Wealthy Catering Holdings Ltd v Superior Luck Ltd And Another

DCCJ 5075/2015
DCCJ 5628/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5075 & 5628 OF 2015

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DECISION

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1. By a summons dated 19 April 2017, the 1^st defendant makes an application under Rules of the District Court (“RDC”), Order 38 rule 21, for an order that:-

(a) leave be granted to the 1^st defendant to call and cross-examine the following persons on the contents of the documents listed as items 5, 14 to 18 of the plaintiff’s list of documents filed on 7 November 2016 (“P’s LOD”):-

(1) Mr Leung Kui Tang (“KT Leung”) and/or Mr Lau Ying Wo (“Lau”); and

(2) Mr Leung Yat Wong (“YW Leung”);

(b) leave to the 1^st defendant to issue and serve writs of subpoena in accordance with Order 38 rule 14 for the purpose of securing the attendance of the said persons at the trial of these proceedings; and

(c) costs of the application be in the cause.

2. The summons is supported by the affirmation of Ho Shek Wing (“Ho”), who is a director of the 1^st defendant.

3. The 1^st defendant and the 2^nd defendant are represented by the same legal team in these proceedings, but the 2^nd defendant does not take part in this application.

4. The plaintiff adopts a neutral stance in respect of this application but invites this court to exercise the case management powers as stipulated in RDC Order 1A to scrutinize the 1^st defendant’s application.

5. The pre-trial review of these proceedings will take place on 3 July 2017, and the trial will start on 4 September 2017 with 4 days reserved.

Background

6. The plaintiff and the 2^nd defendant are shareholders and directors of the 1^st defendant. The 1^st defendant was the corporate vehicle through which the plaintiff and the 2^nd defendant ran the “Joy Luck Club” pursuant to the agreement(s) entered between the parties in 2011. Joy Luck Club was a mahjong entertainment business.

7. According to the relevant agreement(s), the plaintiff granted the 1^st defendant a franchise to run Joy Luck Club for 4 years, ending by 30 September 2015. Joy Luck Club was operated on premises situated in Fanling (“the Premises”). In the plaintiff’s case, the landlord of the Premises was Easter Group Trading Limited (“Eastern Group”), who let the Premises to a company called “Appreciate”. Appreciate then sub-let the Premises to the plaintiff, and the plaintiff entered into agreement(s) with the 1^st defendant permitting the 1^st defendant to run Joy Luck Club therein.

8. In September 2015, before the end of the term of the franchise, the said mahjong entertainment business was no longer covered by any valid and effective licence. The mahjong entertainment business could not be carried on. On 26 September 2015, the 1^st defendant delivered the possession of the Premises to Appreciate.

9. The disputes between the parties ensued. The plaintiff initiated DCCJ 5075/2015 against the 1^st defendant, and the 2^nd defendant commenced DCCJ 5628/2015 against the plaintiff. On 9 August 2016, the court ordered that the two actions be consolidated.

10. The disputes in these proceedings include the following:-

(a) In the 1^st defendant’s case, all matters concerning the licence for the mahjong entertainment business were agreed to be handled by the plaintiff exclusively. The 1^st defendant says that there was a breach of agreement(s) between the parties and/or in any event the breach of director’s duties on the part of the plaintiff in relation to the licensing matter which led to the situation.

(b) The plaintiff denies the breaches suggested by the 1^st defendant. On the other hand, the plaintiff says, inter alia, that the tenancy agreement between Appreciate and Eastern Group required Appreciate to reinstate the Premises when delivering vacant possession at the end of the lease. Such duty was incorporated into the lease between Appreciate and the plaintiff, and also the agreement between the plaintiff and the 1^st defendant. As a result of the 1^st defendant’s failure to reinstate the Premises, the plaintiff has incurred costs on reinstatement. Further, for the purpose of doing the reinstatement, the plaintiff occupied the Premises until October, ie 19 days after the expiry of its lease with Appreciate. The plaintiff claims against the 1^st defendant for, inter alia, the costs incurred in the said reinstatement and the amount payable to Appreciate for the occupation of the Premises for the period beyond 30 September 2015.

(c) Regarding such matters raised by the plaintiff, the 1^st defendant denies the duty to reinstate as suggested by the plaintiff. The 1^st defendant further says that the amount incurred and the time spent on reinstatement are unreasonable. The 1^st defendant also says that on 26 September 2015, Appreciate took delivery of the Premises and confirmed of the acceptance of the interior state of the Premises. The plaintiff was not present on that occasion. Appreciate asked the 1^st defendant to inform the plaintiff of Appreciates’ acceptance of the Premises, which the 1^st defendant did accordingly.

11. The plaintiff filed the P’s LOD on 7 November 2016, in which the plaintiff discloses, inter alia, the following documents:-

Category A - Documents concerning Appreciate

(a) Item 5 on P’s LOD - Copy of a written confirmation signed and sealed by Eastern Group and Appreciate, in which the parties confirmed that on 20 October 2015, Eastern Group had taken back the Premises from Appreciate

(b) Item 14 on P’s LOD - Copy of an invoice issued by Appreciate to the plaintiff dated 29 October 2015 for the rent and the management fee in October 2015

(c) Item 18 on P’s LOD - Copy of a demand letter dated 8 October 2015 issued by Appreciate to the plaintiff together with a copy of the invoice No.006220 dated 29 September 2015, which concern the electricity fee, the rent and the guarantee money for September 2015

Category B - Documents concerning Art Work Engineer (“AWE”)

(d) Item 15 on P’s LOD – Copy of an official receipt issued by AWE to the plaintiff dated 29 October 2015

(e) Item 16 on P’s LOD – Copy of a quotation dated 16 September 2015 from AWE to the plaintiff concerning the demolition works in a club in Fanling

(f) Item 17 on P’s LOD – Copy of a quotation dated 22 October 2015 from AWE to the plaintiff

12. On 2 December 2016, the defendants issued a notice disputing authenticity of the aforesaid documents.

13. On 17 February 2017, the plaintiff issued a hearsay notice covering, inter alia, the said documents.

14. On 20 February 2017, in the case management conference, the 1^st defendant briefly mentioned cross-examining the makers of the said documents but there was no detailed discussion on that issue.

15. After the case management conference, the 1^st defendant wrote to the plaintiff asking it whether it would tender the makers of the said documents for cross examination and the identity of such witnesses.

16. On 19 April 2017, the 1^st defendant took out the summons.

The principles

17. Order 38 rule 21 provides:-

“(1) Where a party tenders as hearsay evidence a statement made by a person but does not propose to call the person who made the...