LI KIN KEUNG v. PU MEI LEE TERESA AND ANOTHER

HCA 873/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 873 OF 2013

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D E C I S I O N

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THE APPLICATIONS

1.  The Plaintiff (“P”) has taken out two summonses, one for an extension of time for making the application for adducing expert evidence, the other for leave to adduce expert evidence at the trial.

2.  The time extension summons was issued because P has passed the deadline on 17 March 2016 for taking out the application for leave to adduce expert evidence in accordance with the Court’s direction.  This application was not opposed seriously by the 1^st Defendant (“D1”).  In fact, it is not disputed that P’s solicitors had been in communication with D1’s solicitor for the appointment of a single joint expert since 22 March 2016.  D1 stated that she would oppose the adducing of expert evidence on 24 March 2016.

3.  Since the argument is mainly on the merit of whether expert evidence should be adduced at the trial, I allow P’s application for time extension.

4.  The parties are legally represented.[1]

FACTUAL BACKGROUD

5.  The argument between P and D1 in this action is over one bearer share in the 2^nd Defendant (“the bearer share”), a BVI company incorporated as a corporate vehicle holding 40% of another corporate T&L Securities Ltd (“T&L”), which owns a property development project on the Lamma Island.  The project has recently been completed.

6.  P was the sole registered shareholder of the bearer share.  In 2009, the bearer share was exchanged for a registered share in the name of D1, and the bearer share certificate was cancelled.  A new share certificate no. 001 in respect of the registered share was issued in the name of D1.  This was purportedly effected by the following documents bearing P’s signatures (“the disputed documents”):

(a)	Written request purportedly by P to the board of D2 to exchange the bearer share for a registered share in D1’s name;
(b)	Resolution by the sole director of D2 approving the exchange of the bearer share for a registered share;
(c)	Share certificate no. 001 certifying that D1 was the owner of 1 share in D2;
(d)	Letter by P to the registered agent of D2 directing it to update D2’s statutory records.

P’s case

7.  P’s case is that:

(a)	D2 was incorporated as his corporate vehicle to hold his interest in T&L (and thus the development project). He was the owner of the bearer share since the incorporation of D2.[2]
(b)	P generally entrusted D1 to handle the administrative matters relating to D2. The bearer share certificate was issued to P and deposited with and kept by D1 for safe custody on his behalf.[3]
(c)	P did not execute the disputed documents and had no knowledge of them. He had no knowledge of and did not authorise the exchange of the bearer share for a registered share in D1’s name.[4]
(d)	He therefore claims for a declaration that the disputed documents are void and of no effect, and that he remains the owner of the entire shareholding in D2. He also claims damages for conversion.[5]

D1’s case

8.  D1’s case is that D2 was her corporate vehicle to hold the interest in T&L and that she was the owner of the bearer share. Because of a change in the law of the BVI in 2009, she instructed P to pass the relevant board resolution for exchanging the bearer share into a registered share in her name.  P passed the relevant resolution and notified the registered agent pursuant to her instructions.

9.  As to the disputed documents, D1 says she has no knowledge that they were not signed by P.  When served with a notice to admit facts, she refused to admit that the disputed documents were not signed by P.

DISCUSSION

10.  It is therefore obvious that the burden is on P to prove his case that the disputed documents bearing his signatures were not signed by him.  The authenticity of the signatures becomes the main issue of dispute between the parties.  P therefore applies for leave to adduce expert evidence in support of his case.

11.  D1 contends that expert evidence will not be useful for P to prove his case because the original disputed documents are not available and the probative value of the expert evidence is questionable.  She relies upon the decision of the Court of Final Appeal in Nina Kung v Wong Din Shin (2005) 8 HKCFAR 387 where Chan PJ held “…Handwriting analysis is not an exact science and the opinion of a handwriting expert, however objective it is, is inherently less precise than a conclusion based on the results of a scientific analysis.  The acceptability of an expert’s opinion depends very much on how sound and convincing the reasons of his opinions are.” (para 20) (emphasis added).  She further relies upon the finding of the Court of Appeal in the case of Chan Yuk  Kwan v Estate of Chow Sing Ka & Others, (unreported, CACV 173/2006, 3 January 2007) where the Hon Rogers VP concluded that the expert evidence was “useless evidence”.

12.  Where the burden falls upon P to prove his case on the authenticity of the signatures of the disputed documents, if the court were to debar him from adducing expert evidence, there must be very strong reason for the court to do so.  Otherwise, there will not be a fair trial for P.

13.  There is no dispute that the issue of the authenticity of P’s signature on the disputed documents is the live issue for trial.

14.  P says that the original disputed documents are in the possession or under the control of D1.  Whether this is the case remains to be seen through the process of discovery.  Even if P were unable to locate the original documents, P’s expert, as according to P, would still be able to compile an expert report to show the authenticity of those signatures in dispute.  Whether the court at trial would accept such evidence is a matter for the trial.  When one relies upon the Court of Final Appeal’s decision, one must understand the rationales of the Court of Final Appeal in the context of the case itself.  In the Court of Final Appeal case, the court was considering the expert evidence vis-à-vis the evidence of a witness of the Will, Mr. Tse’s signature on the Will.  Mr. Tse had passed away before the trial. He was not available for giving evidence at the trial.  The Court of Appeal found that his signature on the Will was not forged. See paragraph 10 of the judgment.  It was in those circumstances that Chan PJ analyzed the expert evidence.  The factual circumstances in that case are obviously different from this case.  Here, P will give evidence to say that he did not sign the disputed documents himself.  P wants expert evidence to support his evidence.  The Court of Appeal’s decision in Chan Yuk Kwan will not assist D1’s argument too because it was after the Court of Appeal had assessed the value of the expert evidence it had come to the conclusion that the expert evidence was useless.  We have not come to this stage yet as this is only an application for leave to adduce expert evidence.  No expert report is available for this Court’s consideration.  So far, there is simply no evidence to convince this Court that the expert evidence to be adduced is useless.

15.  There is no strong reason from D1 to say that P should not be allowed to adduce expert evidence in support of his case that he did not sign those disputed documents.

16.  In the circumstances, leave should be given to P to adduce expert evidence as requested by P.

COSTS AND ORDER

17.  As to the costs of these applications, including those costs reserved and the costs for the hearing today, the costs for the time summons should be given to D1, assessed at $1,200 and the costs for the argument on the extension and the merit for adducing expert evidence should follow the event and be awarded to P with counsel’s certificate.  D1 submits that the costs should be in the cause or in any event.  But this is no longer the practice for interlocutory applications after the CJR.  In the circumstances, the costs for the arguments should be assessed summarily under O.62, r.9A RHC at $85,000.  The awarded costs are to be set off and paid within14 days from the date hereof.

18.  The Court shall now make an order in terms as follows:

(a)	Time be extended for P to make the application for leave to adduce expert evidence;
(b)	P be granted leave to adduce expert evidence by P’s expert serving the expert report on D1 within 35 days from the date hereof, D1 be at liberty to serve her expert report in response thereto within 56 days thereafter and P be at liberty to serve an expert report in reply within 35 days thereafter;
(c)	Costs of the applications for time extension and leave to adduce expert evidence be as per paragraph 17 supra.
(d)	The 3rd Case Management Conference on 21 September 2016 be vacated and varied to 11:30 am on 8 February 2017.