E.BON BUILDING MATERIALS CO LTD AND ANOTHER v. THE HONG KONG HOUSING AUTHORITY

HCAL 21/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE PROCEEDINGS

NO. 21 OF 2003

____________

____________

________________

J U D G M E N T

_______________

Introduction

1.  This is an application for judicial review taken out on 18 March 2003.  Leave to apply was given on 11 June 2003.  The decision under challenge was made by the respondent (“HA”) on 19 December 2002:-

(a)     to remove the 1^st applicant (“E.Bon”) from HA’s list of approved proprietary names for the supply of building materials and components (“the said List”) (for lever handle door furniture and locks, bath, shower and basin mixers, sink mixers, shower door on bathtub rim, white/coloured vitreous China WC suite for Concord and New Cruciform blocks and mortise dead locks);

(b)    not to consider the applications of the 2^nd applicant (“Massford”) for inclusion in the said List

(“the challenged decision”).

2.  At the time when leave was given, the grounds relied upon by the applicants were in short:-

(a)     the challenged decision was made in bad faith on HA’s part;

(b)    further or alternatively, the challenged decision was irrational;

(c)     further or alternatively, the challenged decision was made in an unfair manner.

3.  At the beginning of the hearing of this application, the applicants no longer contended that there was bad faith on the HA’s part at the time when the challenged decision was made.  Instead, they allege that there was bad faith on the part of the Housing Department (“HD”), which prepared the documentation placed before HA upon which HA took into account in reaching the challenged decision.  They further alleged that the said documentation was incomplete, misleading and erroneous.

4.  The allegations of irrationality and unfairness are abandoned, but a short statement about procedural unfairness remains in the amended Form 86A.

Grounds of this Application

5.  The amended Form 86A is a relatively lengthy document consisting of some 27 pages.  The part under the heading “Grounds On Which Relief is Sought” takes up about 24 pages.

6.  The major amendments to the Form 86A can be found in para. 45, 47, 48, 50, 59, 70(15) to (19), 72 to 74, 77 and 79 to 81.  As stated above, by the time of the hearing of this application, the applicants no longer contended that there was bad faith on the part of HA.  They allege that there was bad faith on the part of HD instead.  The main purpose of the amendments is to set out their new case.  Some of the amendments are repetitive; for example, para. 48 and 70(15) and 80; para. 50 and 81. 

7.  The applicants’ complaint can be summarised as follows:-

(a)     during a meeting between the representatives of E.Bon and HA on 27 November 2002, the representatives of HA said that the management of E.Bon was considered “not trustworthy”, that E.Bon and companies under the same management should not be permitted to take part in future HA projects and that E.Bon should expect to receive formal confirmation of the aforesaid later;

(b)    officers of HD prepared a document headed “Memorandum for the Building Committee: Report on a Court Case involving a Door Lock Supplier” on 16 December 2002 (“the Memorandum”).  The Memorandum aimed at (1) informing members of that committee about the judgment of a criminal prosecution in the District Court (details of which are set out under the heading “Criminal Prosecution” below), and (2) seeking their approval for not approving materials supplied by E.Bon and companies under the same management.  The third purpose was to inform the committee members of further improvements to be made to the material listing system.  The Memorandum failed to attach the “Reasons for Verdict” of the District Court nor was the Memorandum supplied to the applicants;

(c)     Further, the Memorandum misrepresented the findings of the District Court and failed to report that the District Court was critical of the material listing system;

(d)    members of the Building Committee were only allotted 5 minutes to read the relevant materials (including the Memorandum) at the committee meeting of 19 December 2002 and the applicants were not invited to attend (or to make representation at) that meeting.

8.  In gist, the applicants’ complaint is:-

“Impropriety on the part of a third party that subverts the decision-making process of a court or tribunal or other body, whether it is occasioned by fraud, bad faith or something altogether less culpable is a ground for judicial review”: para. 55, skeleton submission.

9.  The reference to “fraud” and “bad faith” above is readily understandable in light of the decisions in Matteograssi SPA v. Airport Authority [1998] 3 HKC 25 and Ngo Kee Construction Co. Ltd. v. Hong Kong Housing Authority [2001] 1 HKC 493 (see the paragraphs under the heading “Is the Challenged Decision Amenable to Judicial Review?” below).  The reference to “something less culpable” has caused some concern as to the precise nature of the applicant’s case.  Counsel has helpfully clarified that this was not an attempt to equate “bad faith” with “unreasonableness” and, in the context of this application, the applicants’ case is based entirely on bad faith.  In view of this clarification, no further discussion will be made in relation to this aspect.

Background Facts

10.  The background leading to this application can be summarised as follows.

11.  Suppliers of merchandise to public housing projects of HA have to abide by the requirements of the said List.  The said List was sub-divided into different categories of merchandise.  The merchandise which falls within E.Bon’s range of business is set out in para. 1(a) above.

12.  The applicants are wholly-owned subsidiaries of E.Bon Holdings Limited, a company listed on the Hong Kong Stock Exchange (“E.Bon Holdings”).  E.Bon Holdings’ business is the supply of metal fittings, door ironmongery and bathroom accessories for the construction trade.  It imports metal door locks from all over the world and is the agent for several overseas manufacturers.

13.  In the mid-1980’s, E.Bon Holdings decided to market its own range of hardware.  On 15 June 1984, it registered the trade mark “Bonco” in respect of the range of goods it marketed.  In about May 1996, E.Bon applied to HA to include 4 types of “Bonco” locks into the said List for the lever handle door furniture and locks category.

14.  E. Bon agreed to observe and meet the requirements set out in the letters of undertaking issued by E.Bon to HD.  HA sent to E.Bon a copy of its “Rules for Administration of the Lists of Approved Proprietary Names of Building Materials” (“the Rules”).  The Rules contained provisions regarding, among other things, the need for materials to comply with HA’s requirements and their quality to be verified by tests.

15.  Neither the letters of undertaking nor the Rules expressly required E.Bon to inform HA of any change of the country of origin of the materials.  When E.Bon applied to be placed on the said List, the Bonco locks were manufactured by Showa Lock Company in Japan.  Further, when E.Bon was formally placed on the said List on 25 September 1998 as the supplier of “Bonco” locks, the name of the manufacturer was stated as “Showa Lock Co. Ltd.” (“Showa”) and the place of manufacture was stated as “Japan”.

16.  In late 1997, HA learnt that Showa had gone into liquidation.  E.Bon assured HA that another company would take over its production, or another Japanese company would be located to manufacture the locks.  In March 1998, E.Bon informed HA that production of the locks would continue at the Showa factory and that they would continue to bear the name “Showa”.

17.  It has not been made clear the precise quantity of locks bearing the “Bonco” brand supplied by E.Bon which were manufactured other than in Japan.  But it appears undisputed that some of the Bonco locks were in fact manufactured in mainland China.  E.Bon has not informed HA of the last-mentioned matter.

18.  An internal review was conducted in early 1999.  HA adopted the recommendations of the said review by implementing in July 1999 a new 3-level listing system which, among other things, required the manufacturers of the approved brands of materials to issue certificate of origin of the products (“the control list system”).

19.  It is E.Bon’s case in this application that it was at all material times only subject to the requirements of the said List and the Rules in relation to the supply of “Bonco” locks to contractors working on HA’s projects.  It is also E.Bon’s case herein that the said List applied to building contracts entered into before 1 June 2000 whereas the control list system only applies to building contracts entered into after that date.

20.  Criminal investigation relating to “Bonco” locks and other merchandise supplied by E.Bon took place in 2001 followed by criminal prosecution in the District Court in late 2001.

21.  On 11 December 2002, HA requested E.Bon to confirm in writing that “Bonco” locks supplied by it were made in Japan and any locks not so made had to be identified by reference to their quality, project, place of manufacture and name of manufacturer.  E.Bon did not do as requested and, in a letter dated 18 December 2002 claimed, among other things, that HA had no right to seek the information. 

22.  On 24 December 2002, HA informed E. Bon that its Building Committee had in a meeting held on 19 December 2002 resolved “not to give further business to [E.Bon] and other companies with related management with immediate effect”.  HA said in that letter:-

“We have learnt from the findings of the [District Court] … that you have supplied Bonco door locks to some of [HA’s] works projects between … 2000 and 2001 which were not in full compliance [with] contract specifications applicable to ‘Bonco’ locks including manufacturer/country of origin i.e. Japan.  Despite our request for clarification you have failed to do so.  We therefore considered that your business conduct in this respect do not meet our expectation and requirements. … HA considers that your company had not acted appropriately and or responsibly in the supply of door locks … We will suspend further business relationship … unless you can demonstrate that you can be a responsible and cooperative partner … ”.

Further, in two letters respectively dated 8 January and 10 January 2003, HA informed E.Bon it had been removed from the said List.  No reasons were given for such decision.  This is the first part of the challenged decision.

23.  By another letter dated 8 January 2003, HA informed Massford that it would not consider Massford’s application for inclusion as a supplier in the said List.  This is the other part of the challenged decision.

Criminal Prosecution

24.  In April 2001, ICAC conducted a search on the premises of an agent of E.Bon.  Later, criminal prosecution was commenced in the District Court against 13 defendants, 6 of which were the current or former directors of E.Bon, for two charges of conspiracy to defraud the contractors of HA by dishonestly misrepresenting to them that “Bonco” locks and “Alpha” locks were materials on the said List and were manufactured in Japan.

25.  The trial commenced on 16 September 2001.  7 of the 13 defendants were discharged after the prosecution offered no evidence against them.  Further, on 21 October 2002, the trial judge acquitted all the defendants, indicating in his verdict that he was not satisfied there was dishonesty on their part.  He also found that there was no legal duty on E.Bon’s part to inform HA that the manufacturing base of “Bonco” locks had moved from Japan to the mainland.

26.  Several passages of the “Reasons for Verdict” have been quoted in the amended Form 86A and they are set out here for ease of reference:-

“The operation and criteria of [the said List] appeared to be ‘Black Box’ to the outsiders, including project staff and potential suppliers.  The lack of information and communication led to mis-understanding, poor co-operation and sometime even conflicts.  Again, good and competitive potential suppliers may be discouraged to apply for admission” (para. 33, “Reason for Verdict”;

“Listing Criteria and application procedures should be clear and easily accessible by the potential suppliers” (para. 33, “Reason for Verdict”);

“This prosecution is predicated upon a perceived duty to inform [HA] of any change in the country of manufacture and a perceived duty to seek approval for such a change.  No such duties have ever been made clear to suppliers.  It will be recalled that Mr John Pak says they were ‘implicit’ in the system.  However, when he himself reviewed that system, he came to certain conclusions with which I agree; namely, that the operation and criteria of Approved List was a Black Box and that the lack of information and communication did lead to misunderstandings, poor co-operation and sometimes even conflict” (para. 35, “Reason for Verdict”).

Is the Challenged Decision Amenable to Judicial Review?

27.  The first hurdle which lies in the applicants’ way in this application is that it is undisputed the challenged decision was related to HA’s commercial activities.

28.  In Matteograssi SPA v. Airport Authority [1998] 3 HKC 25, the Airport Authority awarded a contract to provide seating at Chek Lap Kok Airport to someone other than the appellant.  The appellant’s tender was the lowest.  The court of appeal held that the Airport Authority in exercising its capacity to contract was carrying out a purely commercial function.  In the absence of fraud, corruption or bad faith, the decision was not amenable to judicial review.

29.  The Matteograssi decision was followed in Ngo Kee Construction Co. Ltd. v. Hong Kong Housing Authority [2001] 1 HKC 493.  Following the discovery of serious defects in the foundation of two housing blocks, the Housing Authority decided to demolish them and not to award any further contracts to the parties responsible for the problem (or members of the same corporate group).  The applicant was not responsible for the defects but belonged to the same group.  The Housing Authority removed the applicant from its list of contractors.  The court dismissed the application for judicial review holding that decisions (and the decision-making process) of a public body which was commercial in nature, and where there is no statutory underpinning, was not amenable to judicial review where there is no allegation of fraud, corruption or bad faith.

30.  The applicants indicate that they would reserve their position as regards the correctness of the Ngo Kee Construction decision.  But, for present purposes, that decision is to be treated as having been correctly decided.

31.  In this application, the applicants contend that, although there is no bad faith on the part of HA, the challenged decision is still amenable to judicial review because it is tainted by bad faith on HD’s part.

Bad Faith

32.  As stated above, the contention in the original Form 86A was that the challenged decision was made by HA with bad faith on its part.  Particulars of bad faith were given in the Form 86A.  In short, the contention was based on an allegation that HA was abusing its power by ascribing to the applicants faults which in fact were not theirs and by punishing the applicants for an infraction which they did not commit.  Emphasis was placed on HA’s reference to E.Bon’s failure to disclose the change of place of manufacture when the District Court had expressly found that there was no such duty.  The allegation of bad faith is now directed against HD.  The matters in support of the allegation have been summarised in para. 7 above.

33.  In relation to Massford, the abuse of power is said to lie in HA (with bad faith) refusing to consider Massford’s application when there is no suggestion that Massford’s products would not comply with HA’s requirements.  That decision is now contended to be tainted by bad faith on HD’s part.

(1)  The Memorandum

34.  Since the applicants rely heavily on the Memorandum as a matter for inferring bad faith, it is desirable to briefly describe the document in more details.  This will be followed by an examination of its contents.

35.  The Memorandum is about 5-1/2 pages long and contains 21 paragraphs.  It is divided into the following headings:-

(a)     Purposes: para. 1;

(b)    Background: para. 2 to 3;

(c)     The court judgment: para. 4;

(d)    Views of the department on E.Bon: para. 6 to 15 (with sub-headings “E.Bon’s Behaviour”, “The Department’s View”, “Actions against E.Bon” and “Contractors’ responsibilities”);

(e)     Further improvements to the HA material listing system: para. 16 to 18;

(f)     Legal advice: para. 19;

(g)     Recommendation: para. 20;

(h)     Discussion: para. 21.

Para. 19 and 21 of the Memorandum are irrelevant for present purposes.

36.  In relation to the District Court trial and decision, the Memorandum stated:-

(1)     E.Bon’s directors were charged with “conspiracy to defraud” and were acquitted on 21 October 2002;

(2)     according to the mass media, the trial judge commented that HD’s material listing requirements were unclear and the said List lacked transparency;

(3)     the trial judge could not find the required level of dishonesty on the defendants’ part to convict.  His reasons for so concluding were (a) E.Bon had registered “Bonco” as its trade mark for (among other things) metal door locks; (b) the assumption that E.Bon was counterfeiting “Bonco” locks was wrong; (c) he found there was no duty on E.Bon’s part to inform HA of any change in the country of manufacture or to seek approval for such change

(para. 4, the Memorandum).

37.  The gist of the applicants’ accusation about the Memorandum is, it misrepresented the “Reason for Verdict” and stated facts which are inconsistent with the last-mentioned document: para. 35, the applicants’ skeleton submission.  The matters in support of this accusation are said to be contained in para. 70(16) to (19), amended Form 86A.  These will be dealt with in turn below.

38.  The first matter in support, so the applicants contend, is the reference to “the mass media” had reported that the trial judge had commented that the said List was unclear and the material listing system lacked transparency: para. 2, the Memorandum.  The applicants submit that the trial judge had made specific and detailed comments which were highly critical of the said List based on the testimony of Mr John Pak and the documentary evidence.  The Memorandum should not have given the impression that the trial judge’s criticisms were not substantial.  I think the applicants are trying to find a fault which (if it exists) is insignificant.  The statement was firstly made under the heading “Background”.  More importantly, even if there was in fact an intention to play down HD’s responsibility and/or any defects in the said List as found by the trial judge, this per se is insufficient to ground this application.  Of the Memorandum’s 3 stated purposes, one concerned recommended action to be taken against E.Bon and its “related” companies and another one was about improvements to be made to the material listing system.  This part of the Memorandum was related to the latter of the said 2 purposes and not the former one.

39.  The second matter of complaint is that HD had suggested the trial judge had found the defendants guilty of dishonest conduct (though not to the criminal charges): para. 5, the Memorandum.  I consider the applicants have exaggerated what the Memorandum intended to say.  Nothing like that complained of by the applicants has been suggested by HD.  The intention of that part of the Memorandum was only to distinguish between the trial judge’s finding in a criminal prosecution and HA’s need to consider the matter “from a business angle”.  It expressly states that the consideration for HA should be “whether E.Bon had acted in good faith” from that angle and whether it is “a desirable business partner”.  I do not think HD (or HA) can be faulted for adopting such a stance.

40.  The third matter of complaint is the Memorandum refers to “contractors named in the ICAC’s charges” when only one of the two charges concerned “Bonco” locks and it did not name any contractors: para. 7, the Memorandum.  When it is read fairly in the whole context, that part of the Memorandum must have been referring to the phrase “construction contractors selected by [HA]” in the charges.  In any event, this matter by itself is insufficient to found this application.

41.  The fourth matter of complaint is the Memorandum wrongly asserted E.Bon had knowledge of a requirement to notify a change of manufacturing base: para. 7, the Memorandum.  It is important to note that the Memorandum was there relying on the contractual terms entered into between the contractors and E.Bon, or the purchase orders to E.Bon (and not relying on the said List or the Rules).  The Memorandum stated that it was the contract specifications which clearly provided that the country of manufacture was Japan.  It then continued:-

“[HD] consider that E.Bon had no ground to claim that they had no knowledge about [HD’s] requirement for the country of manufacture of the ‘Bonco’ locks they were to supply”.

The applicants have not suggested the contractual terms or the purchase orders had been erroneously described.  Accordingly, I find that this complaint has not been made out on the facts.

42.  The fifth matter of complaint is that the Memorandum alleged a requirement for notification of a change in manufacturing base was “implicit” in the Rules: para. 8, the Memorandum.  It is true that the trial judge has found that there was no duty on E.Bon’s part to so notify HA.  However, that fact has already been stated clearly in the Memorandum: para. 4 thereof and para. 36(3)(c) above.  HA therefore could have decided for itself whether HD’s alleged requirement was well-founded or not (and could not have been misled about this matter).  In addition, in view of the information given by E.Bon (set out in para. 15, 16 and 41 above), the alleged requirement is not entirely without basis.

43.  The sixth matter of complaint is that the Memorandum referred to a letter dated 30 November 1998 from HD advising suppliers to confirm places of manufacture and contended that this had been sent to E.Bon: para. 8, the Memorandum.  However, the Memorandum failed to qualify this by stating that Mr John Pak admitted in his testimony he was unable to prove it had been received by E.Bon; the ICAC search had failed to discover such document.  This complaint fails to appreciate that the Memorandum was a document written for commercial purposes.  The matters therein were looked at “from a business angle”.  In particular, the receipt of the letter in question was looked at from a businessman’s point of view where criminal (or even civil) standard of proof has no place.  Businessmen rely on their daily experience to judge whether letters sent en bloc to their suppliers have been received by one of the intended recipients.  Criminal courts, on the other hand, decide cases based on admissible evidence and a high standard of proof.

44.  The applicants also complain that the Memorandum falsely stated the court had found that E.Bon “had supplied thousands of Chinese-made locks and use in [HA] projects named in the ICAC’s charges during the years 2000 and 2001”: para. 70(17), amended Form 86A.  They say the court has not made such a finding.  The last statement is true.  However, what the Memorandum actually said was:-

“The Court concluded … it was safe to assume that E.Bon had supplied thousands of Chinese-made locks … ” (emphasis supplied): para. 9, the Memorandum.

What the “Reason for Verdict” said was:-

“… accepting for the moment that all of the assumptions predicated in the Trade Link evidence [very probably referring to para. 22(a), (b) and (d) thereof under the sub-headings “Number of Locks Supplied to Contractors”, “The Trade Link Data” and “The Process of Elimination”] are correct, and knowing for a fact that thousands of this type of Bonco locks were made for E Bon in China during this period, it seems safe to assume that E Bon supplied many Chinese-made Bonco locks to HA contractors to meet a shortfall from Japan during the years 2000 and 2001” (emphasis supplied): para. 24 thereof.

First, I do not consider the Memorandum to have referred to a positive finding by the trial judge.  Para. 9 thereof only referred to an assumption by the court (which is what the “Reason for Verdict” stated, although it was stated differently by the trial judge).  I find that this inaccurate statement in the Memorandum was more likely to be the result of a genuine misunderstanding rather than as evidence showing any bad faith.

45.  Finally, the applicants complain that the Memorandum incorrectly said that E.Bon’s action had “… undermined the creditability [probably meaning “credibility”] of [the said List] … ” (para. 70(18), amended Form 86A) and failed to disclose the trial judge commented on the imperfections of the said List or that the Rules “contain no reference whatsoever to country of origin or any need to notify HA of a change in same”: para. 33(b), “Reason for Verdict”.  First, it must be noted this part of the Memorandum was under the sub-heading “The Department’s Views”.  Secondly, the said sub-heading was part of the heading “Views of the department on E.Bon” where HD expressly stated the matter was to be considered “from a business angle”.  Thirdly, it was preceded by the statement that such act by suppliers [that is, the act of not supplying goods in accordance with contractual specifications as regards country of manufacture] would greatly prejudice the quality assurance regime and require huge resources from HD to supervise and rectify material supply practice.  When read in such context, I do not consider there is anything wrong in the statement being complained of.

(2)  Other Matters

46.  The applicants also contend that the withholding of the “Reason for Verdict” from HA is also evidence of bad faith on HD’s part.  This point has to be considered together with the applicants’ case that the Memorandum has misrepresented facts and findings in the “Reason for Verdict” which are relevant to this application.  I have already concluded that substantially at least, the Memorandum was a fair document.  I do not think that merely not providing the “Reason for Verdict” is evidence of bad faith.  Rather, it is also consistent with a desire to save the time and resources of the Building Committee.

47.  I also disagree with the applicant’s submission that only allowing HA a short time to peruse the documents before making the challenged decision is evidence of bad faith on HD’s part.  In addition, there is no suggestion that HA could not have asked for more time to consider the matter if it had wanted to.

(3)  Conclusion on Bad Faith

48.  The above matters (whether singly or cumulatively) do not  show any bad faith on the part of HD.

Procedural Unfairness

49.  As stated in para. 4 above, there is a short statement about procedural unfairness: para. 77, amended Form 86A.  In the applicants’ skeleton submission, there is a heading “A Fair Procedure” (para. 54 and 55).  In view of para. 57 to 59 thereof in particular, the gist of this part of the applicants’ case is this: the “de-listing” of E.Bon and the refusal to consider Massford’s application to be listed was to be regarded as some kind of disciplinary action against them.  That being the case, a fair procedure should have been adopted by HA.

50.  I disagree that the two matters bear any resemblance.  It must be borne in mind the challenged decision was related to a commercial function of HA.  In this connection, I agree with HA that the matters are within the range of function or decisions referred to in Matteograssi and Ngo Kee Construction.

51.  Here again, E.Bon did not enjoy a “right” to remain on the said List.  Before it was included in the said List, E.Bon has to apply to be so included.  But there is no “right” to stay in the said List.  In a similar way, no one can claim it must be included in the said List just because he happens to fit all the requirements of the said List.  This is the position of Massford.  In these circumstances, the removal of E.Bon from, and the refusal to include Massford in, the material listing system cannot be categorised as disciplinary action.

52.  Further, it must be remembered that E.Bon and Massford (because Massford is treated as E.Bon’s “related” company) were effectively only suspended from the material listing system unless and until they can demonstrate that they will act in a responsible and cooperative way with HA: see HA’s letter dated 24 December 2002 to E.Bon (para. 22 Above).  In such connection, I agree with HA that it is entirely proper for HA to take into account E.Bon’s refusal to answer an enquiry from HA about the country of manufacture of the merchandise E.Bon would be supplying under the material listing system.

53.  For the above reasons, there is no valid basis for the applicants to rely on alleged procedural unfairness arising from:-

(1)     HD not attaching a copy of the “Reason for Verdict” to the Memorandum;

(2)     HA (through the Building Committee) not perusing a copy of the “Reason for Verdict”;

(3)     HA not conducting the matter as if it were a disciplinary proceeding, in particular, not deciding firstly if there is a prima facie case of misconduct, not identifying the precise alleged misconduct, not supplying E.Bon with particulars of the alleged misconduct, not allowing E.Bon sufficient time to answer the allegation or not making a formal decision (with reasoned justification):

see the complaints at para.54(a) to (h), the applicants’ skeleton submission.

54.  For the same reasons, the meeting between HD and E.Bon on 27 November 2002 and the fact that HA was only given a short time to read the Memorandum on 19 November 2002 are also irrelevant to this part of this application.  In relation to the last matter, I pause to note there is no suggestion HA could not have spent more time to peruse documents and/or consider the matter if it should think it necessary to do so.

Cross-examination of Witness

55.  There was at one stage an application by the applicants to cross-examine Mr John Pak.  Mr Pak is an employee of HD occupying the post of Senior Professional/Components & Materials in the Components & Materials Team.  He was a prosecution witness in the District Court criminal trial and has filed an affirmation herein.  He denied on HA’s behalf the allegations of bad faith and a wish to punish E.Bon in order to deflect criticism from HA.  The applicants wanted to cross-examine him regarding the last-mentioned matters.

56.  As a result of discussion between the court and counsel, that application was considered unnecessary (because, essentially, the applicants’ case of bad faith is said to be a matter of inference from the circumstances) and formally withdrawn.  However, HA considered it necessary to call Mr Pak.  As a result, he testified and was cross-examined by the applicants.

57.  There is no need to go into the details save to say this.  I do not find that the applicants’ case was in any way advanced by the cross-examination.  I find Mr Pak to be a truthful and reliable witness.  According to him, the preparation of the Memorandum involved many staff of HD of which he was only one.  He also said there were different views as to whether the “Reason for Verdict” should be attached to the Memorandum but at the end someone more senior than him decided not to do so.

Other Matters

58.  To avoid any doubt, although it has not been expressly set out here, I have considered:-

(a)     the points raised by the parties both in their respective written skeleton submissions as well as oral submissions put forth during the hearing;

(b)    the various authorities (which include authorities from jurisdictions such as India, Australia and Canada) which counsel industriously located.

Conclusion

59.  By reason of the matters aforesaid, I do not find that there has been any bad faith on the part of HD (or Mr John Pak, insofar as it may still be suggested that there is any bad faith on his part).

60.  I find that the alleged procedural unfairness is irrelevant to the challenged decision.

61.  For the above reasons, this application is dismissed.

Costs Order Nisi

62.  There is no apparent reason to depart from the usual rule that costs should follow the event.  There will accordingly be a costs order nisi pursuant to Ord 42 r 5B(6) that the costs of this application be paid by the applicants to HA.