CHEUNG FAT ENTERPRISES LTD v. HARVEST TREASURE LTD AND OTHERS

FAMV No 37 of 2016

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 37 OF 2016 (CIVIL)

(ON APPLICATION FOR LEAVE TO APPEAL FROM CACV 67 OF 2016)

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REASONS FOR DECISION

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Mr Justice Tang PJ:

1.  The 1^st respondent, Harvest Treasure Limited, (“R1”) is the owner of two domestic flats in a block of 10-storey commercial/residential composite building known as the Po Fat Building (“the building”).[1]  The Lot on which the building is situated (which I will refer to collectively “as the property”) was the subject of an application for a compulsory sale order under the Land (Compulsory Sale for Redevelopment) Ordinance Cap 545 (“the Ordinance”).  On the 31 December 2015, the Lands Tribunal made an order[2] for the sale of the property by public auction under s 5(1)(a) of the Ordinance.  After an unsuccessful appeal to the Court of Appeal, the property was scheduled to be sold by public auction on 26 August 2016.  On 22 August 2016, the Court of Appeal refused leave to appeal to the Court of Final Appeal.  It also refused a stay pending an application for leave to appeal to the Court of Final Appeal.  On 22 August 2016, R1 applied to a single judge for a stay pending the hearing of their application to the appeal committee for leave to appeal.  I heard the application on 24 August 2016 and refused a stay.   These are my reasons.

2.  Mr Ambrose Ho SC leading Mr Jonathan Lee made the point that if a stay is not granted and the property is sold, R1 would have lost the flats irreversibly.  Also, it was said that, because the building was developed by the father of a director of R1,[3] the director[4] is sentimentally attached to the flats.  I was told the flats had been used as staff quarters but have been unoccupied for eight to ten years.  As noted the flats have a combined value of $6,990,000, they are situated in Belchers Street and were built over fifty years ago.  I do not believe it is said that the flats are particularly special or unique.  On the other hand, since the first convenient date for the hearing of the application for leave is November, it is clear that given the value of the lot and the intended development, the potential loss to the applicants is substantial.[5]

3.  Mr Ho submitted that three questions of great general or public importance are involved in the appeal and leave to appeal was sought from the Court of Appeal on these questions as well as on the “or otherwise” ground. Briefly stated, these questions arise from the fact that an expert witness of the applicants, Mr C Chan, had not disclosed the fact that there was a pending disciplinary proceedings against him in his witness statement or in his oral evidence.  Mr Chan’s evidence was concerned with whether the age and/or the state of repair of the building justified redevelopment under s 4(2)(a) of the Ordinance, as well as the valuation of the existing units and the redevelopment value (“RDV”) of the property for the purpose of the sale by auction.

4.  Mr Chan, concluded his evidence on 20 August 2015.  On

“gave opinions in (his) professional capacity as a professional member that were not, to the best of (his) ability, objective, reliable and honest”.[6]

5.  The information prompted R1 to contend[7] before the Lands Tribunal that Mr Chan’s failure to disclose the pending disciplinary proceeding in his written reports or oral evidence was a non compliance with Order 38 Rule 37C and para 9 of the Code of Conduct for expert witnesses[8]. 

6.  The Lands Tribunal rejected the argument that Mr Chan was under any duty to disclose the pending disciplinary proceedings or that in any event, that failure to comply with Order 38 Rule 37C would render Mr Chan’s evidence inadmissible.  The Lands Tribunal relied on inter alia, s 10(6) of the Lands Tribunal Ordinance which permits the Lands Tribunal to “admit in evidence any statement, document, information or matter, whether or not it would otherwise be admissible in evidence and attach such weight to it as may be appropriate in the circumstances.”

7.  The Lands Tribunal also said :

“56. It was Mr C Chan’s explanation in his letter that he discovered about the Decision and the Suspension one day after he finished his evidence before the Tribunal. There was no evidence to contradict such saying and there was no application made by any of the respondents to cross-examine Mr C Chan on this. We accept that he was not aware of them when he was in the witness box. We are of the view that he should be presumed innocent up to the time of ‘conviction’.”

8.  After a detailed and convincing discussion of Mr Chan’s creditability and consideration of his and the evidence of the expert called on behalf of R5, 6 & 7, the Lands Tribunal accepted a substantial part of Mr Chan’s evidence.

9.  R1 applied for leave to appeal to the Court of Appeal.  On 22 March 2016 leave was granted by the Court of Appeal “in terms of the challenge to the weight attached to (Mr Chan’s evidence)”[9] but not on the question of admissibility.[10]

10.  By judgment dated 15 July 2016, the Court of Appeal dismissed the appeal.

11.  On 22 August 2006, the Court of Appeal refused leave to appeal.  The 3 questions said to be of great general or public importance, which are repeated before me are:

“Question 1

(1) Having regard to the letter and spirit of the Code of Conduct referred to in Order 38 rule 37C of the Rules of the High Court (Cap. 4A), and having acknowledged that pending disciplinary proceedings by an expert’s professional body may potentially affect the Court’s assessment of his reliability as an expert, whether in a civil matter it is correct as a matter of principle that an expert is not required to disclose any pending disciplinary proceedings against him, but is only required to do so as and when the charge is determined and a sentence curtailing his ability to practise as a member of that professional body imposed against him in such proceedings.

(2) Having regard to the matters set out in (1) above, whether in a civil matter the party who adduces expert evidence is never required to disclose to the other parties to the litigation pending disciplinary proceedings by the expert’s professional body against the said expert; and as a matter of principle, whether the first-mentioned party is only required to do so as and when the charge is determined and a sentence curtailing the expert’s ability to practise as a member of that professional body imposed against the said expert.

Question 2

Whether it is correct as a matter of principle that outside the context of case management where the probative value of the expert evidence has to be considered, the Court has no general power to rule against the admissibility of an expert report; and whether as a matter of principle it is correct that there is ‘no scope for expunging [the expert’s] evidence on the ground of his breach of duty towards the court or his failure to appreciate such duty.’

Question 3

Whether the party who adduces expert evidence bears the burden of showing that the expert understands and discharges fully his duties to the Court, rather than imposing such burden on the other party(ies) to show that there had been a breach of duty to the Court on the part of the said expert.”

12.  I will not deal with them separately.  They have been dealt with fully by the Court of Appeal and with respect I agree with the Court of Appeal.  As explained by Mr Ho, Question 2 sought to raise the question of admissibility.  The Court of Appeal rejected it on the basis that they had refused leave in March 2016.  Mr Ho submitted that since the Appeal Committee granted leave to appeal last Friday in FAMV No 21/2016 to raise the question “Does the CFA have jurisdiction to entertain an appeal from a judgment of the CA refusing leave to appeal to it”, an appeal committee could even now grant R1 leave to appeal against the refusal of leave out of time.  Even so, I do not believe it is at all likely that leave would be granted.  I do not believe it is reasonably arguable that Mr Chan’s failure to disclose the pending disciplinary proceedings would render his evidence inadmissible.  In this context, it is logically Mr Ho’s case that failure so to disclose would have rendered the evidence inadmissible even though the proceedings resulted in the exoneration of Mr Chan.  In this context, in fairness to Mr Chan, I must point out that Disciplinary Board’s decision was eventually set aside by consent in judicial review proceedings brought by Mr Chan.

13.  I can deal with the attempt to raise the question of creditability before this court more briefly.  This issue has been dealt with at length below.  With respect, the decisions below are plainly right.  This is not a case where an appeal committee would grant leave for the matter to be argued a third time. 

14.  But even if leave to appeal is a possibility, I would nevertheless refuse a stay.  I will not repeat what I have said in para 2 above.  The loss to the applicant of a stay is clearly disproportionate to any loss which R1 may suffer.

15.  For these reasons, I have refused a stay with costs.

[1] The existing use value of all the residential units flats have been agreed by the experts.  R1’s flats represented 1.3275% of the total existing use value (“EUV”) of all the units.  See judgment of the Lands Tribunal at para 109.

[2] By then, there were only two opposing owners, namely, R1 and R5, 6 & 7 who together owned one flat.  R5-7 are not parties to this application.

[3] A Hong Kong company, with a paid up capital of $1000, and ultimately owned by a BVI company.

[4] Who presumably controls and ultimately owns R1.

[5] I accept that it is difficult to quantify the potential loss.  They are also probably irrecoverable, unless there is an undertaking as to damages.  It was not R1’s case that it would be willing or able to compensate the applicants for their potential loss.

[6] They were also informed that on 21 August 2015, Mr Chan first became aware that he had been suspended for one year from 20 August 2015.

[7] I have not set out in full or in any detail, the various objections taken.

[8] Para 23 of Lands Tribunal’s judgment.

[9] Para 27 of  judgment, 15 July 2016.

[10] Para 4 of CA leave judgment, 22 August 2016.