RE JAMES HENRY TING

HCB 7809/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 7809 OF 2012

____________

____________

__________________________

REASONS FOR DECISION

__________________________

Introduction

1.  This was an application by the Debtor (“Mr Ting”) for an order that he do have leave to use the Technology Court to adduce his evidence by way of video conferencing facilities (“VCF”) at the substantive hearing of the Petition due to be heard on 27 and 28 August 2013. At the end of the hearing, this court dismissed the application with costs, for reasons to be handed down later.

Background

2.  By a Petition dated 23 November 2012, the Petitioner (“Akai”) sought a bankruptcy order against Mr Ting, Akai’s former Executive Chairman and CEO, in respect of debts exceeding US$1 million and GBP340,000 respectively. These debts arose out of three costs orders issued by the Judicial Committee of the Privy Council, the Supreme Court of Bermuda and the Court of Appeal for Bermuda against him in 2010 and 2011.

3.  At paragraph 1 of the Petition, the Petitioner said Mr Ting was domiciled in Hong Kong and had, within 3 years immediately preceding the presentation of the Petition, carried on business in Hong Kong.

4.  In his affirmation in opposition dated 20 March 2013, Mr Ting did not dispute the debts as such. Instead, he contended that the court did not have jurisdiction to grant the bankruptcy order against him, on the basis that, inter alia, his domicile was not Hong Kong. Nor had he carried on business in Hong Kong within 3 years immediately preceding the presentation of the Petition.

5.  On the subject of domicile, Mr Ting said this in his affirmation:

“3. I was born in Shanghai in 1950. My family moved to Hong Kong when I was 7 years old. I later moved to Australia to study and then moved again to be with my mother and sister in Canada in April 1973. I adopted Canada as my domicile of choice.

4. I obtained Canadian citizenship in 1981.  … Whilst I was living in Canada, I started the company Semi-Tech Micro-Electronics Inc. that ultimately became part of Akai. I moved to Hong Kong from Canada in 1985 to assist in the manufacturing side of the business.  Eventually the Hong Kong office became the head office of Semi-Tech Group which later became Akai Holdings Limited.  I did have a Hong Kong I.D. card as this was required in order for me to be able to work in Hong Kong.  When I came to Hong Kong, I did not intend it to become my permanent residence.  I never considered Hong Kong to be my home.”

6.  At paragraph 10 of the affirmation, Mr Ting further asserted that he never intended to adopt Hong Kong as his domicile.

7.  Akai did not accept Mr Ting’s assertion.  In the reply affidavit of Mr Borrelli filed on behalf of Akai, it contended that the preponderance of the objective evidence suggested Mr Ting had adopted Hong Kong as his domicile in the mid to late 1980s. Such evidence included inter alia the fact that for the whole period from 1985 to October 2000, Mr Ting resided in Hong Kong with his family. From its headquarters which were in Hong Kong, Mr Ting managed Akai as its chairman and CEO, save for the last month of that period.

8.  On 27 May 2013, upon Akai’s application, this court granted an order that Mr Ting do attend at the substantive hearing of the Petition and be cross-examined on his evidence, failing which no affidavit evidence filed by him be used as evidence.

9.  The substantive hearing of the Petition was due to be heard on 27 and 28 August 2013. This was of course known to the parties before the 27 May 2013 hearing. In the skeleton submissions of his counsel filed for the purpose of that hearing, Mr Ting already declared his intention to make an application for his evidence to be taken via VCF, in case this court was of the view that he should be cross-examined on his affidavit. At that time, it was envisaged by his legal advisers that such an application would shortly be launched and set down for a hearing estimated to last four hours to one day.

10.  The summons for the present application was, for reasons best known to Mr Ting, issued only on 9 August 2013 and returnable on 20 August 2013. There was no explanation from Mr Ting as to why the application was made at such a late stage.  In fact, there was no affidavit evidence from Mr Ting at all – the affirmation in support of the present application was made by his solicitor.

Unexplained and inordinate delay

11.  It is well-known that, post CJR, a late interlocutory application “may be dismissed on the basis of delay alone”: PD 5.2 at [34].

12.  The issue of delay has been expressly addressed in two recent decisions. 

13.  In Li Xiao Yun v China Gas Holdings Limited unrep CACV 38/2013, 11 March 2013, the Court of Appeal dismissed an appeal against the trial judge’s refusal of a last minute pre-trial application (to add new defendants and amend the pleadings) on the ground of delay and that the trial date would very likely be derailed. Lam JA (as he then was), giving the reasons of the Court (Lam JA, Bharwaney and McWalters JJ) stated at [18]:

“… Last minute pre-trial applications also disrupt the preparation for the trial on the part of a trial judge in terms of reading into the case. Instead of getting himself or herself familiar with the issues that have to be tackled at the trial, the judge would have to divert attention and spend time and efforts on such applications. Thus, such practice has to be discouraged and, unless there are good justifications, the unsuccessful appellant should normally be expected to face an order for indemnity costs.”

14.  In Waddington Limited v Chan Chun Hoo Thomas unrep HCA 3291/2003, 7 May 2013, Lok DHCJ repeated the warning that late applications can be dismissed on the basis of delay alone in accordance with paragraph 34 of PD 5.2, and concluded at [51] and [53]:

“51. … Apart from the prejudice likely to be caused to the parties by such late applications including the possible adjournment of the trial, there is serious disruption to the court diary as the court has to struggle to find some time during the limited time before the trial to hear the applications.

…

53.    … Unless there are exceptional circumstances and there are good reasons for the delay, one should not expect the courts to grant any late applications taken out shortly before the PTR.”

15.  The sentiments expressed by Lok DHCJ were all the more compelling in the present case when the application was taken out just one week before the substantive hearing of the Petition.  As I said earlier, there was no explanation whatsoever as to why the application was made at such a late stage. 

16.  In my view, the delay in the present case was both inordinate and wholly inexcusable. The Petitioner criticised this last minute application as “characteristically tactical”. There was force in this criticism. On this ground alone, the application should be dismissed. But there was a more fundamental objection to the application.

Evidential basis of the application

17.  The application was principally supported by a medical report of Dr Jimmy Dong, a prominent psychiatrist. The report was written after one session of examination on Mr Ting on 1 August 2013 carried out in a conference room at the Shangri-la Hotel, Shenzhen. The session lasted for 2 hours without break. 

18.  Before I examined the contents of the report, it should perhaps be noted that the Petitioner had made extensive submissions to this court that the report was not admissible as it did not contain (i) a statement of truth and (ii) a declaration of duty to court, in breach of RHC O 38 rr.37A & 37C and O 41A r.7. That may well be so. However, for reasons to be set out hereunder, the report, even if taken to its highest, would not, in my view, have sufficed to warrant the application. It therefore served no useful purpose for this court to dwell on the question of admissibility.

19.  I now turned back to Dr Dong’s said report.

20.  After reciting the background history and the history of Mr Ting’s psychiatric complaints, Dr Dong went on to set out Mr Ting’s current psychiatric symptoms as follows:

“16. Mr Ting complained about being anxious all the time. He would have dry mouth, sweating and palpitation from his anxiety. He would wake, often from nightmares related to his arrest, at least twice every night. His mood was low and he would get agitated and angry easily. His appetite decreased and he would not enjoy food. He would have flashbacks daily. He could not enjoy anything. He had loss of sexual interest. He would often cry at night. He felt that he had no future.

17. When under any circumstances that he might need to return to Hong Kong, he would become very anxious. He would also avoid it and resist it physically. When his friend talked about going to Hong Kong, Mr TING would avoid the subject. He would try to “disappear” from the conversation or the gathering completely.

18.       He felt guilty toward his wife and 2 sons…”

21.  Dr Dong then gave his opinion that Mr Ting had been suffering from an Adjustment Disorder with Depressed Mood (Code: 309.0), in accordance with Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, published by American Psychiatric Association (DSM IV), since the failing of his business. Further, Mr Ting had also been suffering from Post-Traumatic Stress Disorder (“PTSD”) (Code: 309.81) in accordance with DSM IV since his arrest in Hong Kong at the immigration counter in 2003.

22.  Most important for the present discussion was Dr Dong’s recommendation at the end of his report ie Mr Ting “should not return to Hong Kong for the time being” because doing so would cause further deterioration to his mental state as well as increased mental suffering. Dr Dong then added that Mr Ting was mentally fit to give evidence by other means, such as by video conferencing.

23.  In response, the Petitioner submitted a report by Professor Felice Lieh-Mak GBS CBE JP, Emeritus Professor in Psychiatry at the University of Hong Kong, which set out her comments on the methodology adopted by Dr Dong in examining Mr Ting and challenged his diagnosis. I should note that Professor Lieh-Mak did not have the opportunity to examine Mr Ting.

24.  In particular, Professor Lieh-Mak criticised Dr Dong for inter alia:

(a)   failing to perform any simple test for reliability, as required of an expert psychiatrist;

(b)   failing to obtain records of previous consultations which would have cast light on whether Mr Ting did indeed suffer from depression or was just distressed by the failure of his business;

(c)    in respect of the diagnosis of PTSD, failing to follow the recognised criteria and that the “traumatic event” complained of by Mr Ting ie a threat from a law enforcement officer was not the kind of stressor that could give rise to PTSD (such as military combat or being kidnapped).

25.  Professor Lieh-Mak concluded her report in this way:

“The report by Dr. Dong is self-serving. It is based entirely on the uncritical acceptance of the subjective complaints made by Mr Ting.

There is no compelling psychiatric reason for Mr Ting not to return to Hong Kong to give evidence.”

26.  Other than responding to some of the adverse comments by Professor Lieh-Mak, Dr Dong’s supplementary report did not take the matter any further. He maintained his original recommendation that Mr Ting should not return to Hong Kong.

Discussion

27.  I will first survey the three most important recent authorities on the giving of evidence by VCF. 

28.  In Re Chow Kam Fai [2004] 2 HKLRD 260, Rogers VP established the following propositions on the giving of evidence by VCF:

a.   “…the giving of evidence by VCF was an exception rather than the rule and that it would be a matter of privilege accorded to the respondent and not a matter of right for him to be allowed to do so” (at [16]);

b.   “The starting point must be that proceedings are conducted in court” (at [17]);

c.   “…the atmosphere of a court is highly important as regards the taking of evidence.  The solemnity of court proceedings and its atmosphere is something which, I have no doubt, plays an important role in the way justice is administered.” (at [18]);

d.   “There is no doubt that VCF is a highly useful tool.  It must be a question of judgment in each case as to whether VCF should be used for the taking of evidence.  No doubt, on those occasions when the witness is giving evidence that is technical or purely factual, without important issues as to credibility, a court may be more disposed to allow evidence to be given by the use of VCF.  Questions of cost and convenience are no doubt also important considerations that the court will have to weigh in deciding whether to allow evidence to be given using VCF.  But, first and foremost, it seems to me that the Judge was correct in his approach that a party wishing to give evidence using VCF should establish a sound reason why that privilege should be accorded.” (at [19]) (emphasis added)

29.  The decision in Chow Kam Fai was applied in Raj Kumar Mahajan v HCL Technologies (Hong Kong) Ltd [2010] 5 HKLRD 119 in which the Court of Appeal upheld the decision of the trial judge (HCA 1510/2004, 15 September 2010, L Chan DHCJ) to reject an application by a defendant to give evidence by VCF by reason of inter alia his alleged medical condition.  

30.  Dismissing the application for leave to appeal, Rogers VP accepted that VCF was a useful tool in situations where the credibility of a witness was not at stake, but also stressed the importance of the solemnity of court proceedings (at [7] – [8]):

“7. As far as I am concerned the solemnity of the court is most important. In Hong Kong it is important that the members of the court, both the judges and counsel appearing, are properly attired. It is important that the court proceedings are carried on in court in the way that we do. It does give a solemnity to the occasion. One only has to observe parties and witnesses coming to court to observe their demeanour. It does have an impact. Giving evidence via a television link, in my view, dispels part of that. The place for a judge to sit, for witnesses to give evidence and for submissions to be made, is in court.

8.     This so-called VCF system, which Hong Kong does have, and, indeed, the Technology Court is frequently used for it, is a very useful tool but, as I said previously, it is a tool which should be used with some care.  If a witness is not giving evidence that is likely to be attacked on the basis of credibility, it may be important.  If, for example, one has technical evidence, perhaps from a well-known and busy physician or surgeon in a foreign country, who has many other patients under his care and many other considerations and is giving highly technical evidence, it may well be important and useful to have his evidence by video link because otherwise one may not have it at all.  But these are very different circumstances.”

31.  The most recent Hong Kong decision on VCF is that of the Court of Appeal in Daimler AG v Leiduck (No. 2) [2013] 2 HKLRD 822which illustrates the kind of circumstances in which a VCF application ought to be granted.  In that case, a defendant, who was in his 80s and lived in Germany in a home for the aged with round the clock medical care, produced evidence from two of his doctors, one of over ten years, affirming (at [7]) that the defendant suffered from:

“the following cardiac problems: severe coronary heart disease, status post anterior and posterior myocardial wall infarction, status post multiple coronary artery stent-implantations with no further options for any additional revascularisation procedure, chronic heart failure, recurrent cardiac arrhythmia, status post pacemaker implantation, chronic cardiac failure and angina pectoris.”

32.  The medical evidence further showed that the defendant was virtually blind and not in a position to travel to Hong Kong because “a journey to Hong Kong by air, or by other means, would be life‑threatening”.

33.  Barma JA (Fok JA agreeing) granted the VCF application holding that, at [19], the “uncontradicted medical evidence is to the effect that it would be life-threatening for the 1^st defendant to have to travel to Hong Kong”. In allowing the application, the Court of Appeal accepted the earlier decisions outlined above but distinguished them, highlighting, at [18], that it was not impossible for the witnesses in those cases to travel to Hong Kong.

34.  The question of Mr Ting’s domicile would be a critical issue at the substantive hearing of the Petition. This, in turn, would involve the determination of the subjective intention of Mr Ting when he moved to Hong Kong in 1985 and started to build the Akai business empire from Hong Kong. From this court’s point of view, it would be wholly unsatisfactory if it had to adjudicate upon this critical issue on the basis of affidavit evidence alone, untested by cross‑examination. Domicile of choice is a difficult issue in itself and it is doubly difficult for the court when it is asked to disbelieve a witness on affidavit, which is likely to be the case here. That was why this court ordered Mr Ting to attend the substantive hearing of the Petition and be cross-examined on his affidavit evidence.

35.  The Petitioner, at this hearing as in the previous hearing, kept emphasising that Mr Ting was an individual who had been found by the court to have acted with dishonesty. The matter, according to Mr Borrelli’s second affidavit, came about in this way.

36.  After the collapse of Akai, Mr Ting was charged with false accounting offences arising from a transaction referred to as the “Micromain” transaction.  The Micromain transaction involved a series of circular payments of HK$100 million which created the false impression that Akai had made an investment in a company called Micromain when in fact no such investment had been made. Following a trial of 38 days, on 30  June 2005, Mr Ting was convicted and sentenced to 6 years imprisonment. Ting appealed to the Court of Appeal which quashed his conviction but ordered that there be a retrial. Ting then appealed the order for a retrial to the Court of Final Appeal.  On 5 November 2007, the Court of Final Appeal held that it was inappropriate that there be a retrial and Mr Ting was released from custody.

37.  While Mr Ting’s conviction was quashed and he was not retried, this was due to manner in which the case against him had been presented by the prosecution. Lord Woolf NPJ, whose judgment was concurred with by all other members of the Court of Final Appeal, stated that Mr Ting had “properly been found by a jury to have acted with dishonesty notwithstanding that his convictions had to be set aside”: (2007) 10 HKCFAR 632 at [52].

38.  Mr Ting’s credibility and integrity was therefore starkly challenged by the Petitioner. In these circumstances, it seemed to this court that there was an acute need for in person cross-examination so that it could directly observe Mr Ting’s demeanour and listen to his viva voce evidence at the hearing of the Petition. In this way, the solemnity of the court proceedings would permit, as far as practicable, a more effective way of taking Mr Ting’s evidence, whether in terms of examination in chief, cross-examination or re-examination, and enable the court to get to the truth and make a proper adjudication on Mr Ting’s credibility, one way or another.

39.  The question then was whether Mr Ting was precluded by his medical condition from coming to Hong Kong.

40.  As I saw it, even accepting Dr Dong’s reports at their face value, there was nothing to suggest that Mr Ting was unable to come to Hong Kong - Dr Dong’s recommendation was simply that Mr Ting should not return to Hong Kong for the time being, because doing so would cause further deterioration to his mental state as well as increased mental suffering.  

41.  Objectively speaking, Mr Ting was certainly fit to travel. According to his affirmation in opposition dated 20 March 2013, he currently resided in Chengdu, Sichuan. He was fit to travel far south to Shenzhen for his medical examination on 1 August 2013. If he were able to travel from Chengdu to Shenzhen, he would certainly be fit to travel from Shenzhen to Hong Kong.

42.  This court was not impressed with Dr Dong’s rather vague conclusion that returning to Hong Kong would cause further deterioration to Mr Ting’s mental state as well as increased mental suffering. It stands to reason that such deterioration could be severe or mild, permanent or temporary, life-threatening or otherwise. If Dr Dong had been of the opinion that the deterioration to Mr Ting’s mental state was such as to preclude Mr Ting from travelling to Hong Kong, he should have said so. He had not. This court could only conclude that Dr Dong did not hold such an opinion. Much the same could be said with regard to the so-called increased mental suffering.

43.  In these circumstances, this court was far from satisfied the medical evidence even came close to establishing that Mr Ting was unable to come to Hong Kong by virtue of a medical condition. There was thus really no need to resolve the conflicting medical evidence submitted by the parties in this application. Even taking Dr Dong’s reports at their highest, there was no justification to dispense with Mr Ting’s personal attendance at the hearing of the Petition.

44.  Put it in another way, the question for this court, at the end of the day, was this: what course was best calculated to achieve a just result for both parties: Daimler AG v Leiduck (No. 2) at [28]. 

45.  On behalf of Mr Ting, it was submitted that if the present application was dismissed, he would be unable to challenge the lawfulness of the Petition because this court had already ordered that he should attend the substantive hearing for cross-examination, failing which he would not be allowed to rely on his affirmation in opposition. If the Petition succeeded, the result would have far larger and graver consequences to Mr Ting as it would mean he could not defend an action ie HCA 42/2005 brought against him by the joint liquidators of Akai involving in excess of US$800 million.  The hearing of the action was due to commence on 18 November 2013 with 20 days reserved.

46.  I did not agree. If Mr Ting was not precluded from coming to Hong Kong by reason of his medical condition, there was no other reason why, if the present application was dismissed, he could not or should not attend court for cross-examination. If so, he would still be able to oppose the Petition on the ground of domicile or otherwise. If he nevertheless chose not to attend court for cross-examination, any prejudice thereby created would be self-induced. As to whether or not Mr Ting could defend the action brought against him by the joint liquidators of Akai, that would be a matter for the trustee in bankruptcy once a bankruptcy order was made. It was not the business of this court to speculate.

47.  On the facts of the present case, I did not think Mr Ting had made out a valid case that it would be just for him to testify by way of VCF instead of in court.

48.  For these reasons, this court was of the firm view that Mr Ting had failed to establish a sound reason why the privilege of testifying by VCF should be accorded to him. The application was dismissed.

Costs

49.  Costs should normally follow the event. This court saw no reason to depart from this rule in the present case. Mr Manzoni SC asked for costs on the ordinary basis. This court therefore ordered that the costs of and occasioned by the application be to the Petitioner, to be taxed if not agreed on the party and party basis and paid forthwith.

50.  For the benefit of the taxing master, I should record that, in view of the lateness and urgency of the application, it seemed to this court that the Petitioner was, in the rather difficult circumstances of this case, justified in having the assistance of two counsel.