UNA TRADING FZE v. HONG KONG NUMISMATIC PROMOTION CO LTD AND OTHERS

HCA 1048/2018

[2022] HKCFI 2406

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1048 OF 2018

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BETWEEN

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REASONS FOR DECISION

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1.  On 24 June 2022 following a trial, which ended on 20 June 2022, I handed down my decision in HCA 1048/2018 dismissing the Plaintiff’s action against the 1^st to 3^rd Defendants. I do not need to repeat the details of the claims. In short the Plaintiff was subject to a fraud. Some of the monies obtained as a result of the fraud were paid to the 4^th Defendant in HCA 966/2018 (Mega Wealth, against whom I entered judgment) and the Plaintiff alleged that Mega Wealth paid a substantial amount of the sums it received to 1^st Defendant. The Plaintiff sought to recover those sums in this action HCA 1048/2018.

2.  The Defendants in HCA 1048/2018 did not dispute that the Plaintiff had been defrauded or that the money received by the 1^st Defendant originated from the monies improperly obtained by Mega Wealth from the Plaintiff. The Defendants defended the claim on the basis that the 3^rd Defendant was a bona fide purchaser for value. The Defendants contended that the 3^rd Defendant had sold a number of valuable watches to Mega Wealth, the watches had been delivered to Mega Wealth and that the sale was bona fide. I accepted the Defendants’ case having heard three witnesses involved in the transaction called on its behalf. The Plaintiff did not call any witness with knowledge of the transaction.

3.  The Plaintiff has issued a notice of appeal. It applies for a stay of the judgment pending appeal, because the monies which it alleges the Defendants are liable to pay to it have been paid into court and, it suggests, if the monies are released there is are a real risk that if the appeal is successful the Defendants will have disposed of it and the appeal will be rendered nugatory.

4.  The principles guiding the court in determining an application for a stay pending appeal are not controversial. Lam VP (as he then was) explains them in Ng Yuk Pui Kelly v Estate of Dung Wai Man[1] at [8]:

“The principles governing an application for stay pending appeal are well settled. They were discussed in Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84. Recently, in Bright Gold Ltd v Mega Well Development Ltd [2019] HKCA 1440, [2019] HKEC 4143, the applicable legal principles were summarised at [13] as follows:

(a) The applicant must show an arguable ground of appeal (viz one with reasonable prospect of success) before the discretion to grant stay is engaged, see Star Play, [9(6)]; Sy Chin Mong Stephen v Lo Shing Kin (CACV 45/2013, [2013] HKEC 383, 13 March 2013);

(b) Even if arguable grounds exist, there must be other circumstances justifying the deprivation of the successful party the fruit of the judgment. Sometimes, the applicant may do so by showing the existence of strong ground of appeal. Sometimes, the applicant may do so by showing that the appeal would be rendered nugatory if no stay is granted. In either case, the court must also have regard to the prejudice that could be suffered by the successful party if a stay is granted. In all cases where the discretion is engaged, ultimately it is a balancing process with common sense; and

(c) In assessing the strength of the appeal for the purpose of a stay application, it is impracticable and undesirable to go deeply into the merits: see Star Play, [9(5)]. A broad brush approach is called for. Thus, counsel should not attempt to deploy full arguments on law and facts quoting in extenso all the relevant evidence and transcript as if the application for stay is a platform for a rehearsal of the appeal proper. Generally, with the benefit of written skeleton submissions, the court is able to assess whether an appeal has a high prospect of success without lengthy oral submissions from counsel, MKKWH v RKSH (CACV 197/2012, [2013] HKEC 281, 27 February 2013), [3]. Application for stay of execution should not be a dry run of the appeal, see Ming Hsieh v Xu Zhe [2018] HKCA 390, [2018] HKEC 2041, [9].”

5.  Also relevant are the principles, which demonstrate the reluctance of the Court of Appeal to interfere with factual findings made by a judge after trial. Lord Hoffmann in Biogen Inc v Medeva Plc[2], which was cited by Bokhary PJ in Ting Kwok Keung v Tam Dick Yuen[3], explains:

“41. … I would reinforce that by respectfully adopting what Lord Hoffmann said in Biogen Inc v. Medeva PIc [1997] RPC 1 at p.45 and repeated in Piglowska v. Piglowski at p.1372 D-F:

‘The need for appellate caution in reversing the trial judge’s evaluation of the facts is based upon much more solid grounds than professional courtesy. It is because specific findings of fact, even by the most meticulous judge, are inherently an incomplete statement of the impression which was made upon him by the primary evidence. His expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualification and nuance ... of which time and language do not permit exact expression, but which may play an important part in the judge’s overall evaluation.’”

6.  Godfrey JA in Tang Kwok Ming v Daxprofit Scaffolding Ltd[4]. At pages 663G-664B, referred to the unhelpful practice of “picking holes in the judgment” in the following passage:

“It is important for counsel and solicitors (and for the legal aid authorities) to remember the very limited extent to which this court will interfere in a case in which the appellant seeks to dispute the judge’s findings of fact. If it is necessary to disturb an adverse finding of primary fact, the appellant has to demonstrate either (1) that there is no evidence to support it; or (2) that it is contrary to documentary or other incontrovertible evidence which the judge overlooked. It is not enough to show there is little evidence to support the judge’s finding, or that it was ‘contrary to the weight of the evidence’. The weight of the evidence is a matter for the trial judge. It does not matter how many witnesses say one thing, and how few say the contrary. The judge is perfectly entitled to prefer the evidence of the few to that of the many.

The important consideration for an appellant who seeks to challenge the judge’s findings of fact is the judgment itself. It is for the appellant to show why he says the judge was wrong. The present case is another example of a practice, all too common in Hong Kong, of trying to pick holes in the judgment, and treating these as grounds of appeal. There is simply no point in setting out in 20 numbered paragraphs (as here) every conceivable error of which the appellant accuses the judge.”

7.  The Plaintiff argues that it has strong grounds of appeal, alternatively that it has shown an arguable ground of appeal. The grounds of appeal, as I understand them, centre on the suggestion that I misunderstood the burden of proof and misapplied it and that if I had properly analysed the evidence I would have rejected the Defendants’ witnesses evidence and found for the Plaintiff. The Defendants unsurprisingly oppose the application.

8.  It seems to me that the Plaintiff’s appeal will involve asking the Court of Appeal to undertake its own independent assessment of the evidence and reach a different conclusion to the one that I did having heard the three witnesses called by the Defendants. The appeal will fall squarely into the kind of case, in which, as Lord Hoffmann and Godfrey JA explain, the Court of Appeal will rarely intervene. In my view the case was ultimately straightforward: did I accept the Defendants’ evidence. I did. I do not, therefore, think that the Plaintiff has satisfied the principles I have explained. I will dismiss the application with costs to the Defendants. If I had been minded to grant a stay I would have required, an undertaking that the Plaintiff will pay any loss of interest incurred by the Defendants by virtue of being kept out of the money presently in court. The Defendants agree to a temporary stay, which I will order, to allow the Plaintiff to issue an application for a stay before the Court of Appeal within 14 days supported by an undertaking to the Court that the Plaintiff will compensate the Defendants for any loss of interest caused by them being held out of the money in court pending the determination of the application for a stay before the Court of Appeal.

9.  There is one last matter I will mention. In [16] of Ms Leung’s skeleton argument she makes the complaint that I cited in [12] of my decision authorities dealing with the drawing of inferences that were not cited to me. This is misleading. I expressly referred Ms Leung to the authorities during her closing submissions. The transcript records the following exchange:

“COURT: And you accept that that’s basically an inference? That must be an inference, mustn’t it?

MS LEUNG: That must be an inference that this court is entitled to draw from, for example, the video. For example, the WhatsApp chat record that has been produced between Mr Hung and Mr Sin. Your Lordship will recall that at the very beginning of this transaction, Mr Hung himself had some doubt that – so much so that he had to give Mr Sin, ‘Wait, don’t use Happy Wise account, use Numismatic account instead’. Your Lordship will recall this part of the evidence.

COURT: Right. But you know the authorities I’m referring to, although you haven’t cited them.

MS LEUNG: Yes.

COURT: So I need to make findings of fact which are sufficiently compelling to justify….

MS LEUNG: Such adverse inference to be drawn.

COURT: Yes, all right.

MS LEUNG: My Lord, we haven’t cited that particular case because we felt this is quite trite, and I don’t want to bore the court with unnecessary authorities here.”

10.  In my view the authorities cited in [12] of my decision should have been cited to me by Ms Leung, but were not. Given the exchange that the transcript records the suggestion, or at least implication, that there was something improper in my referring to them is disingenuous. Their relevance is, I would have thought obvious, namely, that the court was effectively being asked to infer that the Defendants in their dealing with Mega Wealth were not acting bona fide, which is a serious allegation and one which required the disciplined approach to inferences explained by the Court of Final Appeal.