CAPITAL CENTURY TEXTILE CO LTD v. LI DIANXIAO AND ANOTHER

HCA 263/2012

[2018] HKCFI 729

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 263 OF 2012

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D E C I S I O N

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Applications before the court

1.  Before the court are the 2^nd defendant’s applications to:

(1)  exclude from the evidence at the trial of this action:

(a)  the criminal judgment dated 19 September 2010 (“PRC Judgment”)[i] of the 2^nd Intermediate People’s Court in Beijing (北京市第二中級人民法院刑事判決書) (“PRC Court”), by which the 1^st defendant was convicted of corruption and sentenced to a term of imprisonment of 15 years from 29 August 2008[ii] to 28 August 2023 (which the 1^st defendant is serving at the北京市第二監獄 (“PRC Prison”); and

(b)  paragraphs 31 to 36 of the witness statement dated 20 December 2016 of Madam Lai Siu Kuen (黎少娟) (“Madam Lai”) (for the plaintiff) which mentioned, and produced as annex 5 thereto a copy of, the PRC Judgment

on the ground that the PRC Judgment is irrelevant and inadmissible as a matter of law;

(2)  file and serve a re-amended defence;

(3)  file and serve a supplemental witness statement; and

(4)  adjourn the trial of this action sine die pending the 1^st defendant’s release from prison.

2.  These applications are made by summonses issued on 7 and 14 February and 6 March 2018, which are on any view late given that the trial of this action is fixed for 8 to 15 May 2018 before me with the pre-trial review on 7 February 2018.  

3.  The plaintiff opposes all the applications.

4.  As for the 1^st defendant, he had as a matter of fact himself repeatedly applied, unsuccessfully, to adjourn or stay this action on the ground that he would not be able to defend or effectively defend the same until his release from prison.  See the 1^st defendant’s letters to the court dated 10 January 2013, 18 December 2014, 22 September 2016, 15 and 21 February 2017.  See also the last sentence of the paragraphs numbered 1 of the document entitled “補充抗辯書” dated 15 April 2013.  The 1^st defendant has by letters dated 6 and 25 February, 5 and 20 March 2018 from his son, Mr Li Yuan (李元), as well as the PRC lawyer who represented the 1^st defendant in his criminal trial, a Mr Peng Xian Hua (彭憲華), to the court renewed his application for either an adjournment or a stay of this action pending his release from prison.

This action

5.  The plaintiff is a private limited company incorporated in Hong Kong on 5 October 1990. 

6.  Between 15 October 1990 and 22 June 2009, the 1^st defendant was registered as a shareholder (holding 18,999 out of 20,000 shares since 5 October 1995) and director of the plaintiff.  On 22 June 2009, the 1^st defendant transferred all the shares in the plaintiff registered under his name to Madam Lai (who has herself since 5 October 1995 been, and who still is, a director of the plaintiff).

7.  In this action, the plaintiff claims to be the beneficial owner of the following landed properties acquired in, or transferred into, the name of the 1^st defendant who holds/held the same on trust for the plaintiff:

(1)  Office B, 15/F, China Harbour Building, 370-374 King’s Road, Hong Kong (“China Harbour Office”) acquired in the 1^st defendant’s name on 1 October 1991;

(2)  Flat A, 11/F, Block 6, Provident Centre, 31 Wharf Road, Hong Kong (“Provident Centre Flat”) acquired in the 1^st defendant’s name on 18 August 1993 and disposed of by sale on 8 June 1998 at a profit;

(3)  Flat A, 7/F, Tower 9, Phase II, Pacific Palisades, 1 Braemar Hill Road, North Point, Hong Kong acquired in the 1^st defendant’s name on 3 June 1998 and disposed of by sale in 2007 at a profit; and

(4)  Flat B, 17/F, Block 3, Tanner Garden, 18 Tanner Road, North Point, Hong Kong (“Tanner Garden Property”) which was:

(a)  acquired in the plaintiff’s name on 10 September 1996 at $6,450,000;

(b)  transferred from the plaintiff’s name into the 1^st defendant’s name on 7 September 2004 at a stated consideration of $3,980,000; and

(c)  transferred from the 1^st defendant’s name into the 2^nd defendant’s name on 3 July 2007 at a stated consideration of $4,800,000.

8.  The plaintiff so claims on the ground that the monies used to pay the purchase price, mortgage repayment instalments and associated costs and expenses of these properties belonged to it.  Where some of the monies used to make these payments came from accounts held in the names of the 1^st defendant and others, the plaintiff contends that such accounts were also held on trust for it.

9.  By this action, the plaintiff claims declarations of beneficial ownership, orders for transfer, accounts of profits and income etc.

10.  More particularly, with regard to the Tanner Garden Property with which the 2^nd defendant is concerned, it is the plaintiff’s case that:

(1)  The consideration of $3,980,000 stated for the transfer from the plaintiff to the 1^st defendant was never paid so that the 1^st defendant held the Tanner Garden Property upon a constructive/resulting trust for the plaintiff.

(2)  The 1^st defendant has refused or failed to account for the rental income of the Tanner Garden Property to the plaintiff since 7 September 2004.

(5)  With a view to defeating the plaintiff’s claim for beneficial ownership, the 1^st defendant transferred the Tanner Garden Property to the 2^nd defendant (with whose mother the 1^st defendant was co-habiting as husband and wife and whom the 1^st defendant treated as his own child) for a stated consideration of $4,800,000 which was not paid or, if paid, was an undervalue being 25% less than the open market value.[iii]

11.  Insofar as the 2^nd defendant is concerned, the plaintiff seeks a declaration that he has been holding the Tanner Garden Property upon a constructive trust for the plaintiff and an order for an account and inquiry in respect of all the money and profits received by the 2^nd defendant from the Tanner Garden Property since 3 July 2007 or, alternatively, an order that the sale and purchase of the Tanner Garden Property between the 1^st and 2^nd defendants be set aside upon the plaintiff’s repayment of $4,800,000 to the 2^nd defendant.

12.  It is unnecessary for present purposes to go into all the defendants’ grounds of defence or the plaintiff’s points of reply.  It is sufficient for me to highlight the following.

13.  By way of general defence, the 1^st defendant claims (in paragraphs 37 and 36 of his amended defence dated 3 August 2016 prepared by counsel and solicitors) that he was at all material times the beneficial owner of all the shares in the plaintiff (including those held in others’ names which were held on trust for him) so that even if the plaintiff’s allegations regarding the subject properties be true, the dealings complained of could be regarded as having been authorised or ratified by the plaintiff and all its shareholders.

14.  The plaintiff denies such allegation and counters that the 1^st defendant at all material times held all the shares in the plaintiff registered in his name as trustee of a PRC company called 北京針棉織品進出口集團公司 (“Beijing Company”).  More particularly:

(1)  The 1^st defendant was an employee of the Beijing Company.

(2)  In 1986, the Beijing Company commenced business in Hong Kong through a Hong Kong company called Kingpower Textile Limited (“Kingpower”).  The 1^st defendant was posted by the Beijing Company to Hong Kong to work in Kingpower.

(3)  The plaintiff was set up by the Beijing Company as its window company in Hong Kong in place of Kingpower with capital provided by the Beijing Company.

(4)  The 1^st defendant was assigned by the Beijing Company in the course of his employment with the Beijing Company to be the shareholder and director of the plaintiff since 1990.

(5)  On about 16 February 1996, the Beijing Company and the 1^st defendant entered into a 承包協議 by which the 1^st defendant acquired the right to operate the plaintiff independently of and without interference from the Beijing Company at his own profit/loss on terms which included the 1^st defendant’s acknowledgment that the Beijing Company retained full beneficial ownership of, inter alia, the China Harbour Office and the Provident Centre Flat.

15.  With regard to the Tanner Garden Property, the 1^st defendant claims inter alia that immediately prior to the transfer from the plaintiff to him, the plaintiff held a sum of $4,000,000 in its bank account on trust for the 1^st defendant, out of which $3,800,000 was applied to set off the price of the Tanner Garden Property payable by the 1^st defendant to the plaintiff.

16.  The plaintiff denies it had ever held any monies on trust for the 1^st defendant.

The 1^st defendant’s circumstances

17.  As stated above, the 1^st defendant has since 29 August 2008 been imprisoned at the PRC Prison.  In other words, he had lost his freedom by the time the writ of summons herein was issued on 20 February 2012.  Subject to what I will say in the next paragraph, the 1^st defendant is not due for release until 28 August 2023.

18.  While being imprisoned, the 1^st defendant has recently been tried before the 3^rd Intermediate People’s Court in Beijing for other corruption charge(s) in November 2017.  The verdict is still pending.  According to the 2^nd defendant, the 1^st defendant’s said son anticipates a decision on the new charge(s) within a few months.

19.  Despite his incarceration at the PRC Prison, the 1^st defendant was able to retain and give instructions to solicitors and counsel to act for him in this action from 11 November 2015 to 26 September 2016.  His amended defence was filed and served during this period on 3 August 2016. 

20.  The 1^st defendant began to act in person again since 26 September 2016.  Other than writing to the court for the adjournment or stay of this action until his release from prison before the hearings before Master Ho on 27 September 2016 and 28 February 2017, the 1^st defendant has not taken any meaningful part in this action.  In particular, I note that he has not complied with the unless orders made by Master Ho on 27 September 2016 for the filing and service of list of documents and witness statements.

Admissibility of PRC Judgment

21.  On the admissibility/inadmissibility of the PRC Judgment, counsel, Mr K M Chong (leading Mr Alvin Chong) for the plaintiff and Mr Alvin Tsang for the 2^nd defendant, has each referred me to cases which he considers to support his contention and distinguished or criticised the decisions cited by the other.  I do not propose to burden this decision by dealing with each and every authority raised by counsel. Decisions on the admissibility/inadmissibility of an earlier judicial decision are essentially fact sensitive.  I consider it more constructive to approach the matter before me with reference to principle.

22.  On this note, I turn to the PRC Judgment. It is a 33 page document.  In assessing its admissibility/inadmissibility, it is important to appreciate that the PRC Judgment did not contain just the PRC Court’s verdict(s) on the charge(s) laid against the 1^st defendant and findings of fact in support of such verdict(s).  It also summarised the factual evidence presented to the PRC Court.

23.  It is trite that a judgment and factual finding of another court or tribunal in earlier proceedings, whether civil or criminal, is inadmissible in subsequent proceedings, unless the party against whom the finding is sought to be deployed is bound by it by reason of an estoppel per rem judicatam.  See Hollington v F Hewthorn & Co Ltd [1943] KB 587 which, though controversial (and even considered to have been wrongly decided)[iv], has never been overruled.  In Hong Kong, its application to reliance on a domestic criminal conviction in subsequent civil proceedings has been abolished by s 62 of the Evidence Ordinance (Cap 8) (“EO”).  This section has no application to a foreign conviction such as the PRC Judgment.

24.  Anyway, quite apart from the rule in Hollington, the offence(s) with which the 1^st defendant was convicted under the PRC Judgment did not concern the plaintiff or its properties at all.  Rather, they arose out of the 1^st defendant’s disposal of the landed properties of one 北京永大制衣有限公司 (“Beijing Yong Da”) while he was the legal representative and chairman of that company from May 2003 to February 2007.  Hence, the 1^st defendant’s conviction(s) and the findings of fact in support thereof are clearly irrelevant (in the true sense of the word) to, and are therefore admissible at, the trial of this action.  I do not think the plaintiff disputes this.

25.  Nevertheless, for reasons that will become apparent shortly and since Mr Tsang places reliance on Hollington, Hui Chi Ming v The Queen [1992] 1 AC 34, Pacific Electric Wire & Cable Co Ltd v Gold Global Ltd, HCCL 17/2009, unreported, Master de Souza (9 November 2010) and Chen Mei Lan v Registrar of Companies [2017] 1 HKLRD 924 (all of which applied Hollington) in seeking to exclude the entire PRC Judgment, it would be instructive to remind ourselves of the rationale behind the Hollington principle. 

26.  A modern statement of such rationale can be found in Rogers v Hoyle [2015] QB 265 (which concerned the admissibility of a report produced by the Department of Transport’s Air Accident Investigation Branch into the crash of a vintage bi-plane).  At first instance, Leggatt J said at [59], [93] and [104]:

“59. A central part of a judge’s task in a civil case is to evaluate the evidence adduced by the parties and to decide what conclusions may be properly drawn from that evidence. It is a cardinal principle, and an essential ingredient of the right to a fair trail before an impartial and independent tribunal, that in carrying out this task judges must form their own opinions by making their own evaluation of the evidence and must not defer to the opinion of anyone else. …

…

93. When the Court of Appeal[v] described the opinion of the criminal court as “irrelevant”, I therefore do not think that the term was being used in the sense defined earlier to denote evidence which is not logically probative. What I believe they meant is that the opinion of another court, like the opinion of a bystander, is not a matter to which a court required to decide the issue ought to have regard. The underlying rationale in my view, albeit not clearly spelt out in the judgment of the Court of Appeal, is the rationale to which I referred earlier for the exclusion of opinion evidence in general: namely, that it is the duty of a court to form its own opinion on the basis of the evidence placed before it; and that it would not be proper for the court in forming that opinion to be influenced by the opinion of someone else, however reliable that person’s opinion is likely to be. In so far as the evidence before the later court is the same as the evidence before the earlier court, the later court is in as good a position to draw inferences and conclusions from the evidence. In so far as the evidence is different, the opinion of the earlier court does not assist the court’s task.

…

104. As in the case of the rule which excludes opinion evidence generally, therefore, the true justification for the rule in Hollington v F Hewthorn & Co Ltd, as I see it, is not that the opinion of an earlier court is irrelevant but lies in the requirements for a fair trial.  The responsibility of a judge to make his or her own independent assessment of the evidence entails that weight ought not to be attached to conclusions reached by another judge – all the more so where the party to whose interests the conclusions are adverse was not a party to the earlier proceedings. …”

27.  On appeal, Christopher Clarke LJ (with whose judgment Treacy and Arden LJJ agreed) said at [38]-[40]:

“38. The reasoning that has survived is that set out in the following passage of Lord Goddard’s judgment in the Hollington case [1943] KB 587, 595:

“It frequently happens that a bystander has a complete and full view of an accident.  It is beyond question that, while he may inform the court of everything that he saw, he may not express any opinion on whether either or both of the parties were negligent.  The reason commonly assigned is that this is the precise question the court has to decide, but, in truth, it is because his opinion is not relevant.  Any fact that he can prove is relevant, but his opinion is not.  The well recognised exception in the case of scientific or expert witnesses depends on considerations which, for present purposes, are immaterial.  So, on the trial of the issue in the civil court, the opinion of the criminal court is equally irrelevant.”

39. As the judge rightly recognised the foundation on which the rule must now rest is that findings of fact made by another decision maker are not to be admitted in a subsequent trial because the decision at that trial is to be made by the judge appointed to hear it (“the trial judge”), and not another. The trial judge must decide the case for himself on the evidence that he receives, and in the light of the submissions on that evidence made to him. To admit evidence of the findings of fact of another person, however distinguished, and however thorough and competent his examination of the issues may have been, risks the decision being made, at least in part, on evidence other than that which the trial judge has heard and in reliance on the opinion of someone who is neither the relevant decision maker nor an expert in any relevant discipline, of which decision making is not one. The opinion of someone who is not the trial judge is, therefore, as a matter of law, irrelevant and not one to which he ought to have regard.

40. In essence, as the judge rightly said, the foundation of the rule must now be the preservation of fairness of a trial in which the decision is entrusted to the trial judge alone.”

28.  In short, the exclusion of the factual findings and conclusions of an earlier court or tribunal from subsequent proceedings serves to ensure a fair trial, not in any general sense as suggested by Mr Tsang, but in the specific sense that the judge appointed to hear and determine the subsequent case makes his own decision on the evidence and submissions presented to him, without being influenced by the opinion of an earlier adjudicator.

29.  Such concern however does not exist in relation to the evidence referred to in an earlier judgment such as the contents of documents or the evidence of witnesses.  In Rogers v Hoyle, the statements or reported statements of fact in the AAIB report, even those unattributed, were admitted as not falling foul of the Hollington rule at all.  See also JSC BTA Bank v Mukhtar Ablyazov [2017] EWHC 2906 (Comm) at [26]-[28] (per Sir Ross Cranston).

30.  In the instant case, insofar as the PRC Judgment contained a summary of the factual evidence presented to the PRC Court, the 1^st defendant’s relationships with and positions in the Beijing Company and the plaintiff also featured in the PRC Judgment.  In particular, pages 3 to 14 of the PRC Judgment summarised the testimony of 18 prosecution witnesses (including 謝桂如, 鍾群and 張九常 who have made witness statements and will give evidence herein for the plaintiff).  One of the matters covered by these witnesses was the 1^st defendant’s relationship with and position in the Beijing Company and the plaintiff, which tends to contradict his said general ground of defence.  Such evidence was adduced at the 1^st defendant’s criminal trial in the PRC because, according to the PRC Judgment, it was the prosecution case that the plaintiff was set up by the 1^st defendant in 1990 upon the assignment and instruction of the Beijing Company, a state-owned enterprise, and that the plaintiff in turn co-operated with 北京市延慶縣大榆樹農工商聯合企業總公司 to set up Beijing Yong Da in 1993 at the direction of the Beijing Company so that the properties of Beijing Yong Da disposed of by the 1^st defendant were state-owned properties, the unauthorised disposal of which would constitute corruption.

31.  For these reasons, I am of the view that the statements or reported statements in the PRC Judgment of the factual evidence before the PRC Court are not excluded by the operation of the rule in Hollington.

32.  The only other objection to such statements or reported statements is that they are hearsay or even double hearsay.  The rule against the admission of hearsay has been abolished in civil proceedings by the amendments to the EO in 2009.

33.  Mr Tsang has expressed concern that what appears to be a statement describing the evidence in the PRC Judgment may embrace the PRC Court’s assessment of the credibility of the evidence.  Counsel is so concerned because the summary of witnesses’ testimony mentioned in paragraph 30 above was preceded by these words: “上述事實，有下列經當庭舉證、質證，本院予以確認的證據證實” (emphasis added). 

34.  This may or may not be a valid concern but it need not be dealt with here and now.  It appears to me that such concern goes to the weight to be attached to the summary of evidence in the PRC Judgment and does not provide any basis for contesting its admissibility.  In this regard, s 49 of the EO requires the court, in estimating the weight, if any, to be given to hearsay evidence in civil proceedings, to have regard to any circumstances from which any inference can reasonably be drawn as to the reliability or otherwise of the evidence, including:

(1)  whether it would have been reasonable and practicable for the party by whom the evidence was adduced to have produced the maker of the original statement as a witness;

(2)  whether the original statement was made contemporaneously with the occurrence or existence of the matters stated;

(3)  whether the evidence involves multiple hearsay;

(4)  whether any person involved had any motive to conceal or misrepresent matters;

(5)  whether the original statement was an edited account, or was made in collaboration with another or for a particular purpose;

(6)  whether the circumstances in which the evidence is adduced as hearsay are such as to suggest an attempt to prevent proper evaluation of its weight;

(7)  whether or not the evidence adduced by the party is consistent with any evidence previously adduced by the party.

A similar point was made in Roger v Hoyle, supra.  See Leggatt J at [56] and Christopher Clarke LJ at [30].

35.  To conclude, I rule the PRC Judgment admissible but only for the statements or reported statements therein of the factual evidence before the PRC Court that is relevant to the issues in this case. Beyond this, I do not think it is necessary for me to carry out an immediate editing exercise to precisely identify paragraph by paragraph or even sentence by sentence what comes within or without this ruling.  As the trial judge, I shall see the whole of the PRC Judgment and leave out of account any part of it that is inadmissible.  Leggatt J adopted the same approach in Roger v Hoyle, supra, at [118].

36.  Before I leave the PRC Judgment, for the sake of completeness, the plaintiff also challenges the 2^nd defendant’s locus standi to make the application on the ground the PRC Judgment is relied upon by the plaintiff against the 1^st defendant.  In view of my ruling, it is strictly speaking unnecessary for me to deal with this point.  However, to the extent that it is said that the PRC Judgment is relevant to the 1^st defendant’s said general ground of defence which, if successful, would take away the basis for the plaintiff’s claim in respect of the Tanner Garden Property, I am inclined to think that the 2^nd defendant is interested in the admissibility or otherwise of the PRC Judgment.

Paragraphs 31 to 36 of Madam Lai’s witness statement

37.  Paragraphs 34 to 36 of Madam Lai’s witness statement, though put under the heading “第一被告人於國內被刑事檢控”, do not in fact deal with the PRC Judgment but the承包協議 mentioned in paragraph 14(5) above.  I do not see any basis for expunging these paragraphs.

38.  I shall however expunge paragraphs 31 to 33 as falling foul of the Hollington rule.  Paragraph 1 mentions the 1^st defendant’s arrest, conviction and imprisonment for corruption relating to Beijing Yong Da’s properties, which have no relevance to any issues in the present case.  Paragraphs 32 and 33 mentions and relies on the PRC’s court’s disbelief of the 1^st defendant’s defence and finding that the 1^st defendant was deployed by the Beijing Company to set up and manage the plaintiff.  The making of finding as to the 1^st defendant’s relationships with and positions in the Beijing Company and the plaintiff is a matter for me as the trial judge without reference to the opinion of the PRC Court.

Adjournment

39.  As mentioned above, the 1^st defendant will not complete his current term of imprisonment until 28 August 2023.

40.  In seeking to adjourn the trial of this action sine die pending the 1^st defendant’s release from prison, the defendants are putting their case on the basis that the 1^st defendant may be released earlier.  Such case has been variously put as follows:

(1)  According to the 1^st defendant’s said son’s letters to the court dated 6 February and 3 March 2018, “根據中國大陸不成文的規定，只要年滿70歲的服刑人員就可以申請假釋，我父親李殿孝今年68，只要再過兩年就會符合資格”(emphasis added).

(2)  According to paragraph 4 of the 1^st defendant’s said PRC lawyer’s letter to the court dated 25 February 2018, “李殿孝年近70歲了，如果在後期的案件沒有被判為有罪，根據內地的政策會申請保外就醫，屆時，會通過審批會回港參加庭審”(emphasis added).

(3)  According to paragraph 13 of the 2^nd defendant’s 1^st affirmation dated 6 February 2018, the 1^st defendant’s said son had told him that “it is highly likely that the 1^st Defendant will released within these two years, because the usual practice in China that a prisoner will be released from prison early when he attains the age of 70 years old” and that “the 1^st Defendant will be 70 years old in 2019.”

(4)  According to paragraph 5 of the 2^nd defendant’s 2^nd affirmation dated 14 February 2018, the 1^st defendant’s said son had told him that “the 1^st Defendant would apply for compassionate release from prison, and is currently in frail health” and that “the 1^st Defendant suffers hypertension, severe diabetes and ankylosing spondylitis” and that his expert on relevant PRC laws had advised him that “the health condition of a prisoner would be favourably considered in the release application”.

41.  It can be seen that the defendants have not been entirely consistent as to the nature of the early release (parole or temporary service of sentence outside prison to seek medical treatment) or the legal basis therefor (unwritten rules or practice vs state policy).  I think I can be forgiven for being sceptical about the suggestion of early release of the 1^st defendant.  Indeed, I note that the 1^st defendant had, in his letter to the court dated 18 December 2014, expressed hope that he would be released in 2016 if his application for commutation of his sentence or parole should succeed or in late 2017 or early 2018 if such application failed or if he did not apply for parole.

42.  Indeed, according to the 2^nd defendant’s PRC law expert, Dr Chen Li, he has not been provided with any information that the 1^st defendant is eligible to apply for a commutation of his sentence.  See paragraph 8 of Dr Chen’s report dated 21 February 2018.

43.  Further, it is clear on the evidence before me that the 1^st defendant has not made any application for either parole or temporary service of the remainder of his sentence outside prison for medical reasons.

44.  Nor have the defendants adduced any or any sufficient evidence that the 1^st defendant is or would be eligible for either parole or temporary service of the remainder of his sentence outside prison for medical reasons which are governed, not by any unwritten rules or practice or state policy as initially suggested, but by statutes.

45.  On parole:

(1)  Article 81 of the PRC Criminal Law (Revised) (《中華人民共和國刑法（修訂）》) provides:

“被判處有期徒刑的犯罪分子，執行原判刑期二分之一以上，…，如果認真遵守監規，接受教育改造，確有悔改表現，假釋後不致再危害社會的，可以假釋。…” (emphasis added)

(2)  Article 3 of the Provisions of the Supreme People’s Court on the Specific Application of Law in Handling Commutation and Parole Cases (《最高人民法院關於辦理減刑、假釋案件具體應用法律的規定》) explains the requirement of “true repentence” (“確有悔改”) as follows:

“確有悔改表現＂是指同時具備以下條件：

(一) 認真悔罪；

(二) 遵守法律法規及監視，接受教育改造；

(三) 積極參加思想、文化、職業技術教育；

(四) 積極參加勞動，努力完成勞動任務。

對職務犯罪、破壞金融管理秩序和金融詐騙犯罪、組織（領導、參加、包庇、縱容）黑社會性質組織犯罪等罪犯，不積極退贓、協助追繳贓款贓物、賠償損失，或者服刑期間利用個人影響力和社會關係等不正當手段意圖獲得減刑、假釋的，不認定其“確有悔改表現＂。” (emphasis added)

46.  According to paragraph 12 of Dr Chen’s report, he is not sure whether the 1^st defendant has satisfied the conditions for parole given the limited information made available to him.  Nor do I have such information in evidence.

47.  Indeed, as observed by the plaintiff’s PRC law expert Mr Sun Sheng Ai, the 1^st defendant had served half of his sentence, and would have become eligible to apply for parole had he complied with the other conditions, by late February 2016.  In the absence of any explanation as to why the 1^st defendant did not apply for parole after February 2016, the court is entitled to infer that such other conditions (including the extra requirements of compensation etc imposed upon a “職務犯罪罪犯” of which the 1^st defendant is one) had not been satisfied.

48.  Turning then to the prospect of temporary service of the remainder of his sentence by the 1^st defendant outside prison for to seek medical treatment, article 254 of the PRC Criminal Procedure Law (《中華人民共和國刑事訴訟法》) provides:

“對被判處有期徒刑或者拘役的罪犯，有下列情形之一的，可以暫予監外執行：

(一) 有嚴重疾病需要保外就醫的；…

對罪犯確有嚴重疾病，必須保外就醫的，由省級人民政府指定的醫院診斷並開具證明文件。” (emphasis added)

49.  The Supreme People’s Court, the Supreme People’s Procuratorate, the Ministry of Public Security, the Ministry of Justice and the National Health and Family Planning Commission jointly issued the Provisions on Temporary Service of Sentences outside Prisons (《暫予監外執行規定》) on 24 October 2014 to provide detailed guidance.  Of relevance are:

(1)  Article 5 which clarifies that an applicant under article 254(1) of the PRC Criminal Procedure Law should suffer from a serious illness specified in the attached 《保外就醫嚴重疾病範圍》to the extent that he requires medical treatment outside prison.

(2)  Article 6 which states that “對職務犯罪、… 的罪犯適用保外就醫應當從嚴審批，對患有高血壓、糖尿病、心臟病等嚴重疾病，但經診斷短期內沒有生命危險的，不得暫予監外執行。”

(3)  Article 7 which requires an applicant who was sentenced to a term of imprisonment of 10 years or above to have served at least one-third of his sentence, though such requirement may relaxed in case of inter alia s prisoner who is over the age of 65.

50.  In short, to be eligible to apply to serve the remainder of his sentence outside prison to seek medical treatment, the 1^st defendant being a prisoner who had committed his offence in the course of his employment has to be certified by a hospital nominated by the provincial people’s government to be suffering from an illness within the said 《保外就醫嚴重疾病範圍》to a life-threatening extent.

51.  Save for the bare assertion that the 1^st defendant suffers from hypertension, severe diabetes and ankylosing spondylitis, neither the 1^st defendant nor the 2^nd defendant has seen fit to adduce any medical evidence whatsoever as to the 1^st defendant’s physical condition to enable me to assess the credibility of their assertion that the 1^st defendant may be allowed to serve the remainder of his sentence outside prison to seek medical treatment (which would give the 1^st defendant some limited “freedom” to advance his defence in this action).  In this regard, I am afraid I cannot detect any basis for Dr Chen’s assessment in paragraph 19 of his report that it is more likely than not that the 1^st defendant could be granted temporary service of his sentence outside prison.

52.  In the absence of evidence, the factual ground upon which the adjournment is sought is simply not made out and the application should be be dismissed.

53.  Given my said reason for dismissing the application for adjournment, it is not necessary for me to deal with the parties’ arguments made with reference to Arko Ship Leasing Ltd v Winsmart International Shipping Ltd [2013] 2 HKLRD 121 and Velatel Global Communications Inc v Chinacomm Ltd, HCA 1978/2011, unreported, 22 March 2016 which dealt with applications to move trial dates due to unavailability of witnesses.

54.  For the sake of completeness, while I do not under-estimate the difficulty faced by the 1^st defendant in his present circumstances, I am not impressed by, and cannot act on, his bare assertion without any particular that it is necessary for him to personally handle his defence to this action because “本案件涉及事件人物龐大，歷史遠久，案情複雜，需要大量人證和物證”.  In particular, this is certainly not the first time that the 1^st defendant he has to deal with the case that he held the shares in the plaintiff as trustee for the Beijing Company.  As said earlier, evidence to such effect was given for the prosecution and sought to be answered by him in defence in his criminal trial in the PRC.  Presumably, a body of evidence was gathered on the 1^st defendant’s behalf back then.  The same PRC lawyer who defended the 1^st defendant at his PRC criminal trial wrote on his behalf to this court on 20 March 2018.

Re-amendment of the amended defence

55.  The principles governing the grant or refusal of leave to amend pleadings are trite and need not be repeated here: see Hong Kong Civil Procedure 2018, Volume 1, paragraph 20/8/6.

56.  The only objection of the plaintiff is essentially that this application is made at a very late stage. 

57.  Despite the lateness of the application, I am prepared to give leave. 

58.  The only substantive allegation sought to be added is to identify the source of the sum of $4 million said to be held by the plaintiff on trust for the 1^st defendant and used to pay for the transfer of the Tanner Garden Property from the plaintiff to the 1^st defendant.  In short, the 2^nd defendant wishes to plead that the sum of $4 million came from the proceeds of sale of Flats 22A and 22B, Eternal Building, 112-114 Tsat Tsz Mui Road, Hong Kong (“Eternal Building Flats”).  According to the relevant land search records:

(1)  The Eternal Building Flats were acquired in the name of Kingpower on 2 December 1989 at $985,986 and $984,126.

(2)  They were transferred from the name of Kingpower into the name of the 1^st defendant on 6 September 1990 for a stated consideration of $985,986 and $984,126.

(3)  They were disposed of by the 1^st defendant in 1994 at $2,900,000 and $2,630,000.

59.  As I see it, the issues raised by this amendment are as to the beneficial ownership of Kingpower and the Eternal Building Flats. These are not new issues as far as the plaintiff is concerned.  This is because the plaintiff itself has expressly pleaded in paragraphs 7(1) and (3) of its amended reply to the 1^st defendant’s amended defence that the Beijing Company commenced business in Hong Kong through Kingpower and that the Beijing Company had through and in the name of Kingpower acquired the Eternal Building Flats.

Supplemental witness statement

60.  Apart from saying that the supplemental witness statement is required to support the re-amendments to his defence, the 2^nd defendant has not seen fit to provide the court or the plaintiff a draft of such statement.

61.  It is unusual for the court, and I am not prepared, to give blanket leave for further witness statement at this stage without sight of at least a draft.

Dispositions

62.  For the above reasons, I make the following rulings and orders:

(1)  The PRC Judgment should be admitted in evidence and included in the trial bundles but only for the statements or reported statements therein of the factual evidence before the PRC Court that is relevant to the issues in this case.

(2)  Paragraphs 31 to 33 of Madam Lai’s witness statement dated 20 December 2016 should be expunged.

(3)  The application for adjournment of the trial is dismissed.

(4)  The 2^nd defendant should have leave to re-amend his defence as per the draft attached to his summons dated 6 March 2016 within 3 days hereof.

(5)  The plaintiff shall have leave to file and serve a reply to the 2^nd defendant’s re-amended defence within 14 days thereafter.

(6)  There is no order on paragraph (3) of each of the 2^nd defendant’s summons dated 6 February and 6 March 2018 (re supplemental witness statement).

63.  I shall hear the parties on costs which I will then deal with on paper.  The plaintiff and the 2^nd defendant should lodge and exchange

(1)  written submissions on costs within 14 days from today; and

(2)  reply submissions on costs within 14 days thereafter.

Further directions

64.  I have not given any directions for the preparation of the trial at the pre-trial reviews on 7 February and 14 March 2018 as a result of the applications dealt with above.  I now direct that:

(1)  The plaintiff should lodge with the court and serve on the 1^st and 2^nd defendants the trial bundles and its written opening submission and list of authorities on or before 24 April 2018.

(2)  The 1^st and 2^nd defendants should each lodge with the court and serve on the plaintiff and the other defendant his written opening submission and list of authorities on or before 2 May 2018.