ATLAS PLASTIC PRODUCTS (HK) CO LTD v. ATLAS DEVELOPMENT LTD

DCCJ 99/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION CASE NO 99 OF 2013

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DECISION

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1.  This is the defendant’s application for leave to appeal.

2.  The background and facts of this case are summarized in my judgment dated 18 February 2015 (“the Judgment”) at paragraphs 7 – 18 of which I shall not repeat.

THE LAW

3.  Section 63A (2) of the District Court Ordinance states:-

“(2) Leave to appeal shall not be granted unless the judge, the master or the Court of Appeal hearing the application for leave is satisfied that –

(a) the appeal has a reasonable prospect of success; or

(b) there is some other reason in the interests of justice why the appeal should be heard.”

4.  In Ho Yuen Ki Winnie v Ho Hung Sun Stanley, HCMP 1009/2009, (unrep), Le Pichon JA stated at paragraph 16 of the judgment:-

“For leave to be granted, this court must be satisfied that the appeal has ‘reasonable prospects of success’. Merely showing that the appeal is ‘arguable’ and ‘not fanciful’ would not be sufficient. In my view, ‘reasonable prospects’ requires something more and, in that regard, some assistance may be derived from the test applied when setting aside a default judgment.”

5.  In KNM v HTF, HCMP 288/2011, (unrep), Hartmann JJA and Fok JJA stated at paragraph 9:-

“The relevant test of whether an appeal has a reasonable prospect of success under s 63A, is whether the applicant for leave can show that he has an arguable case with reasonable chances of success on appeal. A reasonable prospect of success therefore means an appeal with prospects that are more than ‘fanciful’ but which do not need to be shown to be ‘probable”.

6.  Even if the court finds there to be reasonable prospects of success, it still retains discretion as to whether to grant leave: see Hong Kong Civil Procedure 2016, Vol. 1, paragraph 59/2A/4.

7.  In considering an appeal on findings of fact, the Court of Final Appeal in the case of Ting Kwok Keung v Tam Dick Yuen & others (2002) 5 HKCFAR 336 has reiterated the following passage from the case of Piglowska v Piglowska [1999] 1 WLR 136 at page 1372D – 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.”

GROUNDS OF APPEAL

8.  Defence counsel has raised 6 grounds of appeal.  I shall deal with them in turn.

Err in making the admissibility of extrinsic evidence dependent on findings of conditional delivery and total failure of consideration. (Paragraphs 1 – 2 of the draft grounds of appeal)

9.  The relevant passages in Chitty on Contracts. General Principles, 31^st Ed, reads:-

Paragraph 12-097

“It cannot therefore be asserted that the mere production of a written agreement however complete it may look, will as a matter of law render inadmissible evidence of other terms no included expressly or by reference in the document: “The court is entitled to look at and should look at all the evidence from start to finish in order to see what the bargain was that was struck between the parties.”

Paragraph 12-098

“Scope of the rule: It follows that the scope of the parole evidence rule is much narrower than at first sight appears. It has no application until it is first determined that the terms of the parties’ agreement are wholly contained in the written document. The rule: “only applies where the parties to an agreement reduce it to writing, and agree or intend that the writing shall be their agreement.”

Whether the parties did so agree or intend is a matter to be decided by the court upon consideration of all the evidence relevant to this issue. It is therefore always open to a party to adduce extrinsic evidence to prove that the document is not a complete record of the contract. If, on that evidence, the court finds that terms additional to those in the document were agreed and intended by the parties to form part of the contract, then the court will have found that the contract consists of partly of the terms contained in the document and partly of the terms agreed outside of it. The parole evidence rule will not apply. If, on the other hand, the court finds that the document is a complete record of the contract, then it will reject the evidence of those additional terms. . . . No doubt, in practice, where a document is produced appears to be a complete contract, a party will experience considerable difficulty in proving, on a balance of probabilities, that further contractual terms were agreed outside the written terms of the document. But extrinsic evidence of such terms is not ipso facto excluded.” (Own emphasis added)

10.  The whole basis of the defendant’s case is that the Cheque was delivered subject to the agreement to the pre-conditions set out in the Letter of Confirmation (see paragraph 5 of the Defence).   

11.  In order to determine whether the parole evidence rule is applicable, the court cannot consider the applicability of the rule in vacuum or by merely looking at the Cheque itself.  As per the passages cited from Chitty on Contracts, the court must first decide whether the parties agreed the delivery of the Cheque is subject to the acceptance of the pre-conditions set out in the Letter of Confirmation which are not apparent on the face of the Cheque.  This is the defence of conditional delivery as framed by the defendant. If there was no such agreement, that is, if the delivery of the Cheque was unconditional, then the Letter of Confirmation cannot be admitted by operation of the parole evidence rule.

12.  In such circumstances, I fail to see any reasonable prospects of success on this ground of appeal.

Insufficient weight given to the Letter of Confirmation. (Paragraphs 3 – 6 of the draft grounds of appeal)

13.  Firstly, with due respect, I believe defence counsel has misunderstood the Judgment.

14.  In paragraphs 37 – 43 of the Judgment, I dealt with Mr Ng’s assertion that the Letter of Confirmation had to be signed before it was considered accepted.  I did not suggest nor did I find the Letter of Confirmation had to be signed before it could be accepted.  It was Mr Ng who adamantly asserted Mr Yeung had to sign the Letter of Confirmation before it was considered accepted.  As stated in paragraph 43 of the Judgment, I did not accept the signing of the Letter of Confirmation was determinative of whether there was a binding agreement (sale and purchase agreement of Shenzhen Atlas’ equipment) before the Cheque was delivered.

15.  Having rejected Mr Ng’s contention, I went on to consider whether there was a conclusive and binding agreement regarding the sale of Shenzhen Atlas’ equipment before the Cheque was delivered, irrespective of whether or not the Letter of Confirmation was signed.  Hence paragraphs 44 – 56 of the Judgment deals with Mr Ng’s assertions relating to whether there was a binding agreement between the parties in respect of the sale of the Shenzhen Atlas’ equipment.  In such circumstances, I fail to see any reasonable prospects of success in the submissions at paragraph 4(3), (4), (6) and (9) of the draft grounds of appeal.

16.  Secondly, in respect of whether the specific mode of acceptance of the terms in the Letter of Confirmation had to be pleaded, I disagree with defence counsel’s submission.  It was specifically asserted by Mr Ng that Mr Yeung had to sign the Letter of Confirmation before he could accept the Cheque.  In other words, there was a specific mode of acceptance that was required by the defendant.  This is a material fact that should have been pleaded.  In any event, the failure to plead this matter is only one of the matters I considered in rejecting Mr Ng’s contention in this regard.

17.  Thirdly, counsel submitted I have misconstrued the Letter of Confirmation “as a mere request to the Plaintiff to sign to acknowledge receipt of fund.”  At paragraph 39 of the Judgment, I have stated there was nothing on the face of the Letter of Confirmation which requires acceptance of the conditions by way signature.  It is in this context I have indicated the Letter of Confirmation “only asks the plaintiff to sign to acknowledge receipt of funds”.  The Letter of Confirmation itself states:  “以上，請簽字確認收款並寄回正本一份。”

18.  I fail to see any reasonable prospects of success on paragraph 4 of the draft grounds of appeal.

19.  As for the submissions set out at paragraph 6 of the draft grounds of appeal, I have dealt with the 3 listed emails in the Judgment :-

(1) At paragraphs 62 and 64 of the Judgment, I made reference and considered the email dated 19 May 2012.

(2) At paragraphs 64 – 66 of the Judgment, I have dealt with the plaintiff’s attempt to locate the cap mould.  This deals with the email dated 20 June 2012.

(3) At paragraphs 72 – 75 of the Judgment, I have dealt with the use of the words “協議” in the email dated 9 August 2012.

20.  In assessing the credibility of Mr Ng, I considered his version of events and the significance of the Letter of Confirmation to his version of events.  It would be impossible for the court to have assessed Mr Ng’s case without considering the same.  It is in the context of deciding whether there was conditional delivery and total failure of consideration that I considered the Letter of Confirmation. However for reasons set out in the Judgment, I nevertheless found Mr Ng to be an incredible witness.  

21.  Having found the Letter of Confirmation inadmissible, I fail to see how I could give weight to the contents of the Letter of Confirmation.  I therefore do not find there to be a reasonable prospect of success on the matters submitted at paragraph 5 of the draft grounds of appeal.

Failing to make a finding on the date of delivery of the said letter. (Paragraph 7 of the draft grounds of appeal)

22.  I have set out my findings in respect of the date of delivery of the Letter of Confirmation at paragraphs 57 – 63 of the Judgment.  I accepted the evidence of Mr Yeung.  His evidence was that he was unable to provide a specific date as to when he received the Letter of Confirmation but was certain it was received after they had received the Cheque. Hence I accepted the Letter of Confirmation was received after the Cheque.

Err in concluding “without adequate explanation or analysis” that there was total failure of consideration. (Paragraphs 8 – 9 of the draft grounds of appeal)

23.  My analysis relating to the defence of “total failure of consideration” is set out in paragraphs 82 – 87 of the Judgment and I have dealt with the factual disputes of this case in the preceding parts of the Judgment.  Therefore the discussion relating to the total failure of consideration is to be considered in the context of the findings made in the preceding paragraphs of the Judgment and not just the captioned section alone.

24.  In such circumstances, I fail to see any reasonable prospects of success on this ground of appeal.

Erred in finding the defendant to be an incredible witness. (Paragraphs 10 – 12 of the draft grounds of appeal)

25.  I have set out the reasons in the Judgment for having rejected the defendant’s version of events.

26.  In respect of the paragraph 11 of the draft grounds of appeal, I have set out my reasoning in paragraphs 47 – 49 of the Judgment. I have considered the matters set out in the draft grounds of appeal before determining Mr Ng’s credibility and reliability.

27.  As for the submission at paragraph 11(3) of the draft grounds of appeal, I fail to see the relevance of the argument in the context of the Judgment.

28.  In respect of paragraph 12 of the draft grounds of appeal, I have dealt with the matters in paragraphs 44 – 50 of the Judgment.

29.  During the cross-examination of Mr Yeung, defence counsel put to Mr Yeung that the Cheque was sent to him as a gesture of sincerity. Hence during cross-examination of Mr Ng, counsel for the plaintiff specifically asked Mr Ng if the Cheque was sent as a gesture of sincerity. Mr Ng denied it was.  There was no further re-examination by defence counsel on this issue. Hence I do not agree Mr Ng was not cross-examined on whether there was any explanation for sending the Cheque.  

Other grounds (paragraphs 13 – 16 of the draft grounds of appeal)

30.  In respect of the submissions at paragraph 13 of the draft grounds of appeal, defence counsel cross-examined Mr Yeung at length on the emails and when he received the documents.  Hence both parties took issue on when the Cheque and Letter of Confirmation were received.  In fact, this is one of the core disputes of fact in this case. 

31.  The reference to the phrase “the day before” （日前）in the various emails was to illustrate the point that the emails are inconsistent as to when exactly the documents were received.  Since Mr Yeung explained he relied on Rony Lee, I did not find it surprising that he was unable to give the precise date.  It is precisely because Rony Lee had not been called to give evidence that there has not been any finding on what exactly was meant by the phrase.

32.  I did not rule the words “日前” meant “the day before”.  I merely provided an English translation of the phrase for easy reference.  This is why I included the Chinese phrase in the Judgment.

33.  In respect of paragraph 14 of the draft grounds of appeal, I did not use “this evidence” (referring to the interpretation of the phrase “日前” used in the email dated 19 May 2012) to rule against the plaintiff.  The context in which I mentioned this email and the phrase “the day before” is set out in my judgment and hereinabove.  I shall not repeat those passages.

34.  In respect of paragraph 15 of the draft grounds of appeal, the sentence in paragraph 69 of the Judgment being subject to criticism (“Different accounting rules and procedure would apply to the entry of this sum into the company accounts”) is derived from common sense.  I am of the view that such a proposition cannot be described as a “subjective inference”, as submitted by defence counsel.  Furthermore, Mr Yeung had already stated in his evidence in court that he waited for a prolonged period of time before he cashed the Cheque because he was unsure of “how to deal with it”.  In the context of his evidence, he meant he did not know how it should be dealt with in matters relating to the company accounts.

35.  In respect of paragraph 16 of the draft grounds of appeal, defence counsel is mistaken. Mr Yeung gave evidence to explain he relied on what Rony told him as to when the documents were received.  His evidence was that when Rony told him about the receipt of the Cheque, he was not informed about any additional documents being received.  It was only later that Rony told him about the receipt of the Letter of Confirmation.  It is on this basis he denied the Cheque and the Letter of Confirmation were received on the same day.  This is the basis on which I summarized Mr Yeung’s evidence at paragraph 61 of the Judgment. I therefore fail to see any prospects of success in counsel’s submissions at paragraph 16 of the draft grounds of appeal.

36.  In respect of paragraph 17 of the draft grounds of appeal, defence counsel’s submissions are misconceived.

37.  Firstly, it had been mentioned in defence counsel’s closing submissions that adverse inference should be drawn against the plaintiff due to the failure to call Rony Lee.  One of the reasons listed is because Rony Lee is the author of 3 important emails including the email dated 9 August 2012.  It is incorrect for defence counsel to say the email of 9 August 2012 has not been mentioned.

38.  Secondly, as per paragraph 56 of the Judgment, I had already indicated I would not deal with all the submissions of counsel but only with the salient submissions.

39.  Thirdly, as per paragraph 77 of the Judgment, I had considered 2 separate matters: the submissions of defence counsel on adverse inference and whether it would be appropriate to draw adverse inferences against the plaintiff based on the email dated 9 August 2012.  I specifically and separately considered whether adverse inference can be drawn from the email dated 9 August 2012 as there was much being said about this email and the implications or inferences that could be drawn from this email, whether by way of submissions or during the questioning of the witness.  Although it was not separately listed under the “Adverse Inference” section of defence counsel’s closing submissions, I felt it was a matter that should be addressed nevertheless.

40.  By reason of the matters set out above, I fail to see any reasonable prospects of success on the grounds set out in paragraphs 13 – 17 of the draft grounds of appeal.

SUMMARY

41.  By reason of the matters set out above, I do not find the defendant’s draft grounds of appeal to have reasonable prospects of success. Furthermore, I cannot find any other reason in the interest of justice why leave should be granted.

42.  Hence the defendant’s application for leave to appeal is dismissed with costs to the plaintiff, with certificate for counsel, to be taxed if not agreed.