PC ENTERPRISES (HK) LTD AND ANOTHER v. CHAN WAI CHING

CAMP 592/2021

[2022] HKCA 1714

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 592 OF 2021

(ON AN INTENDED APPEAL FROM DCCJ NO. 375 OF 2019)

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D E C I S I O N

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Hon Cheung JA (giving Decision of the Court) :

I.  Factual background

1.  This is a renewed application by the defendant for leave to appeal against the judgment (‘the Judgement’) of District Court Judge KC Chan (‘the Judge’) of 10 August 2021 who gave judgment in favour of the plaintiffs. The Judge refused to grant leave to appeal to the defendant on 13 December 2021 (‘the Leave Decision’).

2.  The material facts leading to this appeal were comprehensively set out at [3]‑[32] of the Judgment and [4]‑[5] of the Leave Decision.

3.  Briefly stated, the plaintiffs claimed that the defendant, an accountant employed by the 1^st plaintiff and essentially employed as the person in charge of the Finance Department, had misappropriated funds belonging to the 1^st plaintiff and its subsidiary the 2^nd plaintiff, in the course of about nine months immediately preceding the defendant’s resignation in January 2014. The plaintiffs claimed that the defendant did so through 13 online transfers from the plaintiffs’ bank accounts into four bank accounts of the defendant.

4.  The plaintiffs’ case was that these 13 transactions were unauthorized and were not used to discharge liabilities of the plaintiffs. The defendant’s case was that these transactions were all authorized and were used to pay various liabilities of the plaintiffs. The defendant advanced her specific case that in respect of these alleged liabilities, one of which was that she had made two substantial loans to the 1^st plaintiff and eight of the transfers were for the repayments of these two loans. The other five transactions were for partial repayment of bonus, unpaid salary and back pay due to the defendant and reimbursement of expenses paid by the defendant on behalf of the plaintiffs.

5.  Following a nine-day trial, the Judge in an 83‑page judgment found in favour of the plaintiffs, and held that the defendant was liable for all 13 transactions. The Judge described the defendant as a dishonest witness. The defendant was ordered to pay the 1^st plaintiff $386,099.10 and the 2^nd plaintiff $595,641 with interest, and costs were awarded to the plaintiffs on an indemnity basis. In respect of $386,099.10, the Judge had taken into account that Transactions 3 and 8 included overpayment of $186,500.

II.  The defendant’s complaint

6.  By her summons dated 2 September 2021, the defendant who was then legally represented, applied for leave to appeal against the Judgment.

7.  In the draft Notice of Appeal, the defendant raised two grounds of proposed appeal :

‘ (a) The Learned Judge erred in law by intervening excessively in the cross-examination of the Defendant and the Defendant’s witnesses during the trial so as to render the trial unfair. What the judge had done throughout the trial was much more than an attempt to clarify issues that might appear unclear. The learned Judge appeared to assist the 1^st and 2^nd plaintiffs in framing their case against the Defendant [sic] failed to maintain an independence on [sic] neutral role throughout the trial.

(b) By doing what he did, the learned Judge had created substantial bias and impaired his judgment and may for that reason [sic] and may render the trial unfair. By interrogating the defendant and the defendant’s witnesses the way he did, the learned Judge had arrogated to himself a quasi-inquisitorial role contrary to the Common Law adversarial system.’

8.  The defendant specifically complained of three main situations at the trial :

1)  The Judge ignored the defendant’s comment that the plaintiffs’ main witness(es) had made baseless false statements. The Judge mocked the defendant by saying that she was assuming the role of her lawyer when she tried to clarify matters. The Judge asked her lawyer to stop her from speaking, thus obstructing her pursuit of justice by choosing to narrate the events in her way.

2)  The Judge had intervened in the examination of the defendant and her other witnesses with many questions, and had controlled the direction of the questions and answers.

3)  The Judge had helped the plaintiffs’ witnesses by stopping the defendant’s counsel from pursuing his line(s) of questions or by interjecting with his own questions.

III.  The Judge’s reason not to grant leave

9.  The Judge held that the defendant’s proposed grounds of appeal had no reasonable prospect of success. The Judge specifically addressed the situations by which the defendant complained of excessive interventions by him :

1)  He found it necessary in the course of the defendant’s evidence to explain and often to follow up with reminders of her duty and role as a witness, which was to answer questions and not make arguments or comments as she often did. He found it necessary to hold the defendant to the role of a witness to only answer questions put to her in order to properly manage the trial, given the defendant made arguments and referred to additional events and matters.

2)  He found the defendant to be very evasive when giving evidence, and often mixed up the time, place, people or events, unless one clarified with her or pinned her down. He formed the distinct impression that in some of the instances, the defendant purposefully did so to confuse. Thus, he found the need to clarify matters in the middle of the defendant’s evidence so as to clearly understand which part of her answers was factual evidence, and to avoid confusion or potential further confusions.

3)  He was unable to address the third situation that he had helped the plaintiffs’ witnesses by stopping the defendant’s counsel from pursuing his questions or by interjecting with his own questions without any specific instances or examples given by her.

10.  The defendant also complained about the Judge’s reliance on the fact that the defendant had not responded at all to the allegations made by the plaintiffs’ witness Cheung in his witness statement, and alleged bias of the Judge as the plaintiffs’ counsel and the Judge did not ask her to respond to those matters when she was given evidence, and thus she did not have an opportunity to respond. The Judge held this to be clearly unmeritorious because the defendant, who was legally represented, had ample opportunity to respond from the time Cheung’s witness statement was exchanged to the time of trial, or even at evidence-in-chief, but she had failed to do so.

11.  The Judge therefore formed the clear view that an informed bystander, having appraised all the above-mentioned matters, and listening to the case, would not say that the defendant had not had a fair trial. Given he found no reasonable prospect of success to the defendant’s proposed grounds of appeal, leave to appeal was refused.

IV)  Grounds for the renewed application

12.  In the defendant’s renewed application for leave to appeal before this Court, the defendant sought to rely on seven grounds of appeal in the proposed Notice of Appeal annexed to the summons for leave to appeal filed on 24 December 2021, namely :

1)  Ultra vires (‘Ground 1’);

2)  Illegality / Unconstitutionality (‘Ground 2’);

3)  Inordinate Delay (‘Ground 3’);

4)  Material error of fact (‘Ground 4’);

5)  Inappropriate objective – pre-conclusions, abuse of power, inappropriate motive (‘Ground 5’);

6)  Procedural unfairness, breach of natural justice (‘Ground 6’); and

7)  Bias (‘Ground 7’).

13.  Despite the lengthening of the proposed grounds, the gist of the defendant’s complaint is that she had not received a fair trial due to the bias of the Judge, specifically the Judge had assumed an inquisitorial role by excessive intervention throughout her cross‑examination and her witness in the trial process. The Judge had raised questions which were beyond clarification, and had been practically cross‑examining the defendant, thus departed from the impartial role as a trial judge, indicating bias against the defendant.

V.  Legal principle

14.  Under section 63A(2) of the District Court Ordinance (Cap. 336), leave to appeal shall not be granted unless the Court is satisfied that the intended appeal has a reasonable prospect of success; or there is some other reason in the interest of justice that the matter should be heard by the appellate court.

15.  Reasonable prospect involves the notion that the prospects of succeeding must be ‘reasonable’ and therefore more than ‘fanciful’, without having to be ‘probable’. Another way of describing whether the intended appeal has a reasonable prospect of success is whether it is reasonably arguable.

16.  The Court of Appeal will not interfere with 1) the finding of fact by the trial judge unless it can be shown that such finding is plainly wrong and 2) the exercise of a judge’s discretion in the award of costs unless it was shown that he failed to exercise the discretion, or exercised it upon a false principle, or did not exercise it judicially. Put it in another way, the exercise of discretion must be plainly wrong before the Court of Appeal will intervene.

17.  The Court of Final Appeal in Chan Kam Keung v HKSAR (2008) 6 HKC 437 at [11] approved of the approach in R v Yeung Mau Lam [1991] 2 HKLR 468 which at p473C‑E, summarizes five propositions established by authorities as regards to excessive interference by the trial judge and bias :

‘ (1) Interruptions by their number alone are not decisive;

(2) The quantity and quality of the interruptions must be looked at as factors which react upon each other;

(3) Actual bias on the part of the judge need not be established, it being enough if by his conduct he would be thought by the informed bystander to be taking over the conduct of the case from the prosecution;

(4) Where a judge sits without a jury, the appeal court must ask itself whether a person listening to the case would justifiably have had the impression that the judge had by his questions entered the arena;

(5) The ultimate question for the consideration of an appellate court is whether the judge’s conduct was such that it would have caused the informed bystander listening to the case to say that the defendant had not had a fair trial.’ (emphasis added)

VI.  Our view

18.  Due to the serious allegation by the defendant that she did not receive a fair trial by reason of the bias of the Judge who had excessively intervened, this Court had reviewed the transcript of her evidence which covered over 150 pages. The overall impression is that the Judge was well aware of the issues of the case specifically on the defendant’s case on the 13 transactions. There is no doubt that he had taken a proactive approach during the defendant’s cross‑examination which covered a range of topics such as whether she had the possession of the two bank tokens of the plaintiffs which was used to execute the unauthorized transactions; the lack of proper documentation of the alleged loans made in cash by the defendant to Pauline Taylor of the plaintiffs and repayment of the alleged loans to the defendant; misdescription of the nature of the unauthorized transactions from the plaintiffs’ accounts to the defendant, such as the alleged repayments were recorded in the ledgers as payment to payees other than the defendant for apparently legitimate purposes mostly unconnected with the defendant; the failure by the defendant to disclose to the directors that the alleged loans to Pauline Taylor had not only found their way to the plaintiffs’ account but the plaintiffs’ fund had actually been used for the alleged repayment of the loans and other topics relevant to the defendant’s defence. Some of the questions that the Judge asked did give the impression that he was cross‑examining the defendant as the Judge himself recognized. But his questioning was also brought about by the way the defendant answered questions that were asked of her. The Judge observed that she was trying to introduce new matters in her answers in order to confuse the issue instead of answering the questions directly. A trial judge is tasked with the management of the trial and this was what the Judge did. Overall, the impression we have is that the Judge was trying to understand the defendant’s case on the 13 transactions, which on the evidence was mostly inherently improbable, and he sought answers from the defendant on her evidence which required clarification. The Judge did allow her to clarify her answers and her counsel had re‑examined her on matters arising that needed clarification. The intervention did not result or had created a real risk that the defendant was not able to present her case fully or in a coherent way which may affect the assessment of her evidence. We are unable to say that an objective bystander with knowledge of the context of the case, would come to the view that the approach of the Judge was biased or had precluded the defendant from having a fair trial by his intervention during her evidence.

19.  We have also reviewed the transcript of the defendant’s witness Cherry Chan. Again what the Judge asked of this witness was to clarify aspects of her evidence that was confusing. The Judge had also interjected on matters that he considered were not appropriately put to her by the plaintiffs’ counsel.

20.  Having said this, the better approach in our view is for the Judge to let the plaintiffs’ counsel deal with the deficiency of the defendant’s case in the cross‑examination and to wait until the end before seeking clarification from the defendant. No doubt a judge will be required to interject from time to time but unduly lengthy and too frequent interjections will interrupt the flow of a witness’ evidence, it may risk the danger of being seen as the judge entering the arena and form the basis of complaint as in the present case.

21.  The defendant complained that the Judge was partial towards the plaintiffs and had assisted one of their witnesses Pauline Taylor in scripting her evidence. The transcript of her evidence was over 180 pages and the defendant had not identified any specific part of the transcript which supported this allegation.

22.  The defendant also complained about the different treatment the Judge gave in assessing her evidence and the plaintiffs’ evidence. In our view, it is within the province of a trial judge to decide whether the evidence given by a witness and which part of it is to be accepted or not. The Judge had explained why he accepted the plaintiffs’ case. We do not detect any bias by the Judge on his treatment of the plaintiffs or on his assessment of evidence given by the plaintiffs and the defendant. Overall, the complaint of bias and unfair trial is not reasonably arguable.

23.  The defendant complained of inordinate delay in that the trial was originally estimated to last seven days but it ended up lasting nine days because of the Judge’s excessive intervention. The case contained voluminous documents of ten lever‑arched files of trial bundle. We had already dealt with the issue of excessive intervention. We do not consider an overrun of two days has bearing on the issue of fair trial.

24.  The defendant also complained about other matters which we do not consider to be reasonably arguable on appeal. The judgment was based on finding of fact by the Judge and there was ample evidence in support of the finding that the defendant had carried out the unauthorized transactions. It is not reasonably arguable that the finding is plainly wrong. The award of indemnity costs below is appropriate considering the circumstances of the case.

V.  Conclusion

25.  Accordingly, this application is dismissed.

26.  Since this application is totally unmeritorious, we order that no party may request for an oral hearing to reconsider the decision pursuant to Order 59, rule 2A(8) of the Rules of High Court.

VI.  Costs

27.  There will be an order nisi that the defendant do pay the plaintiffs their costs of this leave application with certificate for counsel, to be taxed if not agreed on an indemnity basis.

28.  The costs order will be made absolute after 14 days unless either party makes an application to vary within that time.

29.  The plaintiffs’ costs for this application will be summarily assessed. The defendant may file a list of objections (if any) limited to three pages within 14 days to the plaintiffs’ statement of costs dated 11 July 2022.