CAMP 102/2020
[2021] HKCA 328
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
MISCELLANEOUS PROCEEDINGS NO 102 OF 2020
(ON AN INTENDED APPEAL FROM HCA NO 4089 OF 1994)
________________________
BETWEEN
DAIMLER AG
Plaintiff
and
HELGE HERBERT LEIDUCK,
1st Defendant
INTERCONTINENTAL RESOURCES COMPANY LIMITED
2nd Defendant
________________________
Before: Hon Kwan VP and Yuen JA in Court
Dates of Written Submissions: 16 and 31 July 2020
Date of Judgment: 17 March 2021
________________________
J U D G M E N T
________________________
Hon Kwan VP (giving the Judgment of the Court):
1. This is the defendants’ application for leave to appeal to the Court of Appeal against the judgment of Recorder Lisa K Y Wong, SC (as Lisa Wong J then was) given on 2 December 2016 (“the Judgment ”), in which the judge made rulings on the competence of the 1st defendant, the late Mr Herbert Leiduck (“Mr Leiduck ”)[1]
2. On 3 July 2020, the judge handed down a decision[2] the Leave Decision ”) refusing leave to the defendant to appeal against §§(3) and (4) of the order in the Judgment. The judge held that none of the six grounds of appeal in the draft notice of appeal have reasonable prospect of success. She is also not satisfied there is some other reason in the interests of justice why the intended appeal should be heard, noting that she “[finds] it difficult to envisage the recurrence of the same or similar combination of facts and circumstances, the resolution of which would turn on the burden of proof so that some future case or cases might benefit from a judgment of the Court of Appeal on the incidence of the burden of proof under s 3(b) [of the Evidence Ordinance, Cap 8].” Further, even if there is a reasonable prospect of success, the judge would still exercise the residual discretion to refuse leave to appeal, consistent with the underlying objective under Order 1A rule 1(c) of the Rules of the High Court (ie promotion of reasonable proportion and procedural economy in the conduct of proceedings).
3. On 16 July 2020, the defendants issued the present summons to renew their application before the Court of Appeal for leave to appeal. The draft grounds of appeal relied on are the same as those argued before the judge.
4. Having considered the papers and the submissions, we exercise our power under Order 59 rule 2A(5) to determine this application on paper without a hearing.
Background
5. We refer to §§10 to 29 of the Judgment for a narrative of the background matters of this action. We do not propose to repeat them. For present purpose, a very brief summary would be sufficient. In April 1994, the plaintiff obtained a Mareva injunction against Mr Leiduck and the 2nd defendant, Intercontinental Resources Co Ltd (“IRC ”), upon the usual cross-undertaking as to damages. The injunction was discharged against both defendants for several reasons. After the lapse of more than ten years, in July 2007, the defendants applied for an inquiry as to the damages suffered by them by reason of the injunction and for payment of damages upon such inquiry.
6. In support of the defendants’ case to set aside a settlement agreement between the plaintiff and IRC and the defendants’ claim for damages, from January 2008 to January 2013, Mr Leiduck made a number of affidavits, witness statements and provided answers to interrogatories. He also gave oral evidence via video link between 25 February 2013 and 22 August 2013. When he stopped giving evidence on 22 August 2013 for the reason to be mentioned, his re-examination was under way.
7. On 7 July 2011, Mr Leiduck was diagnosed to be suffering from dementia with Lewy-bodies (“DLB ”), and his cranial computed tomography images recorded on the same day showed clear evidence of severe vascular brain changes, which is diagnostic for vascular dementia (“VaD ”) (or a vascular contribution to cognitive impairment). However, this was not made known to the judge at the outset of the trial. And even after that date, he did not have to suffer from signs of dementia everyday. It depends on different times and under different circumstances with different situational demands[3] .
8. Mr Leiduck also suffered from a condition called retinitis pigmentosa. He became completely blind in 2011 or 2012.
9. DLB is not a common form of dementia. According to the joint expert subsequently appointed by the court, Dr Hans Förstl, the course of both DLB and VaD, though downhill, is characterised by fluctuations, the amplitudes of which can be quite significant and drastic. The patient may on some days be capable of performing quite well, not appearing to be demented at all. On other occasions, especially under pressure, he may show clear signs of dementia. The fluctuations can occur within a matter of hours[4] [5]
10. On 22 August 2013, which was the 34th day of the trial, before Mr Leiduck resumed his testimony under re-examination, the defendants’ counsel, Mr Horace Wong, SC handed to the judge the English translation of a medical report of Mr Leiduck commissioned by the court in Augsburg, Germany. The report noted that he was suffering from dementia and cerebral-organic psycho-syndrome and concluded that he was completely unable to participate as a witness in court proceedings, with no prospect of recovery.
11. The judge adjourned the trial for the defendants to make full and proper disclosure of all the information regarding Mr Leiduck’s mental health and capacity and for the parties to consider the implications on the evidence already given. By the resumed hearing on 28 August 2013, it was recognised by all that the available medical reports put into question Mr Leiduck’s fitness both as a party and as a witness.
12. On 5 November, 8 November and 3 December 2013, the judge gave directions for assessing Mr Leiduck’s competence as a witness. Dr Förstl was appointed the joint expert to assess Mr Leiduck’s mental condition at various times material to the competency issue, and he examined Mr Leiduck on 30 January and 9 February 2014.
13. The relevant aspects in the judge’s directions for resolving the competency issue are as follows:
(1) whether Mr Leiduck was, at the time of his examination by Dr Förstl, incompetent to give evidence in these proceedings within the meaning of section 3(b) of the Evidence Ordinance;
(2) if so, since which date had he become so incompetent; and
(3) in particular, whether he was so incompetent on the dates when he swore/signed his affidavits/witness statements/answers to interrogatories and gave oral evidence.
14. To resolve the competency issue, the judge heard oral evidence from Dr Förstl and one medical expert each from the plaintiff (Professor Felice Lieh Mak) and the defendants (Professor Helen Chiu Fung Kum) over 20 days. A total of seven reports were provided by the three experts. Primary factual evidence was given by the doctors who treated Mr Leiduck, the hospital and nursing home to which he was admitted, and his family and friends.
15. The judge held that the defendants have the burden of proving that Mr Leiduck was not at the material times incompetent as defined in section 3(b) by showing, on a balance of probabilities, that Mr Leiduck:
(1) was not of unsound mind; or
(2) did not appear incapable (a) of receiving just impressions of the facts respecting which he was examined or (b) of relating them truly[6]
16. Owing to the typical changeability of DLB and VaD, each occasion on which Mr Leiduck gave evidence, and each piece of evidence given by him, has to be examined and evaluated individually[7]
17. The judge made these findings embodied in the order of the Judgment:
(1) Mr Leiduck was incompetent to give evidence in these proceedings within the meaning of section 3(b) of the Evidence Ordinance at the time of his examination by Dr Förstl.
(2) He was competent to give evidence in these proceedings within the meaning of section 3(b) on the following dates when he swore and/or signed his 1st , 2nd , 3rd , 4th and (1st ) 5th affidavits: 7 January 2008, 9 December 2008, 25 June 2009, 30 March 2010 and 6 April 2010.
(3) He was incompetent to give evidence in these proceedings within the meaning of section 3(b) on the following dates when he swore and/or signed his affidavits, witness statements and answers to interrogatories: 27 September 2011, 11 January 2012, 19 September 2012, 15 November 2012 and 28 January 2013.
(4) His (2nd ) 5th affidavit, 6th affidavit, witness statement, supplemental witness statement and answers to interrogatories are inadmissible in these proceedings.
(5) He was incompetent to give evidence in these proceedings within the meaning of section 3(b) on all the dates between 25 February 2013 and 22 August 2013 when he gave oral evidence in these proceedings except on 8 May 2013.
(6) His oral evidence given on all the dates between 25 February 2013 and 22 August 2013, except on 8 May 2013, is inadmissible in these proceedings.
18. As mentioned at the outset, the defendants intend to appeal against §§(3) and (4) of the above order. They seek to set aside §§(3) and (4) and replace them with an order that Mr Leiduck was competent to give evidence in these proceedings within the meaning of section 3(b) on the relevant dates in §(3).
19. It is pertinent to note that the defendants are not seeking to adduce the affidavits, witness statements and answers to interrogatories in §§(3) and (4) as hearsay evidence[8]
The intended grounds of appeal
20. Of the six intended grounds of appeal, grounds 1 to 4 seek to contend that the judge had erred in attributing the burden of proving competence under section 3(b) to the defendants. She should have held that the burden is on the plaintiff, who challenged the competence of a witness, to establish that the witness was incompetent.
21. Grounds 5 and 6 relate to the evidence. The contention in ground 5 (which follows from grounds 1 to 4) is that the judge should have held on the evidence that the plaintiff has failed to discharge the burden of establishing incompetence of Mr Leiduck on the relevant dates in §(3) of the order. Ground 6 seeks to argue in the alternative that even if the burden rests with the defendants to prove competence, the judge should have found on the evidence that the burden has been discharged.
22. The crucial contention in the intended appeal is the incidence of the burden of proof of the matters set out in section 3(b) (unsound mind, incapable of receiving just impressions of the facts which the witness was examined, incapable of relating facts truly). In most instances, whether a fact is established would be resolved on the strength and quality of the evidence, and it would not be necessary to resort to the incidence of the burden of proof in order to conclude whether a fact has or has not been established. This is probably why despite the long existence of section 3(b), and the diligence of counsel on both sides, the judge has not been referred to a single authority, whether direct or indirect, on any aspect of section 3(b)[9]
23. It is only because of the very special combination of facts and circumstances in this case that the incidence of the burden of proof of the matters set out in section 3(b) has assumed significance in resolving the competency issue. The typical changeability of the sub-types of dementia suffered by Mr Leiduck means that the criteria of incapability of receiving just impressions of the facts which he was examined and of relating such facts truly could be satisfied differently at different times and under different circumstances[10] [11]
24. For the affidavits and statements even after July 2011, Dr Förstl could not find sufficient evidence upon which he could conclude whether Mr Leiduck was competent or incompetent when making them[12] [13]
Grounds 1 to 3
25. We will first set out the provisions in section 3 of the Evidence Ordinance including section 3(a) which was repealed in 1995, as much reliance was placed by the defendants on this repealed provision for the proper construction of section 3(b).
26. Section 3 reads as follows:
“Incompetency from immature age or unsoundness of mind
3. The following persons only shall be incompetent to give evidence in any proceedings –
(a) children under 7 years of age, unless they appear capable of receiving just impressions of the facts respecting which they are examined and of relating them truly; and[14]
(b) persons of unsound mind, who, at the time of their examination, appear incapable of receiving just impressions of the facts respecting which they are examined or of relating them truly; and no person who is known to be of unsound mind shall be liable to be summoned as a witness without the consent previously obtained of the court or person before whom his attendance is required.”
27. The amendments introduced in 1995 also made changes to section 4. The old section 4 provided for unsworn evidence to be given in criminal proceedings by a “child of tender years” (not defined by statute) where the child does not understand the nature of an oath but in the opinion of the court is possessed of sufficient intelligence to justify reception of the evidence and understands the duty of speaking the truth. This has been replaced by a new provision which defines “child” to mean a person under 14 years of age and provides that a child’s evidence in criminal proceedings shall be given unsworn and shall be capable of corroborating the evidence, sworn or unsworn, given by any other person.
28. Mr Wong’s submissions in grounds 1 and 3 essentially repeat the arguments he advanced before the judge on two occasions and have been rejected for the reasons given in the Judgment[15] [16]
29. The judge is plainly correct that section 3(b) is silent on the incidence of the burden of proving whether a witness is or is not of unsound mind who appeared incapable of justly receiving or truly relating facts. Mr Wong argued there is a clear implication by the language of section 3(b) – by using the words “incompetency” (rather than competency), “unsound mind” (rather than sound mind) and “incapable” (rather than capable) – that the burden of proving the matters stated therein should rest with the person challenging the competency of a witness to establish incompetency. We agree with the judge that no such implication could be drawn from the language of section 3(b), the purpose of which is to prevent incompetent persons from giving evidence and it is only natural to define incompetence in that provision rather than competence.
30. As for the various passages in the authorities relied on by Mr Wong and set out in §76 of the Judgment[17]
31. Further, as pointed out by Ms Sara Tong for the plaintiff, the court’s approaches to child witnesses and witnesses with mental disability or illnesses are different because of the different provisions made in sections 3(a) and 4 for child witnesses. Since the repeal and amendments of sections 3(a) and 4 in 1995, there is no longer any requirement for a judge to conduct an inquiry into the competence of a child witness, although he retains a discretion to do so[18]
32. There is nothing in Mr Wong’s criticism about the judge’s reliance on R v Yacoob (1981) 72 Cr App R 313 by parity of reasoning. The judge was plainly aware that Yacoob was concerned with the position at common law about the issue of competency in criminal proceedings, and that the subsequent changes to the common law position made by statutory provisions in the UK[19] Yacoob for the principle and the rationale behind it, which was encapsulated in this passage in Cross and Tapper on Evidence cited in Yacoob at 317:
“Decisions as to which party bears the burden of establishing a fact constituting a condition precedent to the admissibility of an item of evidence belong to the law of evidence. There is, however, very little authority on the subject, no doubt because, as a matter of common sense, the conditions of admissibility have to be established by those alleging that they exist.”[20]
33. The authors of Phipson on Evidence (19th ed) at §9-12 referred to the legislation governing criminal proceedings (it is the party calling a witness or seeking to have the witness sworn that must satisfy the court on the balance of probabilities the relevant test has been satisfied) and suggested that the same rule should apply in civil cases. This accords with the general principle and common sense as mentioned in Cross and Tapper on Evidence.
34. The position in criminal proceedings in Hong Kong is analysed in Archbold Hong Kong 2020 at §8-45:
“In relation to witnesses proposed to be called by the prosecution, once the issue of competence or compellability is raised, it is for the prosecution to prove competence or compellability beyond reasonable doubt; R v Yacoob (1981) 72 Cr App R 313, CA. Where the witness is to be called by a defendant, and the issue is raised by the prosecution or a co‑defendant, there is no direct authority on where the burden of proof lies or what the standard is. It is submitted, however, that the passage in Cross on Evidence, 6th edn, p 162 (9th edn, p 169, 12th edn, p 183), adopted in Yacoob in relation to prosecution witnesses, applies equally to defence witnesses: “… as a matter of common sense, the conditions of admissibility have to be established by those alleging that they exist ”. On general principles relating to the standard of proof where the onus rests on the defence, it is submitted that the standard should be the civil standard, namely proof on a balance of probabilities: see §4-32, above.”
35. The judge reasoned that the competence of a witness goes to the admissibility of his testimony and where his competence is put in issue, proving that he is not incompetent so that his evidence is admissible is discharging the burden of proving the facts to which such evidence relates. Her reasoning accords with the analysis in the textbook authorities and is consistent with principle and common sense.
36. Mr Wong also sought to rely on section 5 of the Evidence Ordinance, which relates to “Evidence of parties” and provides: “In all proceedings before the court, the parties and the husbands and wives of the parties thereto, and the persons in whose behalf any proceedings may be brought, or instituted, or opposed, or defended, and the husbands and wives of such persons shall, except as hereinafter excepted, be competent and compellable to give evidence, either viva voce or by deposition, according to the practice of the court, on behalf of either or any of the parties to the proceedings.”
37. He argued that section 5 would apply in this instance and the effect is that Mr Leiduck “shall … be competent and compellable to give evidence … except as hereinafter excepted”. He contended that the exception should be shown by the plaintiff and hence the burden should be on the plaintiff to prove the matters in section 3(b) to show that Mr Leiduck was incompetent.
38. This section addresses competence and compellability in the context of spouses as can be seen from the following provisions (section 6 to section 8).
39. Lastly, Mr Wong sought to rely on section 50, which comes under Part IV of the Evidence Ordinance headed “Hearsay Evidence in Civil Proceedings”. The relevant provisions of section are as follows:
“Competence and credibility
50(1) Hearsay evidence shall not be admitted in civil proceedings if or to the extent that it is –
(a) shown to consist of; or
(b) to be proved by means of,
a statement made by a person who at the time he made the statement was not competent as a witness.
…
(4) In subsection (1), “not competent as a witness” means suffering from such mental or physical incapacity, or lack of understanding, as would render a person incompetent as a witness in civil proceedings.”[21]
40. Mr Wong submitted that section 50 would apply in this instance, and the effect is that Mr Leiduck’s statement may only be excluded if “it is shown to consist of … a statement made by a person who at the time he made the statement was not competent as a witness.”
41. This is yet another variation of the same theme of there being a presumption which would shift the burden of proving the matters in section 3(b) on the party challenging competence. This seems to be a strained reading of the statutory provisions. Besides, as mentioned earlier, the defendants are not seeking to adduce the statements, affidavits and answers to interrogatories as hearsay evidence, nor was the judge concerned with the question whether hearsay evidence should be admitted in that the ambit of the issues to be resolved is as provided for in the directions given for resolving the competency issue.
42. The other arguments of Mr Wong’s in Grounds 1 to 3 have been fully dealt with by the judge. It is unnecessary for us to address them. We are not persuaded there are reasonable prospects of success for Grounds 1 to 3.
Ground 4
43. Mr Wong relied on the statement of Lady Justice Hale in C v C [2001] EWCA Civ 1625 in which she addressed the question of the incidence of the burden of proof regarding a statement adduced as hearsay evidence under section 5(1) of the Evidence Act 1995 (similar to our section 50 of the Evidence Ordinance) and stated in §10 that “it is clear from the wording of section 5, …. that the burden lies on the person who asserts that the maker of the statement is not competent to make that assertion and to make it out.” He submitted that a consistent construction should be given to section 50 and section 3(b) such that the burden should rest with the party challenging competency to prove incompetence of a witness.
44. The judge dealt with this argument in the Leave Decision as C v C was only brought to the attention of the court in the hearing for leave to appeal. The judge disagreed with the view of Lady Justice Hale noting the absence of any reasoning in §10 and did not think section 50 should impact on the proper construction of section 3(b) for the reasons she gave in §17 of the Leave Decision.
45. We agree with the judge. We would add the following. The view expressed in C v C at §10 is not consistent with the principle mentioned in Cross and Tapper on Evidence at p 186, in which the author reasoned: “It is reasonable to suppose that the burden of establishing the facts rendering hearsay admissible is always borne by the party tendering the evidence.”
46. We do not think Ground 4 has a reasonable prospect of success.
Grounds 5 and 6
47. Ground 5 would fall if Grounds 1 to 4 should fail.
48. As for Ground 6, the judge has considered the evidence thoroughly and there is no basis to interfere with her findings and the weight given by her on the six categories of evidence identified in the draft notice of appeal.
Interests of justice and proportionality
49. We agree with the judge it has not been made out there is some other reason in the interests of justice why the intended appeal should be heard and that leave to appeal should be refused (even if there is reasonable prospect of success) in the interests of reasonable proportionality and procedural economy, as mentioned in the outset of this judgment.
Conclusion and costs
50. We refuse to give leave to appeal against §§3 and 4 of the order in the Judgment.
51. We make a further order under Order 59 rule 2A(8) that no party may under rule 2A(7) request the determination of this court to be reconsidered at an oral hearing inter partes , as this application is wholly without merits.
52. There is no reason to depart from the general rule that costs should follow the event. We make an order nisi that the defendants are to pay the plaintiff’s costs of this summons. Having considered the plaintiff’s statement of costs for summary assessment, we assess the reasonable costs of the plaintiff at $236,279.
53. The costs order and summary assessment are in the nature of orders nisi and will be made absolute if no application for variation is made by any party within 14 days of the handing down of this judgment.
(Susan Kwan)
(Maria Yuen)
Ms Sara Tong, instructed by LC Lawyers LLP, for the Plaintiff (Respondent)
Mr Horace Wong SC and Mr Clark Wang, instructed by Robertsons, for the 1st and 2nd Defendants (Applicants)
[1] Mr Leiduck passed away on 23 March 2014. An order was made on 9 April 2014 appointing his son Mr Helge Leiduck (“Mr Leiduck Jr ”) to represent Mr Leiduck’s estate in this action (HCA 4089/1994) and to carry on this action on behalf of Mr Leiduck’s estate.
[2] [2020] 3 HKLRD 579
[3] Judgment, §91(6)-(7)
[4] Judgment, §91(6)
[5] Judgment, §§218, 95. For the session on 8 May 2013, the judge accepted the evidence of Dr Förstl (supported by Professor Chiu) as to the typical changeability of DLB and VaD and Dr Förstl’s assessment that Mr Leiduck, though of unsound mind on 8 May 2013, did not appear to be incapable of receiving just impressions of facts or of relating them truly.
[6] Judgment, §80
[7] Judgment, §91(9)
[8] Mentioned in the Judgment at §61.
[9] Leave Decision, §26
[10] Judgment, §91(7)
[11] Judgment, §129
[12] Judgment, §91(13)
[13] Judgment, §§213, 219
[14] Repealed by Ordinance No 70 of 1995, section 2.
[15] Judgment, §§73 to 80
[16] Leave Decision, §§8 to 12
[17] Chan Chi v The Queen [1968] HKLR 61 at 64; The Queen v Fung Kam Keung [1991] 1 HKLR 377 at 385H to 386B; and R v Lam Chi Keung [1997] HKLRD 421 at 424I
[18] Halsbury’s Laws of Hong Kong (2018) 2nd ed, vol 27, §§[175.092], [175.093]
[19] Youth Justice and Criminal Evidence Act 1999, sections 53 to 55. Section 54(2) provides: “It is for the party calling the witness to satisfy the court that, on a balance of probabilities, the witness is competent to give evidence in the proceedings.”
[20] The passage quoted in Yacoob is from the 5th ed of Cross on Evidence , this has remained unchanged in the 13th ed of Cross and Tapper on Evidence published in 2018 at p 186.
[21] The test of incompetency in section 3(b) is worded differently.