XCHRX RE THE PRUDENTIAL ENTERPRISE LTD.

HCCW594/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING UP PROCEEDINGS NO.594 OF 1999

--------------

----------------------------

D E C I S I O N

----------------------------

1. Before me is an application by summons on the part of Samuel Tak Lee ("Mr ST Lee") who is the 1st Respondent to the petition for the winding-up of Prudential Enterprise Limited ("PEL") for an order that I do recuse myself from participating in any further proceedings concerning or arising from the PEL petition. That petition would, in the normal course, be heard by me, being the companies judge. In summary, the basis of the application is that in previous proceedings I had formed and expressed such strong adverse views about Mr ST Lee, his character and motivation that there is now a real danger that I would be unable fairly and justly to resolve the issues arising from the PEL petition.

2. The earlier proceedings referred to are two winding-up petitions concerning two family companies, namely HY and HT Lee Brothers & Company Limited and MW Lee & Sons Enterprises Limited. Mr ST Lee was the petitioner in each of those petitions. They were heard during the months of September and October 1999. The judgments dated 13 October and 29 October 1999 respectively are both under appeal.

3. Leading counsel for Mr ST Lee submitted that the grounds for recusal arise from what I had said in those judgments and in my having made orders on 16 November 1999 in an action (HCA 9522 of 1997) brought by Mr ST Lee and two of his children against the executors named in the will of Mr ST Lee's mother who are his elder sister and brother and in associated caveat proceedings (No.358 of 1995) (collectively "the probate proceedings"), inter alia, that they be heard by me. Those orders are also under appeal.

The applicable law

4. In determining an application for judicial recusal, the approach adopted by the English courts is the "real danger of bias" test laid down by the House of Lords in R. v. Gough [1993] AC 646 :

"... I think it unnecessary, in formulating the appropriate test, to require that the court should look at the matter through the eyes of a reasonable man, because the court in cases such as these personifies the reasonable man; and in any event the court has first to ascertain the relevant circumstances from the available evidence, knowledge of which would not necessarily be available to an observer in court at the relevant time. Finally, for the avoidance of doubt, I prefer to state the test in terms of real danger rather than real likelihood, to ensure that the court is thinking in terms of possibility rather than probability of bias. Accordingly, having ascertained the relevant circumstances, the court should ask itself whether, having regard to those circumstances, there was a real danger of bias on the part of the relevant member of the tribunal in question, in the sense that he might unfairly regard (or have unfairly regarded) with favour, or disfavour, the case of a party to the issue under consideration by him; ..."

See per Lord Goff at 670 D-F. That test was recently applied by the English Court of Appeal in Locabail (UK) Limited v. Bayfield Properties Limited [2000] QB 451 where (at 480) observations were made as to when a real danger of bias might be thought to arise :

"... or if, in a case where the credibility of any individual were an issue to be decided by the judge, he had in a previous case rejected the evidence of that person in such outspoken terms as to throw doubt on his ability to approach such person's evidence with an open mind on any later occasion; or if on any question at issue in the proceedings before him the judge had expressed views, particularly in the course of the hearing, in such extreme and unbalanced terms as to throw doubt on his ability to try the issue with an objective judicial mind (see Vakauta v. Kelly (1989) 167 C.L.R. 568); or if, for any other reason, there were real ground for doubting the ability of the judge to ignore extraneous considerations, prejudices and predilections and bring an objective judgment to bear on the issues before him. The mere fact that a judge, earlier in the same case or in a previous case, had commented adversely on a party or witness, or found the evidence of a party or witness to be unreliable, would not without more found a sustainable objection. ..."

5. As the English Court of Appeal was bound by the Gough test laid down by the House of Lords, the observations made could not and did not in any way alter or quality the Gough test. The mere fact that the evidence of a person may have been rejected in "outspoken" terms does not ipso facto throw doubt on the judge's ability to approach such person's evidence with an open mind on a later occasion. Implicit in the use of the prefix "such" to the phrase "outspoken terms" is the notion of proportionality. In my judgment, unless the outspoken terms used were out of all proportion to or not commensurate with the circumstances before the court, they could not of themselves give rise to a real danger of bias. Further, the effect of the terms used cannot be determined out of context but has to be gauged against the facts and matters particular to the case and which gave rise to those remarks.

6. The Australian approach is markedly different. In Vakauta v. Kelly [1989] 167 CLR 568, the test applied was whether the remarks would have excited in a fair-minded observer or lay person a reasonable apprehension that the judge might not bring an unprejudiced mind to the resolution of the matter before him. Leading counsel for Mr ST Lee accepted that, having regard to Cheung Francis v. Insider Dealing Tribunal (No.2) [2000] 1 HKC 437 in which the Court of Appeal adopted the English approach as laid down in Gough and Locabail, the correct approach in Hong Kong is the English rather than the Australian approach.

7. I dwell on the different approaches for good reason. Under the English test, the court, personifying the reasonable man, needs first to ascertain "the relevant circumstances from the available evidence". A lay observer on the other hand, would not necessarily have such knowledge. It would follow that if the remarks complained of were amply justified or warranted by the evidence before the court, it is hard to conceive that those very same remarks could give rise to a real danger of bias. The evidence or conduct may be such as to merit strong remarks. Judges should not be inhibited from making honest evaluations of the merits of contentions advanced by the parties, or frank assessments of a party's or witness's evidence and/or conduct and, if the circumstances so warrant, to call a spade a spade. It would be a different matter altogether if the evidence before the court did not justify the type of remark made.

Applying the law to the facts

8. Turning to the 10 examples extracted from my earlier judgments, it has to be borne in mind that the remarks were not casual or gratuitous observations made during the course of a hearing. Rather, the remarks were made in reasoned judgments in which the bases for the conclusions reached are fully stated. Having had my attention drawn to those remarks, I have looked at them again in context. Suffice to say that in my judgment the objections taken are devoid of merit : viewing the matter objectively, I see no reason for resiling from any of those remarks.

9. If the remarks were justified, that leaves only the fact that on 16 November 1999, I ordered, inter alia, that the probate proceedings be heard by me. But the submission of leading counsel for Mr ST Lee was to the effect that the remarks complained of having been made, coupled with my orders in the probate proceedings gave rise to "a reasonable apprehension of bias" as regards future litigation. I have some difficulty with that submission. If the remarks do not of themselves, in the words of Mr Dykes SC, "contaminate", I do not see how they can be prayed in aid of the orders made in the probate proceedings as, cumulatively, giving rise to a real danger of bias. Again, one must ask the question whether the facts before me warranted the making of the orders in the probate proceedings. If they did, it is not immediately obvious how or why the making of those orders would give rise to a real danger of bias on my part.

10. It was suggested that Mr ST Lee was somehow deprived of a procedural step. On 16 November 1999, there were various summonses before me not only in the probate proceedings but also in HCMP 457 of 1999 and HCMP 299 of 1999. The summons in relation to the probate proceedings was issued by the executors named in the will of Mr ST Lee's mother, being the defendants in HCA 9522 of 1997 and evidence was filed in support. Mr ST Lee was not taken by surprise. He was represented by counsel and I had the benefit of written submissions from both sides. It was therefore not the case that he was in any way deprived of the opportunity to make representations as to why such orders should not have been made. The complaint appears to be that the application should have been made to Yam J who had been dealing with the probate proceedings and that I should not have heard the summons. But this does not explain why, upon notice of the summons, Mr ST Lee did not take steps to have the matter brought before Yam J, whether before or after 16 November.

Order

11. Applying the test stated in Gough and Locabail to the present application, I have no hesitation in dismissing the application. I would respectfully echo the views expressed by Mason J in Re JRL, ex p CJL (1986) 161 CLR 342 cited in the judgment of Mayo JA in the Francis Cheung case at 445 B-C :

"Although it is important that justice must be seen to be done, it is equally important that judicial officers discharge their duty to sit and do not, by acceding too readily to suggestions of appearance of bias, encourage parties to believe that by seeking the disqualification of a judge, they will have their case tried by someone thought to be more likely to decide the case in their favour."

12. As to costs, I make an order nisi in favour of the petitioners with certificate for two counsel.