RE NG YAT CHI

CACV 306/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. CACV 306 OF 2002

(ON APPEAL FROM HCSD 22 OF 2002)

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J U D G M E N T

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Hon Yeung JA:

1. The appellant, Ng Yat Chi takes out two appeals, one against the order of Deputy High Court Judge Woolley dismissing his application to set aside the Statutory Demand served on him by China Resources (Holdings) Company Limited (China Resources) (CACV 306/2002) and the other by Deputy High Court Judge Carlson striking out his Statement of Claim in HCA 2039/2002 (CACV 414/2002) with a Grepe v Loam order. (see Grepe v Loam (1887) 37 Ch. D. 168)

2. With the leave of the court, Mr. Choy Bing Wing was permitted to address the court on behalf of the appellant.

3. The nature of the appeals is unusual and it is necessary to set out the background history of the dispute, be it just briefly.

4. In HCCW 321 of 1996, the appellant sought to wind up Max Share Limited (Max Share) on the just and equitable ground. On 24 May 2000, Yuen J (as she then was) ruled in favour of the appellant against China Resources and ordered that Max Share be wound up.

5. China Resources took the matter to the Court of Appeal (CACV 204 of 2000). On 31 October 2000, the Court of Appeal (Rogers VP, Stock and Le Pichon JJA) allowed the appeal and set aside the winding up order of Yuen J with costs against the appellant.

6. The Court of Appeal refused leave for the appellant to appeal to the Court of Final Appeal on 13 July 2001, and the appellant sought leave from the Court of Final Appeal under s.24 of the Hong Kong Court of Final Appeal Ordinance ('the Ordinance').

7. On 17 September 2001, the Appeal Committee (Bokhary, Chan and Ribeiro PJJ) refused leave with costs against the appellant. Under s. 18(3) of the Ordinance, the decision of the Appeal Committee is final.

8. The appellant failed to meet the cost orders, and China Resources served on him a Statutory Demand for about $1.4 million, being the balance of the unpaid costs on 14 June 2002.

9. The appellant applied to set aside the Statutory Demand on the basis that the judgment of the Court of Appeal on 31 October 2000, and the Determination of the Appeal Committee on 17 September 2001, were made without jurisdiction and/or obtained by fraud/cheating and are therefore null and void.

10. Deputy Judge Woolley dismissed the application on 15 July 2002.

11. On 29 May 2002, the appellant commenced proceedings in HCA 2039 of 2002 against China Resources and Max Share with a view to restoring the decision of Yuen J of 24 May 2000. These proceedings were of course the subject of the order of Deputy Judge Carlson.

12. It is the appellant's contention - through Mr. Choy both in written and oral submissions - that the Court of Appeal and the Appeal Committee had based their decisions on invented facts and that they had either innocently or dishonestly committed act/acts of fraud/cheating with the acquiescence or connivance of China Resources and Max Share. In the circumstances hereinmentioned, their decisions are void and of no effect.

13. The appellant also alleges that the Appeal Committee had improperly exercised the power of the Court of Final Appeal under s.16 (1) of the Ordinance and its decision of 17 September 2001 is therefore ultra vires.

14. Deputy Judge Carlson struck out the appellant's claim on the basis that it was an abuse of the process of the court. He also made an order preventing the appellant from commencing any further new proceedings in respect of the same subject matters without first obtaining the leave of the court (a Grepe v Loam Order).

15. It appears that the issues in both appeals are identical, namely whether the decisions of the Court of Appeal and the Appeal Committee are void for fraud, and whether the decision of the Appeal Committee is ultra vires.

16. Allegations of fraud are very serious allegations to make against anyone, let alone two of the highest courts in Hong Kong, including the court of final adjudication.

17. An allegation of fraud should not be made unless there is clear and sufficient evidence in support and it must be pleaded with the utmost particularity.

18. Deputy Judge Carlson did a most careful analysis of the appellant's allegation and I do not find it necessary to repeat the same exercise.

19. What it boils down to is the suggestion that the Court of Appeal and the Appeal Committee had misunderstood the effect of the judgment of Yuen J, and that when they rested their decisions on such "twisted facts" they were in error.

20. I have considered the documents in question, including the relevant judgments. There was in fact no misunderstanding and any perceived misunderstanding would not have made any difference. The fact remained that Max Share had a capital deficiency of about $172 million and the appellant's shares were therefore valueless. In the circumstances, the injection of new capital/issue of new shares could not have resulted in any unfair prejudice to the appellant, according to the decision of the Court of Appeal, which specific decision the Appeal Committee of the Court of Final Appeal "entirely endorsed."

21. The materials adduced by the appellant simply do not support a charge of fraud.

22. An appellate court is of course entitled to disagree with the decision of the lower court, be it on matters of fact or law. It is unfortunate, to say the least, that decisions of superior courts, which take a different view of the legal position to that of the Court of First Instance, should as a result be characterised as dishonest or fraudulent.

23. Whether the appellant likes it or not, the Court of Appeal had decided to overrule Yuen J and the Appeal Committee had confirmed such decision. The matter is res judicata and there is no further avenue (as far as judicial proceedings are concerned) for the appellant to re-open the issue. We are bound by the decision, and the appellant should also accept the decision.

24. The allegation that the decisions of the Court of Appeal and the Appeal Committee were obtained by fraud is manifestly unfounded.

25. S. 16(1) of the Ordinance stipulates that an appeal to the Court of Final Appeal shall be heard and determined by a court consisting of 5 judges including 1 non-permanent Hong Kong judge or 1 judge from another common law jurisdiction. It only applies to hearings of appeals for which leave have been granted either by the Court of Appeal or the Court of Final Appeal itself.

26. S. 18 of the Ordinance further stipulates that "the power of the Court (of Final Appeal) to hear and determine any application for leave to appeal,... shall be exercised by the Appeal Committee" consisting of 3 judges.

27. In refusing leave to the appellant to appeal against the decision of the Court of Appeal, the Appeal Committee was exercising its power under s. 18 of the Ordinance.

28. The suggestion that the decision of the Appeal Committee is ultra vires again is completely unfounded.

29. In view of the background of the case as outlined in this judgment, a Grepe v Loam order is a proper order to make in order to avoid further abuses of the process of the court.

30. In an affirmation filed on behalf of the appellant and affirmed on 11 July 2003, Mr. Choy Bing Wing referred to a report by the House of Representatives of the United States of America to the effect that China Resources has been identified as an "agent of espionage, economic, military, and political". The report appears to have been available to the public on 25 May 1999.

31. On 28 May 1999, China Resources denied the contents of the report in a public announcement. However the fact that China Resources is a state owned company of PRC is not in dispute. As a state-owned company, China Resources can of course carry out business activities as any other business organization.

32. Quite apart from the fact that the contents of the Cox Report are double hearsay, they are fresh evidence and the requirements under Ladd v Marshall [1954] 1 WLR 1489 have not been fulfilled. While we have a discretion to receive such fresh evidence, it is not a discretion that I would exercise in favour of the appellant in this case. In any event, I am not persuaded that the report is relevant to any of the issues that we have to decide.

33. The Court of Appeal decided that the appellant could not have formed a personal relationship with the State through China Resources to bring into play the 'just and equitable' clause in order to wind up Max Share, although on this issue, the Appeal Committee preferred "to express no view" as to the proposition that a quasi-partnership could be so constituted. That earlier decision is binding upon us, and the appellant must accept it.

34. There is no foundation whatsoever upon which the appellant can properly rest his appeals. The decisions of Deputy Judge Woolley and Deputy Judge Carlson cannot be faulted.

35. The appellant's both appeals are therefore dismissed.

Hon Stone J:

36. I agree. For the reasons given by Hon Yeung JA, I too would dismiss these appeals.

Hon Lugar Mawson J:

37. I also agree. For the reasons given by Hon Yeung JA, I also dismiss the appeals.