BRAND FARRAR BUXBAUM LLP v. SAMUEL-ROZENBAUM DIAMOND LTD. AND OTHERS

HCA 5191/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 5191 OF 1998

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D E C I S I O N

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1. As a preliminary matter the claimant applies for leave to rely on fresh evidence at the hearing of the appeal. This is by way of the two affirmations of Mr. Asher Rozenbaum which were not before the master at the hearing on 9 April 2002. This application is opposed by the plaintiff.

2. The background facts are that on 1 April 1998 the plaintiff brought this action against the defendants claiming the sum of US$102,278.40 with interest for legal services rendered. On 18 March 2000 the plaintiff obtained default judgment in the said sum together with interest and costs.

3. On 14 January 2002 a writ of fieri facias was issued directing the Bailiff to seize the defendants' goods, chattel and other property in execution of the judgment.

4. On 27 February 2002 the Bailiff seized a quantity of goods at the Hong Kong Convention and Exhibition Centre during the course of a jewellery exhibition. The seized goods consisted of ten lots of diamonds listed in what has been referred to as list A. At the time of the seizure the claimant protested that the diamonds belonged to it and not to the judgment debtors and should not be seized. The plaintiff's solicitors undertook to indemnify the Bailiff. The Bailiff also seized furniture at the claimant's office as listed in what has been referred to as list B.

5. Because of the rival claims of the plaintiff and the claimant the Bailiff took out an interpleader summons on 4 March 2002. Directions were given by Master C B Chan on 22 March 2002 and the substantive hearing of the interpleader summons was heard by Master Stewart Wong on 9 April 2002. The master dismissed the claimant's claim and the claimant has appealed against that decision.

6. It is clear that the decision of the master was by way of summary determination under O.17, r.5(2) of RHC and not by way of a trial of an issue which was ordered to be stated and tried under O. 17, r.5(1)(b). At the hearing before the master the claimant's deponents, Mr. Hadad and Miss Hui, were crossed-examined pursuant to leave given at the directions hearing before Master C B Chan on 22 March 2002. I would observe that the order of Master C B Chan only permitted cross-examination of Mr. Hadad and Miss Hui and that such cross-examination was to be limited to half an hour for each deponent. There is no doubt that this was a summary determination and not a trial.

7. Mr. Chow, for the plaintiff, pointed out that the order of Master Stewart Wong was a final and not an interlocutory order. That may well be so but it is important to bear in mind that the appeal from the order of Master Stewart Wong to a judge in chambers is an actual re-hearing of the application which led to the order. The judge treats the matter as though it came before him for the first time unlike the situation where there is an appeal to the Court of Appeal (marginal note 58/1/2 Hong Kong Civil Procedure 2002). The position is the same whether the order is a final or an interlocutory order.

8. The following passage also appears in marginal note 58/1/2 Hong Kong Civil Procedure 2002 :

“ It is common practice for the judge in chambers, subject of course to the question of costs, to admit further or additional evidence by affidavit to that which was before the master or district judge; but if a party has taken his stand on the evidence as it stood before the master or district judge, the judge in chambers may in his discretion, by analogy with the practice in the Court of Appeal, refuse to allow him to adduce further evidence (see Krakauer v. Katz [1954] 1 W.L.R. 278; [1954] 1 All E.R. 244, CA; Core Resources (Far East) Ltd. v. Sky Finders Ltd., above; Wai Cheong Co. Ltd. v. Kiu May Construction Co. Ltd., above; Chan Wah (t/a Ka Wah Silk Flower Factory) v. Ng Man Ming (t/a Sin Fu Trading Co.), above. "

It is because the judge treats the matter as though it came before him for the first time that the court more readily allows fresh evidence to be adduced. This is a matter of the exercise of the court's discretion.

9. In Core Resources (Far East) Ltd. v. Sky Finders Ltd. [1992] 1 HKLR 193 Kaplan J. refused the application for leave to adduce the fresh evidence on an appeal from a master on an O.14 judgment but that was because the fresh evidence sought to place before the court a completely different defence. Kaplan J. however recognized that the court would usually allow the appellant to put additional documents or another deponent to deal with matters which should have been dealt with below. He said at page 198 :

“ What usually happens in these cases is that the losing party before the Master finds some additional documents or another deponent to deal with the matters which should have been dealt with below. The court will usually allow this to happen. But what I am dealing with here is not the placing before the court of additional information which was available but not used, but placing before the court of a completely different defence which it is said arose only after the hearing before the Master. "

10. I was referred by Mr. Smith SC to Payen International Ltd. v Quality Engine Parts Ltd., a judgment of the Court of Appeal on 26 May 1995. In that case the Court of Appeal was dealing with an appeal where the judge hearing an appeal from a master had refused to allow the plaintiff to adduce fresh evidence on the striking out application. Balcombe LJ at page 3 of the Lexis Report said as follows :

“ But her other ground, and I think it would not be unfair to say her principal ground, for objecting to this evidence being put it in is that it could and should have been obtained earlier, that it is incumbent upon a party in the position of the plaintiffs here to put it best evidence forward the first time round. There must be finality even in interlocutory matters and the courts should be slow to allow parties to improve their evidence at the stage of appeal to the judge in chambers from the district judge in chambers. I have to say that does not accord with my experience. Appeal to the judge in chambers in cases is by way of rehearing, particularly in a case such as this - a strike out for want of prosecution. It seems to me that the court should be slow to preclude a party putting before the court material which on the face of it could be relevant. "

11. Krakauer v. Katz is cited in the Hong Kong Civil Procedure 2002 as authority for the proposition that where a party has taken his stand on the evidence as it stood before the master, the judge in chambers may in his discretion refuse to allow him to adduce the further evidence. The report of that case Krakauer v. Katz makes it plain that at the hearing of the appeal before the judge, counsel sought to read further affidavits and the judge at the time asked the defendant's counsel whether he wished for an adjournment to answer the plaintiff's evidence. Counsel then stated that he did not want to answer that evidence. It was in that context that Denning LJ (as he then was) said at page 279:

“ At the hearing below the judge in chambers asked his counsel whether he wanted to answer the affidavit of the plaintiff and whether he wanted an adjournment so to do, and the counsel said that he did not. Counsel thus took his stand on the evidence as it then stood before the judge; and it would be contrary to the right exercise of our discretion if we were to allow counsel for the defendant to go back on that position and to introduce further evidence in this court. "

12. I do not regard the letter of the claimant's solicitors dated 4 April 2002 relied on by Mr. Chow or the evidence in cross-examination of Mr. Hadad referred to by Mr. Chow as a stand having been taken on the evidence by the claimant so that the discretion should not be exercised in its favour to adduce the fresh evidence.

13. Mr. Chow referred to Hertfordshire Investments Ltd. v. Bubb and another [2000] 1 WLR 2318. In my view that case is of no assistance to the plaintiff. The Court of Appeal held that where an application was made to a county court for a re-hearing on the grounds of fresh evidence after final judgment following a trial on the merits the principles to be applied were the same as those applicable to the power of the Court of Appeal to order a re-hearing from the High Court. This has, in my view, no application to an appeal from a master to a judge in chambers which is an actual re-hearing of the application. I agree with Mr. Smith that the Ladd v. Mashall conditions as set out at page 821 of the Hong Kong Civil Procedure 2002 are inapplicable to such an appeal unlike an appeal to the Court of Appeal. There is no need, in my view, for the claimant to show special reasons for the adducing of the fresh evidence.

14. The fresh evidence does not, in my view, and as is accepted by Mr. Chow, set up a new case. It seeks, as Mr. Smith submitted, to fill in gaps and to exhibit documents such as invoices, shipping documents, import declarations, invoices of sales of diamonds by the claimant, exhibition expenses paid by the claimant. It also seeks to clearly set out the corporate structure of the various Samuel-Rozenbaum companies. As Mr. Smith submitted, all of this is to bolster up the claimant's case that it was the owner or at the very least in possession as the buyer of the diamonds that were seized by the Bailiff. There is no doubt that the fresh evidence is highly material and relevant evidence in support of the claimant's contention that it was the owner or at the very least the buyer in possession of the seized diamonds at the material time.

15. Mr. Chow has criticized the quality of the fresh evidence but these are matters to be fully investigated when dealing with the full merits of the claim. I see no reason why the fresh evidence should not be adduced in evidence at the hearing of the appeal. In the exercise of my discretion I grant leave to the claimant to rely on the two affirmations of Mr. Rozenbaum. It is accepted by counsel that if I were to grant leave to adduce the fresh evidence then an issue ought to be stated and that there ought to be a trial of that issue. I will hear counsel on the order and directions that I should make.