SUN LEGEND INVESTMENTS LTD v. HO YUK WAH DAVID AND OTHERS

HCA1212 & 2915/2002

(Consolidated)

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1212 OF 2002

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AND BETWEEN

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(By Counterclaim)

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ACTION NO. 2915 OF 2002

(Transferred from DCCJ NO.1967 OF 2002)

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BETWEEN

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(By Original Action)

AND BETWEEN

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(By Counterclaim)

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(Consolidated by the Order of Master Woolley dated 31 October 2003)

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DECISION

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1.  By summons filed on 12 February 2008, the defendants by Original Action (“the defendants”) in the above consolidated action apply for leave to (i) set down the trial of the consolidated action in the Technology Court; and (2) use the video conferencing facilities (VCF) throughout the trial. The application is opposed by the plaintiffs by Original Action (“the plaintiffs”). At the heart of the contention is whether the 1^st defendant should be permitted to testify and participate in the trial of the consolidated action through the VCF.

The relevant principles

2.   The use of the Technology Court and its facilities, including the VCF, is regulated by Practice Direction 29. In particular, paragraph 4 provides that:

“It is a case management decision within the discretion of the court or tribunal concerned whether any proceedings or parts of any proceedings should be conducted in the Technology Court.” 

3.  Paragraph 5 of Practice Direction 29 further states that:

“In making the decision, the court or tribunal shall take into account the views of all the parties, the availability of the Technology Court, the subject matter of the proceedings or the relevant part of the proceedings and all other material circumstances, including in particular, whether the proposed use of the Technology Court is likely:

(a)  to promote the fair and efficient disposal of the proceedings;

(b)  to save costs, and/or

(c)  materially to delay disposal of the proceedings.”

4.  In Re Chow Kam Fai David [2004]2HKC645, the petitioner applied for an order that the debtor should attend the trial of the Bankruptcy Petition in person and be cross-examined on his affidavits. In opposition, the debtor applied that, if cross-examination were to be granted, he be permitted to be cross-examined by means of VCF. The judge granted the order for cross-examination and refused the application for the use of VCF. The debtor’s appeal to the Court of Appeal was dismissed.  In his judgment (at paras.16-19), Rogers VP held that an order permitting cross-examination via VCF is discretionary. It is a question of judgment in each case as to whether VCF should be used for the taking of evidence and factors such as the nature of the witness’ evidence and questions of costs and convenience are important relevant consideration. The starting point must be that proceedings were conducted in court and that a party wishing to give evidence using VCF should establish a sound reason for it.  The Court of Appeal agreed with the judge that the desire to remain beyond the reach of an arrest warrant issued against the debtor to enforce an examination order was not such a reason.

5.  Pausing here, it is to be noted that when Re Chow Kam Fai David was decided, Practice Direction 29, though already drawn up, had not yet come into force. The Court of Appeal’s view that the use of VCF is a privilege would have to be read against this background. In my view, the description of the use of VCF as a privilege, in the context, means that the usual or normal way is for witness to attend the trial and give evidence in person, and that VCF evidence is an exception to the norm. It should not be read as imposing a high burden on an applicant to justify the use of VCF.

6.  In connection with what constitutes valid reason for the use of VCF, it is relevant to note the cases of Hong Kong & Shanghai Banking Corp v. Fung Wing King (Executor of Last Will and Testament of Tang Siu, Dec’d) [1973-1976] HKC164 and Attorney General v. Lui Lok alias Lui Mo-lok [1982] HKLR 413.  In the first case, the defendant applied to have his witness examined in Canada because the witness would not come to Hong Kong as he was over 70 years old, had a spinal injury and there was an unsatisfied judgment against him in Hong Kong, such that there was a possibility of enforcement proceedings against him. The Registrar granted the application. In dismissing the appeal, Leonard J (as he then was) noted that the reasons given by the witness for refusing to come might not be very good reasons and did him little credit. However, he considered that the witness was a most important witness for the defendant and that the defence case might be fatally injured by his absence. He was therefore of the view that it was necessary for the purposes of justice that the order made by the Registrar should stand. Mr Szeto submitted that this case demonstrated that the threshold to be overcome by an applicant is not a high one when assessing the reason given for the witness not attending the trial in person. I agree. Although the case involved an application to examine a witness abroad, the principles and approach adopted by the Court are equally applicable.

7.  The second case also concerned an application to take evidence abroad. In that case, the respondent was a police officer normally resident in Hong Kong, but left to live in Taiwan to avoid possible criminal prosecution. In defending the civil action brought by the Attorney General to recover monies believed to have been received by the respondent as bribes or secret commissions, the respondent applied for his evidence to be taken in Taiwan on the ground that a warrant of arrest had been issued against him. The judge at first instance granted the application. The Court of Appeal allowed the appeal, holding that the respondent had not made out a valid reason for the application since by his own choice and action, the respondent had deliberately put himself outside the jurisdiction. The Court of Appeal did not accept that it was simply a matter of doing justice between the parties and considered it was against public policy to grant the application in favour of a fugitive from the justice of the court.

8.   This case is to be contrasted with the more recent House of Lord’s decision in Polanski v. Conde Nast Publications Ltd [2005] 1 All ER 945. The claimant in that case was a French citizen who was a fugitive from justice in the United States. He sued the defendant for libel in respect of an article published in the UK. He applied pursuant to CPR Pt 32.2 for leave to give evidence via VCF as he did not wish to come to the UK and risk being extradited. The judge made the order. The Practice Direction supplementing CPR Pt 32 provides that when the use of VCF is being considered, a judgment must be made on costs saving and on whether use of VCF will be likely to be beneficial to the efficient, fair and economic disposal of the litigation. The Court of Appeal allowed the appeal, holding that the general policy of the court should be to discourage litigants from escaping the normal processes of the law rather than facilitating it.

9.  The Court of Appeal’s decision was considered by Rogers VP in Re Chow Kam Fai David, op cit, at para.22. It was observed that two principles emerged: First, VCF evidence was less than ideal, though this was not the first or foremost consideration in the case.  Second, the court should have regard to all the circumstances in deciding whether it was appropriate to make the VCF order specifically to enable a witness to evade the ordinary process of the law under which he might lose his liberty.

10.  Before the House of Lords, the issue was whether the administration of justice would be brought into disrepute if the claimant’s application were allowed. The House of Lords by a majority reversed the decision of the Court of Appeal and held that a fugitive from justice, despite his status, was entitled to invoke the assistance of the court and its procedures in protection of his civil rights. All the members of the House acknowledged that although evidence given in court is often the best and the normal way of giving oral evidence, in view of technological developments, evidence by VCF is an efficient and effective way of giving oral evidence. In addition, they all agreed that as between the claimant and the defendant, the use of VCF could be efficient and fair and contribute to the economic disposal of the litigation and that it would be appropriate to grant the application. It is only on the issue of whether it is compatible with public interest that the unwillingness of a fugitive of justice to come to the UK can in itself constitute a valid reason for allowing his evidence to be given through VCF that Lord Slynn and Lord Carswell differed from the majority.

11.  Mr Li for the plaintiffs submitted that I am bound by the decision in Re Chow Kam Fai David, but not the Polanski case. This must be right as a matter of stare decisis.  However, this does not mean that I should not pay regard to the House of Lord’s decision in the Polanski case.  It is after all a relevant and highly persuasive authority.  Further, insofar as the first of the two principles summarized by Rogers VP in Re Chow Kam Fai David is concerned, namely, VCF evidence is less ideal, that is clearly reversed by the House of Lords: see also the discussions in the Singaporean case of Peters Roger May v. Pinder Lillian Gek Lian [2003] 2 SLR 381 at paras.26 & 27. That said, however, on a proper reading, it would appear that there is no real difference or conflict between the two cases insofar as the principles on the exercise of the court’s discretion.

12.  The principles to be distilled from the several authorities discussed above are:

(1)     Whether to permit the giving of evidence by means of VCF is a decision within the discretion of the court.

(2)     In general, the applicant should provide a valid reason for the use of VCF. The threshold for valid reason is not a high one, however.

(3)     The court should have regard to all the circumstances of the case. Relevant factors include the matters set out in paragraph 5 of Practice Direction 29, the reason why the witness is unable or unwilling to attend the trial in person, the importance of the witness to the applicant’s case and any prejudice to the other party.

(4)     The witness’ unwillingness to testify in person at the trial because he is a fugitive from justice may, depending on the circumstances of the case, be a good and sufficient reason for making a VCF order.

The present application

13.  With these principles in mind, I now turn to the present application. It should be noted at the outset that there are two parts to the  application. The first is to have the evidence of the 1^st defendant given by means of VCF. The second is to enable the 1^st defendant to observe and take part in the entire trial by means of VCF. I shall deal with them in turns.

14.  The application, which is jointly made by all the defendants, is made on the basis that the 1^st defendant will not and/or cannot come to Hong Kong to attend the trial in person. There are several aspects to it. First, it is said that the 1^st defendant has since 2007 left Hong Kong to settle in Beijing and that he has ceased practising as a solicitor in Hong Kong and sold his interests in the 4^th defendant.  Second, it is said that the 1^st defendant is involved in a number of civil litigation in Hong Kong and is a judgment debtor in an action commenced in 1999. It is not expected the 1^st defendant would return to Hong Kong given that he would be likely to subject to vigorous enforcement actions against him. Third, it is said that he had a spine injury as a result of a traffic accident that happened in Beijing in September 2007 and that he is otherwise in ill health. He is medically advised not to travel to Hong Kong to attend the trial.

The personal circumstances of the 1^st defendant

15.  Mr Li criticised the reasons given as vague and unsatisfactory. I agree that the evidence, particularly on the second aspect, is generalised and lacking in details. Evidently, the 1^st defendant is less than forthcoming in relating the litigation he is embroiled in or the judgment(s) made against him. That said, Mr Li accepted that, to his knowledge, the 1^st defendant is a losing party in a substantial civil claim commenced in the Court of First Instance that went all the way to the Court of Final Appeal. Notwithstanding the lack of particulars as to the physical and financial pressure to which the 1^st defendant is said to be subject, I do not feel able to say that the 2^nd defendant’s affidavit evidence that the 1^st defendant had decided not to come back to Hong Kong to testify at the trial of the consolidated action should not be believed. While the reasons for the 1^st defendant’s decision not to return to Hong Kong, as observed by Leonard J in the Fung Wing King case, do him little credit, it cannot be disregarded as being completely unreasonable or unacceptable. It is also relevant to note that the enforcement actions that he is trying to avoid do not relate to the claims or counterclaims in the consolidated actions. I do not consider this is a case that involves consideration of public interest or public policy, as in the Polanski case or Lui Lok case. 

16.  As to the medical reasons, I share Mr Li’s reservation on the medical opinion that the 1^st defendant is medically unfit to withstand the pressure of trial. Whether he is testifying in person or via VCF, the 1^st defendant has to bear the pressure brought about by the trial. The point is therefore irrelevant. However, the medical reports, notably the one dated 29 November 2007, had given an account of the spine injury and an explanation on the advice against travelling.  In the absence of contrary expert evidence, it is not open to the court to reject or place no weight on the diagnoses and opinions expressed in the reports.

The importance of the 1^st defendant’s evidence

17.  Another main plank in the defendants’ application is that the 1^st defendant is their prime and only witness. The plaintiffs do not accept this proposition.

18.  Simply put, the consolidated actions concern two land development projects in Dongguan and Beijing respectively, in which the 4^th defendant was retained as the solicitors. The plaintiffs’ claims are for the return of the sale proceeds of these projects held by the 4^th defendant. It is the plaintiffs’ case that the 4^th defendant was a partnership carried on by the 1^st to 3^rd defendants. By way of defence, the defendants seek to set-off their legal fees and disbursements against the sale proceeds received by the 4^th defendant for the projects. The defendants further seek to counterclaim for their legal fees and disbursements.   

19.  The basis of the defendants’ case is an agreement said to be made between the 1^st defendant and a Mr Peter Cheng of the 2^nd defendant by Counterclaim. The agreement is said to be made orally after a number of oral discussions between the 1^st defendant and Mr Cheng and evidenced in writing. This is denied by the plaintiffs.

20.  On an analysis of the claims and defence and counterclaim and reading of the witness statements, there can be little doubt that the 1^st defendant is a key witness and his evidence is of critical importance to the defence case.  Mr Li had sought to argue that the defence and counterclaim is shown by contemporaneous documents to be tenuous and devoid of merits. I do not consider it is appropriate at this interlocutory stage and in the context of an application to use VCF to embark upon an assessment of the strengths and weaknesses of the claims and defence and counterclaim. Among other matters, the plaintiffs have not moved to strike out the defence and counterclaim. The court should therefore proceed on the basis that the defence and counterclaim, hence the assertion of an oral agreement, is a relevant and arguable issue.

21.   The plaintiffs also argued that the 2^nd and/or the 3^rd defendant would have been involved in the projects and had knowledge of the terms of the retainer.  Even then, it is quite clear from the 1^st defendant’s witness statements that neither the 2^nd nor 3^rd defendant is privy to the discussions and agreement on which the defence case rests.  It is also a fact that neither the 2^nd nor the 3^rd defendant had made witness statements and that they are not scheduled as witnesses. The witness statements of the 1^st defendant also show that his evidence cover a wide spectrum of matters, including the background facts and the dealings with the former solicitors, Messrs Baker & McKenzie, of which the 1^st defendant was a partner, as well as the practice in the legal profession relating to charging of fees for land development projects in Hong Kong and the Mainland at the relevant time. 

22.  The long and short of it is that the 1^st defendant’s evidence is both relevant and crucial. I accept there will be serious prejudice to the defence case if it were excluded from the trial. As argued by Mr Szeto, the court must also have regard to the interests of the other defendants and their entitlement to a fair trial. When considering the fair and efficient disposal of the proceedings, the need to ensure a fair trial between the parties is a factor that weighs heavily in favour of the application.

Prejudice to the plaintiffs

23.  By contrast, the plaintiffs have not been able to point out any substantial prejudice if the 1^st defendant were permitted to testify by means of VCF. While I acknowledge that the conventional manner of giving oral evidence in court carries with it the benefit of solemnity of court atmosphere, which is important to the administration of justice, the point cannot be over emphasized, given the developments in technology and the increasing use of VCF in judicial proceedings.

24.  As to the suggestion that it is more desirable for witnesses whose evidence and credibility is heavily in issue to testify in court so that their demeanour can be observed, it is apt to note that it is nowadays not unusual for vulnerable witnesses in criminal proceedings to testify by means of the VCF.  In the majority of these cases, the evidence of the vulnerable witnesses and their credibility is critical to the prosecution case and is hotly disputed by the accused. Yet, the court has not recognized this as a compelling reason against the use of VCF. On the other hand, in the context of civil litigation, it is rare that the demeanour of a witness is determinative of the outcome. In this case, Mr Li had submitted, in connection with the merits of the defence case, that there are many contemporaneous documents and objective circumstances that will cast doubt on the veracity of the 1^st defendant’s assertions. That being the case, there should be little need to resort to assessing the demeanour of the 1^st defendant when he gave evidence.  

25.  Further with appropriate directions, the concerns over the control of  the proceedings and the monitoring of the 1^st defendant during the period when he is testifying can be taken care of.  In short, as between the parties and in the interest of fairness and justice, the discretion should be exercised in favour of allowing the 1^st defendant to give testify by means of the VCF.

Other matters

26.  The application for the 1^st defendant to observe and participate in the entire trial through the VCF, however, stands in a different light. The defendants have not identified any compelling reason why the 1^st defendant should be permitted to observe the proceedings by means of the VCF.  Given the competing demands for the use of the Technology Court and the costs involved, convenience or the desire of the party cannot by itself be sufficient reason for allowing an entire trial to be conducted through the use of VCF.  There are other alternatives, such as live notes, if the 1^st defendant wishes to follow the proceedings while he is not present in court.

27.  Having regard to the fact that the trial of the consolidated action is estimated to last 14 days, and that directions have to be given in connection with the use of VCF, it is beneficial to assign a trial judge to the case for effective case management.  Finally, as the time for setting down the consolidated action for trial had already lapsed, I will grant a further extension of 42 days.

Conclusion

28.  Accordingly, on the defendants’ summons, I make the following orders:

(1)     The evidence of the 1^st defendant by Original Action be received by means of video conferencing facilities. For this purpose, the Technology Court shall be used for part of the trial.

(2)     The time for setting down the consolidated action for trial is extended for 42 days from the date of the handing down of this Decision.

(3)     A trial judge is to be assigned to the consolidated action for effective case management. The listing officer is to notify the parties of the judge so assigned.

29.  As to the costs of the application, Mr Szeto asked that costs be in the cause, but that the costs of the hearing be paid by the plaintiffs to the defendants. Although the application is essentially seeking pre-trial direction, given that the plaintiffs have made a substantial challenge to the application but failed in their opposition, the normal rule of costs follow event should apply to the costs of the hearing. I therefore order that the costs of the application be in the cause, save that the costs of the hearing on 8 April 2008 be paid by the plaintiffs by Original Action to the defendants by Original Action in any event, to be taxed if not agreed.