” in the Unless Order is a reference to the Pang Order Statements. Since Yuen Hing was excluded from the 3^rd Extension Application and the Unless Order, it is plain that the Pang Order Statements comprise all statements of factual witness evidence premised on the then existing pleadings and available documents in the Statement Proceedings, but not Ken’s counterclaim against Yuen Hing (“Statements Ambit”). It is also common sense that KJ and FS cannot predict how Statement Proceedings will evolve prospectively, so the Statements Ambit will not include prospective matters in respect of the Statement Proceedings not known at the time of exchange of witness statements as to facts under the Unless Order.

33.On 19 March 2012, FS Solicitors proposed to KJ Solicitors to exchange witness statements on 20 March 2012 at 3:30 p.m. at their offices. On the same day, KJ Solicitors counter-proposed to exchange witness statements at 4:00pm on 20 March 2012 at their offices.

34.Seline in her 4^th affirmation claimed that shortly after the Unless Order, KJ Solicitors sought the consent of FS Solicitors to make a joint application to “vary” the Unless Order. But FS considered it was not open for them to do so, and they were also concerned that KJ were adopting a delaying strategy. But apart from such request, KJ Solicitors did not indicate any difficulty in complying with the Unless Order.

35.On 20 March 2012, FS served and exchanged the witness statements of the Father, Seline and Richard, and KJ served and exchanged Ken’s 1^st Statement and the witness statements by Akio Sakuma, Li Kui and Chan Ming Wai. The contents of such witness statements are summarised in Part III below. Suffice to state here that KJ contended they had complied with the Unless Order, but FS argued Ken’s 1^st Statement was defective in that it (a) merely asserted it was not the right time to file evidence and (b) did not contain any factual evidence at all.

36.On the same day, KJ filed a summons under Order 25 rule 1B of the RHC that sought the following reliefs (“20/3/12 Summons”):

“1. [Seline and Yuen Hing] do file and serve their respective Defence to Counterclaim, if any, by 4:00 p.m. on 10 April 2012;

1. Parties do make discovery by exchanging list of documents within 14 days thereof and any further discovery applications within 14 days thereafter;

2. Parties do serve and exchange signed witness statements of facts within 28 days thereafter or after disposal of further discovery applications, if any, whichever is later;

3. Parties do within 14 days thereafter obtain Counsel’s [advice] on evidence, liability and quantum;

4. Parties do make all interlocutory applications as may be advised by Counsel within 14 days thereafter;

5. There be liberty to apply; and

6. Costs of this application be costs in the cause.”

37.On 21 March 2012, Yuen Hing’s solicitors wrote to FS and KJ Solicitors to say they had no objection in principle to file the YH Defence by 10 April 2012.

38.On 22 March 2012, KJ filed Mr Hui’s 2^nd affirmation in support of the 20/3/12 Summons, which affirmation stated as follows:

“16…Yuen Hing will be filing [the YH Defence] in due course and as such, pleadings have not been closed and issues are yet to be crystallised. It is important for the parties to consider all pleadings and documents including those to be filed by Yuen Hing and for discovery to be completed before they prepare their witness statements.

17. For the reasons above, [KJ Solicitors were] instructed to attempt to procure consent from [FS Solicitors] to vary the deadline of 20 March 2012, which is a non-milestone date. However, [FS Solicitors] declined to agree to such variation without giving reasons and they insisted on the exchange of witness statements on 20 March 2012.

18. In those circumstances, to comply with the [Unless Order], [Ken] exchanged witness statements with [FS] while reserving his rights in his Witness Statement to, inter alia, file supplemental witness statements and statements of other factual witnesses …

19. In the premises, [Mr Hui believes] that it is premature to prepare and exchange witness statements at this stage and for the reasons set out hereinabove, [Mr Hui] respectfully pray for an Order to be made in terms … of the [20/3/12 Summons].”

39.The 20/3/12 Summons was returnable before Master Ho on 23 March 2012 (“Ho Hearing”). In his written submissions, Mr Kwong, counsel for FS, argued that Ken violated the Unless Order by refusing to provide any factual evidence in Ken’s 1^st Statement and by asserting “it is premature to prepare and exchange witness statements at this stage”. Mr Kwong submitted that the 20/3/12 Summons which sought to “vary” the Unless Order was misconceived on inter alia the following grounds:

(a) The court was functus officio after having made the Unless Order, so there was no jurisdiction to vary such order in the absence of an appeal.

(b) Ken was procedurally wrong to invoke Order 25 rule 1B(2) of the RHC to “vary” the deadline to exchange witness statements since the “milestone dates” under such provision only referred to CMC, Pre-trial Review and trial.[3]

(c) Even if Order 25 rule 1B(2) of the RHC were applicable, there were plainly no “exceptional circumstances”[4] that justified any variation since Ken deliberately chose not to abide by the Unless Order.

(d) Ken must not be allowed to defeat the Unless Order via the backdoor.[5]

(e) Since Yuen Hing had not yet filed the YH Defence and was not subject to the Unless Order, there was nothing in the Unless Order to be varied.

Mr Kwong’s written submissions went on to state that since pleadings, discovery and witness statements between KJ and FS had closed, any further directions to be given should be confined to the Ken’s counterclaim against Yuen Hing.

40.At the Ho Hearing, Master Ho granted the following order:

“1. Unless by 4:00 p.m. on 13 April 2012 [Yuen Hing] do file and serve [the YH Defence], failing which [Ken] be at liberty to apply for judgment to be entered against [Yuen Hing];

2. [Ken] and [Yuen Hing] do, after the filing and service of the [YH Defence] by [Yuen Hing], exchange list of documents within 14 days, with inspection of documents within 7 days thereafter;

3. [Ken] and [Yuen Hing] do exchange signed witness statement as to facts within 60 days after the inspection of documents, such witness statements shall be confined to the issues in the Counterclaim between [Ken] and [Yuen Hing]. The said witness statements shall also stand as evidence-in-chief unless the trial judge otherwise directs;

4. [Ken] and [Yuen Hing] do within 14 days thereafter obtain Counsel’s advice on evidence, liability and quantum;

5. All interlocutory applications as may be advised by Counsel shall be taken out 14 days thereafter; and

6. Costs of this application be in the cause as between [Ken] and [Yuen Hing], save that [Ken] shall pay costs of today to [FS] assessed at HK$800 to be paid forthwith.”

41.On 12 April 2012, Yuen Hing filed the YH Defence. At the CMC on 19 April 2012, Master Ho granted inter alia the following directions:

(a) the present action be adjourned to a second CMC before master on 18 October 2012;

(b) FS and KJ were to take out applications to amend their respective pleadings within 21 days and 32 days respectively;

(c) within 14 days, FS and KJ were to serve supplemental List of Documents (if any) with inspection of documents within 7 days thereafter;

(d) within 92 days, FS and KJ were to obtain counsel’s advice on the whole matter;

(e) “[all] interlocutory applications as may be advised including the application for leave to serve supplemental witness statements shall be taken out within 14 days thereafter”.

42.On 26 April 2012, Yuen Hing applied by summons for Ken’s counterclaim to be tried separately from the main action as if they were separate actions or alternatively for Ken’s counterclaim to be stayed pending the determination of the main action. On 16 May 2012, Master Ho adjourned such summons to the global CMC on 25 July 2012 before Harris J.

43.On 21 May 2012, Ken applied for an order that unless Yuen Hing filed and served their List of Documents within 7 days, the YH Defence would be struck out and judgment be entered against them on the counterclaim. On 24 May 2012, Yuen Hing applied by summons for extension of time for Ken and Yuen Hing to exchange their respective List of Documents until 21 days after the adjudication of Yuen Hing’s summons filed on 26 April 2012 unless otherwise directed by the court. On 28 May 2012, Master Levy adjourned both summonses to the global CMC on 25 July 2012 before Harris J.

44.On 13 July 2012, KJ Solicitors informed FS Solicitors that KJ intended to seek leave to serve the Draft Statements (copies of which were enclosed), and to save time and costs they sought FS’ consent on the basis that “… quite a few interlocutory applications are outstanding including … respective applications to amend pleadings. As such, parties are far from being ready for trial and adducing the Statements at this stage will cause no prejudice to [FS]. Quite the contrary, they will enable [FS] to appreciate the case they have to meet at trial.”

45.On 20 July 2012, FS Solicitors replied stating that FS would oppose KJ’s application to file and serve the witness statements as per the Draft Statements.

46.At the global CMC on 25 July 2012, Harris J made the Harris J Order and dismissed Yuen Hing’s and Ken’s summonses filed on 26 April, 21 May and 24 May 2012 respectively with no order as to costs. He also granted the Split Trial Order.

47.Later, KJ took out the Statements and Relief Summonses, and FS took out Ken’s 1^st Statement Summons.

III. KJ’S EXCHANGED WITNESS STATEMENTS

48.Ken’s 1^st Statement (the body of which essentially comprised only two pages) stated that at that time Ken was in the United Kingdom visiting his family and would not return to Hong Kong until 22 March 2012. It further stated that on 12 March 2012 Yuen Hing’s solicitors confirmed to KJ Solicitors that the YH Defence should be ready by 10 April 2012. On 19 March 2012 Ken was informed by KJ Solicitors of (a) the dismissal of the Seline and Yuen Hing Strike Out Summonses and (b) the Ho Clerk Note. Ken’s 1^st Statement went on to state as follows:

“5. As such, pleadings have not been closed and [Ken is] advised that issues are yet to be crystallised, Further, once the Defence to Counterclaim of Yuen Hing and/or [Seline], is filed, in all likelihood, it would be necessary to make discovery and/or other interlocutory applications for disposing fairly of the cause or matter or for saving costs.

6. In the premises, [Ken is] advised by [KJ solicitors] that it is premature to prepare and exchange witness statements at this stage.

7. [Ken is] informed by [KJ Solicitors] that upon receipt of the [Unless Order], efforts were made to procure consent from [FS Solicitors] to vary the deadline on 20 March 2012 (which is a non-milestone date, [he is] informed). Unfortunately and for reasons best known to them, they declined to do so without giving reasons and insisted on exchanging witness statements on 20 March 2012.

8. In the circumstances, [Ken makes] this Witness Statement to comply strictly with the order but at the same time, reserve all [his] rights to amend pleadings, make necessary discovery or other interlocutory applications and file further supplemental statements and that of other factual witnesses.

9. [Ken has] also instructed [KJ Solicitors] to make necessary application and to take all necessary steps in [his] absence to vary the deadline of 20 March 2012.

10. For present purpose, [he has] read the [RAD&RAC] filed herein again and hereby adopt all the matters pleaded therein which [he confirms] to be true and accurate to the best of [his] present knowledge.

11. For the avoidance of doubt, there are areas in this statement that [Ken wishes] to amplify and, no doubt, new matters that [he wishes] to address or ask other factual witnesses to address once [he has] a chance to consider the Defence to Counterclaim to be filed by Yuen Hing and/or [Seline].”

49.Chan Wai Ming was a qualified accountant working for a company associated with Mazars. According to his 7-page witness statement, he met with the Father in February 2009 for the purpose of reconciling and verifying the Father’s Ledgers. He also set out Mazars’ calculations which showed that Ken was entitled to receive a further share of profits from the Group as at 30 November 2011 in the sum of HK$32,640,696.95, and that Richard and Seline had over-withdrawn their entitlements.

50.Lee Kui is the elder brother of the Father who had worked for Luen Tat for many years. His 4-page witness statement spoke of Ken’s and Seline’s personality and behaviour, and their attitude towards him.

51.Akio Sakuma worked for a customer of Luen Tat. In his 6-page witness statement, he dealt with his working relationship with Ken, and his relationship (if any) with the Father, Richard and Seline.

IV. DRAFT STATEMENTS

52.Ken’s Draft Statement ran to 51 pages (with 22 annexures) that covered a wide range of factual evidence, including the relationship of various Lee (or Li) family members and various companies of the Group, Ken’s return to Hong Kong in the 1980s, Ken’s work in Luen Tat over the years, the profit-sharing arrangements, Ken’s investment in the Project and Lianda, the Father’s gift of his shareholdings in Luen Tat to Ken and Richard, the Ken Li trust, Joseph’s role as Ken’s nominee, the setting up of Pak Tat as Lianda’s holding company, the reinvoicing operation, the October 2008 meeting and follow-up actions, the December 2008 and May 2009 discussions, the June 2009 dispute, and other related litigation and winding up of Luen Tat and Pak Tat.

53.Joseph’s Draft Statement has just four paragraphs set out in one page. It stated that Joseph never participated in the business and affairs of Luen Tat and the Group, and explained that on 25 May 2009 Ken arranged to transfer 51 ordinary shares in Luen Tat held by Joesh to Joseph. Such statement went on to state that since then Joseph held those 51 ordinary shares in Luen Tat as nominee for Ken, and as far as Joseph knew Ken was the owner of those shares.

54.Cho Yee Chun was the manager of Messrs Moores Rowland (later re-named as Mazars) who gave tax advice to Luen Tat and Lianda. In his Draft Statement, he explained inter alia the Macau reinvoicing operation and its predecessor tax project. He also explained the positions and roles of the Father, Seline and Richard within the Lee (or Li) family and the Group. He referred to the Father’s Ledgers and explained the calculations and verification done by Mazars. He was present during the incident in June 2009.

55.Lai Yuk Wah was a friend of Lee (or Li) family and his company provided IT consultancy service for Luen Tat and Lianda. In his Draft Statement, he explained about the October 2008 meeting attended by the Father, Ken, Richard and Seline. He was personally involved in the meeting and prepared the minutes of meeting. He also explained the follow-up actions taken after the meeting.

56.Tsang Kam Ping and Chan Tsz Lok were former employees of Luen Tat. In their Draft Statements, they dealt with Luen Tat’s operations and Ken’s contribution to the business. They also explained the positions and roles of the Father, Richard and Seline in the business, the work performance of Richard and Seline, and how Luen Tat dealt with their customers.

57.Giovanni Sordi worked for a customer of Luen Tat. His Draft Statement explained his dealings with Ken and his understanding of the roles played by the Lee (Li) family members (if any) in the business.

V. SYNCRHONISATION OF TIMETABLES

58.I accept that when (a) KJ and FS Solicitors attended the CMS before Master KK Pang on 7 September 2011, (b) KJ made the 1^st, 2^nd and 3^rd Extension Applications, and (c) the parties agreed to the 1^st and 2^nd Consent Summonses, the parties had in mind the practical reality that progress of Ken’s counterclaim against Yuen Hing fell behind progress of the Statements Proceedings. At that time, the Seline and Yuen Hing Strike Out Summonses were still pending, and FS and KJ considered it was not unwise to extend the deadline for serving and exchanging the Pang Order Statements.

59.KJ claimed that in twice postponing the deadline under the Pang Order for serving and exchanging the Pang Order Statements, KJ and FS intended to achieve a synchronised timetable so as to avoid having two sets of case management directions, ie one for Ken’s counterclaim against Yuen Hing and another for the Statements Proceedings.

60.Seline agreed that such postponements anticipated that the Seline and Yuen Hing Strike Out Summonses would be heard and the Burrell Decision would be handed down during such periods so that FS and KJ would have sufficient time to revise their witness statements (if necessary) in light of the Burrell Decision. FS’ acknowledgement of the underlying purpose of synchronising timetables is also evident from Mr Kwong’s submissions at the Ho Hearing:

“… there was [the Burrell Decision] dismissing [the Seline and Yuen Hing Strike Out Summonses]. So now [Yuen Hing] … will file the [YH Defence], so the pleadings have only closed. The issues have not been crystallised. There is no discovery yet. So in our submission, all the parties should be able to see the full picture and to consider all the pleadings and documents reviewed when preparing the witness statements, and it is important for the parties to know what case and documents to meet.

There are two earlier orders made on 16 November 2011 and 5 January 2012 [in respect of the 1^st and 2^nd Extension Applications]. They all aim at synchronising the timetable of all parties to consider. Master will understand that the [CMS] was heard on 7 September. At that time, Master, the issue of the involvement of [Yuen Hing] was discussed, but Master KK Pang directed that all parties at that time should proceed to exchange – serve and exchange the witness statements and the issue of Yuen Hing be revisited after its acknowledgment of service.”

61.But notwithstanding the common wish on the part of KJ and FS to “synchronise timetables”, Master KK Pang was not prepared to accede to such wish at the CMS on 7 September 2011. Instead, by the Pang Order he directed FS and KJ to serve and exchange the Pang Order Statements on or before 23 November 2011. Neither party appealed against the Pang Order, so KJ and FS were bound to serve and exchange the Pang Order Statements by the prescribed deadline (see paragraph 11 above).

62.Against such background, the 1^st, 2^nd and 3^rd Extension Applications plainly were not for “variation” of the Pang Order as suggested in the letter by KJ Solicitors of 15 November 2011 (see paragraph 20 above). In my view, the orders made pursuant to the 1^st and 2^nd Consent Summonses (see paragraphs 21 and 26 above) did not seek to “vary” the substance of the Pang Order which was to require FS and KJ to serve and exchange the Pang Order Statements. Rather, the effect of these orders was to extend time for FS and KJ to comply with the Pang Order, which order was binding upon them despite their wish to “synchronise timetables”.

VI. UNLESS ORDER

(a) Unless Order as an amended order?

63.Pursuant to the 3^rd Extension Application made with the consent of KJ and FS, Master Ho granted the Unless Order. Since the relief sought in the 3^rd Extension Application was not in the form of a peremptory order with sanction to be imposed upon default, Mr Joffe suggested that the Unless Order was in effect an “amended order” as suggested in the Ho Clerk Note that stated “[by] Consent, OIT as amended of paragraph 1 [of the 3^rd Extension Application] …” He submitted it was not right to say that the Unless Order was made by consent.

64.I do not agree that the Unless Order was an “amended order”. An amended order envisages that an order granted by the court has been subsequently amended by further court order. By the Ho Clerk Note, KJ and FS Solicitors were informed of the Unless Order being only order made by the court in respect of the 3^rd Extension Application. By the Ho Clerk Note, what appeared to have been “amended” was not any order granted by the court. Rather, Master Ho (upon deciding that he would not accede to the terms of the relief sought in the 3^rd Extension Application and instead would impose an “unless” sanction) took a clerical short-cut to change or “amend” the wording of the proposed relief set out in the 3^rd Extension Application so that the revised wording became the Unless Order he intended to and did grant. On any view, the Unless Order cannot be regarded as an “amended order”.

65.Further, whether the Unless Order was made by consent or not is neither here nor there. Even if it was not made with KJ’s consent, it was still an order of the court which had to be complied with.[6] This is especially so when KJ do not challenge the validity of the Unless Order (see paragraph 67 below).

(b) Validity of the Unless Order

66.Mr Joffe suggested that Master Ho might not have been aware of procedural history (including the 1^st and 2^nd Extension Applications and the reasons therefor) and/or the background intention of “synchronising timetables” when he dealt with the 3^rd Extension Application by paper disposal. Mr Joffe queried whether Master Ho was entitled to impose the Unless Order (as notified to KJ and FS Solicitors by the Ho Clerk Note) on his own motion without a hearing or without specifying in the order that FS or KJ could apply to the court to have it set aside, varied or stayed. [7] On the other hand, Mr Wong submitted that under the Civil Justice Reform (“CJR”) Master Ho clearly had case management power to ensure that the proceedings were prosecuted expeditiously by the parties, and for such purpose to impose (as he did) an “unless” sanction by way of the Unless Order to avoid further delay.

67.In my view, there is no need for me to deal with the above disagreement because neither KJ nor FS challenged the validity of the Unless Order. This was confirmed by Mr Joffe on the 2^nd Hearing Day, and he added that his submissions on the procedural background that led to the Unless Order were made not to address the issue of whether or not there was breach of the Unless Order but were rather for the purpose of the Relief Summons. I also note there was no appeal against the Unless Order, and indeed it is KJ’s primary case that they had complied with the Unless Order. The Unless Order is therefore valid and binding on the parties.

(c) Nature of the Unless Order

68.I next turn to the nature of the Unless Order. An unless order is peremptory in nature, ie it directs a party or parties to perform some requirement by a certain date and specifies the consequences of default. The consequences may differ according to the circumstances. Auld LJ in Hytec Information Systems Ltd v Coventry City Council, [8] stated that such an order “is, by its nature, intended to mark the end of the line for a party who has failed to comply with it and any previous orders of the court”.

(d) Automatic sanction

69.Order 2 rule 4 of the RHC provides as follows:

“Where a party has failed to comply with a rule or court order, any sanction for failure to comply imposed by the rule or court order has effect unless the party in default applies to the Court for and obtains relief from the sanction within 14 days of the failure.”

This means that the sanction imposed in any unless order takes effect automatically unless relief from sanction is obtained, and the non-defaulting party does not have to make any application in order to enforce the sanction.

70.In Foshan City Commercial Bank v Chen Yong Yi & ors,[9] Chung J said as follows:

“4. … it has to be borne in mind that the events which occurred since the making of the ‘unless’ order were ‘automatic’ in the sense that default in complying with the ‘unless’ order would (in accordance with the terms of that order) result in the dismissal of this action. …”

More recently, in Daimler AG v Leiduck,[10] Fok JA confirmed that “it is not for the party seeking to take advantage of a default to apply to the Court in order to render a sanction for that default effective. Instead, the sanction takes effect immediately and it is for the party in default to apply for relief from the sanction. Only if there is an application for relief from the sanction is the Court required to consider whether, in all the circumstances, it is just to make an order granting relief from the consequences that would otherwise follow”.[11]

71.It is therefore important to keep in mind the distinction between the operation of the sanction which is automatic and the exercise of the court’s discretion to grant relief. In considering whether the sanction has become operative, the court must confine itself to deciding whether there has been any breach of the unless order, and must not embark on the exercise of examining whether there is any plausible explanation or justification for the default. Hence, in deciding whether the sanction under the Unless Order has come into effect, KJ’s and FS’ wish to “synchronise timetables” pending the Burrell Decision and KJ’s further wish to await the service of the YH Defence are neither here nor there. Further, since the sanction in any unless order becomes operative automatically upon breach, it is not for the court in deciding whether or not there has been such breach to question the suitability of the sanction vis-à-vis the default or to re-write the sanction imposed under such order.

72.This can be procedural tripwire for the unwary. Once a breach of the unless order occurs, the defaulting party cannot escape the guillotine effect of the sanction by seeking extension of time and/or by putting forward mitigating factors to explain the default. His only recourse is to apply for relief from sanction.

(e) Relief from sanction

73.Pursuant to Order 2 rule 4 of the RHC, application for relief against sanction should be made within 14 days of the failure to comply with the unless order (see paragraph 69 above), and requires the court considering such application to take into account the nine factors set out in Order 2 rule 5(1) of the RHC set out below and any other relevant factor:

(a) the interests of the administration of justice;

(b) whether the application for relief has been made promptly;

(c) whether the failure to comply was intentional;

(d) whether there is a good explanation for the failure to comply;

(e) the extent to which the party in default has complied with other rules and court order;

(f) whether the failure to comply was caused by the party in default or his legal representatives;

(g) in the case where the party in default is not legally represented, whether he was unaware of the rule or court order, or if he was aware of it, whether he was able to comply with it without legal assistance;

(h) whether the trial date or the likely trial date can still be met if relief is granted;

(i) the effect which the failure to comply had on each party; and

(j) the effect which the granting of relief would have on each party.

74.The above nine factors used to mirror those in Part 3.9(1) of the English Civil Procedure Rules (“CPR”). In England and Wales, these factors have accumulated considerable case law that has led to extensive analysis and lengthy hearings. Recently, the Civil Procedure (Amendment) Rules 2013 enacted on 31 January 2013 have simplified and widened the scope of the rules on applications for relief from sanction to provide the court with the power to deal with failure to conduct litigation at proportionate cost.[12] However, in Hong Kong, it is still necessary to consider the aforesaid nine factors in the context of all the circumstances.

75.The relevant principles governing the circumstances in which the court will extend time to permit compliance with an unless order had been thoroughly discussed in the pre-CJR case of Chan Chun Lung Allen & anor v Ryland Limited & ors.[13] In that case, Ribeiro J (as he then was) followed the test laid down by Bohkary JA (as he then was) in PT Bank Pembangunan Indonesia (Persero) v Tan Eddy Tansil [14] and declined to lower the threshold which he noted in some English authorities, in particular Hytec Information Systems Ltd at p.1677. But since the CJR came into effect, there was a trend towards the greater use of orders to specify automatic consequences of non-compliance and for placing the onus on a party guilty of non-compliance to seek relief from those consequences. This trend was reflected in the RHC themselves.[15]

76.In Top One International (China) Property Group Co Ltd v Top One Property Group Ltd,[16] Fok J (as he then was) noted that relief from sanction under Order 2 rule 4 of the RHC is not automatic, and Order 2 rule 5 of the RHC specifies the circumstances which the court shall consider on an application for such relief. The learned judge considered the Hytec approach to be consistent with the more proactive case management approach encouraged by the CJR such that the Hytec approach now reflects the approach that should be applied in Hong Kong:

“… That is to say, although intentional and contumelious disregard of a court’s peremptory order may be the most usual circumstance leading to the refusal of an extension of time to comply with a peremptory order, the exercise of the discretion to refuse an extension or to relieve a party from sanctions is not limited to cases of intentional and contumelious default. As directed by O.2 r.5 of the [RHC], the court should consider all the individual circumstances including those listed in r.5(1) at subparas.(a)-(j). Depending on the circumstances, failure to comply with one or a number of orders through negligence, incompetence or sheer indolence may be such as to lead the court to conclude there is an existence and degree of fault which warrants a refusal of an extension of time, so that relief from a sanction for non-compliance specified in a peremptory order (including an order striking out a pleading) should not be granted. Any other conclusion would, in my opinion, be to ignore the positive duty placed on parties to assist the court to further the underlying objectives of CJR (O.1A r.3 of the [RHC]) and on the court to do so by actively managing cases (O.1A r.4(1) of the [RHC]).”

77.The approach outlined in Top One International (China) Property Group Co Ltd is followed in subsequent authorities.[17] In An Zhou & ors v Zhou Zheng Kuan & ors.[18] To J held that in an application for relief from sanction the burden of proving entitlement to relief is on the party seeking relief, and the court will then decide whether in all the circumstances it is just to relieve the party in default from the consequences of its breach. “But, not unusually, as an act of prudence and depending on the seriousness of the consequence of the sanction, the court invites, as in the present case, the defaulting party to show cause why the sanction should not be applied against him. If appropriate and necessary, the court will give direction and grant extension of time for making an application under Order 2, rule 4” (para.26).

78.To J went on to say at para.27 that the list of factors in Order 2 rule 5 of the RHC is not exhaustive and that:

“… Basically, the court considers the reasons for the default, explanation for the delay in applying for relief, whether there was a history of default, whether the sanction is out of line with the consequence of the breach and whether the breach was intentional and contumelious: see Top One International (China) Property Group Co Ltd v Top One Property Group Ltd [2011] 1 HKLRD 606 at 616. Usually the court would have considered the appropriateness of the sanction at the time of making of the unless order. However, circumstances may change. The extent of the breach as it turned out may not be as serious as anticipated and there may be mitigating circumstances. Worth noting is that Order 2, rule 5(f) expressly distinguishes between default caused by the litigant and that caused by his legal representative. The court is inclined to grant relief to a litigant if he has no deliberate feet dragging and the default was caused by his legal representative.”

VII. 20/3/13 SUMMONS

79.Ken admitted he asked KJ Solicitors to liaise with FS Solicitors “with a view to clarifying the situation, agreeing on the way forward and making a joint application to Court before the deadline of 20 March 2012 expired” or “to agree on a further time extension for exchange in advance of the deadline imposed by Master Ho”. Seline agreed that shortly after the Unless Order, KJ Solicitors sought the consent of FS Solicitors to make a joint application to “vary” the Unless Order (see paragraph 34 above).

80.FS did not respond positively to such overture. They maintained that the Pang Order Statements should be exchanged by 20 March 2012. In the absence of any appeal against the Unless Order or (at least up to April 2013) any application for relief from sanction, FS’ stance was not unreasonable in view of the nature/effect of the Unless Order explained in Part VI above.

81.Ken in his 4^th affirmation characterised the 20/3/12 Summons as an application for “time extension to serve supplemental and further witness statements by 5 June 2012 together with the witness statements to be filed in [his] Counterclaim against Yuen Hing on the ground that the Court could seize the opportunity to synchronize the case management timetable for the [the Statements Proceedings] and [his] Counterclaim against Yuen Hing”. In his 7^th affirmation, Ken also said “significant costs could be saved as the parties would have to deal only with one round of discovery applications and one round of witness statements. This made perfect sense to a layman like [Ken]”. Mr Joffe reminded that at that time pleadings for the entire action had not been closed since Yuen Hing had not yet filed the YH Defence,[19] and Ken had been advised that the issues were yet to crystallise.

82.However, Seline and Ching characterised the 20/3/12 Summons as an application to “vary” the Unless Order. In my view, they might have been affected by (a) Mr Hui’s 2^nd affirmation which stated that just prior to the issuance of the 20/3/12 Summons KJ Solicitors approached FS Solicitors for consent to “vary the deadline of 20 March 2012” (my emphasis) for exchange of the Pang Order Statements, but FS Solicitors “declined to agree to such variation without giving reasons and they insisted on the exchange of witness statements on 20 March 2012” (my emphasis) (see paragraph 38 above), and (b) Ken’s 1^st Statement which stated that Ken instructed KJ Solicitors to make necessary application and to take all necessary steps to “vary” the deadline of 20 March 2012 (see paragraph 48 above).

83.But as explained in paragraphs 69-72 above, subject to the Relief Summons which was only issued quite recently, the Unless Order could have only one of two possible consequences, ie (a) that KJ and FS had complied with the requirement in the order and the sanction would not take effect (in which case there would be no need to vary the Unless Order or extend time for compliance), or (b) either or both KJ and FS were in default and the sanction became operative against the defaulting party(ies) (in which case the automatic operation of the sanction would preclude any subsequent variation of the order or any extension of time to ameliorate the consequence).

84.Hence, if KJ were in breach of the Unless Order (which matter will be discussed in Part VIII below), then absent any application for relief from sanction, they would not have been able to relieve, mitigate or postpone the full force of the sanction under the Unless Order (a) no matter whether the 20/3/12 Summons was characterised as an application for extension of time to comply with the Unless Order or one for variation of the terms thereof or (b) whatever might have been KJ’s and/or FS’ intention for making the 3^rd Extension Application.

85.In short, KJ could not revisit the Unless Order by way of the application in the 20/3/12 Summons for an order that “[parties] do serve and exchange signed witness statements of facts within 28 days thereafter or after disposal of further discovery applications, if any, whichever is later”, especially when the broad reference to “[parties] do serve and exchange signed witness statements of facts” is not confined to witness statements as to facts to be served in respect of Ken’s counterclaim against Yuen Hing but necessarily includes the Pang Order Statements. This is borne out by the submissions made on behalf of KJ at the Ho Hearing:

“COURT: Mr Yeung [appearing on behalf of KJ], in paragraph 3 of your summons it seems that you are seeking for a variation of my order in respect of the unless order made by me. You ask the parties do exchange signed witness statements within 28 days.

MR YEUNG: Yes.

COURT: Why should I vary the order?

……

MRYEUNG: Master, the submission is that [Yuen Hing’s] defence to counterclaim may have bearing on the original action and that may lead to amendments of pleadings and other issues, and that happens only after we have – that happens in between the time of our filing the consent summons on 5 March [ie the 3^rd Extension Application] and your, Master’s, amendment made on 15 March. …” (my emphasis)

86.Such procedural error is evident from the following:

(a) As explained in paragraph 39(b) above, the 20/3/12 Summons on its face invokes Order 25 rule 1B(2) of the RHC which provides that “[a] party may apply to the Court if he wishes to vary a milestone date”, but milestone dates under Order 25 rule 1B(8) of the RHC do not include the deadline of 20 March 2012 imposed by the Unless Order for serving and exchanging the Pang Order Statements. Indeed, Mr Hui’s 2^nd affirmation accepted it was a non-milestone event (see paragraph 38 above), but such characterisation is not entirely accurate since the effect of a sanction is expressly recognised by Order 2 rule 4 of the RHC.[20]

Further, as explained in paragraph 39(c) above, any application under Order 2 rule 4 of the RHC for relief from sanction does not require the defaulting party to establish exceptional circumstances as required under Order 25 rule 1B(3) of the RHC for variation of a milestone date.

It is obvious that in proceeding under Order 25 rule 1B(2) and not under Order 2 rules 4 and 5 of the RHC the correct procedure had been overlooked.

(b) Mr Hui claimed that the effect of the Unless Order was to disrupt the “synchronisation of timetables”, and it was important for the parties to consider all pleadings including the YH Defence before preparing the witness statements as to facts, hence (as Ken’s 7^th affirmation explained) KJ took out the 20/3/12 Summons as a “summons for directions” to invite the court “to take into account the facts that [the Yuen Hing Strike Out Summons] had been dismissed and that it was due to file and serve its pleadings shortly (so pleadings had not yet closed), and accordingly, the Court could give further directions for the conduct of this action”.

But as explained in paragraphs 69-72 above, the automatic nature of the sanction in the Unless Order precludes the court from giving directions to synchronise the case management timetables for witness statements as to facts in respect of Ken’s counterclaim against Yuen Hing and for the Pang Order Statements. It is plain from the suggestions that parties would save time and costs by having to deal with only one round of discovery applications and “one round of witness statements” upon such synchronisation (see Ken’s 7^th affirmation) and that it would be premature to prepare and exchange witness statements (see Mr Hui’s 2^nd affirmation and Ken’s 1^st Statement) that the effect of the automatic sanction was overlooked.

(c) As explained in paragraphs 83-85 above, once the sanction automatically became operative upon default, its effect could not be reversed either by any application to extend time to comply with the Unless Order or by any application to vary such order. The reference time and again to an intention to “vary” the deadline of 20 March 2012 under the Unless Order demonstrated misunderstanding of the irrelevancy of such applications.

87.In my view, Master Ho was correct in refusing KJ’s application under the 20/3/12 Summons to “synchronise timetables” and/or to extend time to exchange the Pang Order Statements. He was also correct in confining his directions on witness statements as to facts to those in respect of Ken’s counterclaim against Yuen Hing (see paragraph 40 above). Even though (a) Master KK Pang had indicated that directions for serving and exchanging witness statements as to facts could be revisited after the RAD&RAC was served on Yuen Hing and (b) the 1^st, 2^nd and 3^rd Extension Applications were motivated by considerations for “synchronising timetables” or awaiting the Burrell Decision, these matters were overtaken by the subsequent Unless Order which remains binding on the parties.

VIII. KEN’S 1^ST STATEMENT AND UNLESS ORDER

88.I now turn to the following issues:

(a) what was the requirement in the Unless Order that KJ and FS had to comply;

(b) what was the sanction that was imposed in the Unless Order;

(c) whether there was breach by KJ of the requirement in (a) that would automatically trigger the sanction in (b).

(a) Requirement under the Unless Order

89.As explained in paragraph 32 above, the Unless Order by requiring FS and KJ to “exchange signed statements of witnesses as to facts” in effect directed them to exchange the Pang Order Statements that were within the Statements Ambit. I have no doubt that the plain and natural meaning of the Unless Order (especially bearing in mind (a) the need for the prescribed witness statements to be “exchanged” and (b) the sanction thereby imposed) is that all and not just some or part of the Pang Order Statements must be exchanged by 20 March 2012 in order to forestall the automatic operation of the sanction. This means FS and KJ could not choose to exchange only some or part of their Pang Order Statements, and then defer the rest to be served at a later time. This also means that FS and KJ could not withhold and defer exchange of any witness statements as to facts that were within the Statements Ambit on the pretext that such evidence also relates to Ken’s counterclaim against Yuen Hing. Quite simply, under the Unless Order (and putting aside prospective matters), the factual witness evidence that KJ could reserve to deal with later would be that in respect of Ken’s counterclaim against Yuen Hing that was outside and beyond the Statements Ambit.

90.If it were otherwise, the sanction in the Unless Order would become a toothless tiger with an empty bite. Nothing can be easier than for a defaulting party to serve a short perfunctory so-called “witness statement” that deals with a miniscule aspect of the claim/defence contentions in the Statement Proceedings and then keep the bulk of his witness statements as to facts up his sleeve to be served at a later time as further and/or supplemental witness statements (which, according to Mr Joffe, ought in the usual course to be allowed under Order 38 rule 2A(1) of the RHC and the principles in Allington Investment Corp & ors v First Pacific Bancshares Holdings Ltd & ors [21] – see paragraph 115 below). In my view, the court will not allow such farcical “compliance” to render any unless order useless and its sanction nugatory.

(b) Sanction under the Unless Order

91.The court has no discretion to revise or re-write the sanction imposed by the Unless Order, ie the defaulting party shall be debarred from adducing evidence at trial, absent an appeal. The sanction does not distinguish between documentary evidence, witness evidence as to facts and/or expert evidence as to opinion. So upon any default by the prescribed deadline, the sanction would have come into effect automatically to debar the defaulting party(ies) from adducing any form of evidence at trial.

(c) Compliance or breach?

92.It is Ken’s primary position that he had complied with the Unless Order. When the Pang Order Statements were due for exchange on 20 March 2012, Ken served the four witness statements referred to in Part III above. No issue arises over three of such witness statements, but there is substantial debate over Ken’s 1^st Statement. The question is whether such statement is capable of being a true witness statement as to facts that contains proper factual witness evidence. If not, KJ would be in breach of the Unless Order and Ken’s 1^st Statement is liable to be struck out.

93.In Ken’s 1^st Statement, Ken effectively stated “it was premature to prepare and exchange witness statements at this stage”, and then adopted “all the matters pleaded” in his pleadings to be his evidence. He also flagged his intention, ie “there are areas in [Ken’s 1^st Statement] that [he wishes] to amplify and, no doubt, new matters that [he wishes] to address or ask other factual witnesses to address once [he has] a chance to consider the Defence to Counterclaim to be filed by Yuen Hing and/or [Seline]”. He also reserved his right to “file supplemental statements and that of other factual witnesses”.

94.Before dealing with the question raised in paragraph 92 above, I wish to quickly dispose of two points. First, Seline had in fact filed her Defence to Ken’s counterclaim against her as long ago as on 3 November 2010 (see paragraph 10 above), so there is no reason why KJ could not have dealt with matters arising from such Defence in Ken’s 1^st Statement. As regards Yuen Hing, new matters arising from the YH Defence to be filed after the Unless Order appear to be outside the Statements Ambit (see paragraph 32 above), and it does not alter the requirement that witness evidence as to facts that come within such ambit had to be exchanged.

95.Secondly, Mr Joffe suggested that FS only complained of Ken’s 1^st Statement but not the witness statements of Akio Sakuma, Chan Ming Wai and Li Kui exchanged pursuant to the Unless Order. Mr Joffe submitted that with these three witness statements there could be no suggestion that the Unless Order had been violated. However, as explained in paragraphs 89-90 above, it does not aid KJ if only some or part and not all of the Pang Order Statements within the Statements Ambit were exchanged with a view to introduce further witness evidence as to facts that was within the Statements Ambit.

96.Turning back to the question whether or not there was breach of the Unless Order, Mr Joffe submitted that the RAD&RAC was a lengthy document that set out in detail Ken’s averments as confirmed by his statement of truth, and that Ken’s 1^st Statement by expressly adopting all the matters pleaded therein plainly demonstrated there was no breach of the Unless Order. Mr Joffe argued that the fact Ken did so by reference rather than by setting out the facts in extenso was nothing to the point, and he cited In re Hinchliffe [22] to support such proposition. That case held that a person who had the right to inspect and take copies of an affidavit had a similar right to a document that was made an exhibit to such affidavit. Lord Herschell LC said at pp.119-120 that because the deponent “chooses to bring [those documents] before the Court herself, as part of her affidavit, in order to induce the Court to act in a [certain] manner … They form as much part of the affidavit as if they had actually been annexed to and filed with it”. AL Smith LJ said at p.120 that:

“When a person makes an affidavit, and states therein that he refers to a document marked with the letter A, the effect is just the sane as if he had copied it out in an affidavit. It is only made an exhibit to save expense. Therefore any person who is entitled to see the affidavit is equally entitled to see the document referred to therein.”

97.On the other hand, FS suggested that Ken’s 1^st Statement violated and disregarded the Unless Order because it was not in substance a witness statement as to facts at all. Mr Wong submitted it was irregular in that it contained no factual evidence, and he even suggested that Ken purposely refused to include any substantive evidence in Ken’s 1^st Statement to deal with the issues within the Statements Ambit. Mr Wong submitted that at the Ho Hearing Master Ho indicated that KJ had breached the Unless Order.

98.In my view, the starting point is to ask what constitutes a proper witness statement as to facts. Hong Kong Civil Procedure 2013 Vol.1 at p.764 states as follows:

“ Accordingly, the written statement of such a witness must contain only such material facts as the witness is able to prove of his own knowledge … the written statement of the witness is the equivalent of the oral evidence which the witness will give if called, in his evidence in chief at trial … Like the oral evidence of the trial witness, the written statement served must be full and complete; …

Again, like the oral evidence of the trial evidence, his written statement must not contain any inadmissible evidence … It must not contain any statement of information or belief even if the grounds and reasons thereof are given. …

Like the oral evidence of the trial witness, a written statement must not contain any expressions of opinion, but be confined to matters of fact.” (para.38/2A/6)

“… Witness statements should be stated in a clear, straightforward narrative form, and should use the language of the witness, his ippissimma verba. For the sake of clarity it should follow the chronological sequence of the events or matters dealt with. …” (para.38/2A/7)

99.In light of the above clarification and given that Ken’s 1^st Statement is to be used for trial, paragraphs 1-9 and 11 of such statement that set out Ken’s position as regards service and exchange of the Pang Order Statements and reservation of his right to deal with future interlocutory matters such as further and/or supplemental witness statements (ie facts and matters that do not touch on the factual issues for the purpose of trial in respect of the Statement Proceedings) are essentially extraneous and irrelevant (see paragraph 48 above).

100.The only remaining matter in Ken’s 1^st Statement is his assertion in paragraph 10 of such statement that he adopted “all the matters pleaded” in the RAD&RAC. Whilst I accept it is in principle possible to incorporate into a witness statement clear and specific statements of facts that are within the witness’ own knowledge set out in another document (eg a witness’ factual description of a traffic accident he was involved in or which he observed at the accident scene in his statement to the police), it is difficult to see how Ken’s purported attempt to incorporate “all the matters pleaded” in the RAD&RAC (as distinct from any specific factual allegation) into Ken’s 1^st Statement as his only witness evidence is helpful.

101.The RAD&RAC sets out the whole of Ken’s pleaded case which is founded on material facts and not evidence (but a witness statement as to facts is concerned with evidence). Such pleading is itself verified by statements of truth and does not require further verification by Ken’s 1^st Statement. More importantly, the pleas, averments, denials and non-admissions in the RAD&RAC are necessarily drawn from instructions from Ken and Joseph as well as information provided by other witnesses and extracted from the available documents. Such pleading does not distinguish between the factual matters that Ken could speak to personally in contra-distinction to what other witnesses could speak to from their own knowledge (eg Ken’s precise role and involvement, if any, in respect of the calculations or verification of the Father’s Ledgers as distinct from the work done by Mazars which Chan Wai Ming and Cho Yee Chun can speak to – see paragraphs 49 and 54 above). It also does not distinguish between the factual matters that Ken is able to prove from his own knowledge and the pleaded consequences at law such as the constitution of a trust, the imposition of fiduciary duties, and the presumption of advancement.

102.I am not persuaded that Ken’s 1^st Statement will be allowed to stand as Ken’s evidence-in-chief at trial, which is a clear indication that it is not a true or proper witness statement as to facts. In my view, Ken’s 1^st Statement does not represent compliance in substance with the Unless Order but rather it is superficial “compliance” in form that is incomplete and insufficient. This is borne out by Ken’s 1^st Statement which stated that on the basis it was “premature to prepare and exchange witness statements at this stage” Ken made Ken’s 1^st Statement “to comply strictly with the order but at the same time, reserve all [his] rights to … file further supplemental statements and that of other factual witnesses”. Mr Joffe tried to explain this away by saying that Ken was plainly referring the anticipated necessity of dealing with new matters after considering the YH Defence when it was eventually served, but such suggestion is belied by the assertion in Ken’s 1^st Statement that Ken intended in due course to amplify on areas already in Ken’s 1^st Statement.

103.For the avoidance of doubt, I have come to the above conclusion without taking into consideration the following observations by Master Ho at the Ho Hearing:

“COURT: Well, appropriate application should be taken out to strike out that witness statement and bar them from filing further witness statements.

MR KWONG: Yes, in due course we will do it …

…

COURT: And if what Mr Kwong submitted is correct, then I take the view that the witness statement filed by your client should be struck out. …” (my emphasis)

As Mr Wong eventually accepted on the 3^rd Hearing Day, Master Ho did not form any definitive view as to whether or not Ken’s 1^st Statement ought to be struck out.

104.However, Mr Joffe submitted that I should take into consideration other subsequent events which he said demonstrated ex post facto that FS acknowledged that KJ had complied with the Unless Order. He argued that ever since 20 March 2012, FS never approached the present action on the basis that there was non-compliance on the part of KJ. They behaved as if KJ were not subject to any sanction. FS made applications to which KJ responded, and they stood by (or opposed) whilst KJ made their own applications. FS did not suggest that KJ were debarred from defending at the Ho Hearing, at the hearing on 19 April 2012, and at the global CMC on 25 July 2012. In particular, FS did not suggest it was jurisdictionally impermissible for Master Ho to make his order on 19 April 2012 for counsel’s advice to be obtained and for “all interlocutory applications as may be advised including applications for leave to serve supplemental witness statements [to] be taken out …” Mr Joffe submitted it was quite clear Master Ho must have understood that KJ had complied with the Unless Order, and KJ eventually complied with Master Ho’s order dated 19 April 2012 by issuing the Statements Summons on 3 August 2012. Mr Joffe claimed that FS’ behaviour encouraged KJ to believe they had complied with the Unless Order otherwise there would have been no point in further dealing with the above interlocutory matters. Mr Joffe submitted it did not lie in FS’ mouth to say KJ had failed to comply with the Unless Order and was debarred from adducing evidence at the trial.

105.On the other hand. Mr Wong submitted that Master Ho refused to vary or extend time to comply with the Unless Order at the Ho Hearing, and the provisions in Master Ho’s order dated 19 April 2012 could not defeat the sanction in the Unless Order that had come into effect.

106.In my view, it does not necessarily follow that a direction for obtaining counsel’s advice means that KJ had complied with Unless Order. Once KJ were in breach of the Unless Order, the sanction (which only barred KJ from adducing evidence at trial and not from seeking counsel’s advice) automatically became operative, and the subsequent orders dated 23 March and 19 April 2012 cannot defeat or undo the sanction. However, the sanction does not debar FS and Yuen Hing from adducing evidence at trial, and under Master Ho’s order dated 19 April 2012 they would be at liberty to issue any interlocutory application. Indeed, KJ could also issue interlocutory applications that did not concern their own evidence (e.g. the Amendment, Striking Out and 1^st and 2^nd Discovery Summonses), but they could not regard the orders dated 23 March and 19 April 2012 as recognition of their compliance with the Unless Order and/or as permission for them to issue interlocutory applications concerning their evidence.

107.Mr Joffe complained that although Mr Kwong informed Master Ho at the Ho Hearing that FS would apply to strike out Ken’s 1^st Statement, FS did not do so until they issued the Ken’s 1^st Statement Summons a year later on 14 March 2013. He submitted that plainly FS had no genuine belief that KJ had failed to comply with the Unless Order, and their position was just an opportunistic and late attempt to prevent KJ from taking part in the proceedings and presenting their evidence to the court. On the other hand, Mr Wong submitted that as early as on 23 March 2012 Mr Kwong’s submissions for the Ho Hearing made clear that FS did not regard Ken’s 1^st Statement as containing any factual evidence at all, and they considered Ken’s intimation of his intention to amplify on areas covered by his statement was non-compliant. Mr Wong further submitted that no one could have been mistaken about FS’ position that they regarded Ken’s purported compliance with the Unless Order artificial.

108.I am not persuaded by Mr Joffe’s argument. Even if no attempt has been made to strike out Ken’s 1^st Statement, as I have explained in paragraphs 100-102 above, it is not a true or proper witness statement as to facts, and it is doubtful whether it can stand as Ken’s evidence-in-chief at trial.

109.If, as Mr Joffe submitted, one were to consider subsequent events, the inadequacy of Ken’s 1^st Statement and the incomplete nature of the witness statements as to facts exchanged by KJ on 20 March 2012 are clearly reflected by the contents of the Draft Statements. I agree with Mr Wong that the Draft Statements (and in particular Ken’s and Joseph’s Draft Statements) actually appear to be a re-write of all KJ’s factual witness evidence in one go (or, to put it in another way, they appear to be the main evidence within the Statements Ambit that KJ seek to rely) rather than new matters that arose from the YH Defence.

110.Although KJ labelled Ken’s Draft Statement as a “supplemental” witness statement, its contents (see paragraph 52 above) does not even remotely suggest it is merely “supplemental” in nature. Instead, the 51-page Ken’s Draft Statement appear to set out Ken’s substantive evidence on every and all aspects of the issues that were already joined between KJ and FS as of 20 March 2012 under the Statement Proceedings. It is not limited to new matters that arise from the YH Defence as summarised in paragraphs 114-115 of Decision No.1, which do not raise any significantly new matter beyond or outside the RAD&RAC. Ken’s Draft Statement cannot be said, as Ken suggested, to fill the gaps in Ken’s 1^st Statement, and Mr Joffe did not refer me to any material parts of Ken’s Draft Statement that were independently “new”.

111.Another tell-tale sign is Joseph’s Draft Statement, the contents of which deal with matters strictly in respect of his defence to the Father’s claim and had nothing to do with the YH Defence (see paragraph 53 above). In my view, there is no reason (and none has been put forward) as to why Joseph’s Draft Statement could not have been exchanged on or before 20 March 2012 as required by the Unless Order.

112.It is also obvious from the contents of the other Draft Statements (see paragraphs 54-57 above) that KJ by the Statement Summons were seeking to adduce substantive factual witness evidence that was plainly within the Statements Ambit. I cannot agree with Mr Joffe’s submissions that the Draft Statements were aimed to fill in the gaps in Ken’s 1^st Statement and/or to address more fully the issues raised by the other side in their witness statements and/or to rebut FS’ witness evidence. In my view, the Draft Statements largely relate to matters in support of KJ’s own case or in respect of issues that were already joined in KJ’s and FS’ pleadings as of 20 March 2012 in respect of the Statements Proceedings.

113.Mr Joffe submitted that KJ did not complain about the Draft Statements other than Ken’s Draft Statement. Such argument is met by Mr Wong’s submissions that any attempt by KJ to serve witness statements as to facts in breach of the Unless Order would be objectionable. In my view, the Draft Statements proposed under the Statement Summons hark back to feed the assertions in Ken’s 1^st Statement that he would in due course “amplify” on “areas in this statement” and he would reserve all his rights to “file further supplemental statements and that of other factual witnesses”. In my view, the above analysis does not in any way detract from my view (and indeed it even bolsters my view) that KJ were in breach of the Unless Order and that Ken’s 1^st Statement ought to be struck out.

114.Both Mr Joffe and Mr Wong spent much effort in their written and oral submissions in criticising the “litigation gamesmanship” of the other party. However, for the purpose of determining whether KJ were in breach of the Unless Order, which question does not turn on FS’ and KJ’s intentions and/or motives, it is unnecessary for me to find whether any such breach was deliberately made. But I will return to this subject below when dealing with the Relief Summons.

IX. STATEMENTS SUMMONS

115.In respect of the Statements Summons, Mr Joffe submitted that the court has a wide discretion under Order 38 rule 2A(1) and (17) of the RHC and also has the power to direct further witness statements be served to supplement those already served.[23] Mr Joffe submitted there is nothing unusual for parties to seek leave to supplement their witness statements by supplemental or further statements on matters arising from the other side’s statements. He cited Allington Investments Corp & ors in which Jerome Chan J had this to say at p.570:

“The witness statements ought, in the usual course, be mutually exchanged so that no unfair advantage would be conferred on any one party. In the premises, it is not unusual for parties to seek leave to supplement their witness statements by further statements from their witnesses to deal with matters arising from the other side’s statements … usually no more than one supplemental statement from a witness is necessary.” (my emphasis)

116.Since I have found that the Draft Statements essentially set out primary factual witness evidence of KJ’s own case rather than “deal with matters arising from the other side’s statements” (see paragraphs 110-113 above), and that KJ was in breach of the Unless Order which automatically triggered the operation of the sanction, KJ cannot seek leave to serve supplemental and/or further witness statements as to facts as per the Draft Statements unless relief from sanction is obtained and/or unless such statements fall outside the ambit of the Unless Order.

117.The issue of relief from sanction will be considered in Part X below. Although I have found that the contents of the Draft Statements essentially fell within the Statements Ambit, Ken’s 4^th affirmation said “[since] the first round of witness statements, Madam Tsang Kam Ping, Mr Chan Tsz Lok and Mr Giovanni Sordi are now willing to give evidence in this action”. The short answer is that although such assertion (if accepted) may well lend weight to favour grant of relief from sanction, it is insufficient to take the Draft Statements by these three persons outside the scope of the Unless Order. After all, the contents of such Draft Statements fall within the Statements Ambit.

118.Even if I am wrong and the “unless” sanction does not catch, say, witness statements as to facts that genuinely only became available after the prescribed deadline, the court is not assisted by a bare assertion that Tsang Kam Ping, Chan Tsz Lok and Giovanni Sordi were willing to give evidence “[since] the first round of witness statements” without any information as to precisely when they were approached to give witness statements, precisely when they confirmed their willingness to assist, and why their willingness was only forthcoming “[since] the first round of witness statements” when the Pang Order required witness statements to be exchanged as early as in November 2011. It behoves an applicant who seeks leave to provide full and sufficient information to satisfy the court the subject statements were outside the scope of the Unless Order and the sanction thereunder.

119.In any event, KJ did not suggest there was any impediment for Ken and Joseph to give witness statements as to facts on or before 20 March 2012 apart from their wish to await developments in respect of Ken’s counterclaim against Yuen Hing and their belief (now shown to be erroneous) that Ken’s 1^st Statement amounted to sufficient compliance of the Unless Order. Although Ken in his 4^th affirmation said Lai Yuk Wah and Cho Yee Chun were willing to give evidence, he was carefully silent on when they indicated their willingness.

X. RELIEF FROM SANCTION

120.It is KJ’s alternative case that the court has power to grant relief from sanction. As explained in paragraph 69 above, an application for relief from sanction must be made within 14 days from failure, ie on or before 4 April 2012 in the present case. However, the Relief Summons was not issued until almost a year later on 2 April 2013, so KJ were substantially out of time in making such application.

121.Mr Joffe submitted that the power to extend time confers the widest measure of discretion on the court to avoid injustice.[24] He argued it was plainly the right course to grant an extension of time in the present case, and then for the court to go on and grant relief from sanction.

122.In considering whether to extend time to grant relief from sanction, the court has to consider all relevant factors, particularly (a) the length of the delay, (b) the reasons for the delay, (c) the merits of the proposed application for relief from sanction, and (d) the degree of prejudice to the other party. The factor in (c), ie consideration of the merits of the Relief Summons, will bring into focus the nine factors in Order 2 rule 5(1) of the RHC. To avoid unnecessary duplication, I will deal with these factors under broad headings before returning to the separate issues of whether extension of time should be granted to KJ to issue the Relief Summons, and if such extension of time is to be granted, whether relief from sanction ought to be granted.

(a) Bona fide belief of compliance vs deliberate default

123.This discussion is relevant to the issue of delay in applying for relief against sanction and also to the following factors under Order 2 rule 5(1) of the RHC:

(a) the interests of the administration of justice;

(b) whether the application for relief from sanction has been made promptly;

(c) whether the failure to comply was intentional;

(d) whether there is a good explanation for the failure to comply.

124.Mr Joffe submitted that the delay in applying for relief from sanction was not a contumelious or deliberately defiant act. Although the Relief Summons was not issued promptly after 4 April 2012, it was a consequence of Ken’s reasonable and bona fide belief that he had complied with the Unless Order premised on the fact that (a) he had expressly incorporated all the matters pleaded in the RAD&RAC into Ken’s 1^st Statement, which he believed to be transparent rather than defiant, and (b) he had exchanged Ken’s 1^st Statement together with three other witness statements as to facts on 20 March 2012, which demonstrated that he did not intend to flout the Unless Order.

125.Mr Joffe submitted that KJ’s efforts to comply with the Unless Order could not be viewed in isolation and must be put in the context of the relevant procedural history. All along, pending the resolution of the Seline and Yuen Hing Strike Out Summonses, parties were engaged in negotiations to “synchronise timetables”. Pending the Burrell Decision, as a result of the discrepancy between progress of Ken’s counterclaim against Yuen Hing and progress of the Statements Proceedings, which state of affairs was considered to be undesirable, there were agreements amongst the parties to postpone the exchange of witness statements as to facts until 6 March 2012, but unbeknownst to KJ and FS and even though the 3^rd Extension Application did not have any “unless” element, Master Ho imposed the Unless Order with a deadline for compliance in merely five days.

126.Mr Joffe admitted that the Unless Order came as a surprise to KJ, who did their best to comply by exchanging four witness statements as to facts on 20 March 2012. Even though the court has found KJ’s efforts to be insufficient compliance with the Unless Order, Mr Joffe argued that the above procedural history showed they were attempting to comply. Further, KJ issued the 20/3/12 Summons (described as a summons for directions) on the same day to take into account the dismissal of the Seline and Yuen Hing Strike Out Summons, which demonstrated that KJ was seeking to move the proceedings along rather than to delay or hinder them. Again, although the court has found such approach to be insufficient, Mr Joffe submitted there could be no doubt that this was not a case that had gone to ground. It could not be said that KJ’s failure to comply was intentional or there was deliberate intention to ignore the Unless Order or their conduct amounted to an abuse of the court’s process.

127.On the other hand, Mr Wong pointed out that the delay was substantial. He argued that Ken made a wilful, calculated and knowing decision to disobey the Unless Order based on his subjective belief at that time it would be premature to file any evidence. A mere assertion of bona fide belief was insufficient to exonerate KJ of their delay and/or failure. Mr Wong submitted that if the matter were considered objectively, it was obvious that the delay and/or failure were deliberate. If KJ had any bona fide belief of substantial compliance with the Unless Order, there would not have been any need to issue the 20/3/12 Summons for extension of time to comply with the Unless Order. Such summons, Mr Wong submitted, meant KJ knew they had not complied with the Unless Order. Ken’s and Mr Hui’s affirmations also made clear there was a conscious decision to “synchronise timetables”, which was wishing thinking that was one-sided and unwarranted in the circumstances.

128.Further, Mr Wong reminded that Kwong’s written submissions for the Ho Hearing already complained that the incorporation of pleadings into Ken’s 1^st Statement was inappropriate and that Ken had failed to provide any factual evidence in Ken’s 1^st Statement, and on such basis there was insufficient compliance with the Unless Order. Mr Wong submitted that Master Ho made clear at the Ho Hearing what was required was compliance in substance and not in form, and he refused to vary the Unless Order or extend time for compliance. In the circumstances, there could not have been any further misunderstanding as to KJ’s non-compliance with the Unless Order after the Ho Hearing, and there was no suggestion that these matters were not relayed to KJ by KJ Solicitors. Mr Wong argued that KJ being aware of the sanction in the Unless Order chose not to comply with open eyes, and he urged the court to bear in mind that even up to the 3^rd Hearing Day KJ did not admit to and/or show remorse for breach of the Unless Order. In this respect, Mr Wong referred to Chung J’s observations in Foshan City Commercial Bank as follows:

“4. …… the Plaintiff should have complied with the ‘unless’ order or given a valid reason for any failure to so do.

5. It therefore does not lie in the Plaintiff’s mouth to complain of insufficient time when, since at least …… the date of the ‘unless’ order ……, the Plaintiff had chosen not to take any step in these proceedings …… Indeed, up to now no reason has been given by the Plaintiff as to why it has not complied with the ‘unless’ order, or as to why it has apparently been relatively dilatory in prosecuting this action. There is no application to set aside the order [dismissing the action with costs] either. …”

(b) failure by defaulting party or legal representatives

129.In PT Bank Pembangunan Indonesia (Persero), Bokhary JA (as he then was) said at p.59 that “if a party can clearly demonstrate that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances, such failure to obey is not to be treated as contumelious and therefore does not disentitle the litigant to rights which he would otherwise have enjoyed”. Ribeiro J (as he then was) in Chan Chun Lung Allen referred to the above passage and said as follows:

“39. Applying that principle, the Court of Appeal held that where non-compliance with the unless order is due to the default of the solicitor rather than the litigant himself such default should be regarded as an extraneous cause of non-compliance so far as the litigant is concerned, inclining the court towards granting him an extension of time.

…

47. For non-compliance to be contumelious, there is no necessity for it to involve anything akin to a contempt of court. Non-compliance is contumelious where it is the result of the litigant's conscious and deliberate decision to ignore or disobey the court's order in the absence of any extraneous excuse. Such deliberate conduct may be contrasted, for instance, with cases where the litigant has made a serious effort to comply in good faith but has been unsuccessful through bad luck or incompetence … or with cases where the litigant has not complied because of circumstances outside his control (including cases where his solicitor has negligently or otherwise missed the deadline through no fault of the litigant).”

130.Mr Wong submitted that the incompetence of legal representatives would not be a strong factor to be taken into account, and referred to Hytec Information Systems Ltd at pp.1675-1676 in which Ward LJ said as follows:

“ Ordinarily, this court should not distinguish between the litigant himself and his advisers. There are good reasons why the court should not: first, if anyone is to suffer for the failure of the solicitor it is better that it be the client than another party to the litigation; secondly, the disgruntled client may in appropriate cases have his remedies in damages or in respect of the wasted costs; thirdly, it seems to me that it would become a charter for the incompetent … were this court to allow almost impossible investigations in apportioning blame between solicitor and counsel on the one hand, or between themselves and their client on the other. The basis of the rule is that orders of the court must be observed and the court is entitled to expect that its officers and counsel who appear before it are more observant of that duty even than the litigant himself.”

131.Mr Joffe submitted that Hytec Information Systems Ltd was a pre-CPR authority that had been overtaken by Order 2 rule 5(1)(f) of the RHC. In Stolzenberg & ors v CIBCMellon Trust Co Ltd & ors,[25] whether the failure to comply was caused by the party or its legal representatives was regarded as a relevant consideration in the exercise of the discretion (at paras.122-124). In An Zhou & ors, a case cited by Mr Wong, To J at para.27 said “[worth] noting is that Order 2, rule 5(f) expressly distinguishes between default caused by the litigant and that caused by his legal representative. The court is inclined to grant relief to a litigant if he has no deliberate feet dragging and the default was caused by his legal representative”.

132.In my view, whether the delay or default was caused by the defaulting party or the legal representative is a relevant factor to be considered not just for the application to extend time to issue the Relief Summons but also for the substantive application for relief from sanction if leave were granted. I bear in mind not only the factor in Order 2 rule 5(1)(f) of the RHC, but also the need to consider all the circumstances.

133.Mr Joffe submitted that it might readily be inferred that whether the service and exchange of Ken’s 1^st Statement and the three other witness statements as to facts on 20 March 2012 was sufficient compliance with the Unless Order in the context of the procedural history of the present action was quintessentially one for legal advice and not one which a layman could reach an informed decision. Mr Hui’s 2^nd and 4^th affirmations made clear that “[without] waiving privilege, … it appeared to [Ken’s] legal representatives that, by incorporating those facts in [Ken’s 1^st Statement] in this way, [Ken] was complying with the [Unless Order] : certainly that was his intention. In adopting the pleaded facts by reference in his witness statement, [Ken] was being transparent rather than defiant as [FS] now seem to be suggesting. At any rate, [Ken] of course filed and served three other factual witness statements which were also exchanged on 20 March 2012”.

134.Mr Joffe argued that Ken’s 1^st Statement stated that Ken was advised by KJ Solicitors (and not putting forward his own view) that it was premature to prepare and exchange witness statements at that stage. KJ Solicitors were referring to the fact that Yuen Hing had not yet filed the YH Defence and the pleadings for the entire action had not yet closed, as a result of which it might well be necessary to file further witness statements. Mr Joffe submitted that KJ’s non-compliance was due to a misunderstanding on the part of KJ’s legal representatives as to what would amount to full compliance. Even though the court disagrees with the understanding by KJ’s legal representatives, Mr Joffe submitted that the question was one in which there was considerable measure of dispute and different views might be held. But what was clear was that Ken had not caused any failure to comply (eg by giving instructions not to comply). There was no evidence that he did, or that he had tried to delay the proceedings. Mr Joffe said the opposite was the case as the 20/3/12 Summons issued on 20 March 2012 attested. He argued there was no gamesmanship or abuse.

(c) Prejudice to FS

135.This discussion is relevant to the issue of prejudice to FS caused by delay in applying for relief against sanction and to the following factors under Order 2 rule 5(1) of the RHC:

(a) the effect which the failure to comply had on each party;

(b) the effect which the granting of relief would have on each party.

136.FS complained that KJ adopted an unfair and calculated strategy “to elicit [them] to put forward [their] evidence in advance, such that [Ken] could tailor make his witness statement based on [FS’] evidence …” It was suggested that the Statements Summons issued on 3 August 2012 would wholly defeat the purpose of “exchanging” witness statements as to facts.[26] Mr Wong argued that such circumvention of the Unless Order by slipping in factual witness evidence through the backdoor under the pretext of serving supplemental and further witness statements should not be allowed.

137.Mr Joffe submitted that the extension of time sought for the Relief Summons and for serving witness statements as to facts as per the Draft Statements would not prejudice FS in any way. FS had the Draft Statements since 13 July 2012, and hence had ample time to respond to them. Notwithstanding that FS had the Draft Statements for 8 months, they were not able to identify any instance of KJ tailoring their evidence to meet theirs or of any specific advantage which KJ might be said to have gained. Mr Joffe submitted that if KJ wanted to “elicit” evidence from FS in advance so as to tailor-make theirs, they would not have asked KJ Solicitors to liaise with FS Solicitors to agree on an extension of the 20 March 2012 deadline for exchanging the Pang Order Statements, and they would not have made formal application by the 20/3/12 Summons for such purpose. In any event, the Liability Trial would not be heard until March 2014, and the relief sought in the Statements Summons would allow FS to respond to KJ’s witness statements to be filed as per the Draft Statements so that FS would have the opportunity to “tailor” their evidence to meet such witness statements and to have the last word.

138.As regards any concern over the scope of the contents of Ken’s Draft Statement, both Mr Joffe and Mr Wong accepted that some of the contents (eg those relating to the Misappropriation Claim) had since become redundant, so if relief from sanction out of time were allowed, revised drafts of the Draft Statements would have to be prepared and dealt with as part of the Remaining Statements Issue.

(d) Consequences for KJ

139.This discussion is relevant to the question of the impact on KJ if extension for time to apply for relief from sanction is refused and to the following factors under Order 2 rule 5(1) of the RHC:

(a) the interests of the administration of justice;

(b) the effect which the failure to comply had on each party;

(c) the effect which the granting of relief would have on each party.

140.Mr Joffe submitted it could not be suggested that KJ were behaving so as to frustrate the administration of justice or to delay the proceedings. The position as of 20 March 2012 was that the pleadings for the entire action had not been closed and Yuen Hing had not yet filed the YH Defence. KJ tried to comply with the Unless Order whilst the YH Defence was still pending and his legal representatives anticipated they would need further evidence, and by the 20/3/12 Summons they applied to ensure that Yuen Hing also served their pleadings, gave discovery and exchanged witness statements.

141.Mr Joffe argued that the consequences for KJ (if they could not obtain an extension of time to issue the Relief Summons) would be very grave: they would be unable further to defend the action, prosecute Ken’s counterclaim or take any part in the trial. That gravity would be magnified now that the Father had amended the RASOC and revamped the New Shares Claim. Mr Joffe submitted that a fair trial in this case would require oral evidence. Indeed, Mr Wong in his first written submissions dated 19 March 2013 accepted that “[the] dispute is largely a matter of credibility about the oral agreements and common understanding amongst members of the Lee family”. Mr Joffe argued that if KJ were not able to adduce any evidence at trial, their inability to defend themselves and to present Ken’s counterclaim would work a real injustice in that a bona fide defence and counterclaim would simply not be put before the court, which would have to determine the Father’s claim on the burden of proof on FS’ evidence alone. This would run counter to the interests of administration of justice as well as the underlying objective in Order 1A rule 1(d) of the RHC to ensure fairness between the parties. The rules are not intended to punish litigants but to ensure the just resolution of their disputes (see Order 1A rule 2(2) of the RHC).

142.On the other hand, Mr Wong submitted that KJ knew of the breach of the Unless Order and had been warned by Master Ho at the Ho Hearing, yet they still insisted they had complied with the Unless Order and took another five months to prepare the Draft Statements (which they could not adduce under the Unless Order) and to issue the Statements Summons. The Relief Summons was not issued until almost a year later after the 1^st Hearing Day. In the circumstances, the Statements and Relief Summonses were calculated strategic moves to defeat the Unless Order by introducing the bulk of KJ’s evidence through the backdoor.

143.Mr Wong submitted this was an abuse of the court’s process, and hence there would be no room for this court to grant relief from sanction out of time. He argued that the alleged grave consequences would not tip the scales in KJ’s favour for KJ only had themselves to blame when they made a knowing decision to flout the Unless Order. Whilst Mr Wong accepted that KJ would be “handicapped to a certain extent” at trial as a result of the sanction under the Unless Order, he maintained that such sanction would not prevent a fair trial because the Father would still have to prove his case and KJ would be entitled to cross-examine the Father’s witnesses to ensure that the Father’s case would stand up to scrutiny.

144.Mr Wong urged the court to consider the guidance in various authorities on the factor of the interests of administration of justice and reminded that all such guidance emphasised that the circumstances of each case must be considered. In Kai Yip Air-Conditioning Engineering Company v Ma Hei Sun trading as Luen Wah Air Condition Engineering,[27] Chung J said as follows:

“12.… Hong Kong Civil Procedure 2001… set out at para. 3/5/7:-

‘... The sanction [in an unless order] was a necessary forensic weapon which the broader interests of the administration of justice required to be deployed unless the most compelling arguments were advanced to exonerate the failure.

... It seemed axiomatic that if a party intentionally flouted the order he could expect no mercy.

... A sufficient exoneration would almost invariably require that he satisfied the court that something beyond his control had caused the failure.

... The judge would exercise his judicial discretion whether to excuse the failure in the circumstances of each case on its own merits, at the core of which was service to justice.

... The interests of justice required that justice should be shown to the injured party for procedural inefficiencies causing the twin scourges of delay and wasted costs. The public administration of justice to contain those blights also weighed heavily. Any injustice to the defaulting party, though never to be ignored came a long way behind the other two ...’ (emphasis supplied) …”

145.In Fred Perry (Holdings) Ltd v Brands Plaza Trading Ltd,[28] it was held that compliance with court orders was a fundamental part of the interests of the administration of justice. Lewison LJ said it was obvious that the power to grant relief from sanction is a discretionary power (p.813), and he further stated at p.813 (quoting from Lord Jackson’s report) that the English Court of Appeal were supportive of judges who make “robust but fair case management decisions”:

“… courts at all levels have become too tolerant of delays and non-compliance with orders. In so doing they have lost sight of the damage which the culture of delay and non-compliance is inflicting on the civil justice system. The balance therefore needs to be redressed.”

146.In Stolzenberg & ors, the English Court of Appeal agreed it would not be in the interests of justice to set aside unless orders in the face of deliberate non-compliance. Arden LJ said as follows:

“… The fact that an unless order has been made inevitably meant that there is an additional factor to consider. … It is only a factor to be weighed in the balance. Moreover, compliance with orders of the court … goes to the essence of the rule of law that parties subject to the court’s jurisdiction … should comply with the court’s orders. The gravity of the matter of non-compliance is plainly increased where the non-compliance results from a conscious decision … He has to persuade the court that in all the circumstances the injustice to him outweighs the interests of the administration of justice and the injury to the other party.” (para.167)

“The fact that a fair trial is possible does not mean that relief from sanctions should follows. In Hansom v Makin (which was decided after the judge’s judgment in this case), Mance LJ (with whom Dame Elizabeth Butler-Sloss P and Keane LJ agreed) held:-

‘27. No doubt there will be many cases where the possibility or otherwise of a fair trial is highly important to the exercise of discretion under CPR 3.9. In Audergon the claimant’s ‘substantial delays … [had] placed such a difficulty in the way of a fair trial of the issues’ that justice required that the stay should not be lifted … But it does not follow that, where a trial is still possible, relief will necessarily be granted. CPR 3.9 deals generally with relief from sanctions imposed for failure to comply with a rule, practice direction or court order. It could not be the case that, whenever such a sanction had been imposed, and however flagrant or persistent the failure, the defaulting party could have it set aside by showing that a fair trial was still possible …’” (para.171)

(e) Other factors

147.Order 2 rule 5(1) of the RHC also includes other factors. There is no dispute that in respect of factor (e) KJ had complied with other rules and court orders in the present action, and in respect of factor (h) the Liability Trial in March 2014 could still be heard even if relief were granted.

(f) Discussion

148.In my view, there can be no doubt that the application for relief from sanction is made substantially out of time. However, this is only one of the factors for deciding whether to grant extension of time for making such application. I bear in mind that notwithstanding KJ’s failure to issue proper application under Order 2 rules 4 and 5 of the RHC until recently, on 13 July 2012 KJ Solicitors had already intimated KJ’s intention to serve supplemental and/or further statements as to facts and even provided copies of the Draft Statements to FS Solicitors. Hence, even though KJ had gone down the incorrect procedural route, FS had been alerted to the KJ’s aforesaid intention to serve further witness evidence for 8 months, which is the substantive purpose of the Relief Summons, ie to lift the sanction under the Unless Order in order to serve the witness statements as to facts as per the Draft Statements.

149.But FS asked the court to take a cynical view of the Relief Summons and to conclude that the reason for the delay is the result of KJ’s contumelious and deliberate default in defiance of the Unless Order, hence the court should not sympathetic to KJ’s plea for indulgence.

150.In this respect, I bear in mind a number of undisputed matters:

(a) Ever since the present action commenced in 2009, the pleadings have been amended on various occasions and there have been numerous interlocutory applications, but throughout KJ had complied with the procedural rules and/or court orders.

(b) The present action is one in which both FS and KJ have actively pursued their claims and defences. It is not a case in which KJ have allowed the action to go to the ground.

(c) I have found that since the Pang Order KJ wished and FS also agreed to “synchronise timetables” and/or to await the Burrell Decision, which resulted in the 1^st, 2^nd and 3^rd Extension Applications and the 1^st and 2^nd Consent Summonses. In fact, it was KJ who took the initiative to issue the 1^st and 2^nd Extension Applications, and to invite the 3^rd Extension Application and the 1^st and 2^nd Consent Summonses.

(d) The Unless Order is unexpected in the sense that the 3^rd Extension Application did not invite an “unless” sanction, and FS was in fact agreeable to an extension of time until 20 March 2012 to serve and exchange the Pang Order Statements without sanction.

(e) The time gap between the grant of the Unless Order and the deadline by which the sanction thereunder would become operative upon default is just five days, but as of 20 March 2012 Ken was in the United Kingdom visiting his family.

(f) After KJ Solicitors were notified of the Unless Order, KJ through KJ Solicitors took the initiative to liaise with FS Solicitors for deferral of the exchange of the Pang Order Statements notwithstanding the deadline imposed in the Unless Order. Upon being rebuffed, KJ took the initiative to issue the 20/3/12 Summons.

151.I agree with Mr Joffe that this case is unusual in that the defaulting party was in fact the party who was all along acting in a proactive manner. It was not a case in which there has been a series of defaults that has led to an unless order being granted. Whilst KJ’s proactive stance cannot aid them on the issue of whether or not there has been a breach of the Unless Order, it shows that the gravity of their wrong is not as serious as Mr Wong would have portrayed.

152.KJ do not shy from the fact that they thought it was premature to exchange witness evidence. Indeed, that was the whole premise for “synchronising timetables” and for awaiting the Burrell Decision (ie pending developments at the Yuen Hing end of the present litigation) that led to the 1^st and 2^nd Extension Applications as well as the 1^st and 2^nd Consent Summonses and indeed the 3^rd Extension Application (which FS also concurred). The problem is that KJ persisted in such thinking even after the Unless Order was imposed and failed to recognise the nature of an unless order as explained in Part VI above. Is that contumelious and intentional default?

153.Mr Wong criticised the carrying over of such belief as being conscious and knowing disobedience of the Unless Order on the basis that such belief cannot be sustained on an objective basis. In this respect, he relied strongly on the submissions made by Mr Kwong at the Ho Hearing and Master Ho’s rejection of KJ’s request in the 20/3/12 Summons for extension of time to exchange witness statements. But, in my view, such contention ignores the fact that KJ’s emphasis on “synchronising timetables” (which led to their belief that (a) it was premature to prepare and exchange witness evidence and (b) it was appropriate to supplement the witness statements as to facts exchanged on 20 March 2012) was in fact fuelled by advice from their legal representatives. Not only is this confirmed in Ken’s 1^st Statement (see paragraphs 48 and 134 above) and Mr Hui’s 2^nd affirmation (see paragraphs 38 and 133 above), the misunderstanding by KJ’s legal representatives is abundantly demonstrated by the 20/3/12 Summons and their stance at the Ho Hearing. They thought KJ could revisit the Unless Order by way of the 20/3/12 Summons (see paragraph 85 above) even though such summons was procedurally erroneous (see paragraph 86 above). The Statements Summons is clear evidence that KJ’s legal representatives still persisted with their misunderstanding notwithstanding the Ho Hearing. These procedural errors are essentially not matters for the layman. I also agree with Mr Joffe that the question of what amounts to sufficient compliance with the Unless Order is essentially one that required legal advice. In coming to this view, I bear in mind that it is not the case that KJ had done nothing at all in respect of the Unless Order. Ken served Ken’s 1^st Statement (although I have since found that it is non-compliant as a result of the misunderstanding by KJ’s legal representatives) as well as three other witness statements as to facts. I therefore conclude that KJ’s breach of the Unless Order was not intentional or contumelious, and I do not think there is deliberate feet dragging on their part.

154.Having thus dealt with the reasons for the delay and also for the default, I now turn to the question of whether the sanction as imposed is out of line with the consequence of the breach (see paragraph 78 above). Such sentiment is echoed in the pre-CJR observation by Reyes J in Yeung Shu Lam Wilson trading as Wilson Yeung v Chan Sui Ting & anor [29] as follows:

“62. The Court certainly should not condone non-compliance. But neither should the Court order an unjust sanction, which is not proportionate to a party’s fault. The issue here is not whether there has been non-compliance. There plainly has been. That is not disputed. The real question is what is a proper sanction.”

155.Here, the Unless Order deals with the deadline for serving and exchanging witness statements in respect of the Statement Proceedings, but upon default the sanction cuts off not just factual witness evidence by KJ but also their documentary evidence notwithstanding that they have made discovery of documents in the course of the present action. Question therefore arises as to the justification for debarring documentary evidence by KJ.

156.One would have thought that, absent special circumstances, a sufficient and appropriate sanction for failing to exchange witness statements would generally be that the defaulting party be debarred from adducing witness evidence at trial. Of course, it is possible that depending on the nature of the case, the bar may extend to prevent the defaulting party from adducing documentary or other evidence. But here, it is evident from the pleadings that KJ relies on a host of documentary evidence to establish their case, eg documents that evidence the setting up of the Ken Li Trust by BNP Paribas, and documents that evidence the profit-sharing arrangements as well as the Father’s and Ken’s investments in the Project and Lianda. Indeed, for the latter Ken relies on the Father’s Ledgers which originate from the Father and not from KJ. In my view, in the present context, the sanction imposed in the Unless Orders is far too draconian – it is a punishment that does not suit the crime.

157.Further, one needs to ask whether the consequences of the sanction should be mitigated by the extent of the breach as it turned out (see paragraph 78 above). Although I have rejected Ken’s 1^st Statement as a proper witness statement as to facts, it must not be forgotten that KJ did exchange three other witness statements as to facts on 20 March 2012 (ie within the deadline specified in the Unless Order). In my view, the breach as it turned out is not as serious as anticipated (eg as compared with the scenario of no witness statement having been served at all), and in the present circumstances debarring KJ from adducing even these three witness statements that were exchanged within time appear to be disproportionate.

158.There can be no doubt that maintaining the sanction will have serious consequences for KJ notwithstanding Mr Wong’s valiant efforts to play down its effect. As Mr Wong rightly accepted in his written submissions, this is a case that requires assessment of the credibility of oral testimony of witnesses. On any view, the consequence of the sanction cannot be regarded as a minor handicap. I am not persuaded that there would be a fair trial by effectively limiting KJ’s role at the Liability Trial to cross-examining the Father’s witnesses and making submissions on the quality and logic of his case.

159.There are also other considerations. First, the Father has revamped the New Shares Claim and amended other aspects of his pleading in the RRASOC. Whilst the New Shares Claim is not a fresh allegation that can be said to be outside the Statements Ambit, should KJ be prevented from adducing evidence to address the new revisions thereto? Secondly, the Father does not just rely on oral and documentary evidence to prove his case at the Liability Trial. He also relies on the presumption of resulting trust (see paragraphs 72 and 77 of Decision No.1). I share the following sentiments of DHCJ Au-Yeung (as she then was) in Tang Kim Kwan Patrick also known as Patrick Tang:

“30. To preclude the defendant from relying on her witness statement will effectively deprive her of a proper defence as the plaintiff is relying in the presumption of resulting trust. The primary aim of the Court in exercising its powers is to secure the just resolution of disputes in accordance with the substantive rights of the parties and not technical failure. It will not be conducive to the administration of justice to bar the defendant entirely from adducing witness statements.”

Thirdly, Ken has a counterclaim against FS. If Ken is debarred from adducing any evidence at the Liability Trial, bearing in mind the general principle that he who claims carries the burden of proof, Ken’s counterclaim is quite possibly doomed before it gets off the ground. It has been said that the possibility of a fair trial does not mean that relief from sanction will follow (see paragraph 146 above). But it does not mean that conversely court will also shut its face against relief from sanction if the consequence of the sanction stifles a fair trial. It all depends on the circumstances.

160.Further, I am not persuaded that FS would be badly prejudiced by any relief from sanction. They acknowledge that the trial dates for the Liability Trial can be maintained. Of course, the unexpected revival of KJ’s witness statements must have been a disappointment to FS, but it is not something they cannot overcome between now and the Liability Trial. Indeed, KJ have made clear (as evident from the Statements Summons) that if relief from sanction is granted and KJ are allowed to serve witness statements as per the Draft Statements, any risk of prejudice caused by the failure to abide by the direction for “exchange” of witness statements can be overcome by allowing FS to serve witness statements in reply to enable them to have the last word. Mr Wong has raised the spectre of KJ tailoring their evidence, but as Mr Joffe submitted, no specific instance has been identified. Further, in a trial where oral testimony will be a main feature, detailed pleadings verified by statements of truth go a long way to reduce risk of subsequent tailoring of witness evidence.

161.Bearing in mind that what the court must strive is to avoid injustice and to ensure just determination of disputes, and upon considering all the circumstances, the factors relevant to exercise of the discretion to extend time for seeking relief from sanction, and also the factors for the application for relief, I am satisfied that I should grant leave for KJ to apply for relief against sanction under the Unless Order out of time, and to grant relief against such sanction.

XI. CONCLUSION

162.In respect of Ken’s 1^st Statement Summons, I order that Ken’s 1^st Statement be struck out. I also dismiss the Statements Summons. There is no reason why costs should not follow event. I therefore grant a costs order nisi that KJ do pay FS’ costs of Ken’s 1^st Summons and the Statements Summons (including all costs reserved, if any) in any event to be taxed if not agreed.

163.In respect of the Relief Summons, I grant the following orders:

(a) leave be granted to KJ to make the application by way of paragraph 2 of the Relief Summons out of time;

(b) subject to any term(s) that may be imposed by the court upon the determination of the Remaining Statements Issue, relief be granted to KJ from the sanction imposed in the Unless Order;

(c) within 21 days after FS file and serve the RAR&RADC pursuant to paragraph 194(d) of Decision No.1, KJ shall serve on FS and Yuen Hing revised drafts of the Draft Statements;

(d) subject to paragraph (e) below, paragraph 2 of the Relief Summons, the Remaining Statements Issue, and the 1^st and 2^nd Discovery Summonses be adjourned for argument before myself or the trial judge on a date to be fixed with one day reserved (“Adjourned Hearing”)

(e) the Adjourned Hearing shall be earlier of the available dates in the diaries of myself or the trial judge but shall not be earlier than 77 days from today;

(f) no later than 7 days before the Adjourned Hearing (excluding Saturday, Sunday and public holidays), KJ shall lodge with the court and serve on the other parties paginated updates to the hearing bundle;

(g) no later than 7 days before the Adjourned Hearing (excluding Saturday, Sunday and public holidays), KJ shall lodge with the court and serve on the other parties (i) further supplemental written submissions (not exceeding 8 pages), and (ii) reading list that identifies the relevant pages of the hearing bundle for the purpose of the Adjourned Hearing (“KJ List”);

(h) no later than 4 days before the Adjourned Hearing (excluding Saturday, Sunday and public holidays), FS shall lodge with the court and serve on the other parties (i) further supplemental written submissions (not exceeding 8 pages), and (ii) reading list that identifies the relevant pages of the hearing bundle other than those in the KJ List for the purpose of the Adjourned Hearing;

(i) Yuen Hing is at liberty to lodge with the court and serve on the other parties (i) further supplemental written submissions (not exceeding 8 pages), and (ii) reading list that identifies the relevant pages of the hearing bundle other than those in the KJ List for the purpose of the Adjourned Hearing no later than 4 days before the Adjourned Hearing (excluding Saturday, Sunday and public holidays);

(j) no further written submissions shall be submitted without leave of the court;

(k) the fixing of the hearing date for further CMC be reserved for directions at the Adjourned Hearing.

164.Both Mr Wong and Mr Joffe have already submitted detailed written submissions on the 1^st and 2^nd Discovery Summonses and the Statements Summons. Their further supplemental written submissions to be submitted for the Adjourned Hearing should be succinctly confined to new developments. The court urges FS and KJ to carefully consider whether the Remaining Statements Issue and the 1^st and 2^nd Discovery Summonses can be sensibly resolved upon clarification of the parties’ respective case after the current round of pleadings so that the parties can focus their efforts on preparation for trial rather than further rounds of interlocutory skirmishes.

165.By the Relief Summons, KJ accept that they should bear the costs of seeking indulgence from the court. In the circumstances, I grant a costs order nisi that (a) costs of and occasioned by paragraph 2 of the Relief Summons and/or the Remaining Costs Issue be reserved, and (b) save and except for (a) above, costs of and occasioned by the Relief Summons be paid by KJ to FS in any event to be taxed if not agreed.

	(Marlene Ng)
	Deputy High Court Judge

Mr William Wong and Mr Alan Kwong, instructed by D S Cheung & Co, for the plaintiff by original action and 1^st and 3^rd defendants by counterclaim

Mr Victor Joffe and Mr Jean Paul Wou, instructed by Stevenson Wong & Co, for the 1^st and 2^nd defendants by original action and the plaintiff by counterclaim

Ms Frances Lok, instructed by Christine Koo & Ip, for the 4^th defendant by counterclaim

[1] paragraph 59 of Decision No.1

[2] paragraph 62 of Decision No.1

[3] see Order 25 rule 1B(8) of the RHC

[4] see Order 25 rule 1B(3) of the RHC

[5] Top One International (China) Property Group Co Ltd v Top One Property Group Ltd [2011] 1 HKLRD 606

[6] see Tang Kim Kwan Patrick also known as Patrick Tang v Lee Chi Ting Karen also known as Karen Lee HCA920/2009, DHCJ Au-Yeung (as she then was) (unreported, 6 January 2012) at para.17

[7] pursuant to Order 1B rule 2(3) or (5) of the RHC

[8] [1997] 1 WLR 1666, 1676

[9] HCA 15922/1998, Chung J (unreported, 20 February 2002)

[10] [2012] 3 HKLRD 119, 134-135

[11] see An Zhou & ors v Zhou Zheng Kuan & ors HCA241/2010, To J (unreported, 30 August 2012) at paras.25-26

[12] the new Part 3.9(1) of the CPR which applies to applications made on or after 1 April 2013 provides as follows:

“On an application for relief from any sanction for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need – (a) for litigation to be conducted efficiently and at proportionate costs; and (b) to enforce compliance with rules, practice directions and orders.”

[13] HCA4904/1996, Ribeiro J (as he then was) (unreported, 26 August 1999)

[14] [1997] HKLRD 57, 59

[15] eg Order 25 rule 1C of the RHC and Top One International (China) Property Group Co Ltd at pp.617-618.

[16] [2011] 1 HKLRD 606, 618

[17] Tang Kim Kwan Patrick also known as Patrick Tang at para.15

[18] HCA241/2010, To J (unreported, 30 August 2012)

[19] see Hong Kong Civil Procedure 2013 Vol.1 para.18/20/1 at p.428 and Hongkew Holdings Limited & anor v Kongson Securities Limited & ors CACV115/1992 (unreported, 18 September 1992)

[20] Tang Kim Kwan Patrick also known as Patrick Tang at paras.31 and 37

[21] [1995] 2 HKC 567, 570

[22] [1895] 1 Ch 117

[23] see Hong Kong Civil Procedure 2013 Vol.1 para.38/2A/10 at p.765

[24] see Hong Kong Civil Procedure 2013 Vol.1 para.3/5/2 at pp.58-59

[25] [2004] EWCA Civ 827

[26] see Allington Investments Corp & ors at p.570 and paragraph 115 above

[27] HCA2696/2000, Chung J (unreported, 13 July 2001)

[28] [2012] FSR 28

[29] HCA284/2002, Reyes J (unreported, 7 December 2004)

Cites 5 cases

Cases cited in this judgment