DAIMLER AG (FORMERLY KNOWN AS MERCEDES BENZ AG) v. HELGE HERBERT LEIDUCK, APPOINTED BY ORDER TO REPRESENT THE ESTATE OF HERBERT HEINZ HORST LEIDUCK, DECEASED AND ANOTHER

HCA 4089/1994

[2020] HKCFI 1437

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 4089 OF 1994

________________________

________________________

_______________

DECISION

_______________

1.  On 2 December 2016, I handed down judgment (“Judgment”) on what has become known in these proceedings as the “competency issue”, finding that:

(1)     The defendants had discharged the burden of proving that the late Mr Herbert Leiduck (“Mr Leiduck”) (who was, until his death on 23 March 2014, the 1^st defendant and one of the witnesses for the defendants in this action) was not of unsound mind and, therefore, not incompetent to give evidence in these proceedings within the meaning of s 3(b) of the Evidence Ordinance (Cap 8) (“EO”) on 7 January 2008, 9 December 2008, 25 June 2009, 30 March 2010 and 6 April 2010 when he swore his 1^st, 2^nd, 3^rd, 4^th and (1^st) 5^th affidavits.

(2)     Mr Leiduck’s 1^st, 2^nd, 3^rd, 4^th and (1^st) 5^th affidavits are admissible.

(3)     The defendants had not discharged the burden of proving that the Mr Leiduck was not incompetent to give evidence in these proceedings within the meaning of s 3(b) of the EO on 27 September 2011, 11 January 2012, 19 September 2012 and 15 November 2012 when he swore/signed his (2^nd) 5^th affidavits, 6^th affidavit, witness statement and supplemental witness statement and on 28 January 2013 when he answered interrogatories administered by the plaintiff on oath.

(4)     Mr Leiduck’s (2^nd) 5^th affidavits, 6^th affidavit, witness statement, supplemental witness statement and answers to interrogatories are inadmissible.

2.  By a summons filed on 16 December 2016 (“Summons”), the defendants sought leave to appeal to the Court of Appeal against the above third and fourth-mentioned findings.

3.  Unless otherwise stated, I shall continue to use the abbreviations adopted in the Judgment.

The provision of s 14AA(4)

4.  The Court of First Instance can grant leave to appeal against a civil interlocutory judgment or order under s 14AA(4) of the High Court Ordinance (Cap 4)if it is satisfied either that the appeal has a reasonable prospect of success or that there is some other reason in the interests of justice why the appeal should be heard.

Merits

5.  A reasonable prospect of success requires the intended appeal to be more than “arguable” or “not fanciful”, without having to be “probable”: SMSE v KL [2009] 4 HKLRD 125, [17] and Wynn Resorts (Macau) SA v Mong Henry [2009] 5 HKC 515, [19].

Proposed grounds of appeal

6.  Indorsed on the Summons was a draft notice of appeal, by which it was contended that:

(1)     Grounds 1-4: I had erred in attributing the burden of proving competency under s 3(b) of the EO to the defendants.

(2)     Ground 5: I should have held on the evidence that the plaintiff had failed to discharge the burden of establishing the incompetence of Mr Leiduck on the said various relevant dates.

(3)     Ground 6: Further or alternatively, even if the burden rested with the defendants to prove competence, I erred in reaching the conclusion that on the evidence the burden had not been discharged.

Grounds 1-4: incidence of burden of proof

7.  I have in [73] to [80] of the Judgment set out the analysis that led me to the conclusion that the defendants have the burden of proving that Mr Leiduck was not at the times of his various written evidence incompetent as defined in s 3(b).  I shall not repeat the same.

8.  With respect to counsel, Grounds 1, 2 and 3 merely repeated arguments which were previously made by Mr Horace Wong SC (with Mr Clark Wang) and which I had addressed in [73], [76]-[77] and [75] of the Judgment respectively. 

9.  The only clarifications that one could make are, firstly, I referred to R v Yacoob (1981) Cr App R 313 at [78] of the Judgment (Ground 2) not for the facts, but for the principle at common law that in criminal cases, once the issue of competence of a witness is raised, the burden is on the party calling the witness or seeking to have the witness sworn to satisfy the court that the witness is competent to give evidence in the proceedings, which I think should also apply in civil proceedings by parity of reasoning having regard to the rationale behind the rule.

10.  Second, I disregarded the repealed s 3(a) of the EO (Ground 2), which dealt with the competence of child witnesses under the age of 7, because I did not derive any assistance from it in deciding the incidence of the burden of proving the competence/incompetence of persons of unsound mind.  That section read:

“The following persons only shall be incompetent to give evidence in any proceedings-

(a) children under 7 years of age, unless they appear capable of receiving just impression of the facts respecting which they are examined and of relating them truly” (emphasis by the defendants)

According to Mr Wong SC, “in steep contrast to how the burden is placed under s 3(b)”, it is clear that under s 3(a), the burden was placed upon the party who alleged that a child under 7 years old was competent to affirmatively prove that he “appear[ed] capable of receiving just impressions of the facts respecting which [he] is examined and of relating them truly.  It is not clear to me that the wording of s 3(a) was also intended to deal with the burden of proof of the competency/incompetence of a child witness under 7 one way or another.  There is however, no need to debate about the incidence of the burden of proof under s 3(a).  As a matter of principle, I do see any or any apparent or necessary correlation either way between s 3(a) and 3(b) in terms of the incidence of the burden of proving the matters provided for therein, especially after the repeal of s 3(a).  Unlike s 3(b) which is to prevent persons appearing incapable of receiving just impressions of facts or relating them truly due to unsoundness of mind from giving evidence, it appears to me that the part after “children under 7 years of age” in s 3(a) were drafted as it was to allow children under 7 but appear capable of receiving just impressions of facts or relating them truly to give evidence.

11.  Third, I did not recognise the existence of a presumption of competence, as suggested in Ground 3.  What I said in [75] of the Judgment was whether or not there is such a presumption is neither here nor there.  Mr Wong SC’s previous submission on the existence of a presumption of competence was thinly supported and reasoned.  See paragraphs 11 to 13 of Mr Wong SC’s skeleton submissions on the competency issue dated 6 May 2016 and paragraphs 28 and 47 of the supplemental submissions on the competency issue for the defendants dated 16 May 2016.  In short, it was based on his reading of the wording of s 3 of the EO, which was said to be supported by the attracts from R v Lam Chi Keung [1997] HKLRD 421, per Mortimer JA at 424I; Chan Chi v The Queen [1968] HKLR 61, per Hogan CJ ogan at 64 and, The Queen v Fung Kam Keung [1991] 1 HKLR 377, per Silke VP at 395H-386B, all quoted and distinguished at [76] of the Judgment.

12.  Grounds 1 to 3 have no reasonable prospect of success.

13.  As for ground 4, s 50 of the EO, enacted in 1999, stipulates:

“(1) Hearsay evidence shall not be admitted in civil proceedings if or to the extent that it is

(a) shown to consist of; or

(b) to be proved by means of,

a statement made by a person who at the time he made the statement was not competent as a witness.

(4) In subsection (1), “not competent as a witness” (沒有資格作證人) means suffering from such mental or physical incapacity; or lack of understanding, as would render a person incompetent as a witnesss in civil proceedings”

It is Mr Wong SC’s contentions that (1) s 50 expressly placed the burden of proof on the party challenging the admissibility of the hearsay evidence to prove inadmissibility on the ground of incompetence; (2) the legislature clearly intended that the burden rests with the party challenging the competence of a witness to prove his incompetence in accordance with the test set out in s 3(b); and (3) a consistent construction should be given to s 3(b) and s 50.

14.  In support of the first proposition, Mr Wong SC placed reliance on C v C [2001] EWCA Civ 1625, a case found and produced by Mr Paul Shieh SC (with Ms Sara Tong) in honour of the best tradition of the Bar.  This case was concerned with the admissibility of the hearsay evidence of what a girl who was 10 going onto 11 had said to her mother about what his father had said of the mother under s 5(1) of the Evidence Act 1995 which is similarly worded as our s 50(1) of the EO and which reads:

“Hearsay evidence shall not be admitted in civil proceedings if or to the extent that it is shown to consist of, or to be proved by means of, a statement made by a person who at the time he made the statement was not competent as a witness.

For his purpose … a child shall be treated as competent as a witness if he satisfies the requirements of section 96(2)(a) and (b) of the Children Act 1989 (conditions for reception of unsworn evidence of child).”

The conditions are that the child understands that it is his duty to speak the truth and he has sufficient understanding to justify his evidence being heard.

15.  At [10], Lady Justice Hale said, “it is clear from the wording of section 5, … , that the burden lies on the person who asserts that the maker of the statement is not competent to make that assertion and to make it out.” 

16.  This sentence was, however, neither preceded nor followed by any reasoning.  In the absence of reasoning, I respectfully beg to differ (notwithstanding the stature of Lady Justice Hale).  I cannot find in the wording of s 50 of the EO any express provision that operates to place the burden on proving incompetence on the party challenging the admissibility of the hearsay evidence.  It is odd and inconceivable that the legislature intended to cater for the burden of proof by the use of such cryptic language.

17.  Second, s 50 of the EO was introduced by amendment by Ordinance No 2 of 1999.  Section 3(b), not distinguishing between competence in terms of oral evidence and hearsay evidence, has existed on the statute book long before that.  During the period of time before the introduction of the present s 50, the incidence of burden (for both oral evidence and hearsay evidence) could not have been influenced by the provision of s 50.  If the defendants were right, the enactment of s 50 in 1999 would have had the effect of altering the pre-existing common law incidence of burden.  I can find no clue that s 50 has been intended to affect such a sea change in burden of proof in respect of both oral testimony and hearsay evidence.

18.  Ground 4 has no reasonable prospect of success either.

Ground 5: assessment of evidence on reversal of burden of proof

19.  This ground rises and falls with Grounds 1 to 4.

Ground 6: assessment of evidence competent regardless of burden of proof  

20.  By this ground, criticisms were made of the weight I attached to the following categories of evidence: (1) the care records kept by the nursing home at which Mr Leiduck stayed from 2 February 2012 to 18 April 2013; (2) the evidence of the staging of Mr Leiduck’s dementia on the various material dates; (3) the positive observations on Mr Leiduck’s condition by the friends and relatives interviewed by Dr Förstl; (4) the contents of Mr Leiduck’s affidavits/witness statements/answers to interrogatories themselves; (5) the notary certificates of the notary public before whom Mr Leiduck signed his written evidence on 19 September 2012, 15 November 2012 and 28 January 2013; and (6) the fact that the environment and circumstances under which Mr Leiduck prepared and confirmed his written statements were conducive to his performance at his best level cognitively. 

21.  The weight to be attached to any particular piece of evidence is a matter for the trial judge.  I believe I had adequately explained why I could not give weight or more weight to the said 6 categories of evidence in [209] to [218] of the Judgment.  For the avoidance of doubt, in addition to pondering on each category of evidence individually, I should clarify here that where more than one category of evidence are relevant to the competence of one piece of written evidence, I have also considered them cumulatively.

22.  We were concerned with Mr Leiduck’s competence when he signed his affidavits/witness statements/answers to interrogatories on 5 specific dates.  Based on my personal experience of having Mr Leiduck cross-examined before me, it is not sufficient to just show that Mr Leiduck did not exhibit any abnormality at the moments in question or on dates close to those moments.  Further to what I have already said in [218] of the Judgment, at the time of his cross-examination, Mr Leiduck was in his 80’s; he was physically frail; he was completely blind; he had suffered from DLB since July 2011; and he was giving evidence in what was to him a foreign language.  Despite his old age, physical and mental disabilities and not speaking in his mother tongue, to the untrained eye, Mr Leiduck was “normal” when, in fact, he was incompetent the whole time save for 1 session.

23.  The simplest step that the defendants could have taken but did not take was to adduce evidence on how instructions were actually taken for each piece of the written evidence in question; how each piece of such written evidence was then drafted, verified and finalised with, and signed by Mr Leiduck; and Mr Leiduck’s condition at each such stage.  I believe such evidence could have been adduced without waiving the legal professional privilege attached to the instructions given by or on behalf of Mr Leiduck.  In short, this court did not in fact have evidence, but was asked to make assumptions, as to “the environment and circumstances under which Mr Leiduck prepared and confirmed his written statements”.

24.  Ground 6 has no reasonable prospect of success.

The “other reason in the interests of justice” limb

25.  As for the “other reason in the interests of justice” limb, it is suggested in Hong Kong Civil Procedure 2020, Volume 1, paragraph 59/2A/4 at p 1186 that leave may be granted under this limb if the question is one of general principle, decided for the first time; or a question of importance upon which further argument and a decision of the Court of Appeal would be to the public advantage.

26.  This is not such a case. Section 3(b) has a long existence.  Despite its history and the habitual exceeding diligence of counsel on both sides in this case, I have not been referred to a single authority, whether direct or indirect, on any aspect of s 3(b).  I find it difficult to envisage the recurrence of the same or similar combination of facts and circumstances, the resolution of which would turn on the burden of proof so that some future case or cases might benefit from a judgment of the Court of Appeal on the incidence of the burden of proof under s 3(b).   

Residual discretion

27.  Even if there is a reasonable prospect of success, the court still retains a residual discretion to refuse leave (though a reasonable prospect of success would weigh heavily in favour of the grant of leave).  For instance, consistent with the underlying objective under Order 1A, rule 1(c) of the Rules of the High Court (Cap 4A) (ie promotion of reasonable proportion and procedural economy in the conduct of proceedings), the court may refuse leave to appeal in the interests of procedural economy and proportionality.  See Ho Yuen Ki Winnie v Ho Hung Sun Stanley under HCA 391/2006, unreported, 25 May 2009, [3] and on renewed application to the Court of Appeal under HCMP 1009/2009, unreported, 24 August 2009, [22].  See also Wong Kar Gee Mimi v Severn Villa Limited [2012] 1 HKLRD 887, [31].  In Ho Yuen Ki Winnie, A Cheung J (as he then was) (at [7-9]) and the Court of Appeal (Le Pichon and Hartmann JJA) (at [22]) were not convinced that there was a reasonable prospect of success but indicated obiter that they would not grant leave even if they were of a different view because the intended appeal would merely be an interlocutory skirmish that only served to increase costs and delay adjudication of the litigation.

28.  Having regard to the nature, contents and quality (hearsay, bare assertions) of the evidence given in Mr Leiduck’s (2^nd) 5^th affidavit, 6^th affidavit, witness statement, supplemental witness statement and answers to interrogatories and the availability of another witness (to be recalled, if necessary) who claims to be able to give the same evidence first hand, it would be procedurally uneconomical and disproportionate to permit the defendants to appeal on the competency issue.

29.  In this connection, I had in [27] to [29] of the Judgment identified the parts of Mr Leiduck’s written evidence relating to the 3 matters before the court: (1) the defendants’ case for setting aside the settlement agreement; (2) the defendants’ claim for damages for loss of commission under the housing project; and (3) IRC’s claim for loss of the value of its business or Mr Leiduck’s alternative claim for loss of opportunity to sell his IRC shares.

30.  The evidence that Mr Leiduck sought to give on the defendants’ case for the setting aside of the settlement agreement is to be found entirely in his 1^st and 2^nd affidavit which are untainted by any unsoundness of mind.

31.  As for the loss of the housing project and the collapse of IRC’s business, Mr Leiduck had to some extent dealt with these 2 matters in his 1^st to (2^nd) 5^th affidavits and the documents he had disclosed in these proceedings, an example of which is a memorandum of understanding dated 23 December 1991 between the Russian Ministry of Defence, Russia’s State Military Industrial Association Konversija, the Urban Development GMBH and IRSAM (in respect of the housing project).  However, insofar as Mr Leiduck’s own evidence is concerned, it will be recalled that Mr Leiduck was incarcerated in Monaco from 19 October 1993 to 22 June 1996.  He was therefore not around when the injunction struck.  His evidence on the events after the injunction and before his release in 1996 was essentially based on hearsay.  In fact, it was Mr Leiduck Jr who claimed to have actually witnessed first hand how the injunction allegedly impacted upon the operation and business of IRC; who allegedly tried to salvage the situation to no avail: who allegedly negotiated with Stern-Stroy for the sale of the shares in IRC and for the injection of capital by Stern-Stroy into IRC; who allegedly had a conversation with Philip Yip, IRC’s general manager, about his own interest to acquire IRC; who knew that Yip had a wealthy uncle who could finance such acquisition; who allegedly continued to pursue the housing project on behalf of IRC, etc.  See Mr Leiduck Jr’s 2^nd and 3^rd affidavits and the exhibits thereto. See also the transcript of Mr Leiduck’s Jr’s evidence in court.

32.  The defendants may wish to review their evidence on the issues of the case without Mr Leiduck’s (2^nd) 5^th affidavit, 6^th affidavit, witness statement, supplemental witness statement and answers to interrogatories.

33.  Even if the defendants have shown an appeal with a reasonable prospect of success before the Court of Appeal, as a matter of discretion, leave to appeal should be refused for the sake of procedural economy and proportionality.

Disposition

34.  For these reasons, I dismissed the Summons.  I also make an order nisi that the defendants should pay the plaintiff’s costs with certificate for 2 counsel, to be taxed if not agreed.