DAIMLER AG v. LEIDUCK, HERBERT HEINZ HORST AND OTHERS

CACV 12/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 12 OF 2013

(ON APPEAL FROM HCA NO. 4089 OF 1994)

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BETWEEN

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REASONS FOR JUDGMENT

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Hon Fok JA:

1.  I agree with the Reasons for Judgment of Barma JA.

Hon Barma JA:

2.  This is an appeal against the decision of L Chan J on 30 November 2012 (the reasons for which were given on 6 December 2012) dismissing an application by the defendants for an order permitting the 1^st defendant to give evidence by video link for the purposes of the impending trial of the defendants’ application to enforce the cross-undertaking as to damages given by the plaintiff in order to obtain a Mareva injunction against the defendants, which was subsequently discharged.  Leave to appeal was given on 17 January 2013, and in view of the fact that the trial (which is set down for 16 hearing days) is due to commence on 4 February 2013, the appeal was heard on an expedited basis.

3.  At the end of the hearing, we allowed the appeal, set aside the Judge’s order and made an order in terms of the defendants’ summons, together with the costs orders set out in paragraph 31 below.

4.  The background is as follows.  The plaintiff obtained a Mareva injunction against the defendants on 29 April 1994.  It was subsequently discharged against both defendants.  On 23 July 2007, the defendants applied by summons for an order for an enquiry as to the damages suffered by them by reason of the injunction, and for the payment by the plaintiff of such damages to them.

5.  On 20 August 2012, the defendants applied for leave for the 1^st defendant to give his evidence at the trial by way of video link from Germany, where he resides.  The application was supported by the 1^st defendant’s 7^th affidavit and by affidavits from two doctors who have been treating him – Dr Bernd Langmack and Dr Reinhold Kramer, all dated 25 September 2012.

6.  In his 7^th affidavit, the 1^st defendant said that he is blind and suffers from a number of serious heart related diseases, and has been living in a home for the aged, at which there is round the clock medical care available, since February 2012.  He said that he is almost totally immobile, and needs assistance to move around.  He said that, although he is eager to give evidence at the forthcoming trial, he has been advised by his doctors that it would be life-threatening for him to try to travel to Hong Kong, and therefore wishes to be able to give his evidence by way of video link.  He added that enquiries he has made (on a hypothetical basis) suggest that airlines or other carriers would not permit him to travel without medical clearance, which he will not be able to obtain.

7.  The evidence of Drs Langmack and Kramer sets out in some detail the medical conditions from which the 1^st defendant suffers.  Dr Langmack, who has been treating the 1^st Defendant since 2001, says that he suffers from the following cardiac problems: severe coronary heart disease, status post anterior and posterior myocardial wall infarction, status post multiple coronary artery stent-implantations with no further options for any additional revascularisation procedure, chronic heart failure, recurrent cardiac arrhythmia, status post pacemaker implantation, chronic cardiac failure and angina pectoris.  Dr Langmack also says that the 1^st Defendant suffers from retinitis pigmentosa with profound eyesight restriction (i.e. virtual blindness).  Dr Langmack states that the 1^st Defendant is no longer in a position to undertake air travel or longer surface travel because the physical or mental stress involved could cause acute heart failure and rhythm disturbances which would eventually be life-threatening.  Dr Kramer sets out a similar list of medical conditions, says that he is treating the 1^st defendant and prescribing medication for him on an ongoing basis (having last seen him on 21 August 2012), and that no improvement to the 1^st defendant’s state of health can be expected.  He goes on to say that because of the 1^st defendant’s very severe heart related conditions, a journey to Hong Kong by air, or by other means, would be life-threatening.

8.  Although the plaintiff did not accept this evidence, it did not file any contrary evidence, and the judge below accordingly proceeded, in my view correctly, on the basis that it should be accepted.

9.  However, notwithstanding this evidence, the judge dismissed the application.

10.  In doing so, he had regard to the importance of the 1^st defendant’s evidence for the purposes of the trial, in the light of the following matters:-

(1)   It was common ground that the 1^st defendant’s evidence would be of great importance at the trial.  He is the only witness for the defendants who gives evidence of two alleged frauds committed by the plaintiff in relation to the obtaining and discharge of the Mareva injunction.  The proof of such frauds is of crucial importance to the defendants’ attempt to enforce the cross-undertaking as to damages.

(2)   The 1^st defendant’s evidence is highly controversial, and will be the subject of (almost certainly extensive) cross-examination by the plaintiff – not least as to what are said to be inconsistencies in various versions of his evidence as to the position of the 2^nd defendant, the authenticity of documents relating to one of the damages claims being advanced, and as to the way in which the damages claims have evolved and expanded over time.

(3)   In these circumstances, the 1^st defendant’s credibility would be a major issue at the trial.  The plaintiff intended to apply for him to give his evidence-in-chief orally, rather than by simply adopting his witness statement, and to cross-examine him vigorously.

11.  The judge correctly observed that the question of whether or not to make an order permitting the 1^st defendant to give his evidence by video link was a question of case management, taking into account whether or not the use of the Technology Court for this purpose would be likely to promote the fair and efficient disposal of the proceedings, to save costs and/or materially to delay disposal of the proceedings (as set out in paragraphs 4 and 5 of Practice Direction 29).  He also referred to earlier decisions in which the question of whether leave to give evidence video link should be granted was considered, in which the Hong Kong courts have emphasised the fact that the normal mode of proceeding is for a witness to attend at the hearing and give his evidence live, before the court, and suggested that the use of video link technology might be more readily approved in cases involving non-controversial evidence, or expert evidence of a technical nature (see Re Chow Kam Fai ex parte Rambas Marketing Co LLC [2004] 2 HKLRD 260, paras 16-19; Raj Kumar Mahajan v HCL Technologies (Hong Kong) Ltd [2010] 5 HKLRD 119, paras 7-9; Asia-Pac Infrastructure Development Ltd v Ing Yim Leung Alexander & others (unreported, HCA 16778/1999, Stone J, 8 November 2010, paras 57-62)).

12.  On the basis of these authorities, the judge concluded that it was for the defendants to show good grounds for being permitted to adduce the 1^st defendant’s evidence by way of video-link.  He concluded that the defendants had not done so, for the following reasons:-

(1)   Although accepting the undisputed evidence as to the 1^st defendant’s state of health, he took the view that there was nothing in the evidence to suggest that the 1^st defendant would not be able to travel safely to Hong Kong if he were to fly first class (with a doctor in attendance if necessary) or by means of an air ambulance service, so that it would not be impossible for the 1^st defendant to come to Hong Kong to give evidence.

(2)   He took the view that the stress involved in travelling (particularly if this was in first class or by air ambulance) would not be particularly strong when compared with the stress of having to undergo a searching cross-examination.

(3)   He also seems to have placed some weight on the facts that:-

(a)   the 1^st defendant had not been hospitalised since about February 2012; and

(b)   the visit to Dr Kramer on 21 August 2012 appeared to be a routine one, with no particular matters having to be dealt with.

13.  The judge therefore concluded that it was not shown that it was impossible for the 1^st defendant to travel to Hong Kong for the purpose of giving evidence.

14.  He further took into account what he considered to be the prejudice that would be caused to the plaintiff if an order permitting the 1^st defendant to give his evidence by video link were to be made.  His reasoning was as follows:-

(1)   It was common ground between the parties that it would not be possible to take the 1^st defendant’s evidence in accordance with the procedures under the Hague Convention on the Taking of Evidence Abroad on Civil or Commercial Matters, as the time needed to make the necessary arrangements for this to be done was such that it could not be arranged before the trial starts, and that the only method of taking the 1^st defendant’s evidence in Germany would be by way of what was described as “passive legal assistance” – in effect a mutually agreed process for taking such evidence by video link or otherwise – in which there was no effective sanction for perjury (as the witness would not be in Hong Kong when giving evidence).

(2)   Having regard to the controversial nature and importance of the 1^st defendant’s evidence, the judge placed weight on the absence of an effective sanction for perjury if such evidence were to be given by video link.

(3)   He also considered that given the controversial nature of the 1^st defendant’s evidence, the plaintiff would be prejudiced by having to cross-examine the 1^st defendant via video link, as the impact of such cross-examination might be weakened as a result.

15.  Before us, Mr Wong SC, appearing for the defendants contended that the judge had plainly erred in making the decision that he did.  He submitted that:-

(1)   The judge was wrong to assume that it would be safe for the 1^st defendant to travel to Hong Kong by first class (with or without a medical escort) or air ambulance, in the face of the uncontradicted evidence from his doctors that it would be life-threatening for him to travel here, and in the absence of any evidence to suggest that travel by the modes suggested by the judge would remove the risks to the 1^st defendant’s health and life.  The judge therefore took into account an irrelevant matter, or a matter for which there was no proper evidentiary basis.

(2)   The judge’s attempt to compare the relative stress of travelling to Hong Kong with that arising from giving evidence and cross-examination was similarly devoid of any evidential basis.

(3)   While there might be some prejudice to the plaintiff in terms of the unavailability of an effective sanction for perjury, this could be addressed by the trial judge taking account of this when assessing the weight to be given to the 1^st defendant’s evidence.

(4)   The judge erred in thinking that there would be any detrimental impact on the effectiveness of cross-examination, having regard to the views expressed by the House of Lords in Polanski v Conde Nast Publications Ltd [2005] 1 WLR 637, where Lord Hope observed (at para 68 of the judgment) that the process of cross-examination by video link “takes place as naturally and freely as when a witness is in the court room” (similar observations being made by the other members of the House of Lords: see per Lord Nicholls at para 14, Lord Slynn at para 43, Baroness Hale at para 69 and Lord Carswell at para 84).   Even if there was some such detrimental impact so far as the plaintiff was concerned, this, too, could be addressed by the trial judge taking account of this when considering what weight to give to such evidence.

(5)   Even if there were some detriment to the plaintiff, it was clearly outweighed by the severe prejudice that would be suffered by the defendants in being unable to place their evidence before the court at all.

16.  For the plaintiffs, Mr Yan SC submitted that:-

(1)   As this was a case management decision, it should only be interfered with if the judge “has gone clearly wrong and made orders which will clearly involve an injustice or an inability for the trial court to carry out its task” or has “erred in principle or the order was irrational having regard to the issues that had to be resolved” (see Eton Properties Ltd (unreported, HCMP 13, 15, 18 & 21/2012, CA, 14 February 2012) at para 9 of the judgment).

(2)   Here, the judge had correctly applied the relevant legal principles (to which I have referred at paragraph 10 above), and had taken into account all of the evidence placed before him.

(3)   He had also placed into the balance all relevant considerations, including the 1^st defendant’s medical conditions, the importance of his evidence, the fact that his credibility would be hotly contested, the fact that there could be no effective sanction for perjury if he were permitted to give evidence by video link, the impracticality of seeking to make use of the Hague Convention procedures, the availability of more comfortable modes of travel and the possibility of employing a medical escort service (and the fact that the 1^st defendant could afford to do so).

(4)   The medical evidence was vague, did not state in terms that it was impossible for the 1^st defendant to come to Hong Kong, and failed to assess the viability of the different classes and means of travel (such as by air ambulance) that were available.

(5)   The suggestion that the prejudice to the plaintiff would be minor was tantamount to a suggestion that all applications to give evidence by video link should be allowed, and ignored the impairment that would be caused to the court’s ability to assess the 1^st defendant’s credibility, and the weight to be attached to his evidence.  The absence of sanctions for perjury would be similarly prejudicial to the plaintiff.

(6)   As the case had developed since the hearing before the Judge, the 1^st defendant’s evidence could not be said to be essential for the defendants’ case, as the defendants’ recently filed Consolidated Points of Claim demonstrated that in many respects, the 1^st defendant had no personal knowledge of matters relied upon by the defendants, and would therefore be giving hearsay evidence, which could (and apparently would) be given by other witnesses in any event.

17.  In my view, the judge clearly erred in his decision not to allow the defendants to adduce the 1^st defendant’s evidence by way of video link.  In coming to this decision, he had regard to matters which were not in the evidence before him, and which were, with respect to him, no more than speculation on his part.  Further, it seems to me that in weighing up the relative advantages and disadvantages to the parties of permitting the use of a video link for the 1^st defendant’s evidence, he was clearly wrong in his conclusion as to which way the balance lay.

18.  Although the judge, and the plaintiff, placed considerable reliance on the earlier decisions of this Court (and the Court of First Instance) in which applications to make use of video conferencing facilities were refused, it is important to bear in mind that each such decision was made in the light of the circumstances of the particular case before the court.  In the Rambas case, the party seeking to give evidence by video link was in Macau, and wished to avoid travelling to Hong Kong in order to avoid the possibility of being arrested in order to secure his attendance for examination as to his assets.  There was no suggestion of any inability on his part to travel to Hong Kong.  Not surprisingly, the Court of Appeal took a dim view of his attempt to give evidence via video link instead of coming to give evidence in person.  The position in the Mahajan case was that the applicant relied only on his busy schedule, and a medical condition (of which no details are given in the judgment) as a reason for not wishing to give evidence in person in court.  There was again no suggestion, so far as I can see, that it was impossible for him to travel to Hong Kong.  In the Asia-Pac Infrastructure Development case, Stone J described the witness in question as a crucial witness (the only witness for the plaintiff in that case), who wished to positively avoid coming to Hong Kong for reasons peculiar to himself.

19.  Those cases are, in my view, far removed from the present case, where the uncontradicted medical evidence is to the effect that it would be life-threatening for the 1^st defendant to have to travel to Hong Kong.

20.  I do not consider that that evidence is fairly to be described as general or lacking in detail.  On the contrary, both Dr Langmack and Dr Kramer spell out in clear terms the extensive list of serious heart conditions from which the 1^st defendant suffers.  They both state, clearly and unequivocally, that it would be hazardous to the 1^st defendant’s life and health to have to undertake the journey to Hong Kong.  There is nothing in their evidence to lend support to the judge’s supposition that the adoption of a more comfortable mode of travel, even with the benefit of a medically qualified person in attendance, would be acceptable from the 1^st defendant’s point of view.  Nor was there any other evidence that could support such a proposition.  In my view, it was not open to the judge to speculate that there might be some other means by which the 1^st defendant could come to Hong Kong for the purpose of giving his evidence at the trial.  In doing so, the judge took into account matters for which there was no evidential foundation, thereby vitiating his exercise of discretion.

21.  I think that the same can be said about the judge’s hypothesis that the stress of cross-examination would be likely to be greater than any stress that might be occasioned to the 1^st defendant by having to travel (in a suitably comfortable way) to Hong Kong.  The comparison is not a valid one – not least because the 1^st defendant has no alternative but to give his evidence (and offer himself for cross-examination) if the defendants are to have evidence to support their claims, and he has, in any event, expressed himself to be keen to give such evidence.  He is not, to my mind, someone who is seeking to avoid coming to Hong Kong, but someone who desires to do so but is unable to, by reason of his ill-health.  Thus, in taking this matter into consideration, the judge similarly erred.

22.  I also think that the Judge erred in having regard to the matters I have mentioned in paragraph 12(3) above.  Neither of them provided any basis for thinking that the 1^st defendant’s heart conditions and ill-health might not be as serious as his doctors had indicated.

23.  Further, and more fundamentally, it seems to me that the judge’s assessment of the balance of the prejudice as between the parties was flawed. Although he rightly had regard to the crucial nature of the 1^st defendant’s evidence, he appears to have focussed only on the difficulties that would face the plaintiff if the order sought was granted, and to have lost sight of the fact that the refusal of the order would be likely to mean that the defendants would be wholly deprived of evidence which was crucial to their case, making it extremely difficult, if not impossible, for their application for an inquiry as to damages to succeed.

24.  In any event, I am of the view that the difficulties that the plaintiff would face are not intractable.

25.  While the absence of an effective sanction for perjury is a disadvantage of the mode of giving evidence that has been applied for, I am satisfied that it is a matter that can adequately be addressed by the trial judge taking it into account in considering the weight to be accorded to the 1^st defendant’s evidence.

26.  Similarly, while there may be some disadvantage to the plaintiff in cross-examining the 1^st defendant through the medium of a plasma screen and speakers, and to the judge in assessing the 1^st defendant’s credibility, I am inclined to think that such disadvantages as there may be are likely to be less serious than the Plaintiff has suggested, particularly in the light of the views expressed by the House of Lords in the Polanski case (supra), given the greater experience of the English courts in relation to the use of video link evidence, which appears to be more common than it is here.

27.  But even if there are difficulties in this respect, they pale into comparative insignificance when compared with the difficulties that would be placed in the way of the defendants as a result of the order sought not being made, having regard to the crucial nature of the 1^st defendant’s evidence for their case.  In this regard, I do not agree with the plaintiff’s submission that there would be no real prejudice to the defendants even if the 1^st defendant were unable to give evidence. Notwithstanding that his evidence may be hearsay in nature, the question of its weight would be a matter for the trial judge to determine.  Even if the same or similar evidence might be available from other sources, the weight attaching to such other evidence would also be a matter for the judge.  If the 1^st defendant’s evidence is not placed before the court, this might well have an adverse effect on the weight given to other hearsay evidence, not least because it can be expected that adverse comment would be made as to the 1^st defendant’s failure to attend and give evidence himself.  The exclusion of his evidence would clearly be prejudicial to the defendants.

28.  At the end of the day, the question that must be addressed is: what course is best calculated to achieve a just result – for both parties.  Having regard to the circumstances in which the 1^st defendant finds himself, I am firmly of the view that, in relation to this application, this question admits of only one answer – that an order should be made permitting the 1^st defendant to give his evidence at the forthcoming trial by way of video link.  In coming to the contrary view, I am afraid that the judge was clearly wrong, and has made an order which does, in the circumstances of this case, involve an injustice.  It is therefore open to this Court to exercise the discretion for itself, and for the reasons I have given, I am satisfied that it should be exercised in favour of making the order sought by the defendants.

29.  Finally, I would say also that the plaintiff’s submission that to hold the prejudice to it to be slight would be tantamount to suggesting that all applications to give evidence by video link to be allowed is not one that is justified.  It will always be for the party applying for leave to adduce evidence by way of video link to make out a valid case for such an order to be made, and to justify it having regard to all relevant considerations applicable to the proceedings in which the application is made.

30.  For the foregoing reasons, the appeal was allowed, the Judge’s order set aside, and in its place an order made granting leave to the 1^st defendant to give his evidence at the trial of the defendants’ summons dated 23 July 2007 by video link.  In the course of his submissions, Mr Yan SC indicated that the plaintiffs wished to keep open the possibility of making an application to the trial judge for the 1^st defendant’s evidence to be taken in Germany, with the trial judge and counsel for the parties travelling to Germany for that purpose.  Mr Wong SC did not object to this, although he reserved his position as to any submissions the defendants might make in response to such an application should it be made.  Whether or not such an order, or indeed any other order as to the mode of taking evidence at the trial, should be made is clearly a matter for trial management by the trial judge, and nothing in this judgment should be taken as in any way impinging on the trial judge’s ability to make such orders as he or she may think appropriate for the purpose of conducting the trial.

31.  As far as costs are concerned, we set aside the Judge’s order below, and order that the costs of the application before him are to be paid by the plaintiff to the defendants in any event, on the party and party basis, with certificate for two counsel.  It will be a matter for taxation as to how the costs of the hearing before the Judge below are apportioned, having regard to the fact that there were two other applications before the Judge in respect of which he made separate costs orders.  As for the costs of the leave applications before the Judge, and on paper before the single judge of this court, and the costs of the appeal itself, these are to be paid by the plaintiff to the defendants, to be taxed on the party and party basis if not agreed, with certificate for two counsel.