CHINA EVERBRIGHT - IHD PACIFIC LTD. v. CH'NG POH AND OTHERS and LOW CHANG HIAN AND OTHERS (Third Party)

1995 No.A12837

H E A D N O T E

1. A conviction, quite apart from shifting the legal burden of proof under s.62(20(a) Evidence Ordinance cap. 8, is also probative evidence of some weight in a subsequent civil action (Taylor v Taylor [1970] 1 WLR 1148, Stupple v Royal Insurance Co. Ltd. [1971] 1 QB 50, Hunter v Chief Constable of the West Midlands [1982] AC 529 considered).

2. The circumstances of that conviction (such as the extent of the evidence led in the trial, and the cases presented by the prosecution and the defendant, and what was argued and what was not), would be relevant in the weighing process of that piece of evidence in the civil case.

3. A summing-up (the purpose of which is explained in R v Lawrence and in Brinks Ltd. v Abu Saleh (No.2) [1995] 1 WLR 1488) would help to identify the factual basis on which the defendant was convicted. The summing-up was relevant to the issues in a subsequent civil action.

4. Section 62(2)(b) Evidence Ordinance envisaged that evidence to identify the factual basis on which the defendant was convicted would be relevant, and expressly left room for evidence for that purpose to be admitted, although on the construction of s.62(2)(b), that evidence must itself be admissible under the general law of evidence (Brinks No. 2).

5. The summing-up of a judge is admissible evidence. Although a judge when summing-up, is not referring "testimonially" to the evidence given in the trial (i.e. referring to the evidence to establish it as true), he is referring to it to state that he had heard such evidence given. Viewed another way, the judge did not have personal knowledge of the facts which either party sought to adduce, but he did have personal knowledge that such evidence formed part of the cases presented before him.

6. The Court should allow a litigant to bring forward the evidence it wishes to adduce, if the evidence is of an admissible character and is relevant to the issues between the parties, even though that litigant has failed to comply with the rules for the admission of such evidence, so long as no real prejudice is caused by that failure and so long as such failure is not deliberate (Technalloy Chemical Corporation v International Merona Ltd [1993] 2 HKC 94 applied).

1995 No.A12837

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. A12837 OF 1995

_____________________

D E C I S I O N

_____________________

1. This is an application by the Plaintiff to serve hearsay notices out of time; alternatively, for leave to adduce certain hearsay evidence without serving a hearsay notice. Before I set out the reasons for my decision however, it may be helpful for me to first set out the context of this case, against which the parties' respective arguments have been raised.

Backdrop

2. This was an action which started in 1995. The Plaintiff ("IHD") is a company which before July-August 1985 was controlled by a company called Territorial. In August 1985, Territorial sold its shares in IHD to a company called Join Park, which was controlled in whole or in part by the 1st Defendant ("CP"), for $232m. odd.

3. In 1994, CP was convicted after trial of inter alia, conspiracy to defraud IHD by dishonestly causing and permitting IHD to participate in an exchange of cashier orders and cheques in order to conceal the fact that certain funds ($127m odd) were used improperly to give financial assistance to Join Park to acquire the IHD shares from Territorial.

4. In 1995, this action was started by IHD against inter alios CP for damages for conspiracy and/or conversion and/or for breach of fiduciary duty in relation to those funds i.e the $127m (less certain amounts recovered).

5. IHD has pleaded reliance on the conviction of CP under s.62 Evidence Ordinance cap 8, and CP has pleaded amongst other defences that the conviction was erroneous.

6. In due course, Third Party proceedings were commenced by CP against five individuals, including the alleged co-conspirators and the 5th Third Party.

7. On 14 January 1998, the respective solicitors for IHD & CP attended before the Listing Judge in the usual check-list hearing. The solicitors for IHD indicated that Hearsay Notices had not been served but would be served within 28 days. The solicitors for CP told the listing judge that their Hearsay Notices would be served within 90 days (see the 1st Affidavit of Bryan O'Hare, paragraph 3). In the event, neither side served any Hearsay Notices.

8. After that attendance before the listing judge, the respective solicitors corresponded with each other concerning the preparation of the bundles for trial.

9. On 11 August 1998, IHD's Solicitors wrote to CP's Solicitors with a proposal for trial bundles which included a bundle of documents relating to the criminal proceedings. They said: " this bundle will include the indictment, transcripts of the proceedings, the summing-up of Lord Justice Keith and additional documents produce to the court during the summing-up".

10. On 18 August 1998, CP's Solicitors replied saying inter alia : "We do not disagree in principle with your proposal on the trial bundles. However nothing herein is to be construed as our agreement to the admissibility of any of the materials referred to in your letter dated 11 August 1998."

11. Notwithstanding this indication by CP's Solicitors that they would be standing on the strict rules of evidence, IHD's Solicitors did not "appreciate the implications" of this (see O'Hare I, paragraph 5) and did not take the necessary steps to prepare Hearsay Notices in good time for trial. Although there were further correspondence and communications between the respective solicitors on the preparation of trial bundles, the issue of admissibility of hearsay documents was not specifically addressed. It was apparently not until there were communications between the respective leading counsel for IHD and CP last week that IHD's Solicitors became aware that compliance with the hearsay rules would be necessary.

12. I have to say that the matters set out in the evidence from IHD's Solicitors do not justify their failure in complying with the hearsay rules, especially in the light of the caveat contained in the letter dated 18 August 1998 from CP's Solicitors. I accept however that Mr. O'Hare's Affidavit is evidence that the delay in serving the Hearsay Notices was not deliberate, and that CP's Solicitors had been notified in August 1998 that IHD's Solicitors intended to include at trial a bundle containing documents in the criminal proceedings.

13. So that was the backdrop of the present application which was made on 15 October (the Thursday before the start of trial on Monday 19 October).

Application

14. IHD's application concerns 3 categories of documents.

15. The 1st category comprises 85 documents listed in App A, to which, IHD says, s.47 Evidence Ordinance applies. In respect of some of these documents being company minutes, s. 119 Companies Ordinance would also apply.

16. IHD seeks to adduce these (App A) documents on the grounds that their makers are either beyond the seas or cannot be identified, or that their makers cannot be reasonably expected to recollect matters relevant to the documents.

17. Being out of time, IHD asks for an extension of time to serve the Hearsay Notices; alternatively, it asks the Court to exercise its discretion to permit these documents to be adduced under O.38 r.29(1).

18. The 2nd category (App B) comprises what Mr. Griffiths SC, counsel for IHD, called the "criminal documents". They comprise :-

1) a statement made to the ICAC by Mr Quek Teck Huat ("Quek"), an alleged co-conspirator who had been given immunity to testify in the criminal trial against CP, and who is the 2nd Third Party in the Third Party proceedings;

2) the transcript of Quek's evidence at the criminal trial;

3) the transcript of CP's evidence at the criminal trial; and

4) the summing-up of the trial judge.

19. In relation to these documents, IHD relies on s.47 and s.49 Evidence Ordinance and on the grounds that Quek is beyond the seas, and that the transcripts were compiled by persons acting under a duty from information supplied by persons who might reasonably be supposed to have had personal knowledge of the contents.

20. As with the App A documents, IHD is asking for an extension of time to serve Hearsay Notices; alternatively it is asking the Court to exercise its discretion to permit these statements to be adduced under O.38 r.29(1).

21. The 3rd category (App C) comprises various documents emanating from CP himself. IHD seeks to adduce these documents under O.38 r.29(2) which allows a party to adduce a document in evidence without a hearsay notice where the maker is the opposite party.

Principle to be applied

22. I take it to be the guiding principle that the Court should allow a litigant to bring forward the evidence it wishes to adduce, if the evidence is of an admissible character and is relevant to the issues between the parties, even though that litigant has failed to comply with the rules for the admission of such evidence, so long as no real prejudice is caused by that failure and so long as such failure is not deliberate (Technalloy Chemical Corporation v International Merona Ltd [1993] 2 HKC 94).

23. On the other hand, in considering the discretion which I am about to exercise, I have taken into account the fact that the hearsay rules are rules of Court, and so long as they remain, are there to be obeyed, however inconvenient and time-consuming compliance may in practice be in a complex case such as this.

24. I have also taken into account the fact that if I permit IHD to adduce the documents in these appendices, an adjournment of the trial (which has been set down for 3 weeks) may have to be sought, and although I have yet to hear the parties on the appropriate length of adjournment, obviously it is unsatisfactory for the Court's schedule to be re-organized as it affects other litigants.

25. Nevertheless, as I have said, the interests of justice are best served when the Court has before it all the relevant evidence which is admissible, and not only part of it, so long as no real prejudice is caused to the other party and so long as the delay was not intended as an "ambush".

Relevance

26. So I turn first to see if these documents are relevant. There seems little dispute between the parties that the documents in Appendices A & C (and the statement to the ICAC in App B) are relevant to the issues between the parties. I appreciate that Mr. Strachan, QC, counsel for CP, says that he has not been able in the time available to consider all the documents, but these were all documents that had been disclosed in discovery either by IHD or by CP, and in the case of documents disclosed by IHD, would have been subjected to inspection by CP's Solicitors in the usual discovery process.

27. I then turn to the transcripts of the evidence and of the summing-up.

Before I consider their relevance, it is first necessary to see what is the effect of the conviction in the present case.

28. Indisputably, it shifts the legal burden of proof from the Plaintiff to the 1st Defendant (see s.62(2)(a) Evidence Ordinance).

29. But there is also significant support for the proposition that, quite apart from shifting the burden of proof, it is also probative evidence of some weight. In Taylor v Taylor [1970] 1 WLR 1148, 1152, the Court of Appeal, considering the then first instance judgment in Stupple v Royal Insurance Co. Ltd. [1971] 1 QB 50 concurred with Paull, J in stating that the most serious consideration and the heaviest weight should be given to the fact of a conviction in the criminal court.

30. This was further discussed in the Court of Appeal in Stupple, where Lord Denning MR held that what weight is to be given to the criminal conviction would depend on the circumstances, cf Lord Buckley's view that no weight should be given.

31. Later in Hunter v Chief Constable of the West Midlands [1982] AC 529, 544 Lord Diplock held that although the burden of proof on a defendant faced with the equivalent of our s.62 Evidence Ordinance remains the ordinary civil burden of a balance of probabilities, in the face of a conviction after a full hearing, this is likely to be an uphill task - thus recognizing the greater probative weight of a conviction in circumstances where there has been a full hearing.

32. Once it is recognized that there is some probative weight in a conviction (and I consider as particularly persuasive the 2nd reason set out in Phipson on Evidence at §33-104), then the circumstances of that conviction (such as the extent of the evidence led in the trial, and the cases presented by the prosecution and the defendant, and what was argued and what was not), would be relevant in the weighing process of that piece of evidence in the civil case.

33. As such, it is clear that the transcripts of the evidence of Quek and CP at the criminal trial are likely to be relevant to the present trial.

34. Insofar as the transcript of the summing-up at the criminal trial is concerned, the purpose of a summing-up had been set out in R v Lawrence [1982] AC 511, 519: it should include a succinct but accurate summary of the issues of fact as to which the jury's decision is required, a summary of the evidence on both sides on those issues of fact and a statement of the inferences which the jury are entitled to draw from the primary facts as found by them.

35. It is true that one may not necessarily know, after a summing-up followed by a conviction, which parts of the evidence the jury had accepted and which it had not, but the summing-up (as explained in Lawrence and in Brinks Ltd. v Abu Saleh (No.2) [1995] 1 WLR 1488, 1491) would help to identify the factual basis on which the defendant was convicted. Section 62(2)(b) Evidence Ordinance envisaged that such evidence would be relevant and expressly left room for evidence for that purpose to be admitted, although as I construe s.62(2)(b), that evidence must itself be admissible under the general law of evidence (see Brinks No. 2, 1497).

36. In conclusion, therefore, I find that the documents sought to be adduced by IHD are relevant to the issues before me.

Admissibility

37. I then turn to the question of admissibility.

38. There was no substantive dispute on the admissibility of the documents in Appendices A & C.

39. As to the documents in App B, s.47 and s.49 apply to the ICAC statement and the transcripts of the evidence. Quek is said to be beyond the seas and CP is of course an opposite party, but even if that were not so, it would be open to the Court to permit their evidence at the criminal trial to be proved in any manner authorised by the Court under the proviso to s.47(3).

40. It is an interesting issue whether the summing-up would be admissible under s.47 or s.49. Davies LJ in Taylor thought that it might not be admissible under the equivalent of our s.47 Evidence Ordinance because s.47 deals with a statement in evidence, and a judge does not give evidence whilst summing-up, but he was satisfied that it would "probably" be admissible under s.49 because the summing-up was a record compiled by the shorthand writer acting under a duty.

41. This aspect was considered in greater detail in Brinks (No.2) where Rimer, J. held that the transcript of the summing-up would not be admissible under our s.47 but would be admissible under our s.49.

42. For my part, I am persuaded by the analysis that a judge, when summing-up, is not referring "testimonially" to the evidence given in the trial (i.e. referring to the evidence to establish it as true), but is referring to it merely to state that he had heard such evidence given. Viewed another way, the judge did not have personal knowledge of the facts which either party sought to adduce, but he did have personal knowledge that such evidence formed part of the cases presented before him.

43. In conclusion on this aspect of the arguments, I am satisfied that all the documents in the appendices are admissible.

44. As a matter of completeness, I would note that Mr. Strachan has also drawn my attention to certain defects in the Hearsay Notices - they refer to the documents by their discovery numbers, and have not had the documents annexed. I do not consider these to be substantive objections and in any event, non-compliance with the rules do not render the Notices a nullity.

No real prejudice

45. There being no evidence in the present case that the delay in adducing this evidence was with a view to "ambushing" the defendant, and there being affidavit evidence to the contrary, the question then is whether there is any real prejudice suffered by the defendant which is not remediable by giving him time to consider and meet this new evidence.

46. I do not find any real prejudice to have been proved. Mr. Strachan says that the case he had come to meet last week (without this evidence) would have been a weaker case than the one he will have to meet (with the inclusion of this new evidence). He says his client is prejudiced because the new evidence might turn IHD's case from a loser to a winner.

47. In the light of the discussions on the weight of the conviction, that may or may not be correct, and I say no more on this as the case has not been opened, but in any event, with respect to Mr. Strachan, whilst I understand that submission from the point of view of an adversary, I do not find that submission attractive from the point of view of a court seeking to further the interests of justice, which is generally best served by a full and proper consideration of all the evidence which is relevant to the issues between the parties, and not by considering only part of the relevant evidence, half-baked as a result of a procedural slip on the part of one party's solicitors.

48. Mr. Strachan also complains of prejudice if the Court were to permit Mr Quek's evidence to be given by way of hearsay notice only. He says that in particular where there was what he called "post-trial" material here in the form of certain "debriefing" tapes of CH Low, he would want to cross-examine Quek on the basis of the material in those tapes.

49. Mr. Strachan referred me to O.38 r.28 which provides that where a party has given notice in accordance with rule 21 that he desires to give in evidence at the trial a statement falling within s.47 which was made by a person in the course of giving evidence in some other legal proceedings, or a statement falling within s.49 which is contained in a record of direct oral evidence given in some other legal proceedings, then any party to the cause may apply to the Court for directions, and the Court may give directions as to whether, and if so on what conditions, the party desiring to give the statement in evidence will be permitted to do so, and as to the manner in which that statement and any other evidence given in those other proceedings is to be proved.

50. Mr. Strachan says that the Court should either refuse to admit Quek's evidence or impose as a condition to the admission of Quek's evidence the requirement that Quek should attend for cross-examination (as was ordered in Tremelbye (Selangor) Rubber Co Ltd v Stekel [1971] 1 WLR 226).

51. In reply to this, Mr Griffiths argues that that condition should not be imposed because Quek is beyond the seas, and he relies on the authorities that hold that once one of the grounds in O.38 r.25 is shown, in the absence of challenge by way of a Counter-Notice, the Court has no residual discretion to exclude that evidence. Tremelbye was a different case because there was no evidence there that the witnesses were unavailable.

52. As I see it, what IHD's present summons seeks in this respect is only an extension of time for it to serve Hearsay Notices under O.38 r.21. If an extension of time is given, it would be open to CP to :-

(i) consider within the 21 days under the rules whether he can challenge the assertion that Quek is beyond the seas (and here I note that the Third Party Notice had to be served on Quek out of the jurisdiction), and

(ii) also to consider (within a reasonable time, there being no time prescribed under the rules) whether to seek directions under O.38 r.28 and if so, what directions.

53. The fact that CP says that he may be asking under O.38 r.28 for directions (including directions that IHD should not be permitted to adduce Quek's evidence or to adduce such evidence unconditionally) does not in my view affect the exercise of my discretion at this stage to given IHD an extension of time to serve the Hearsay Notices under O.38 r.21.

54. Mr. Strachan has also said that he has not been given sufficient time to consider whether to ask for other directions arising from the ramifications of the new evidence - new not because the documents or their contents are newly disclosed, but new in their deployment in the case against CP.

55. I can see some force in his argument that if certain parts of the evidence in the criminal trial were to be put in evidence now, he on his part would also wish to put in some other parts of the evidence (and he has given examples of the evidence of Ngai and of CH Low). He says that he would also wish to put in other documents containing previous inconsistent statements under the provisions of the Evidence Ordinance. That is open to him if he wishes to apply for directions on this and other respects under O.38 r.28, and if he needs time to consider this, no doubt reasonable time can be given.

56. Mr. Strachan also complained that due to the lateness of the Hearsay Notices, he has not been given time to consider whether to issue Counter-Notices. I note that Mr Griffiths' summons does not seek an abridgment of time for Mr Strachan to serve counter-notices, so he would have the full period of 21 days after service of the Hearsay Notices to consider if that action is appropriate.

57. In conclusion, therefore, I would give leave to the Plaintiff to file the Hearsay Notices in Appendices A and B out of time, and to adduce the documents in App C in evidence without the need for Hearsay Notices. I will now hear the parties as to whether (and if so, when) Mr. Strachan intends to apply for directions under O.38 r.28 and other consequential matters.