TCWF v. LKKS

CACV 154/2012 &
CACV 166/2012

(Heard together)

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS 154 and 166 OF 2012

(ON APPEAL FROM HCMC NO 5 OF 2008)

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REASONS FOR DECISION

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Hon Lam VP (giving the Reasons for Decision of the Court):

1.  This judgment deals with the following summonses:

(a)   The summons taken out by the Respondent on 1 August 2013; and

(b)   The summonses taken out by the Petitioner on 9 and 15 August 2013.

2.  After hearing parties, we decided in favour of the Respondent on his summons and dismissed the summonses of the Petitioner. We now give our reasons for these decisions.

The summons of 1 August 2013

3.  By this summons, the Respondent seeks a direction that the following documents [“the Letters”] be included in the appeal bundles:

(a)   A letter dated 9 December 2011 from Messrs.CRA Lee & Allen; and

(b)   A letter dated 9 February 2012 from Messrs KPMG.

4.  He also seeks leave to do so insofar as leave is necessary.

5.  The Letters had been placed before Saunders J for the purpose of what can conveniently be described as the Barrell hearing. Saunders J refused to admit the Letters as evidence at that hearing.

6.  The Respondent contended that though the Letters were written by accountants, they were not in the nature of expert evidence. Rather, according to Mr Coleman SC (appearing together with Mr Jeremy Chan for the Respondent), they are summaries of existing evidence: documents seeking to distil the facts as they appeared from evidence already before the court at the trial and setting them out in a way which would be useful and helpful to the court instead of requiring the court and counsel going through the same tortuous process.  Counsel refers to the explanation given in the 1^st Affirmation of the solicitor for the Respondent as to how the Letters sought to achieve that.  In that respect, Mr Coleman said the Letters were similar to affirmations admitted by the court (and upheld by the Court of Appeal) in Wong Kar Gee Mimi v Severn Villa [2012] 1 HKLRD 887.  Counsel said the purposes of the Letters were to demonstrate some arithmetical errors in Saunders J’s calculations in the main judgment.

7.  The arithmetical errors were identified by the solicitor for the Respondent at para 11 of her first affirmation:

“The Arithmetical Errors

11. The arithmetical errors made by Saunders J can be summarised as follows:-

(1) Having held that the ‘soft-loans’ from STL/his companies ought to be excluded and on the basis that monies flowing in both directions are ‘soft-loans’, Saunders J failed to exclude the loans from the Property Group/Citic Group to STL/his companies;

(2) Paragraph 350 of the Main Judgment fails to take into account the value (or ‘negative’ value) of the Citic Group. Due to the various inter-group loans made between the Citic Group and the Property Group, it was wrong to consider the value of the Property Group in isolation and independently from the Citic Group;

(3) Paragraph 350 of the Main Judgment separately valued a number of assets that were already included in the balance sheets of the Property Group, but Saunders J failed to exclude them – those assets were thereby double counted (at different values) in paragraph 350 of the Main Judgment; once within the balance sheets of the Property Group (at book value), and another time as separate items;

(4) Saunders J took the wrong value for the Aoyama Project;

(5) Having held that the Aoyama Project beneficially belongs to the Husband (and not OIL/STL), Saunders J failed to include the repayment due from the Husband of the commission which had been paid to the Husband by OIL/STL;

(6) Paragraph 350 of the Main Judgment made a deduction for the Eurobond Tax being disallowed when this had already been taken into account in the figure for “Tax realised on disposal of property” – this is a point against the Husband’s interests.”

8.  It should also be noted that paragraphs 9(7) and (8) of the Notice of Appeal of the Respondent challenged the judge’s refusal to admit the Letters as evidence.

9.  On the other hand, the Petitioner opposed the inclusion of the Letters in the appeal bundle on the ground that the criteria in Ladd v Marshall [1954] 1 WLR 1489 could not be satisfied.  She also contended that the decision of the judge to refuse to admit the Letters was a case management decision and the Respondent faced a very high hurdle in his attempt to challenge it.

10.  She further submitted that the Letters were in substance new accountancy evidence for the purpose of persuading the court to undertake a wholesale revision of the basis upon which the decision was made by the judge. In this connection, she referred to para 109 of the Barrell judgment.  At that paragraph, the judge said:

“109.   Mr Pointer and Mr Todd sought, under the Barrell Jurisdiction a review of the conclusions reached in those paragraphs contending that there were “arithmetical errors” in the calculation.  It is not necessary to have recourse to the Barrell jurisdiction to correct an arithmetical error.  Such an error may be corrected under the slip rule.  What is sought in the application by the husband and the father is a wholesale revision of the basis upon which the decision was made.  That would involve the analysis of the accounting evidence that was produced for the hearing at which I have rejected.  It would involve a re-opening of issues in the same way as was rejected in Townsend v Achilleas [2001] All ER (D) 221 and in Earl of Malmesbury v Strutt & Parker [2007] EWHC 2199.  Where the judgment can be adequately explained on the basis of its own content, such a re-opening is not permissible, and the argument becomes one properly for appeal.”

11.  The judge further explained his own calculations in the subsequent paragraphs in the Barrell judgment.

12.  There is also a dispute as to whether the judge did refer to the Letters even though he ruled them to be inadmissible.  We do not find it necessary to discuss at length the basis on which the Respondent put forward the suggestion that the judge had actually had regard to the Letters.  In our view, given the matters that the Petitioner has drawn our attention to in her submissions, we are not satisfied that such a serious allegation against the judge can be established. In any event, we do not think this is of much significance in terms of the outcome of the summons.

13.  As we see it, in this connection, the substantive point in dispute which would have to be canvassed at some length at the appeal is whether the judge did make the arithmetical errors as contended by the Respondent.  The Respondent may make good his submissions on such arithmetical errors by reference to all the evidence that had been placed before the judge at the trial.  Insofar as the Letters were, as suggested by Mr Coleman, merely summaries of existing evidence without any element of new expert evidence, we do not see any real objection to references being made to the Letters.  Since they have been placed before the court at the Barrell hearing, they are not new evidence which comes within the ambit of Ladd v Marshall.  But one must also have regard to what the Respondent said to be the nature of the Letters.  Thus, if they go beyond the ambit of the nature of them as suggested by Mr Coleman and if the Petitioner were able to show that they were not merely summaries of existing evidence which are relevant for showing the arithmetical errors, we do not think they could be admitted for the purpose of the appeal.

14.  Hence, the key issue is who is correct in terms of the nature of the Letters.  At the moment, though the Respondent has set out his case as to how the information in the Letters was derived from existing evidence presented at the trial in the 1^st Affirmation of the solicitor for the Respondent, the Petitioner has not clearly identified any new or additional aspect of expert evidence in the Letters.  What Saunders J said at para 109 and the subsequent paragraphs in the Barrell judgment appears to focus on a slightly different point: whether the so-called arithmetical errors were arithmetical errors or different bases of calculations altogether.  That question would also have to be debated at the substantive appeal (and as such, not a question that we can resolved at this stage).  But it is a rather separate question from whether the Letters are mere summaries of existing evidence.

15.  As matter stands, we think that the Letters can be included in the appeal bundles on a non-agreed basis.  The Petitioner has failed to demonstrate that they go beyond summarizing existing evidence and that there are elements of additional expert evidence built into them.  There is therefore no question of the Petitioner having any need to reply to any new expert evidence.

16.  We therefore made an order in terms of para 1 of this summons.

17.  Further, as it seems to us that the real dispute is whether the so-called arithmetical errors are in substance alteration in the bases of the calculations (as so held by Saunders J in the Barrell judgment), we see no reason why the parties cannot sensibly narrow down the dispute in terms of setting out the agreed factual positions (as shown in the existing evidence at the trial) relevant to the so-called errors and then focus on arguments on the real dispute.

The summonses of 9 and 15 August 2013

18.  By these summonses, the Petitioner seeks a direction that the following documents exhibited in her 5^th Affidavit be included in the appeal bundles:

(a)   Financial statements of a number of Singaporean companies;

(b)   Documents contained in a brown envelope received by her father exhibited as “5-FT-2” and “5-FT-3” [“the Brown Envelope documents”].

19.  Amongst the Singaporean companies, there is a company called Bertelli Holding Pte Ltd.  The Petitioner wants to rely on a statement in its financial statements for the year ended 30 September 2012 [“the Bertelli statement”] that the ultimate controlling party of Octaland III Ltd, the 3^rd Intervener, is the Respondent.

20.  As for the other financial statements, she wants to rely on them to show that the Respondent is the ultimate controlling party of the Veloqx group of companies.

21.  As for the Brown Envelope documents, she wants to rely on them to show that the Respondent has used another name.  She said he was doing so for the purpose of evading his financial liability to her.  At para 16 of her 5^th Affidavit, she explained the relevance of these documents to the appeal:

“16 I believe the documents exhibited at “5-FT-2” and “5-FT-3” are significant and relevant to the appeals to be heard on 21^st October 2013 because they show:

16.1 if what is stated in the CV is correct, then the Husband had more assets in Japan than he had disclosed in the divorce proceedings and the CV is evidence which supports Mr Justice Saunders’ finding as to the Husband’s net worth;

16.2 that contrary to the injunction imposed on the Husband and STL in paragraph 9 of the Order dated 23^rd February 2011 in HCMC 5/2008, the Husband has disposed of Daiwa Fudosan Corporation; and

16.3   contrary to the Husband’s presentation to the Court that the Japanses properties are in negative equity, he is still flying around the world in his private Boeing Business Jet.”

22.  She accepts that all the documents she seeks to include are fresh evidence and she needs to satisfy the criteria in Ladd v Marshall.

23.  The Respondent opposed the summons against him in its entirety.  The 2^nd Intervener opposed the identical summons against him in respect of the financial statements and adopted a neutral stance as regards the Brown Envelope documents.

24.  As pointed out by Mr Coleman and Mr Charles Manzoni SC (appearing together with Mr Norman Nip for the 2^nd Intervener) in their submissions, it is indeed common ground that the Respondent was ultimate controlling party of the Veloqx group of companies. Notwithstanding the Petitioner’s submission with reference to para 58 of the Amended Notice of Appeal of the 2^nd Intervener, we do not think the financial statements of those companies would take the matter further in respect of the 2^nd Intervener’s rights under the Framework Agreement and the Call Option Agreement.  As such, these financial statements would not have any important influence on the result of the appeal.  The Petitioner cannot satisfy the criteria in Ladd v Marshall in respect of these financial statements.

25.  As regards the Bertelli statement, at the court below the Petitioner advanced a positive case that the effect of what the judge called the D-Day documents was to deplete the Respondent’s legal and beneficial ownership of the Japanese assets and transfer them into the hands of the 2^nd Intervener through Octaland III.  The foundation for such argument must be that Octaland III was controlled by the 2^nd Intervener as opposed to the Respondent. They had also given evidence to such effect in respect of the beneficial ownership of Octaland III.  The Petitioner’s case was accepted by the Judge, see paras 28 and 40 of the main judgment.  As we understand, the Petitioner is still contending that the Judge was correct in reaching the conclusion as to the effect of the D-Day documents.  This means she is still relying on the proposition that Octaland III was controlled by the 2^nd  Intervener.

26.  At present, there is no challenge in the Respondent’s Notice on the Judge’s holding that the 2^nd Intervener was the beneficial owner of Octaland III.  Though the Petitioner suggested in her skeleton submissions that she could amend her Respondent’s Notice to take such a point, we do not see how that could be viable given what we said above. She cannot be allowed to blow hot and cold.

27.  We do not think it is open to the Petitioner to embark on new contention as to the beneficial ownership of Octaland III in the appeal. Further, given the explanation put forward by the Respondent and the 2^nd Intervener that the statement of ultimate ownership of Octaland III was a mistake and it had now been rectified on public records, it is by no means clear that the admission of the Bertelli statement would have an important influence on the outcome of the appeal.  If we permit the Petitioner to adduce the Bertelli statement, we must give leave to the Respondent and the 2^nd Intervener to file evidence in response.

28.  Though the Court of Appeal does have the power to hear fresh evidence, it is only in very exceptional and rare circumstances that it would be appropriate to do so, see CFF v ZWJ  CACV 171 of 2012, 27 May 2013, paras 19 to 20.  In the present appeal, if we permit the Petitioner to raise the new attack as to the ownership of Octaland III, substantial time would have to be spent in the appeal on such factual disputes which would inevitably cause serious disruption to the disposal of the appeal.  In the absence of very cogent reason calling for such a course (and we see none in the present case), it would be against the underlying objectives in Order 1A Rule 1 to permit this to be done.

29.  We are not satisfied that the Bertelli statement should be admitted as evidence in the appeal.

30.  What we said above on the disruptive effect of admitting the new evidence in the appeal applies equally to the Brown Envelope documents.  In effect, the Petitioner is trying to re-open the evidence on the Japanese assets in her contention at para 16.1 of her 5^th Affidavit instead of linking such documents to issues which are before the Court of Appeal as set out in the Notices of Appeal and Respondent’s Notices. Neither can we see any relevance of what she said at paras 16.2 and 16.3 in terms of what we need to decide in the appeal.

31.  There are also problems in respect of the reliability of these documents, in particular in respect of the CV (the author of which is unknown).  The Brown Envelope documents were given to the father of the Petitioner in very suspicious circumstances.

32.  The purpose of the appeal is not to give the parties the opportunity to adduce another round of evidence.  There has been ample opportunity for the Petitioner to conduct extensive investigation on the Japanese assets before the trial and very substantial evidence had been placed before the Judge.  In the present circumstances, we do not deem it appropriate to allow the Petitioner to re-open the evidence on Japanese assets.

33.  We therefore dismissed these summonses.