CRANE WORLD ASIA PTE LTD v. HOTRADE ENGINEERING LTD

HCA 109/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 109 OF 2014

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D E C I S I O N
(Leave to Appeal)

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Introduction

1.  This is an application by P for leave to appeal against a decision handed down by this court on 20 May 2016 (“Decision”).

2.  For ease of reference, in the present decision, I shall adopt those abbreviations in the Decision, unless otherwise indicated.

3.  D made the application to strike out the Objected Contents in the 2^nd witness statement of one of P’s witnesses, namely Yau under Order 38 rule 2A of the Rules of the High Court (RHC) and/or inherent jurisdiction of the court.

4.  The overriding features of written statements of the witness are that they are intended for use at the trial itself and that they relate to issues of fact to be adduced at the trial[1].  Order 38 rule 2A (8) states that nothing in the rule shall make admissible evidence which is otherwise inadmissible.  D’s application was on the basis that Without Prejudice Privilege or WPP, applied to the Objected Contents.

5.  In the Decision, I ordered that the Objected Contents be struck out on the following grounds:

(i)    WPP, or Without Prejudice Privilege, applied to the Objected Contents, as the proposals made by D in the 26.11.15 Letter and also the 22.12.15 Letter were part and parcel of a genuine or bona fide attempt to settle the dispute between Yau and D[2];

(ii)   The 26.11.15 Letter did not amount to an attempt to pervert the course of justice or contempt of court, nor was it unlawful. This court was not satisfied that there was a clear case of unambiguous impropriety or any other abuse for the veil of the WPP to the 3 Letters and the Objected Contents to be uplifted[3].

6.  This court also considered that the Objected Contents had no relevance at the trial of the 3 Actions, other than prejudicial effect on D’s case.

7.  P now applies for leave to appeal to the Court of Appeal primarily against this court’s decision that there was no clear case of unambiguous impropriety. 

P’s grounds of appeal

8.  There are 4 grounds of appeal in the draft notice of appeal (“Draft Notice”), the 1^st Ground being the main ground.

The 1^st Ground

9.  The 1^st Ground is that this court’s findings in paragraphs 67 to 72 are wrong as a matter of principle, in that the effect of this court’s findings is that the parties can in genuinely trying to settle one case, freely and justifiably prevent or prohibit (as a term of settlement) a party to that settlement from giving evidence (or giving a witness statement) in another case.

10.  I would first of all point out that as P was relying on the exception from WPP, the burden fell on P to satisfy this court that the exclusion of the Objected Contents would act as “a cloak for perjury, blackmail or other unambiguous impropriety”, bearing in mind that the exception should be applied only in the clearest cases of abuse of a privileged occasion[4].

11.  At the hearing on 12 May 2016 (“Hearing”), P’s then Counsel Mr Chan submitted that the condition in the 1^st Additional Matter in the 26.11.15 Letter, namely that Yau shall not prepare a witness statement, unambiguously amounted to an attempt to prevent Yau from preparing a witness statement for P and was clearly unlawful.  His submission was based on 5 main grounds.

12.  To summarise, it was my view in paragraphs 62-72 of the Decision, and based on the facts of this case, that (a) the 26.11.15 Letter was not a clear attempt to interfere with P’s proper and reasonable attempt to elicit and rely on Yau’s evidence; and that the purpose of the letter was to propose settlement terms to resolve all outstanding matters/disputes between D and Yau including the action of HCA 655; (b) Yau was not “prohibited” from providing a witness statement to P in the 3 Actions; (c) the settlement terms proposed in the 26.11.15 Letter did not constitute  “financial incentive”, that is any “bribe” or “improper pressure” as alleged by P; (d) the 26.11.15 Letter did not have the tendency to prevent Yau from making a free and voluntary choice as to whether to give evidence or what evidence to give; (e) the object of the approach by D to Yau was not unlawful. 

13.  Based on the above , I found that P had not satisfied this court that there was a clear and blatant attempt to pervert the course of justice, or that there was a contempt of court, and concluded that P did not satisfy this court that there was a clear case of any unambiguous impropriety or any other abuse.  

14.  Mr McCoy SC has referred to what Ribeiro PJ said in the R v Wong Chi Wai case on the court’s duty in the administration of justice[5], and he also referred to the passage from Harmony Shipping case which was quoted by this court in paragraph 57 of the Decision.

15.  However, as pointed out by Mr Khaw and as seen from the two Court of Appeal cases, the act of approaching a witness may or may not have a tendency to pervert the course of justice.  As Clarke J said in Versloot, which has been set out in paragraph 60 of the Decision, whether there has been improper interference with a witness or the evidence-gathering process is fact sensitive, and it is not possible to be prescriptive as to what circumstances will, and what circumstances will not, constitute improper interference.

16.  It is not my ruling, nor the effect of my findings, that a genuine attempt to settle an extant dispute per se would exclude the case of “unambiguous impropriety”.  One has to consider the facts and circumstances of each case, and it is based on the particular facts and circumstances of the present case that I have come to the conclusions I did.   I agree with Mr McCoy that this was not an exercise of discretion as set out initially in D’s skeleton arguments.  However, Mr McCoy has not convinced me that as a matter of legal principle, I was wrong in coming to my conclusions.

17.  Mr McCoy has also submitted that there is general public interest involved, in that the Decision may be taken as a sign of encouragement that a witness may be prevented from giving evidence under the cloak of without prejudice proposals for settlement.  In my view, this submission is too far fetched.

The 2^nd Ground

18.  It was submitted under the 2^nd Ground that this court had erred in finding that the 26.11.15 Letter did not have the tendency to interfere with the administration of justice and/or had no real risk of interfering with the due administration of justice.

19.  As pointed out by Mr Khaw, the 2^nd Ground is essentially the same as the 1^st Ground.  In any event, I have set out my reasons in the Decision for coming to the view that the 26.11.15 letter did not have the tendency to interfere with the administration of justice and/or had no real risk of interfering with the due administration of justice.  They do not need to be repeated here.

3^rd Ground

20.  It was never disputed that Yau being a mere shareholder of a limited company could not have been responsible for any of D’s losses, as a shareholder, in the event of any adverse judgment and/or costs orders against D in the 3 Actions.  However, D in HCA 665 is suing Yau, personally, for damages alleging that Yau, in his capacity as D’s director had breached his fiduciary duty and conspired and colluded with the other defendants in HCA 655 in carrying out a series of unlawful and damaging acts which had injured the economic interest of D, for which Yau may be personally liable if D succeeds in its claims.  Thus, I do not see why D could not impose a condition in the settlement proposals in the 26.11.15 Letter that Yau was to be 43.75% personally liable for any adverse judgment and/or costs against D in the 3 Actions.  As I have said whether the proposals would be attractive to Yau would be another matter.

21.  In fact, as I have said in the Decision, since D’s proposals came with the condition that Yau would have to be personally responsible for 43.75% of any adverse judgment and/or costs in the 3 Actions, I could not see how the proposals would amount to “financial incentive” in terms of a “bribery”, or “improper pressure”, as submitted by Mr Chan at the Hearing.

4^th Ground

22.  Under this ground, the complaint was in relation to this court’s finding on the relevancy of the Objected Contents in the 3 Actions and that relevance was not a ground relied upon in D’s summons for striking out.

23.  However, as pointed out by Mr Khaw, relevancy was raised by Mr Chan in his skeleton arguments at the Hearing, and it was Mr Chan’s submissions then that the Objected Contents were relevant towards credibility and that the attempt to deprive the trial court of Yau’s testimony could portray as a view taken by D’s witnesses themselves of the strength of Yau’s evidence against D’s case.  I maintain that I do not see any relevance as submitted.

Conclusion

24.  Having considered all the above, this court is not satisfied that the intended appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard.  I decline to grant P leave to appeal.  

25.  Costs of this leave application be to D’s in any event, with certificate for two Counsel.  As D has applied to vary the costs order nisi made in the Decision and to seek, among other things, that costs be summarily assessed and paid forthwith instead of being taxed, my ruling on that will include the costs of this application.