Summary of facts
P applied on 18 September 2020 for leave to allow its witness, Mr Jia Bin (Jia), who was living in Singapore, to testify via VCF at the trial scheduled to commence on 27 October 2020, with five days reserved.
The claims and disputes arose out of a due diligence agreement in relation to the purchase by P from D of a majority shareholding in a listed company (the Due Diligence Agreement). Pursuant to the Due Diligence Agreement, P paid D earnest money in the sum of RMB 20,000,000 (the Earnest Money). P argued that issues which came to light during the due diligence exercise had not been satisfactorily resolved and that the Earnest Money had, as a result, become refundable. D’s defence was that the parties had entered into an oral sale and purchase agreement (the Oral Agreement), and that the Earnest Money had become non-refundable and remained a forfeitable deposit under the Oral Agreement. D further claimed repudiatory breach by P for failing to complete the transaction, thereby forfeiting the Earnest Money.
The main issue to be resolved during the trial was whether the parties had entered into the Oral Agreement. According to D, the Oral Agreement was reached orally during a “personal meeting” in 2015 between Jia and D (the Personal Meeting). P accepted, therefore, that Jia’s evidence would be important in the resolution of the main issue and that his credibility would be hotly disputed.
Decision
The Hon. Keith Yeung J handed down his decision on 28 September 2020 and refused the application.
The judge endorsed the summary of the relevant principles set out by the Hon. Anthony Chan J in Tsang Woon Ming v. Lai Ka Lim [2020] HKCFI 891 (covered in our previous alert) and held that, aside from the starting position that proceedings should be conducted in court, on the facts of the case, it was of particular importance that Jia be examined under the solemn atmosphere of the court. The main issue between the parties was a factual one – what (if anything) was discussed and agreed upon during the Personal Meeting. It was going to be a one-on-one situation, i.e. the main issue would be resolved by weighing the conflicting evidence of two witnesses, Jia and D. The judge further held that it was an important pillar of the legal system that justice was not only done but seen to be done. D would have a justified sense of grievance if Jia were to be permitted to give evidence by VCF, thereby having a perceived advantage over D.
On COVID-related issues, the judge attached little weight to the general inconvenience associated with quarantine arrangements due to readily available technologies and facilities, and noted that Jia did not put forward any evidence suggesting that he would be exposed and subject to any “specific problems over and on top”. Further, while the judge accepted that the health risks which Jia might be exposed to whilst travelling were a legitimate concern, he concluded that they were insufficient to justify leave being granted as the flight between Hong Kong and Singapore was not a long one and appropriate precautions could be taken on-board to minimise the risks.
P also pointed to the unpredictability of the pandemic as one of the grounds in support of the application. In this regard, the judge commented that the Hong Kong court could only deal with the matter “as things are” – the prevailing health situation was easing and judicial proceedings were resuming normal order.
Commentary
All in all, this decision is largely in line with earlier CFI decisions,1 which held that the general inconvenience due to quarantine arrangements bore little weight in an application for a witness to testify via VCF. Whilst in this case the CFI pointed to the short flight duration between Singapore and Hong Kong in a one-on-one case (i.e. conflicting evidence between two witnesses leading to their credibility being at issue), on a previous occasion the CFI allowed an application with respect to a witness travelling between Shanghai and Hong Kong also in a one-on-one case: see Taishin International Bank Co Ltd v. QFI Ltd [2020] HKCFI 938.2 Given the similarities between these two cases, it appears therefore that the court will likely take into account the existing circumstances, such as the seriousness of the outbreak, at the time when the application is heard (i.e. the circumstances “as things are”) and give weight to health risks considerations accordingly, despite the unpredictability of the developments of the pandemic.
For a summary of the facts and decisions in the earlier cases mentioned above, and the key takeaways, please refer to our previous alert.
- Taishin International Bank Co Ltd v. QFI Ltd [2020] HKCFI 938 at §7 (“I also agree that the inconvenience which Huang may have to face if she comes to Hong Kong to give evidence… is not a sufficient factor justifying VCF evidence”) and Tsang Woon Ming v. Lai Ka Lim [2020] HKCFI 891 at §§13-15 (“Giving evidence at the trial should be a matter of top priority for them. …Putting their business interest first is not a good or sound reason for this application”).
- In that case, DHCJ MK Liu held, at §8, that the transmission risk in air travel was a “legitimate concern of a reasonable person nowadays”, and that “health should be the paramount concern of everyone” and he had to “make arrangements to ensure the safety of everyone participating in the trial” insofar as practicable.
Client Alert 2020-586
