QUIET & COOL ENGINEERING CO. LTD. v. TSE KAM LUEN t/a SHING YIP ENGINEERING CO.

CACV 1078/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 1078 OF 2001

(ON APPEAL FROM DCCJ NO. 18 OF 2001)

____________________

____________________

____________________

J U D G M E N T

____________________

Hon Rogers VP:

1. The plaintiff in this action is an air-conditioning contractor. The defendant was a general contractor. The plaintiff brought an action against the defendant in respect of a number of different invoices which were said to have arisen from work carried out by the plaintiff as sub-contractor for the defendant.

2. By the time the matter came to trial there remained in dispute a total of something over HK$500,000. In respect of three invoices there was no dispute that the plaintiff had carried out the work on the defendant's instructions. In respect of the fourth invoice, the dispute was as to whether the plaintiff had carried out the work at the premises of a new fitness centre on the defendant's instructions or upon the instructions of Action Pro Enterprises Limited.

3. The dispute in respect of the first three invoices arose because the defendant alleged that there had been an agreement on 16 April 1999 that the defendant would only pay HK$99,020 in respect of three invoices which totalled HK$299,020. The defendant alleged that he had been caused a loss of something in the region of HK$400,000 because the plaintiff's work at a development in the New Territories, namely, Grand Palisades, had been delayed. It was said that although the plaintiff and defendant were not in direct contractual relationship in relation to that project, because the defendant would have had a claim against the main contractor which could have been passed on to the plaintiff, the employer under the contract had requested the plaintiff and defendant to settle their differences between them directly. After a long period the matter had finally been settled by the plaintiff agreeing to waive $200,000, which was half of the amount originally claimed by the defendant.

4. In respect of the work carried out at the fitness centre, the defendant's case was that although he was in partnership with a Mr Randy Yu in relation to the fitness centre through his shareholding in Action Pro Enterprises Limited, he was not responsible for instructing the plaintiff. It was the defendant's case that Randy Yu knew the plaintiff well. It was said that it was Randy Yu who decided to engage the services of the plaintiff and that all negotiations were done by him on behalf of Action Pro Enterprises Limited. The defendant's witness statement, which was adopted as his evidence-in-chief, went on to say that Randy Yu had no position in the defendant's firm and that he had no capacity to negotiate or deal with the plaintiff on the defendant's behalf. It was made clear however that on occasions Randy Yu did go to the defendant's offices and did use the fax machine there.

The trial

5. The trial of the action was set down for hearing over two days. A full transcript has been provided. There were only two witnesses. Mr Yu To Cheung gave evidence on behalf of the plaintiff. Despite the fact that he adopted his witness statement and confirmed its truth at the beginning of his oral evidence, he appears to have been taken through his witness statement quite fully in examination in chief. The judge noted the pointless nature of many of the questions asked in chief. After he had observed that fact, the judge himself asked a number of questions with regard to that witness's dealings with Randy Yu. The judge appears to have been satisfied on the say-so of the witness that Randy Yu was a staff member of the defendant despite the fact that there was no indication as to how the witness might have known that or the basis of his professed knowledge.

6. The cross-examination of the plaintiff's witness commenced with questions in relation to the Grand Palisades project and as to whether there had been a dispute between the parties. The plaintiff's solicitor objected to some part of the translation. Not only did the judge overrule the objection without inquiring as to the nature of it, but he blamed the defendant's counsel for raising the objection. He then appears to have taken issue with the phrasing of a question and, although the defendant's solicitor attempted to direct the judge's attention to the question he wanted to ask, it is clear that the judge concentrated entirely on his own objection without appreciating the nature of the defendant's solicitor's question. There followed a somewhat heated exchange between the judge and the defendant's solicitor during which the solicitor complained that he was not being given an opportunity to cross-examine in a meaningful manner.

7. It then appears that for what has been described as ten minutes but was approximately four pages of transcript, the judge interrupted the cross-examination of the plaintiff's witness and examined him himself on the major point of the defence in relation to the payment of the three invoices. It should be observed that the questions were not directed to clarifying ambiguities but were directed to matters in the defendant's case about which the solicitor had not yet asked questions. There were then warnings from the judge to all concerned that any challenge to the interpretation had to be done in the formal manner and the witness was told not to interject any arguments into his answer.

8. When the defendant's solicitor turned to the question of the witness's contact with Randy Yu the judge again asked questions. When the defendant's solicitor attempted to follow up on those questions the following interchange took place.

"COURT:	Ever involve with him in any way, in the business negotiation, business, or did he ever give you any job, or did he ever negotiate with you for another job? I mean, before the fitness centre.
A.	Not at all.
Q.	So when you were ...
COURT:	Wait, wait, wait.
MR CHAN:	I'm sorry.
COURT:	Do you have any social contact with him, inviting him out for a drink, dinner, a meal, etc., etc., just to get together personally, socially?
A.	No.
COURT:	Yes?
Q.	So you are saying that you were in touch with him neither socially, nor ...
COURT:	That is what he said. Why do you have to repeat?
MR CHAN:	Well, I follow that up with another question, your Honour.
COURT:	Yes.
MR CHAN:	Yes, because it would be ...
COURT:	That is not necessary. That is what he said.
MR CHAN:	I say that, well, because if I want to put another question in that context, I have to say ...
COURT:	You don't have to say this.
Q.	Now, Mr Yu, all right, I put ...
COURT:	What kind of context do you have in mind which has not been covered by my question? By all means, put that to him. You just ask 'Did you mean to say this?', he meant what he said. It cannot be simpler, can it? If you can make it simpler, by all means, but you don't have to ask him, 'Did you mean to say ...' This is exactly what he meant. Yes?
MR CHAN:	Well, he said two things.
COURT:	No business dealing, no social contact.
MR CHAN:	He said two things.
COURT:	Yes."

9. After that interruption, the defendant's solicitor elicited from the witness the answer that there had been no contact whatsoever between the witness and Randy Yu. The defendant's solicitor then asked whether in relation to the fitness centre project, the defendant did all the talking and not Randy Yu to which the answer was that Randy Yu did telephone the witness once about the project. There followed the following interchange:

"Q.	Did you ask Randy Yu why was he phoning you, why was he talking to you? What position did he have in relation to the job?
COURT:	Did you ask him that?
A.	No.
...
Q.	Did you ask him, 'What's that to do with you? I'm contracting with Shing Yip ...'
COURT:	He said he did not ask.
Q.	Why did you not ask him, 'What's that to do with you? I'm contracting with Shing Yip ...'
COURT:	Why do you say he should ask that?
MR CHAN:	Well, because out of the blue he received a telephone ...
COURT:	Well, why out of the blue if he was the employer? Why out of the blue? He's the ultimate employer.
MR CHAN:	Ultimate employer of what?
COURT:	Why do you think he should ask this?
Q.	Is it not natural that when someone phone you out of the blue ...
COURT:	It's not out of the blue.
MR CHAN:	It's out of the blue; it's the first time, he told us. They had not been in touch at all.
A.	Because I thought that he was waiting for Shing Yip and he told me -- and according to him, he was setting up some claims for Sino."

That interruption was unwarranted and unfairly disruptive of the defendant's case. It indicated in part the possibility that the judge had formed a conclusion as to the relative relationships between Randy Yu, the defendant and the plaintiff. In the light of the interjections from the court it is hardly surprising that the defendant's solicitor did not follow up an answer from the witness that he had met Randy Yu "in some gatherings". To have done so would have simply invited further rebuke and risked antagonising the tribunal of fact.

10. The evidence concluded at 3:43 pm on the first day and at 3 pm on the second day the judge delivered an oral judgment. In the course of that judgment the judge considered with the question of the three invoices which totalled $299,020 and the defendant's case that a cheque of $99,020 had been paid in discharge of those because of the set-off arising from the complaint in respect of the plaintiff's carrying out of the work at Grand Palisades. The judge came to the conclusion, in part at least based on the fact that there had been no challenges to the monthly statements in which the amounts alleged to be owing were set out, that the defendant's defence failed.

11. The judge appears to have accepted that the defendant himself did not sign the contract for the fitness centre. He said "No satisfactory explanation has been offered as to who signed it and in what authority that person has signed the contract." Such an observation might be thought to lead to the conclusion that in the absence of an explanation as to any authority of the person to sign the contract the court would come to the conclusion that the person signing it did not have authority on behalf of the defendant. That, however, was not the conclusion to which the judge arrived.

12. In my view the judge's intervention and the taking over of the cross-examination of a major part of the defendant's case was excessive. On reading the transcript it would appear that the judge became so intimately involved in the examination of the witnesses that not only did the judge fail to allow the defendant's solicitor to develop the defendant's case and examine the plaintiff's witness in the best way he saw fit but also the judge put himself in a position where it would appear that he was likely to have formed conclusions from his own examination of the witness and these might be faulty by reason of the fact that he himself had overlooked aspects which could have been brought out by somebody else. To use the time hallowed phrase, his eyes would have become clouded with the dust of the arena.

13. Mr Lin urged upon us that in view of the documentary evidence the judge's conclusion was inevitable. In my view that is not necessarily so. Indeed, if that had been so there might have been no need for a trial, the matter could have been decided by a summary judgment. Mr Lin also urged upon us that a considerable latitude should be allowed to a trial judge in terms of case management and proactive control of the proceedings before him. However, it has to be observed that case management cannot be allowed to extend to turning the testing of evidence from an adversarial procedure into an inquisitorial procedure. It is one thing for a judge to limit the evidence to that which is relevant to the issues that have to be tried and to clarify matters which he feels need clarification arising out of the evidence. It is quite another thing for a judge to take over the conduct of the cross-examination when there is no cause to consider that the legal representative is incapable of carrying out that task. Of course, a judge is entitled to ask questions during the course of the evidence if he feels that the clarification is most appropriately done at the time rather than delaying it until the end. As a general rule, however, questions from the court are often best raised once the parties have concluded their examination of the relevant witness.

14. In this case, regrettably I have come to the conclusion that because of the judge's interventions the defendant's solicitor did not have a proper opportunity of challenging the plaintiff's evidence and thereby putting forward the defendant's case. Even giving full weight to the circumstances of the case urged upon us by Mr Lin, I cannot say that the plaintiff would have been bound to succeed in the action. In those circumstances, this appeal should be allowed, the judgment below set aside and the matter remitted to the District Court to be retried by another judge.

Hon Le Pichon JA:

15. I agree.

Hon Yeung J:

16. I agree.

Hon Rogers VP:

17. The appeal will therefore be allowed, the judgment in the court below will be set aside, the matter will be remitted to the District Court to be retried by a judge other than the judge who heard the matter on the first occasion. There will be an order nisi that that the costs here and below will be to the defendant.