HUANG, YUAN-YUAN IAN v. KWOK SIU-MING, SIMON

HCA492/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 492 OF 2005

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REASONS  FOR  DECISION

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1. The Defendant in this action, Mr Kwok Siu-ming Simon, is and was at all material times the chairman of a well-known listed company in Hong Kong.

2. The Plaintiff, Mr Huang Yuan-yuan Ian, commenced this action on 21 March 2005.  The gist of the claim is malicious prosecution on the part of Mr Kwok, in that Mr Kwok knowingly and maliciously prosecuted Mr Huang in order to deceive a sum of US$3.23 million from him.

3. By summons dated 20 September 2005, Mr Kwok applied to strike out the present action under RHC Order 18, rule 19.  In substance, Mr Kwok’s contention is that Mr Huang’s claims must fail because:

(1)     malicious prosecution by Mr Kwok has not been or could not be shown, and

(2)     the core facts relied on by Mr Huang have been determined against him in a previous civil action between Mr Huang and Mr Kwok, in a judgment of Mr Justice Stone given on 18 November 1998 after a 3 day trial.

Preliminary – Plaintiff’s application to adjourn the hearing

4. The Defendant’s strike out application was taken out on 20 September 2005.  Due to a number of reasons which I do not need to recount here, the substantive hearing of the application only came before me on 13 December 2006, 15 months after the summons was issued.

5. However, on 11 December 2006, Mr Haung applied to stay or adjourn the strike out application pending the determination of another civil action which he had chosen to commence on the same day, to set aside Mr Justice Stone’s Judgment.

6. Having reviewed the procedural history, and after hearing the parties, I decided that the strike out application should proceed.  The hearing was fixed as early as 18 July 2006.  Mr Huang has had ample time to bring any proceedings to set aside Mr Justice Stone’s Judgment.  Indeed, on 14 July 2006, he had issued a generally indorsed writ seeking to set aside that judgment on the ground of fraud, but for some unexplained reason that writ was discontinued a couple of weeks later.  He has chosen to issue a fresh writ, this time with a detailed Statement of Claim indorsed, just 2 days before the scheduled hearing date.

7. I did not think it was right to delay the disposal of the strike out application any further.  In the exercise of my discretion I dismissed the application for adjournment, and proceeded to hear the strike out application.

DECISION

8. At the end of the hearing, I pronounced that I was satisfied that the Points of Claim should be struck out and the action dismissed.  I also ordered that Mr Huang should pay Mr Kwok’s costs of the action, to be taxed if not agreed.

9. I now set out my reasons for coming to that decision.

BRIEF FACTS

10. For present purposes, the material facts can be briefly stated.

11. On 25 July 1997, Mr Kwok reported to the Hong Kong police of the alleged wrongful transfer of a sum of US$3.23 million from his bank account with HSBC to a bank account in Switzerland held in the name of a company called Alidex.  There was no dispute that this company was owned or controlled by Mr Huang.

12. Mr Kwok also commenced civil proceedings against Mr Huang, a Ms Pauline Ang who was Mr Kwok’s personal assistant and companion of Mr Huang, and Alidex to recover the US$3.23 million.  The action was HCCL 140 of 1997.  It was Mr Kwok’s case in that action that Mr Huang and Ms Ang conspired fraudulently to procure Mr Kwok to sign a letter authorizing the transfer of US$3.23 million to Alidex, without Mr Kwok appreciating the content of the letter.  Mr Kwok denied any previous dealing with Mr Huang at all.

13. In their Defence filed in the civil action, Mr Huang and Ms Ang denied any wrongdoing on their parts.  It was pleaded that the money was transferred to Mr Huang/Alidex pursuant to a Joint Venture Agreement that he had reached with Mr Kwok relating to the development of video mobile phones.

14. The trial of the civil action took place before Mr Justice Stone on 16-18 November 1998.  The Defendants to that action did not appear at the trial.  Mr Justice Stone heard evidence from Mr Kwok and a number of witnesses called on his behalf.  In a judgment dated 18 November 1998, Mr Justice Stone found that Mr Kwok had been the victim of a fraud skilfully engineered by Mr Huang and Miss Ang.  The learned Judge was satisfied that Miss Ang misrepresented to Mr Kwok the nature of the authorization letter he was asked to sign, and Mr Kwok appended his signature on the letter without appreciating its content.  The Judge also found that Mr Kwok had no business dealings of any kind with Mr Huang.

15. Mr Huang and Ms Ang did not seek to appeal against Mr Justice Stone’s Judgment.  Alidex, on the other hand, tried to appeal out of time.  But its application was rejected by the Court of Appeal twice, the first time by a single judge and then the full court.

16. Mr Haung and Miss Ang were eventually charged and prosecuted for theft and other offences.  The criminal trial took place in October 2004.  Both Mr Huang and Miss Ang were acquitted of all charges on 29 October 2004.

17. After his acquittal, Mr Huang sought to set aside Mr Justice Stone’s Judgment by a Summons taken out in HCCL 140 of 1997 on 18 March 2005, over 6 years after the date of the judgment.  The ground relied on by Mr Huang was that Mr Kwok had given materially false evidence at the trial before Mr Justice Stone in 1998, which falsity was only revealed in the criminal trial.  That application was dismissed by Mr Justice Stone on 31 August 2005.  The reasons for that dismissal appear in the Judgment of Mr Justice Stone and I need not repeat them here.

18. Three days after his summons to set aside the 1998 judgment, Mr Huang commenced the present action for malicious prosecution on 21 March 2005.

malicious prosecution

(1) The Law

19. It is well settled that the tort of malicious prosecution has four ingredients: first, the plaintiff must show that he was prosecuted by the defendant, that is to say that the law was set in motion against him on a criminal charge; secondly, that the prosecution was determined in his favour; thirdly, that it was without reasonable and probable cause; and fourthly, that it was done maliciously.

20. Mr Russell Coleman SC, counsel for Mr Kwok, attacked Mr Huang’s case on the first, third and fourth requirements.  His main submission, in summary, is that Mr Kwok was not the prosecutor in the criminal case against Mr Huang: the prosecutor was the public prosecution authority, in this case the Department of Justice acting for the Hong Kong Government.  In relation to the third and fourth requirements, he contended that in the light of the facts as determined in the civil action, Mr Huang had no sustainable case either.

(2) Whether Mr Kwok was the Prosecutor

21. The Court of Appeal has recently considered the law on malicious prosecution and in particular on the test to be applied in determining whether a defendant should be held responsible for a prosecution.

22. In Oh Jae-hoon Eugene v Richdale [2004] 4 HKC 315 at paragraphs 18-19, Ma CJHC summarized the applicable principles.  In particular, in paragraphs 19 (3)-(7), Ma CJHC emphasised that the critical issue is whether the “nexus” between the false evidence given by the defendant to the police and the decision to prosecute has been broken.  If the prosecution authorities were able to and did exercise an independent discretion or judgment in investigating the case and in the decision to prosecute, the nexus between the lie and the prosecution is broken and the defendant will not be held to be the prosecutor.

23. Ma CJHC’s Judgment was subsequently approved by the full court in Oh v Richdale (No 2) [2005] 4 HKC 28, see: Woo VP (with whom Le Pichon JA and Chung J agreed) at paragraphs 15 to 18.  I note, in particular, that Woo VP approved the Judgment of the First Instance Judge (Deputy Judge Lam, as he then was) that the threshold that the plaintiff must meet was to establish that the discretion of an independent and professional prosecution authority had been prejudiced to the extent that it could properly be regarded as negating the discretion to prosecute: see Woo VP at paragraphs 20-22.  See also the judgment of Le Pichon JA at paragraphs 30-31.

24. In the instant case, all that Mr Huang endeavoured to show in his Points of Claim and the evidence placed before me was that Mr Kwok (and witnesses called to support his evidence) gave allegedly false evidence to the police, which led to the prosecution.  That was clearly not sufficient.

25. Moreover, and in my judgment fatal to Mr Huang’s case, was the clear and unanswered evidence from the senior government counsel who was the prosecutor in charge of the criminal case that the decision to prosecute was made solely on the basis of matters referred to in the Department’s Statement of Prosecution Policy and Practice and nothing else.

26. In my judgment, the evidence was clear that an experienced professional prosecution authority exercised an independent discretion or judgment to prosecute Mr Huang.  This is not a simple “one-on-one” case where the offence alleged was entirely within the knowledge of Mr Kwok.  The necessary nexus was broken even if Mr Huang could prove that Mr Kwok had given false evidence to the police.

27. Accordingly, the claim was bound to fail and must be struck out.

(3) Other matters

28. Mr Huang also relied on proceedings in Switzerland.  However, there was no prosecution in that jurisdiction.

29. For completeness, I also agree with Mr Coleman’s submissions on the third and fourth requirements.  This will be apparent after I have set out my reasons in relation to the Issue Estoppel ground.

ISSUE ESTOPPEL

30. I can state my reasons shortly. The core facts relied on by Mr Huang, which he alleged Mr Kwok to have lied about, were that there was indeed a genuine Joint Venture Agreement between them, and that it was pursuant to that agreement that Mr Kwok had transferred the US$3.23 million to him.

31. Those issues have been conclusively determined against Mr Huang in HCCL 140 of 1997, to which both he and Mr Kwok were parties.  It did not matter that Mr Huang chose not to attend the trial.  Unless and until Mr Justice Stone’s Judgment came to be set aside, Mr Huang was bound by those findings.  These proceedings were therefore frivolous, vexatious and an abuse of the process of the court in so far as Mr Huang sought to re-litigate these issues.

32. In his submissions to this court, Mr Huang tried to rely on what he said was new evidence from Ms Cindy Cheng.  Ms Cheng’s evidence concerned whether the telephone system at Mr Kwok’s office could perform a “call forward” function to forward an incoming call to an outside line.  That evidence was contained in an affirmation of Ms Cheng filed in November 2005 in support of the strike out application.  I was unable to understand how that evidence could assist Mr Huang in any way.

33. It follows that Mr Huang could not seek to prove at any trial that the prosecution by Mr Kwok (if Mr Kwok were the prosecutor, which he was not for the reasons given above) was without reasonable and probable cause and that it was malicious.

Conclusion

34. For the reasons set out above, the Points of Claim must be struck out and the action dismissed, with costs to Mr Kwok.