CHONG HING BANK LTD (formerly known as LIU CHONG HING BANK LTD) v. FAIRVIEW CITY LTD AND OTHERS

CACV 468/2018

[2019] HKCA 1033

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 468 OF 2018

(ON APPEAL FROM HCMP NO 3225 OF 2014)

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J U D G M E N T

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Hon Barma JA (giving the Decision of the Court):

1.  This is an application by the appellant plaintiff for leave to adduce fresh evidence at the hearing of its appeal against the judgment of Lok J dated 25 July 2018. Lok J dismissed the plaintiff’s claim against the respondents (the 5^th and 6^th defendants in the proceedings below) for possession of certain property in the New Territories.

2.  The proceedings below began as a mortgage action by the plaintiff against the 1^st to 4^th defendants, who were the paper owners and mortgagors of land which included the properties which were the subject of Lok J’s judgment. The 5^th and 6^th defendants intervened in those proceedings to resist the order for possession sought by the plaintiff, claiming to have acquired a possessory title to parts of the land owned by the 1^st to 4^th defendants and mortgaged to the plaintiff through their (and their predecessors in occupation’s) adverse possession of those parts. The part of the land claimed by the 5^th defendant was known as the “Green Area”, and the part of the land claimed by the 6^th defendant was known as the “Orange Area”.

3.  Lok J accepted the claims of the 5^th and 6^th defendants, and declined to make orders for possession against them for the reasons explained in his judgment. The plaintiff has appealed against the judgment by its Notice of Appeal dated 20 September 2018.

4.  On 17 June 2019, the plaintiff applied for leave, pursuant to RHC Order 59 rule 10(2) to adduce fresh evidence to be used at the hearing of the appeal. The evidence sought to be adduced consists of correspondence between the plaintiff’s former solicitors (Messrs Anthony Chiang & Partners (“ACP”)) who had acted for them in the proceedings below, and various offices within the Lands Department. The correspondence consists of nine letters, dated between 15 February 2016 and 24 January 2018. Seven of the nine letters had come into existence between 15 and 20 months before the trial before Lok J took place, while two of the letters came into existence about two and a half months after the trial, when judgment was pending. None of them were adduced in evidence below, or otherwise brought to the attention of the judge.

5.  The first two letters were an exchange in which the Squatter Control section of the Lands Department confirmed that markings on the huts on the Green and Orange areas were squatter control survey numbers, and that the huts were structures tolerated by the Government. The third to fifth letters consisted of correspondence by which the District Lands Office indicated, in response to questions by the plaintiff’s former solicitors, that no structures on the land were covered by any Modification of Tenancy. The sixth and seventh letters related to a request that action should be taken in respect of any structures exceeding the original size tolerated by government, to which the Squatter Control section responded that the huts were under investigation. The final two letters were a request for information as to the Squatter Control sections position as to the structures and their occupiers, which elicited a somewhat general response indicating that squatter structures were those unauthorised structures erected on Government land and leased agricultural land before June 1982, which were tolerated and permitted to remain subject to the Squatter Control Policy (in relation to which a pamphlet issued by the Lands Department explaining the Policy had been in evidence at the trial).

6.  Mr Patrick Chong, representing the plaintiffs for the purposes of the appeal (in place of counsel appearing in the court below), submits that the documents are relevant to ground 6 in the plaintiff’s Notice of Appeal, which states:

“Further, in light of the Sale Agreement, which only referred to the Metal Hut as opposed to the Orange Area, this supports the fact that Uncle Tang did not have the requisite intention to adversely possess the Orange Area”.

7.  He suggests that the documents are relevant in the following respects:

(1)  They show that the number on the metal hut is the registration number pursuant to the Government’s Squatter Control Policy.

(2)  They tend to show that the metal huts are structures tolerated by the Government.

(3)  They go to the ambit of the Government leases and any Modification of Tenancy.

(4)  They indicate when the survey was taken and the contents of the Squatter Control Policy.

8.  The application is opposed by the 5^th and 6^th defendants.

9.  Mr Chong submitted that the application should be adjourned for consideration at the same time as the substantive hearing of the appeal, on the basis that this would save time and costs, and that it was hoped that by then an explanation might be forthcoming from the plaintiff’s former solicitors as to the reasons why the documents were not adduced at the trial.

10.  We do not think that this would be appropriate. It seems to us that it would be more convenient, and more conducive to a focused hearing at the appeal for any question of adducing new evidence to be dealt with in advance of the hearing, in order to enable both the court and the parties to focus on the issues arising on the appeal knowing what materials are to be considered for this purpose. To leave the question of whether or not the documents sought to be adduced as fresh evidence unresolved would mean that the parties, and the court, would not know what material might be in play on the appeal and would have to prepare for the appeal on different factual basis, resulting the expenditure of increased and possibly unnecessary time and effort. Further, the application is (as Mr Chong acknowledged) a fairly simple and straightforward one, and thus lends itself to reasonably prompt determination. It is also one which can appropriately be dealt with on paper on the basis of the written submissions lodged by the parties. We have therefore decided to deal with it now, on paper, rather than leaving it to be dealt with at the hearing of the appeal.

11.  The general approach to an application for leave to adduce fresh evidence for the purposes of an appeal is well established, and requires the court to be satisfied that the three conditions identified in Ladd v Marshall [1954] 1 WLR 1489 are met. These are:

(1)  that the evidence could not have been obtained with reasonable diligence for use at the hearing below;

(2)  that the evidence must be such that, if admitted, it would probably have an important influence on the result of the case, although it need not be decisive; and

(3)  the evidence must be such as is presumably to be believed, or must be apparently credible, though it need not be incontrovertible.

12.  In the present case, Mr Ernest Koo, representing the 5^th and 6^th defendants, rightly submits that the first two of these conditions are clearly not met.

13.  It is plain that the first condition is not met. Seven of the nine letters sought to be relied on were in existence well before the trial below took place. As they were correspondence between the plaintiff’s solicitors and the Lands Department, they were clearly in the possession of the plaintiff and available to be deployed at the trial on the plaintiff’s behalf if it had been thought appropriate to do so. Although the last two of the letters were not in existence at the time of the trial, there is no reason why the inquiry made by the plaintiff’s solicitors could not have been made earlier, so as to elicit a response which could have been put into evidence at trial if necessary. No explanation for the failure to put the correspondence that was in existence, or for the failure to make the remaining inquiry earlier, has been provided.

14.  As to the second condition, it is far from apparent that the new material is relevant to the ground of appeal (Ground 6) referred to by the plaintiff in its submissions. It might have some relevance to Ground 5 (which is not apparently relied upon for the purpose of this application), but even so, Mr Chong has suggested in his written submissions only that the material is relevant to the matters mentioned identified in paragraph 7 above. It is not suggested that the new material is not just relevant, but likely to have an important influence on the outcome of the case, which is what is required by the second condition in Ladd v Marshall.  Nor do we think that it is likely to have such a significant effect as is called for. Although the judge did not consider that there was evidence in relation to the nature of the markings on the huts, he was prepared to assume (in the plaintiff’s favour) that they were probably registration numbers under the Squatter Control Policy. The relevance of any question of Modification of Tenancy has not been explained. As for the contents of the Squatter Control Policy, this was already in evidence in much the same terms through the pamphlet referred to above. It thus cannot be said that the documents would be likely to have an important influence on the outcome of the case. Even if (contrary to our view) they might, the fact remains that the plaintiff could not satisfy the first condition in Ladd v Marshall, and thus would fall at the first hurdle.

15.  Mr Chong sought to suggest that post-Civil Justice Reform, the court should seek to achieve the overriding objective of doing justice between the parties, and that this called for the admission of the additional evidence on appeal because the letters were obviously credible and relevant as they emanated from the Lands Department, much of the information contained in them was public information and that the 5^th and 6^th defendants would suffer no prejudice that could not be compensated by an appropriate order for costs. Mr Chong also suggested that as the nature and effect of the Squatter Control Policy might be engaged in this appeal, this gave rise to a matter of public interest, as this was a matter which might arise for consideration in many adverse possession cases.

16.  With respect, it is wrong to suggest that the overriding objective of doing justice between the parties can readily trump the principles established by Ladd v Marshall. On the contrary, this court (and the English courts) have repeatedly held that those principles remain applicable and should not be departed from save in exceptional circumstances, such as where there has been some procedural irregularity during the trial, or where there is some important question of public interest involved (see eg Chan Chiu Yin v Chan Chi Kau (unrep, CACV 468/2001, 28 May 2001); Pacific Electric Wire & Cable Co Ltd v Texan Management Ltd (unrep, CACV 90-96/2012, 17 September 2013); Law Wai Hay v Law Po Chung Priscilla (unrep, CACV 91/2014, 29 October 2015)).

17.  In our view, the principles established by Ladd v Marshall are entirely consonant with doing justice between the parties. It is difficult to see why fairness or justice should entitle a party who has failed to adduce at trial evidence which he later asserts to be significant, should be allowed to do so on appeal, particularly where no cogent explanation for the failure is put forward. It is, of course, also a strong public interest in finality of litigation. To too readily allow the adducing of fresh evidence after trial, with its attendant risks of necessitating a retrial, would clearly go against that public interest.

18.  In the present case, no question of procedural irregularity arises. Nor do we accept that there is any genuine element of public interest arising in these proceedings, which essentially involve fairly straightforward adverse possession claims.

19.  We therefore see no reason to depart from the Ladd v Marshall test in this case. On contrary, we regard this as a hopeless application, which was doomed to fail, as it is clear that the plaintiff could not satisfy two of the three conditions. We thus have no hesitation in dismissing this application. As we are of the view that the application was totally without merit, we also make an order pursuant to Order 59 rule 2A(8) that no party may request that this determination be reconsidered at an oral hearing inter partes.

20.  So far as costs are concerned, we are satisfied that this is an appropriate case in which costs should be awarded to the 5^th and 6^th defendants on an indemnity basis, and assess their costs summarily at HK$147,709.