XCHRX CHINA EVERBRIGHT - IHD PACIFIC LTD. v. CH'NG POH

CACV 513/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 513 OF 2001

(ON APPEAL FROM HCA No. 12837 OF 1995)

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J U D G M E N T

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The application

1. In February this year the Plaintiff obtained judgment against the Defendant for the sum of HK$127,617,747.88 together with compound interest and costs less a credit of HK$58,574,315.00. The Defendant lodged an appeal against the judgment. The appeal is due to be heard on 24 January 2002. The length of the appeal is estimated for six days. The defendant now applies to vacate the hearing dates; his summons was issued on 28 November 2001.

The Conviction

2. The Defendant was convicted of two criminal offences in 1994. First, conspiracy to defraud a Hong Kong Listed Company, Intercontinental Housing Development Limited ("IHD") of $127 million. IHD is now known as China Everbright-IHD Pacific Limited. The gist of the allegation was that the Defendant had conspired with others to use $127 million belonged to IHD to acquire shares in IHD through a company belonging to the Defendant and another person. Second, he was convicted of publishing a false statement, such false statement being the failure to report in the Annual Report for 1985 to IHD's shareholders an amount of $127 million missing from IHD's accounts after he took over IHD and discovered the money to have been missing.

3. His appeal against conviction was dismissed by the Court of Appeal in January 1996. Leave to appeal to the Privy Council was refused by the Privy Council in July 1996.

The present action

4. The present action was commenced by IHD against the Defendant in December 1995. It was heard on 17 January 2000. The judgment was based on the criminal conviction of the conspiracy charge. The learned judge held that the Defendant had to disprove that he had conspired to use $127 million belonging to IHD to assist the Defendant's company in purchasing the IHD's shares. She found that the Defendant had failed to satisfy the burden of overturning the conviction.

The petition

5. Shortly before the trial, on 14 January 2000 the Defendant lodged a petition to the Chief Executive seeking a pardon of his conviction or alternatively a referral of his conviction to the Court of Appeal for reconsideration. The Defendant relied on new evidence that he said had emerged since the conviction and appeal.

Basis of the present application

6. The present application to vacate the hearing dates of the appeal is based on the ground that if the Defendant's petition is acceded to by the Chief Executive, his conviction would be quashed and he would not have to bear the burden of proof in the civil action and the claim by IHD against him could not be sustained. IHD had called no factual witness at the hearing. It is submitted that there are substantial overlapping of the grounds of appeal and matters contained in the petition which challenged the conviction. These include the credit worthiness of a witness, evidence of the conspiracy, evidence contained in the debriefing tapes, finding on the loss and also the exact date of the appointment of the Defendant as the CEO of IHD. It is submitted that justice requires the hearing to be adjourned until the determination of the propriety of the Defendant's conviction.

Application refused

7. In my view this is not a proper basis for adjourning the appeal particularly at this late stage. As the petition is pending, it is not appropriate to go into the merits at this stage of the proceedings. Leaving aside the question on the nature of a pardon which can be granted on a wrongful conviction or where innocence of the accused is established, although technically the conviction can only be quashed by a judicial act : R v. Home Secretary Ex parte Bentley [1994]Q.B. 349 and R v. Foster [1985]1Q.B. 115, there is no certainty that the Chief Executive will grant a pardon. The Department of Justice, which is advising the Chief Executive, had already on 20 July 2000 responded negatively to the petition. It was in the nature of a provisional response. Although further submissions had since been made by the Defendant which have not yet been responded to by the Government, there is no indication that there would be any favourable result for the Defendant. If the matter is referred to the Court of Appeal again there is no certainty that the Court of Appeal must quash the conviction.

8. In my view there must be finality in civil litigation. The appeal must be heard and determined. If the result of the civil appeal is against the Defendant but the criminal division of Court of Appeal eventually seizes of the matter and finds in his favour, the Defendant is still entitled to bring an appeal to the Court of Final Appeal. As the matter now stands, the Plaintiff is effectively prevented from enjoying the fruit of the judgment. The judgment sum and compound interest came to about $336 million. Part of this, in the sum of $270 million, had been released to the Plaintiff subject to the condition that the Plaintiff would provide a bank guarantee for its repayment. The money is now deposited in a bank to enable it to provide the guarantee. The Plaintiff had to pay banking charge of $1 million for the guarantee and would be further required to pay monthly payment of about $80,000.00 from April 2002 onwards if the appeal is adjourned and not determined by then. Also the Defendant has failed to pay the balance of the judgment sum of $70 million despite demand by the Plaintiff and its undertaking to provide a similar guarantee for its repayment. An adjournment of the appeal will clearly operate to the Plaintiff's prejudice.

9. In the circumstances, I will dismiss the application with costs to the Plaintiff. There shall be certificate for two counsel.