WONG SEE LUNG v. HUANG HUA JIANG AND OTHERS

CACV194 & 196/2014
(Heard together)

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 194 AND 196 OF 2014

(ON APPEAL FROM HCA 2067 OF 2009)

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(HEARD TOGETHER)

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REASONS FOR DECISION

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Hon. Chu JA (giving the Reasons for Decision of the Court):

1.  In each of these appeals, the 2^nd defendant (the appellant in CACV 196/2014) and the 3^rd and 4^th defendants (the appellants in CACV 194/2014) had, on 24 March and 5 May 2015 respectively, filed summonses applying to stay the execution of the judgment of Mr Recorder Pow SC (‘the Judge”) and to adduce fresh evidence at the hearing of the appeals.

2.  After hearing submissions, we dismissed the application to adduce fresh evidence with costs and granted the stay application on condition that the 3^rd and 4^th defendants pay into court within four weeks HK$ 4 million pending the determination of the appeals with the costs of the application to be in the cause of the appeals.  The reasons for our decision appear below.

Application to adduce new evidence

3.  The fresh evidence sought to be admitted is a copy of a 20-page faxed copy of a sale and purchase agreement dated 22 December 2006 that was exhibited as “PKT-7” in the 3^rd defendant’s affirmation filed on 21 April 2015 in connection with the application to stay the judgment under appeal.  Page 18 of this document bore the signatures of the plaintiff and Mr Yau Chap Yin (“Mr Yau”), who was at the material time a solicitor with Messrs Tung, Ng, Tse & Heung (“TNTH”).  The document was referred to by counsel as the “TNTH Fax”.

4.  It is the 2^nd to 4^th defendants’ case that this 20-page faxed document was from Ms Au, a conveyancing clerk of TNTH, to Ms Chow of the 4^th defendant, who is the 3^rd defendant’s wife. The fax transmission began at 10:52 am on 22 December 2006 and was successfully completed at 10:56 am. The defendants say that exhibit C3, a fax communication report generated at 10:57 am, which was kept in the conveyancing file retained by TNTH, evidences the transmission of the TNTH Fax, and does not concern a draft S&P Agreement as the Judge said in paragraph 65(7) of the Judgment.

5.  It is the 3^rd and 4^th defendants’ case[1] that the plaintiff instructed TNTH to fax the SPA that he had signed to the 3^rd and 4^th defendants to let the 3^rd defendant know that he had done so in order to persuade the 3^rd and 4^th defendants to release the loan.

6.  Order 59 rule 10(2) of the Rules of the High Court, Cap. 4A provides that:

“The Court of Appeal shall have power to receive further evidence on questions of fact, either by oral examination in court, by affidavit, or by deposition taken before an examiner, but no such further evidence (other than evidence as to matters which have occurred after the date of the trial or hearing) shall be admitted except on special grounds.”

7.  The starting point is that fresh evidence should not be received save on special grounds.  The three conditions for considering whether there are special grounds as laid down in Ladd v. Marshall [1954] 11 WLR 1489 require that: (i) the fresh evidence could not have been obtained with reasonable diligence for use at the trial; (ii) the evidence, if given, would probably have an important influence on the result of the case, though it need not be decisive; and (iii) the evidence must be apparently credible, though it need not be incontrovertible.

8.  Mr Chan who, together with Mr Fung, appeared for the plaintiff, opposed the application on the basis that it failed to meet the first and second requirements of Ladd v. Marshall.

9.  Mr Bell SC who appeared for the 2^nd to 4^th defendants argued that the Ladd v. Marshall conditions are not strait jackets to the court’s discretion, relying on the judgment of Laddie J in Saluja v. Gill [2002] EWHC 1435, and submitted that this is a case where the conditions should be applied flexibly.

10.  It has been apparent from the beginning of these proceedings that the circumstances surrounding the signing of the SPA and the Assignment are a critical aspect of the case.  The cases of the plaintiff and the defendants on this are diametrically opposed to each other. 

11.  Paragraph 20.a. of the Amended Statement of Claim specifically pleads that the plaintiff had not instructed TNTH to act for him in the transaction, that he never attended the office of TNTH, that he did not know Mr Yau, and that Mr Yau was not present when the plaintiff signed the SPA and the Assignment and other documents for the transaction.

12.  In paragraph 23(1) of both the 2^nd defendant’s Amended Defence and the 3^rd and 4^th defendants’ Amended Defence, it is pleaded that the plaintiff was represented and advised by TNTH in the transaction. Paragraph 23(1)(b) & (c) further plead that the plaintiff signed the SPA and Assignment in the presence of Mr Yau and the documents were attested and interpreted to the plaintiff.

13.  Whether the plaintiff signed the SPA and the Assignment at the office of the 4^th defendant in the presence of the 3^rd defendant (as contended by the plaintiff), or at the office of TNTH in the presence of Mr Yau (as contended by the defendants), has been a live issue and a key dispute of fact throughout the case.

14.  The TNTH Fax is undoubtedly a relevant document in the action.  The 3^rd defendant had deposed, and Mr Bell (appearing for the defendants) had submitted, that the document has the important effect of discrediting the plaintiff’s case and his evidence while supporting the defendants’ case and the evidence of the 3^rd defendant and Mr Yau.

15.  Notwithstanding its obvious relevance and its importance as perceived by the defendants, the TNTH Fax was not disclosed by any of the defendants in the course of discovery in the proceedings.

16.  According to the 3^rd defendant[2], the TNTH Fax had been in the 4^th defendant’s possession since it was transmitted to the 4^th defendant on the morning of 22 December 2006.  Together with other documents, it was given to the 4^th defendant’s then solicitors, T H Koo & Associates, on 16 July 2010 when HCA 1550/2009 was commenced.  On 26 January 2012, the documents set out in a list, including the TNTH Fax, were transferred to Michael Pang & Co, who were appointed by the 3^rd and 4^th defendants to act in the place of T H Koo & Associates.  Michael Pang & Co were the 3^rd and 4^th defendants’ solicitors in the action below and in lodging the present appeal.  It was said that it was only after the judgment was handed down that Michael Pang & Co discovered the TNTH Fax.

17.  The 3^rd defendant also explained that as TNTH had previously confirmed to the plaintiff’s solicitors that the plaintiff did visit its office to sign the SPA, and Mr Yau attested his signing of the SPA, it was believed that this would be sufficient for the defendants to prove that the signing of the SPA had taken place at the office of TNTH as they alleged, and that it was therefore unnecessary to rely on the TNTH Fax.  This reason, however, would appear to be at odds with the claim that Michael Pang & Co only discovered the TNTH Fax after the judgment below was given.

18.  It was also said that when the conveyancing file was produced to the court on 8^th August 2014, the fourth day of the trial, the legal team of the 3^rd and 4^th defendants did not have an opportunity to inspect the file, that their counsel was not present and the respective solicitors for the 2^nd defendant and the 3^rd and 4^th defendants were also not present.  The 3^rd defendant also claimed that the late discovery of the conveyancing file took the defendants by surprise, that the defendants were denied the right to examine the file and that there was insufficient time for the defendants’ legal team to react to the new developments.

19.  We do not accept these explanations and complaints. As pointed out above, where and in whose presence the plaintiff signed the SPA and Assignment was very much a live issue that had an important bearing on the veracity of the parties’ case. The TNTH Fax is directly relevant to that issue. The 2^nd to 4^th defendants were legally represented throughout the proceedings.  It is inexplicable that the TNTH Fax was not disclosed before the trial by way of List of Documents. 

20.  On the other hand, as Mr Chan (for the plaintiff) pointed out, there was an order for specific discovery against the 3^rd and 4^th defendants.  The 3^rd defendant stated under oath that the 3^rd and 4^th defendants had disclosed all relevant documents that were in their possession, custody and power.  Despite that, the TNTH Fax was never disclosed and several other documents were only disclosed in the course of the trial. 

21.  In our view, the defendants have provided no good reason for the failure to make discovery of the TNTH Fax. It would also seem from the affirmations of the 3^rd defendant filed in these applications that the defendants had made a conscious decision not to deploy the TNTH Fax at the trial. 

22.  The 3^rd defendant’s complaint that the calling of Mr Yau as a witness and the production of the conveyancing file had taken the defendants’ legal team by surprise and there was no opportunity for them to inspect the conveyancing file is not borne out by the evidence before us.  It was known on 6 August 2014 that Mr Yau would be called to testify and it was only on 12 August 2014 that Mr Yau commenced his evidence.  The transcript of the trial also shows that copies of the conveyancing file were made and provided to the defendants’ legal representatives in the afternoon of 8 August 2014, after the file was produced by Mr Tse.  The defendants had been afforded more than reasonable opportunity to deal with the conveyancing file.  The temporary absence of the 3^rd and 4^th defendants’ counsel[3] in the morning of 8 August 2014 could not have prejudiced the defendants’ position.  Counsel for the 2^nd defendant was present throughout that morning, and he had been asked to hold the papers for the 3^rd and 4^th defendants in their own counsel’s absence.  Further, the 3^rd and 4^th defendants’ solicitors should have been present, and we have had no explanation why the 3^rd and 4^th defendants’ solicitors absented themselves that morning.

23.  The case of Saluja v. Gill is entirely different.  In the UK, CPR r. 52.11(2) no longer requires that special grounds be shown, but under our Order 59 rule 10(2), it is still necessary to show special reason for admitting new evidence on appeal.  The facts in the present case are also very different. The new evidence sought to be admitted has always been with the defendants. Not only was there no need to search for it, the defendants appear to have consciously chosen not to disclose it or to deploy it at the trial. This is notwithstanding its obvious relevance to the disputed issue of where and how the plaintiff signed the document and that Mr Yau was called and cross-examined and other documents produced.  To the extent it was submitted that it was because the defendants were then confident of their case, it serves to reinforce the point that the non-production of the evidence was the defendants’ deliberate choice and decision.  There is no injustice in not allowing them to have a second bite of the cherry.

24.  In summary, the requirements of Ladd v Marshall have not been met, and there is thus no basis on which we could exercise our discretion in favour of the defendants.  We should also point out that the suggestion of fraud or tampering of the conveyancing file after it was produced in court was wholly speculative, there being no factual or evidential foundation for it.  The new evidence sought to be admitted only shows that the plaintiff must have got the date of signing the SPA wrong, that it could not have been a few days after 22 December 2006.  This does not necessarily invalidate the Judge’s findings and his assessment of credibility.  It certainly does not support the suggestion that the plaintiff had practiced a fraud.

25.  For these reasons, we refused the application to adduce new evidence.

Stay of execution application

26.  In our view, the defendants’ appeal is at best arguable.  We do not think it can be said to be so likely to succeed as to make the grant of a stay appropriate on the basis of its strength alone.  It is thus necessary to consider whether or not the refusal of a stay might render the appeal nugatory.  In this connection, the main argument advanced was that the plaintiff’s financial position appeared to be such that if the appeal were successful, there might well be difficulty in recovering sums paid to him if no stay were granted, as he did not appear to have any assets or business in Hong Kong out of which such recovery could be made.

27.  There was no obligation for the plaintiff, in opposing a stay, to demonstrate that the appeal would not be rendered nugatory if a stay were not granted. However, the plaintiff has put forward, on oath, a description of his business interests which has turned out to be admittedly wrong.  Additionally, taking into account the fact that the plaintiff’s only known asset is an interest in a PRC business, we would accept that there may be difficulty in recovery of the judgment sum if the appeals were to be successful.

28.  We note also that the appeal is only four months away, and the defendants had offered to pay $4 million into court so as to provide full security for the plaintiff’s claim.  Taking all of these circumstances into account, we considered that the discretion should be exercised in favour of granting a stay of execution on terms that the 3^rd and 4^th defendants paid into court $4 million.  We therefore granted the application for stay of execution on terms.

[1] The 3^rd defendant’s affirmation filed on 21 April 2015, §34.

[2] The 3^rd defendant’s affirmation filed on 21 April 2015 §§31-34 and the defendants’ solicitors letter dated 16 April 2015 to TNTH.

[3] The hearing commenced at 10:05 am and adjourned at 10:20 am.  Counsel returned to court at 10:37 am.