Paron Gloves International Ltd v. Wu Wai Kit
Read the full judgment text of HCA 1357/2007 on BabelCite. This High Court CFI judgment was delivered on 25 July 2013.
1. On 10 March 2010, leave was granted to the plaintiff to set the matter down for a 5-day trial. The case was not set down up till now. In May 2012, Madam Leung Yuk Chun applied to join as a defendant in this action. On 6 September 2012, an order was made for her to join in. On appeal, this order was set aside by Madam M. Chan J., who delivered her Decision on 10 January 2013. The plaintiff therefore applies for extension of time to set the matter down for trial. The defendant has also take
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HCA 1357/2007 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE HIGH COURT ACTION NO 1357 OF 2007 ________________________ BETWEEN
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_______________________________ DECISION _______________________________ INTRODUCTION 1.On 10 March 2010, leave was granted to the plaintiff to set the matter down for a 5-day trial. The case was not set down up till now. In May 2012, Madam Leung Yuk Chun applied to join as a defendant in this action. On 6 September 2012, an order was made for her to join in. On appeal, this order was set aside by Madam M. Chan J., who delivered her Decision on 10 January 2013. The plaintiff therefore applies for extension of time to set the matter down for trial. The defendant has also taken out two summonses for altogether six applications. These applications are set out in counsel’s written submissions. For convenience, I shall copy the introduction of these applications from Ms. E. Yang’s written submissions. Ms. Yang and Mr. T. Chow, counsel act for the plaintiff and Mr. K. Chan and Mr. H. Leung, counsel act for the defendant. The applications are:
2.The plaintiff also complains the following acts of the defendant.
3.It is not necessary to deal with the Discovery Application as the parties have made the arrangements themselves.[1] Mr. Chan has also fairly agreed to abandon his Replacement Application. 4.Mr. Chan submits that he would plead section 358 of Companies Ordinance as a defence rather than as a counterclaim. He would therefore delete the counterclaim, leaving the paragraph thereunder as part of the Re-Amended Defence. Ms. Yang has no objection to this proposal. Leave is given to the defendant to make the amendments as proposed and re-submit the rectified one, under the title of Re-Amended Defence for filing and service if leave is granted. 5.As to the plaintiff’s application for extension of time for setting down for trial, the defendant says that in view of the defendant’s outstanding matters, the matter is not yet ready to be set down for trial. 6.As to the defendant’s applications, Ms. Yang submits that, on procedural grounds and on merits, they should be dismissed. THE FACTUAL BACKGROUND 7.For the factual background of this action, I gratefully adopt the summary of the facts set out in Madam Justice M. Chan’s Decision delivered on 10 January 2013 for Madam Leung’s application for joining as a defendant. The learned judge summarized the facts as follows:
8.The learned judge had considered the facts of the case, and having heard submissions from counsel of respective parties, she commented in her Decision that it is a relatively simple case as she said:
THE APPLICATIONS 9.For convenience, I shall first deal with the defendant’s applications before I deal with the plaintiff’s application for extension of time for setting down for trial. AMENDMENT APPLICATION 10.Mr. Chan submits that the present Amended Defence is not complete and the defendant should be allowed to amend her defence in view of the further witness statements and that there is no prejudice to the plaintiff. 11.Ms. Yang argues that this is a late application. The defendant had, in the Listing Questionnaire filed on 2 March 2010, said there would be no application for amendment of the Amended Defence and the plaintiff had not changed its case. To allow the defendant to amend the defence would inevitably delay the proceedings further. 12.The legal principles on amendment are trite. The plaintiff relies upon the following authorities, which I consider relevant in opposition to this application:
13.However, I would like to add another authority to the list above, which bears similarity to this application and in which the learned Judge had set out the proper approach for the consideration of the application. In VSC Building Products Company Limited v. Kono Insurance Limited HCA947/2005, 9 September 2009, (unreported) by Mr. Justice A. Cheung (as he then was), the defendant made an application to amend the Defence in less than 3 months before trial, a milestone date as the CJR had already commenced on 2 April 2009. It sought to raise formally the defence that the plaintiff had, in breach of a condition in the policy, failed to notify the insurer of the accident in time. Knowledge of the plaintiff of the accident therefore became a crucial matter. The learned judge set out the court’s approach to the application. At paragraph 19 of the Decision, he said:
14.In Mr. Chan’s written submissions, he set out the purposes for the proposed amendments. They are added to clarify the various bank accounts in which the defendant had deposited the money allegedly misappropriated by her, update the information as to where and when she had deposited the cheques.[2] Ms. Yang does not dispute this in her written submissions. 15.As mentioned in the factual background, this case is a relatively simple case where the plaintiff has built up a prima facie strong case against the defendant, who had allegedly deposited 340 cheques into her account or otherwise had misappropriated the money. It will be for the defendant to give a full account of explanation for the deposits and use of the money for her defence. Ms. Yang does not argue that the proposed amendments are relevant to her defence. I consider that they are crucial for the defendant’s defence. To deprive her of the opportunity of stating her case clearly in the pleadings would be unfair to the defendant. As Mr. Chan has rightly pointed out, the allegations raised by the plaintiff in this Action carry criminal liability against the defendant. The matter has not been set down for trial. No doubt, there will be some delay in the corresponding procedural steps caused by the proposed amendments. However, Ms. Yang has not shown to me the prejudice that cannot be compensated by costs. She submits that the amendment would cause other interlocutory applications such as further discovery. That may be so. However, Mr. Chan has confirmed today that there will not be any application for further discovery because of the amendments. 16.Accordingly, I allow the defendant’s application for amendment in terms of paragraph 4 supra. SUPPLEMENTAL WITNESS STATEMENTS APPLICATION 17.The defendant seeks leave to file and serve her supplemental witness statement, witness statement of Leung Yuk Chun (“LYC”) and witness statement of He Shuqin (“HSQ”). I shall deal with each of the proposed supplemental witness statement and the further witness statements separately. Supplemental witness statement of the defendant 18.The plaintiff opposes this supplemental witness statement on the ground that it is, in fact, not a supplemental witness statement, but a fresh witness statement de novo. In her written submissions, Ms. Yang has also set out the objectionable paragraphs with reasons[3]:
19.Mr. Chan submits that the supplemental witness statement of the defendant is not given de novo. It will serve the purpose of giving more particulars to the defendant’s defences. The comments made by Ms. Yang are unwarranted because the comments or opinions of the defendant are supported by the facts stated in her statement or they are necessary conclusions because of the facts stated in her statement. Some of them may be technically objectionable. But to dwell on such technical details will not assist the proceedings. I agree. If such technical transgressions of the witness statement are not prejudicial to the other party, it will not be necessary to waste time and costs to deal with them. 20.I note that the witnesses who have given their witness statements are not allowed to change their witness statements inconsistent with their previous statements. See §10 of Commerzbank Aktiengesellschaft (Hong Kong) v Peregrine Fixed Income (in Liquidation)CACV296/2002 (unreported) 10 September 2002. Today, Ms. Yang has admitted that the supplemental witness statement of the defendant is not outside the scope of her original witness statement. If her supplemental witness statement were served as the original witness statement, the plaintiff would have no objection to it. The reasons for the plaintiff’s objection is that it is late and the plaintiff was given insufficient time to consider it. 21.I shall give leave to the defendant to serve her supplemental witness statement. Witness statement of LYC 22.The plaintiff’s objection to this witness statement is based on the reasons that her witness statement will only cover the background facts and she had no direct or only had limited knowledge of how the cheques had been used. Her witness statement would only expand the issues and prolong the proceedings. 23.The legal principles relating to witness statements are set out in my Decision in Talent Weaving Dyeing & Printing Limited v Able Billion Textiles Limited [2013] 2 HKLRD 479, the relevant parts of which are as follows:
24.Ms. Yang relies upon Parsad v Great Wealthy Eng. Co Ltd, [2012] 3 HKLRD 705, Bharwaney J, in which the learned Judge referred to Chung Hiu Bun, the administrator of the estate of Chung Chun Kong, deceased v. Yeung Yiu Sing and anor., HCPI 123/2012, 28 July 2011, which said that the Court might refuse application for introduction of new evidence at a late stage of the proceedings and “the probative value of such new evidence is low and of marginal relevance”. 25.As I have already allowed the proposed amendments to the Amended Defence, I will take into consideration those proposed amendments. Having considered the amended pleadings, it is quite obvious that in the amended paragraph 18A of the Re-Amended Defence, the defendant pleaded that for cheques No. 86 and 87, Madam Leung was the drawee and in paragraph 28(b), the defendant pleaded that the practice of depositing the cheques of the company into the Joint Name Account and the HK Account was made under the directions of Wu Kwok Kwong, a director and shareholder of the plaintiff and this practice was made known to Madam Leung. 26.The plaintiff may prefer to have a simple factual scenario that the defendant had misappropriated the cheques for her own use and it is for the defendant to account for the use of those cheques and the money. The defendant has already admitted that she had drawn the 340 cheques except for Nos. 86, 87, 309 and 310 as defined in Annex 1 to the Re-Amended Statement of Claim.[4] The burden is clearly upon the defendant to account for the money of those cheques. Otherwise, she will be liable to account the money to the plaintiff. However, the defendant has pleaded her case in such a way that there had been agreement between Mr. Wu Kwok Kwong and herself that the cheques could be deposited in the Joint Name Account and the HK Account. I consider that to deny the defendant the opportunity of adducing Madam Leung’s evidence in support of her defence at this stage would be unfair to her. 27.I have no idea how the plaintiff would plead to the proposed amendments by way of a reply. For interlocutory application, the Court will not go into the details of the evidence, which is matter for the trial. On the materials before me, I consider that Madam Leung’s supplemental witness statement is relevant to the amended pleadings and it should be allowed into evidence. So I do. Witness statement of HSQ 28.The plaintiff’s objection to this witness’s statement is based on the reason that no explanation has been given as to why HSQ was not engaged earlier and the following paragraphs in her witness statement are objectionable.
29.Mr. Chan makes the similar observations to those comments as he has done to the defendant’s supplemental witness statement. 30.This witness is certainly important for the defendant to advance her defences. Her evidence is relevant to the issues in dispute. I grant leave for the defendant to serve this witness’s statement. EXPERT EVIDENCE APPLICATION 31.The defendant intends to adduce expert evidence of Mr. Doman Wong, Director of Risk Advisory Department of Baker Tilly Hong Kong Risk Assurance Limited. The defendant applies for expert directions of:-
32.The plaintiff opposes this application on procedural grounds and on merits. 33.On procedural grounds, the plaintiff says that the defendant’s application is late and she has not complied with paragraph 20 of Practice Direction 5.2; that she has taken away the Court’s power of appointing a single joint expert. 34.On the merits, the plaintiff says that the matching and tracing exercise of the cheques into various bank accounts do not require any specialized knowledge and do not call for expert testimony. 35.In Wong Hoi Fung v. American International Assurance Company (Bermuda) Limited & Another [2002] 3 HKLRD 507, the court set out the two-stage test for determining admissibility of expert evidence:
36.Since the plaintiff argues that the matching and tracing exercise done by Mr. Doman Wong does not require specialized knowledge and hence, does not call for expert testimony, it will be helpful to make reference to the case of Barings plc (in liquidation) and another v Coopers & Lybrand (a firm) and others Barings Futures (Singapore) Pte Lye (in liquidation) v Mattar and others [2001] All ER (D) 110 by Evans-Lombe J., where the court directed the parties to adduce expert evidence on banking management and there was an extensive discussion on the issue of what was the proper subject matter of expert opinion. The ground of objection to the defendants’ expert report was that the subject matter was not properly the subject of expert evidence, being directed to generalised management failings by Barings where criticism was not based on any objective standards but only upon Mr Giannotti's own experience. The head-notes of the law report summarize the learned judge’s decisions as follows:
37.Mr. Wong has submitted his draft report for the Court’s consideration. In his report, Mr. Wong has set out his professional qualifications and the factual basis on which he made the matching and tracing of the cheques as alleged in the pleadings. By looking at this report briefly, one can see immediately that the exercise takes a professional accountant to make the matching and tracing in order to make a finding on the way cheques were treated through the various accounts. 38.It will be enlightening to find the following results during the relevant period in question between 1 May 1995 and 31 December 2004 after Mr. Wong’s matching and tracing exercise:
39.Ms. Yang has fairly admits that the above information would be relevant to the issues at the trial. She only argues that these matters do not require an expert to handle. She submits the trial judge will be able to look at the accounts and entries to obtain the information in the draft expert report. With respect to her, I have to admit that if I were the trial judge myself, I might have difficulty in understanding the various accounting entries, tracing the flow of money and doing the matching myself. 40.Furthermore, as the burden is on the defendant to account for the cheques, which she had admitted to have drawn, it is at least reasonable to allow her to obtain the assistance of an accountant to present comprehensive and logical accounts to defend herself at the trial. Such expert report, in my view, will certainly assist the trial judge to understand the evidence of the defendant. It will save time and costs for the trial than otherwise having the accountants to explain the matching and tracing of the accounts in court. 41.I am satisfied that the defendant has passed the two-stage test and Mr. Doman Wong’s expert report should be given leave to be adduced as evidence at trial. 42.Once I have come to this conclusion, the plaintiff’s argument on the procedural grounds will fall away. Practice Direction 5.2 is not applicable as the defendant has already obtained a draft expert report. This draft expert report was prepared before the court has granted leave to the defendant to adduce it as evidence. The defendant therefore prepared this expert report at her own risk that if the court refuses to grant her leave, she has to bear the cost for the expert report herself. It will be for the plaintiff to consider whether it will call an expert to respond to the defendant’s expert opinions. 43.As to the court’s power of appointing a single joint expert, this power cannot be taken away. However, it is quite apparent that a single joint expert, though convenient and costs-saving, would not be practicable for this matter. If the plaintiff is minded to have a single joint expert, it may consider agreeing to adopt Mr. Wong’s report, in which event, it will save time and costs for the trial. But this is entirely a matter for the plaintiff’s legal advisors. 44.I will therefore grant leave to the defendant to call Mr. Doman Wong as the expert for the defence and leave is granted to the defendant to adduce the expert report within 28 days from the date hereof. The plaintiff is at liberty to serve its own expert report in response to Mr. Wong’s expert report within 56 days from the date of service of the defendant’s expert report. The defendant is at liberty to serve an expert report in reply within 21 days thereafter. The costs of the expert reports should be in the cause of the Action. THE PLAINTIFF’S APPLICATION 45.As I have granted leave to the defendant to amend the Amended Defence, to serve the witness statement and the supplemental witness statements and to serve the expert report, there must be time for the plaintiff to take the corresponding steps in response to these changes. I agree with Mr. Chan that in those circumstances, the plaintiff’s application should not be considered until all outstanding interlocutory matters have been cleared. 46.I shall therefore adjourn the plaintiff’s summons, returnable on 12:00 noon on 11 December 2013 for the next Case Management Conference before myself. COSTS 47.As to the costs of the defendant’s applications, the plaintiff submits that it agrees that the costs for the summons and the costs of and occasioned by the application for amendment be to the plaintiff and the costs for today’s hearing on amendment be to the defendant, who has succeeded. Mr. Chan has no objection to this proposal. I shall make an order as proposed. As to the costs for the witness statements and the expert report, the same basis will apply, that the costs of the application be to the plaintiff but the costs for today’s argument will be dealt with separately. What follow is the costs for today’s hearing. The plaintiff asks for costs on the basis that the defendant has only served the witness statements and draft expert report on the plaintiff late, causing this hearing inevitable. The defendant argues that if the plaintiff considers that it cannot have sufficient time to consider the defendant’s witness statement and expert report, the plaintiff should apply for an adjournment and the costs for the adjournment will be dealt with accordingly. However, since the plaintiff has elected to argue the case before the court today and it has failed, the costs for the argument should follow the event and must be given to the defendant. I agree. Costs is a matter at the discretion of the court. In considering the costs, the court has to take into consideration the factors under Order 62 rule 5, one of which is the parties’ conduct. Having taken into consideration of the circumstances, I consider that the costs for the defendant’s application relating to the witness statements and the expert report should be given to the defendant. But because of the conduct of the defendant in serving the materials late, the defendant’s costs for the witness statements and expert report applications be reduced by 20%. Since the defendant has not prepared the schedule of costs and the plaintiff’s schedule of costs may have to be amended because of the order here, I shall direct the parties to submit their schedules of costs (in revised form by the plaintiff) within 14 days from the date hereof. I shall then consider whether the summary assessment be made on paper or by way of oral hearing on a date to be fixed. On the question of two counsel as proposed by Mr. Chan, I consider that although there are a number of items in dispute, the legal arguments involved do not warrant the service of two counsel, with no disrespect to counsel for both parties, for whose assistance I am grateful. ORDER 48.I shall make an order in terms as follows:
Ms. Elizabeth Yang and Mr. Tony Chow, instructed by C.L. Chow & Macksion Chan, for the plaintiff Mr. Kenneth Chan and Mr. Herbert Leung, instructed by Cheung, Fung & Hui, for the defendant |
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