HONG LOK SCHOOL LTD AND ANOTHER v. CHOW SAI YIU AND ANOTHER

HCA 17139/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 17139 OF 1999

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D E C I S I O N

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1. The trial of this action started on 30 June 2003. Due to unforeseen circumstances, it has to be adjourned part heard on 14 July 2003 with an estimate by counsel that another 10 days will be required. A number of factors caused this adjournment. The first witness called on behalf of the Plaintiffs was Madam Kwan Ko Siu Wah. She started to give evidence on 2 July 2003 and cross-examination began on 3 July. She was a lady of 78 years old and she suffered from hypertension. She had to take medication from time to time to tackle her heart problems. I of course appreciate that giving evidence, particularly being subject to cross-examination could be a stressful experience. During the course of her evidence, I have granted breaks more frequently than I usually did so that Madam Kwan would not be subject to unnecessary prolonged pressure.

2. Unfortunately, she felt unable to continue with her evidence after 4 July 2003. Her counsel Mr Thomson applied on 7 July for the case to be adjourned to 10 July on the basis that Madam Kwan was medically unfit to continue to give evidence in the meantime. The application was supported by certificates from two medical practitioners. Mr Wong, counsel for the Defendants did not oppose the application but reserved his position as to costs.

3. In the afternoon of 7 July 2003, solicitors for the Plaintiffs informed the court that the Plaintiff wished to make an application to lead some other evidence during the adjournment. Hence, counsel were back in court on 8 July 2003. It turned out that Mr Thomson wanted to renew his application for his handwriting expert's evidence to be heard. On the first day of trial, I have already indicated that because the expert evidence may depend on some factual evidence, I would follow the usual practice of hearing all the factual evidence first. Mr Thomson accepted that arrangement and told the court he would liaise with his expert accordingly. For some reasons, there seems to have been a breakdown in communication and the Plaintiff's expert came to Hong Kong on 7 July and planned to stay until 9 July 2003. Mr Thomson therefore invited the court to interpose the most crucial factual witness (a defence witness) on 8 July 2003 so that he could lead the evidence of his expert witness on 9 July 2003.

4. However, due to the adjournment on 7 July 2003, this court had already listed another matter in the afternoon of 9 July 2003. Moreover, the relevant defence witness was not in Hong Kong on 8 July 2003 and it was not possible to arrange him to be called on 9 July 2003. Mr Wong had told Mr Thomson previously that he required 2 days' notice to arrange for this witness to come to give evidence as he often stayed out of Hong Kong. Mr Wong also indicated that he would take up substantial time in the cross-examination of the Plaintiffs' expert and there was simply no realistic chance of completing her evidence by 9 July 2003.

5. In the circumstances, it is obvious to the court that apart from the undesirability of hearing evidence of the expert before the completion of the factual evidence on the facts of the present case, it was simply impossible to complete the evidence of the Plaintiffs' expert by 9 July 2003. It would be a futile exercise and waste of costs to allow the expert to be called at this stage and I refused the application. It was then agreed that the Plaintiffs would explore the taking of the evidence of their expert through video-link at the Technology Court.

6. On 10 July 2003, Mr Thomson informed the court that the Plaintiff was still unfit to attend court and asked the court to excuse her from giving further evidence. A medical report was produced to support the application. Not surprisingly, Mr Wong did not accept the conclusion set out in the report. To facilitate his clients in looking into the matter, he asked for discovery pertaining to the medical history of Madam Kwan and examination of Madam Kwan by a doctor appointed by the Defendants.

7. Directions were given for these matters and examination of Madam Kwan by the Defendants' doctor took place on 11 July 2003. The Plaintiff called the doctor attending Madam Kwan, Dr Victor Goh to give evidence on 14 July 2003. He was cross-examined by Mr Wong until about 4:00 p.m. on 14 July 2003.

8. The case was originally scheduled to run up to 14 July 2003. Due to the state of this court's diary, it was not possible to continue with the trial after that date, particularly when counsel estimated that the case required another 10 days. In any event, arrangement had to be made for the taking of video-link evidence from the Plaintiff's expert.

9. Since it is unlikely that the evidence of the Defendant's doctor could be finished within the remaining court session on 14 July 2003, this court hear submissions on applications for costs which Mr Wong indicated that he intended to make before the case is adjourned.

10. Before I turn to these applications for costs, I should mention that Mr Thomson told the court after the evidence of Dr Goh that irrespective of the court's findings on the medical evidence, Madam Kwan did not intend to come back to court to continue with her evidence. Mr Thomson also acknowledged that he knew of no procedure by which the court can make an interlocutory ruling as to the effect of Madam Kwan's testimony in view of these developments. On the other hand, Mr Wong did not ask for an order directing Madam Kwan to come back to court to give evidence. His position was that if the court were not satisfied that Madam Kwan was medically unfit to continue with her evidence, this court should disregard all her evidence in favour of the Plaintiffs whilst the Defendants could rely on her evidence in their favour.

11. In these circumstances, given that neither party has invited me to do so and counsel have not directed my attention to any authorities affirming that the court could do so, I do not think this court should make any interlocutory ruling and make any findings on the medical evidence on an interlocutory basis. I indicated that I would treat the medical evidence as evidence in the trial and I would take those into account in assessing what I should do with Madam Kwan's evidence. My determination would be given in my judgment after trial. I understand that counsel for both parties agreed to this course being adopted.

12. Mr Wong's applications for costs directed towards the costs relating to the following matters,

(a) Plaintiffs' application to admit new evidence;

(b) Plaintiff's abandonment of the allegation against Mr Chow Siu Nam;

(c) Plaintiff's application for adjournment on 7 July 2003;

(d) Plaintiff's application on 8 July 2003 referred to in Paragraphs 3 to 5 above;

(e) Plaintiff's application to excuse Madam Kwan from continuing with her evidence.

Mr Wong asked the Plaintiffs to bear the Defendants' costs of and occasioned by these applications/ matters and asked for such costs to be paid forthwith.

13. Mr Wong also asked for a direction that the company should not pay for the costs of this action on the basis that the dispute is essentially one between the shareholders. He relied on the principles set out in Re Crossmore Electrical and Civil Engineering Ltd [1989] BCLC 137, Re Milgate Development Ltd [1991] BCC 24 and Re CG & L Investment Ltd [1993] 1 HKLR 107. Mr Thomson accepted that the company should only be a nominal party to this action.

14. The main submission of Mr Thomson to the applications for costs is that the court should not deal with the question of costs at this stage. He said it was wrong in principle for the court to decide on question of costs until the court has heard all the evidence. I think it depends on the matter regarding which costs are being asked for. The point may be a valid one regarding items (e) bearing in mind that I have not heard all the evidence regarding the medical fitness of Madam Kwan and as I said, I regard such evidence as evidence of the trial. As regards (b), on the facts of the present case, I consider that it would be more appropriate to reserve my decision as to costs until the end of the trial.

15. However, I fail to see the relevance of the rest of evidence to items (a) and (d). I have set out the circumstances and the manner in which the application for admission of new evidence was made in my Reasons for Ruling on 7 July 2003. With the adjournment of the trial, I think it is appropriate to deal with such costs at this stage. Irrespective of the merits of the Plaintiffs' case in the action, I am of the view that the Plaintiffs should pay the Defendants' costs of this application. Likewise, I see no reason why costs should not follow event and why it is inappropriate to make any order for costs regarding the application on 8 July 2003. Had those advising the Plaintiffs made proper enquiries with solicitors for the Defendants before coming back to court on 8 July 2003, they would readily appreciate that it is an application doomed to fail since it was physically impossible to fit the evidence the Plaintiff's expert and the defence witness within the short time available.

16. As regards (c), one must not lose sight of the fact that even assuming Madam Kwan had valid medical reasons for seeking the adjournment on 7 July 2003, she was asking for an indulgence. I see no reasons why the Defendants should suffer financially as a result of such indulgence. In my view, they should be compensated by an order for costs in their favour.

17. However, I am not satisfied that this case warrants an order that these costs be paid forthwith. Nor do I think that they should be awarded on indemnity basis. Hence, the order I make is that Kwan Ko Siu Wah and Kwan Kay Cheong do pay the costs of Chow Sai Yiu and Chan Cheung Po in respect of the following,

(a) the costs of and occasioned by the Plaintiff's application for admission of new evidence on 30 June and 2 July 2003, and I recorded for the purpose of taxation that the time spent at the trial on this application was, according to my records, 3 hours;

(b) the costs of and occasioned by the Plaintiff's application on 8 July 2003;

(c) the costs of and occasioned by the adjournment of 7 July 2003.

These costs are payable in any event.

18. Since Mr Wong is partly successful and partly unsuccessful in his applications, I propose to take a global approach and make a costs order nisi that the applications for costs be costs in the cause.

Representation:

Mr James Thomson, instructed by Henry Lam & Associates, for the 1st and 2nd Plaintiff (by original action) and the 1st and 2nd Defendants (by Counterclaim)

Mr Horace Wong, instructed by Liu, Chan & Lam, for the 1st and 2nd Defendant (by original action) and the Plaintiff (by Counterclaim)

HCA 17139/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 17139 OF 1999

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(By Counterclaim)

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REASONS FOR RULING

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1. On the first day of trial, Mr Thomson (counsel for the Plaintiffs in HCA 17139 of 1999 and the Defendants in HCA 19001 of 1999 ["the Plaintiffs]") informed this court that the Plaintiff had prepared a Supplemental List of Documents dated 28 June 2003 and intended to rely on the ten items listed therein for the purpose of the trial. The Supplemental List was supplied to the other parties at so late a stage that Mr Wong (counsel for Chow Sai Yiu and Chan Cheung Po ["the Defendants"]) did not have an opportunity to inspect the originals of the documents listed. Mr Wong initially took objection to such late discovery.

2. Eventually, the differences between the parties narrowed down to items 1 to 5 of the Supplemental List. Having heard the explanation of Mr Thomson as to the relevance of items 7 and 8 and inspected the originals, Mr Wong conceded that the Plaintiffs could rely on those items at the trial. On the other hand, in view of the deprivation of the Defendants of a proper opportunity to investigate into some hearsay statements contained in items 9 and 10, Mr Thomson conceded that the Plaintiffs would not rely on those two items.

3. After hearing submissions, I ruled on 2 July 2003 that the Plaintiffs should be allowed to rely on items 1 to 6 as well for the purpose of this trial. I now give reasons for this ruling.

4. Although discovery is a continuing obligation and supplemental lists of documents have to be filed from time to time to fulfill such obligation, a litigant giving late discovery should anticipate his opponents complaining about the same. In a proper case, the court may consider adjourning a trial in order to give the other side a proper opportunity to look into issues arising out of these new documents. In most cases, the party giving late discovery would also need to serve additional hearsay notice to enable him to adduce those new documents as evidence at the trial. The requirement in Section 47A(2) of the Evidence Ordinance is that the notice should be served in a manner as is reasonable and practicable in the circumstances for the purpose of enabling the other parties to deal with any matters arising from its being hearsay. However, Section 47A(4) provides that a failure to comply with sub-section (2) shall not affect the admissibility of such evidence. But this would have a bearing on costs and weight to be attached to such evidence.

5. Section 47 (1) of the Evidence Ordinance provides that the court in certain circumstances could exclude hearsay evidence. Sub-section (1)(b) laid down the criteria,

"the court is satisfied, having regard to the circumstances of the case, that the exclusion of the evidence is not prejudicial to the interests of justice."

Mr Wong relied on this sub-section to invite this court to exclude items (1) to (6).

6. In the light of the above, I am of the view that it behoves a litigant giving discovery at the eleventh hour (as in the case of the Plaintiffs here) to provide the court and the other side with full and accurate information as least as to the following to enable the court to exercise its discretion properly in dealing with possible objections from his opponents,

(a) the reasons why these documents were not disclosed earlier;

(b) the provenance and the makers of these documents;

(c) the relevance of these documents to the issues before the court;

(d) the availability or non-availability of the makers to attend trial for cross-examination in case his opponents makes an application under Section 48.

7. Regrettably, when Mr Thomson addressed this court on 30 June 2003, he was unable to give reliable information concerning some of these matters. As a result, Mr Wong was quite justified in being suspicious about the explanation offered by Mr Thomson as to the late discovery of these documents. Pursuant to my direction, the Plaintiffs produced an affidavit of Mr Kwan Kay Cheong to account for the late discovery of these documents on 2 July 2003.

8. The account given by Mr Kwan Kay Cheong was slightly different from the explanation offered to this court by Mr Thomson on 30 June 2003. Mr Thomson accepted responsibility for that and told the court on 2 July 2003 that it was due to his misunderstanding. He accepted that he should have taken clearer instructions before he addressed the court.

9. I accept this explanation from counsel and I can see the relevance of items (1) to (6) to the issues I have to decide. I would not go into the details as the trial is still going on before me. I was told by Mr Thomson that the Plaintiffs could not be sure as to the precise identity of the makers of these items. However, the Plaintiffs' case was that the cheque book in question was kept by Kwan Bing Sun at the material time and those cheques and records on the cheque stubs should have been written by him or by someone on his instructions. Kwan Bing Sun is dead and it is unlikely that whoever wrote these on his instructions could be located or if located, could have much recollection about making these entries. Hence, even if these documents had been disclosed at an earlier stage, it probably would not make much difference to the Defendants' preparation of the their case. Mr Wong had not suggested otherwise. In other words, the Defendants have not identified any specific prejudice caused to them as a result of this late discovery. I also bear in mind that the issue of unilateral withdrawals by Kwan Bing Sun had already been raised in the existing evidence and the Defendants were not taken by surprise as to that. The new documents only supplemented the Plaintiffs' evidence. As matter stands, the Defendants' position regarding these withdrawals appear to be putting the Plaintiffs to strict proof instead of setting up any positive case to rebut the Plaintiffs' case.

10. The main attack of Mr Wong was on the lack of proper explanation on the late production of these documents on 30 June 2003 and the discrepancies between Mr Kwan's account and Mr Thomson's earlier account. These have been partly dealt with by Mr Kwan's affidavit and partly by Mr Thomson's explanation in Paragraph 8 above.

11. I note that items (1) to (6) were only photocopies and the Plaintiffs did not have the originals. They were however consistent with the records of withdrawals from the company's account contained in a minute of meeting at D673 of the court bundles. Mr Kwan suggested in his affidavit that these were photocopied by Kwan Bing Kong. Mr Wong can of course cross-examine Mr Kwan as to his account of late discovery of these documents in his Affidavit. On the whole, I think these are points more relevant to the weight that the court could attach to these documents. Having regard to the circumstances of this case and the circumstances under which these documents were disclosed, I cannot say that the exclusion of these documents is not prejudicial to the interests of justice. I therefore ruled that they were admissible at the trial.

Representation:

Mr James Thomson, instructed by Messrs Henry Lam & Associates, for the 1st and 2nd Plaintiffs

Mr Horace Wong, instructed by Messrs Liu, Chan & Lam, for the 1st and 2nd Defendants