WANG HSIAO YU v. WU CHO CHING

HCA 1690/1997

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1690 OF 1997

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J U D G M E N T

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1. The Plaintiff Mr Wang Hsiao Yu sues on a judgment obtained in the Taipei District Court on 25 July 1992 against Mr Choi Man Wan as the principal debtor and the Defendant Mr Wu Cho Ching as the guarantor in respect of a loan of NT$1,300,000.00. By that judgment, Mr Choi was ordered to pay the Plaintiff NT$1,300,000.00 plus interest thereon at the rate of 5% per annum from 4 October 1991 until payment. It was further ordered that if the Plaintiff should be unable to recover the judgment debt from execution of Mr Choi's property, the judgment sum and interest thereon shall be paid by the Defendant.

2. There were altogether six appeals by Mr Choi, the Defendant and the Plaintiff to the Taiwan High Court and the Taiwan Supreme Court arising out of the proceedings brought by the Plaintiff against Mr Choi and the Defendant in Taiwan. On 3 October 1996, the Defendant's appeal to the Taiwan Supreme Court was finally dismissed. Notwithstanding repeated demands for payment including 3 letters dated 31 October 1996, 29 November 1996 and 16 December 1996 from the Plaintiff's solicitors to the Defendant, the Defendant has failed to pay the Plaintiff the amount as ordered by the courts in Taiwan. On 18 February 1997, the Plaintiff issued the writ in this action. The cause of action is the foreign judgment.

3. Three lines of defence are pleaded in the Defence filed in June 1997 and they are as follows:

(1) It is alleged that the judgment of the Taiwan courts would not be recognised or enforced by the Hong Kong courts as it would be contrary to public policy because the Hong Kong Government did not and does not recognise the Government in Taiwan.

(2) It is alleged that the Plaintiff is not entitled to enforce the Taiwan judgment against the Defendant without first enforcing the judgment against the property of Mr Choi.

(3) The judgment in Taiwan was obtained by the fraud of the Plaintiff in that:

(a) Mr Choi was not in Taiwan on 15 January 1984 which was the material time and so could not have signed the Chinese memorandum being the IOU;

(b) the signature of Mr Choi on the IOU was a forgery;

(c) Mr Choi did not receive the alleged loan of NT$1,300,000.00; and

(d) the Defendant did not sign on the IOU as a guarantor.

4. At the outset of the trial, Mr Kenny Chan, counsel for the Defendant, informed the Court that he would not be running the defence that the judgment of the Taiwan courts ought not be enforced by the Hong Kong courts on the ground that this would be contrary to public policy. This was because of the judgments given by the Court of Appeal and the Court of Final Appeal to the effect that the courts in Hong Kong would give effect to the orders made by the courts in Taiwan where the rights covered by the orders were private rights and giving effect to such orders would accord with the interests of justice, the dictates of common sense and the needs of law and order and that to do so would not be inimical to the sovereign's interests. (Chen Li Hung v. Ting Lei Miao [1998] 3 HKC 119 (Court of Appeal), [2000] 1 HKC 461 (Court of Final Appeal); and CEF New Asia Co., Ltd v. Wong Kwong Yiu John [1999] 3 HKC 1 (Court of Appeal)).

5. I was informed by Mr Nelson Miu, counsel for the Plaintiff, in his opening address that he would not ask the court to make a preliminary ruling whether it would be an abuse of process for the Defendant to re-litigate the issue of the alleged fraud of the Plaintiff in this court as that very issue had been extensively investigated in Taiwan and decided in the Plaintiff's favour after 6 rounds of appeals. Mr Miu stated that given the history of the many appeals taken out by the Defendant and Mr Choi in Taiwan, it might well be more cost effective for this court to make a finding whether there was any fraud on the part of the Plaintiff as alleged. He would, however, rely on abuse of process by the Defendant in re-litigating the issue of fraud if I should find in favour of the Plaintiff after hearing the evidence so as to seek an order of costs on an indemnity basis against the Defendant.

6. I have heard evidence from the Plaintiff, the Defendant and Mr Choi. Other witnesses who had given evidence in the Taiwan proceedings for the Defendant, being Mr Wong Chung Hung, Mr Ng Hung Mo and Mr Chung Wing Shing were not called by the Defendant.

The Plaintiff's evidence

7. The Plaintiff is over 80 years old. Although he appeared to be quite alert, he had not answered all the questions put to him by the Defendant's counsel directly or in a straightforward manner. It is suggested by the Defendant's counsel that the Plaintiff was evasive and that the Plaintiff was not telling the truth. Having observed the Plaintiff carefully and after considering his evidence, it is clear that the Plaintiff had taken great exception to some of the questions put to him persistently by the Defendant's counsel. At one point, he was so angry when the Defendant's case was put to him that he reacted with an outburst that he did not want to continue with the litigation because he felt like a prisoner under interrogation. The Plaintiff might not have conducted himself wisely. However, I do not think his failure to answer properly some of the questions put to him in cross-examination was because he was untruthful. It seems to me that he was either not listening to the questions properly or he was showing a dismissive attitude towards the cross-examiner out of his indignation because he felt he was treated like an accused being questioned.

8. Further, unlike the Defendant and Mr Choi (whose evidence I shall deal with shortly), there is no inconsistency in the matters covered by the Plaintiff in his evidence, whether in this court or in the Taiwan proceedings. What the Plaintiff had said in evidence may be summarised as follows. The borrower, Mr Choi, was introduced to the Plaintiff by the Defendant. The Plaintiff agreed to lend NT$1,300,000.00 to Mr Choi on condition that the Defendant was to act as a guarantor. On 15 January 1984, the Plaintiff met Mr Choi, the Defendant and Mr Lai Rung Chu at the Imperial Hotel in Taipei and gave the money to Mr Choi in the presence of the Defendant and Mr Lai. The Plaintiff wrote on a memo of the Hotel an IOU which was addressed to him and this simply stated that a loan of NT$1,300,000.00 was received by the maker of the memo being Mr Choi. Mr Choi's signature was followed by that of the Defendant, who was described as a guarantor and then by the signature of Mr Lai, who was described as a witness and the date was put at the end of the memo. He said that he had asked Mr Choi to repay the loan repeatedly but Mr Choi refused to do so. At last, he sent a letter to Mr Choi by certified mail on 3 July 1991 asking him to settle the debt within 40 days. As this was ignored by Mr Choi, the Plaintiff started proceedings in the Taipei District Court. He denied the allegation that the loan of NT$1,300,000.00 was not made to Mr Choi but to Mr Choi's friend Mr Wong Chung Hung and said that his loan to Mr Wong was completely different from his loan to Mr Choi. He further denied the allegation that Mr Choi was not in Taiwan at the time and that he had asked the Defendant and a Mr Yeung Wo Ching to take the memo to Japan for Mr Choi to sign.

The Defendant's evidence

9. According to the Defendant, he had introduced Mr Choi to the Plaintiff. Mr Wong was Mr Choi's schoolmate and he was introduced by Mr Choi to the Defendant and the Plaintiff. Through the Defendant's introduction, the Plaintiff lent NT$1,300,000.00 to Mr Wong. Mr Wong's house was charged to the Plaintiff as security for the loan. About a year later and when Mr Wong defaulted on some instalments, the Plaintiff informed the Defendant that unless the Defendant could get Mr Choi to sign an IOU to the Plaintiff, he would sell Mr Wong's house that was charged to him. The Defendant agreed to go to Japan and asked Mr Choi to sign the IOU. The Plaintiff wrote on a memo notepaper words to the effect that a loan of N$1,300,000.00 was received from the Plaintiff. There was then no date and no signature on that memo. The Defendant went to Japan with Mr Yeung but could not get Mr Choi to sign the memo, so he brought the memo back and returned it to the Plaintiff. Some time later, the Plaintiff showed the Defendant the memo with a signature that purported to be Mr Choi's and he said the Defendant should also sign the memo because he had introduced Mr Wong to obtain the loan. The Defendant therefore signed on the memo believing that Mr Choi had signed. When the Defendant signed, the characters which meant "the guarantor" did not appear on it.

10. In the first place, I find the Defendant's account difficult to believe. I find it difficult to accept that the Defendant had agreed to make a special trip to Japan in an attempt to persuade Mr Choi to sign an IOU when he knew that the loan was not made to Mr Choi but to Mr Wong. He would have this court believe that notwithstanding Mr Choi had refused to sign the IOU when requested by the Defendant to do so in Japan, he was deceived by the Plaintiff into thinking that the signature on the IOU was Mr Choi's when Mr Choi did not sign it. If Mr Choi had indeed refused to sign the memo as requested by the Defendant, why should the Defendant believe that Mr Choi would act differently and sign the memo subsequently? Besides, it should have been relatively easy for the Defendant to verify with Mr Choi if he had signed. There was no mention by the Defendant he had ever taken any such precaution. I also find it difficult to believe that the Defendant had signed his name next to that of Mr Choi without the characters which meant "guarantor" appearing above the Defendant's signature. If the characters which meant "guarantor" did not appear on the memo, it would be strange for the Defendant to sign his name next to Mr Choi who was described as the maker of the memo and the borrower of the loan. His evidence that he merely signed on the memo out of a sense of duty because he had introduced Mr Wong to obtain the loan from the Plaintiff is quite simply incredible.

11. The Defendant's evidence in this court also differs from his case in the Taiwan court in a material aspect. According to the judgments in the Taiwan proceedings, the Defendant's version was that when he signed on the memo, the signature of Mr Choi was there as well as the signature of Mr Lai and they were described in the memo as "maker" and "witness" respectively. He said he had to squeeze in his signature between Mr Choi's and Mr Lai's and that the character "人" above his signature was not in fact that character but was an inverted "V" next to the characters "見證人" (i.e. witness) which was to signify that he was signing as a co-witness with Mr Lai. This allegation was rejected by the courts in Taiwan. In his evidence in this court, the Defendant gave a different version and said that when he signed on the memo, he was very sure that the characters which meant "witness" and Mr Lai's signature were not there. When he was asked about the difference of his evidence in this court and his case in the Taiwan courts, he said that his Taiwan lawyer had made wrong submissions to the Taiwan courts. I find it difficult to believe that the Defendant would not have discovered that his lawyers had made wrong submissions on his behalf on such an important matter given that his case had gone through 6 rounds of appeals in the Taiwan courts.

Mr Choi's evidence

12. Mr Choi claimed that he saw the IOU for the first time in Japan and that was in 1986 or 1987. There were no signatures on the memo. He was asked by the Defendant and Mr Yeung to sign the memo because Mr Choi's friend Mr Wong had charged his house to the Plaintiff as security for a loan of NT$1,300,000.00. If he should refuse to sign, the Plaintiff would sell Mr Wong's house to realise the security. Mr Choi refused to sign and the Defendant and Mr Yeung took the unsigned memo back to Taiwan. The next time Mr Choi saw the IOU was when the Plaintiff sued him in the Taipei District Court. He denied the signature was his.

13. Mr Choi also claimed that he had a conversation with the Plaintiff in the Taiwan courts in which he told the Plaintiff that the signature on the IOU was not his. He alleged the Plaintiff had asked him to admit in court it was his signature and if he would do so, the Plaintiff would not enforce the judgment against him and he would only pursue the Defendant for the debt. This alleged conversation was not in Mr Choi's witness statement, nor was it put to the Plaintiff in cross-examination. I fail to see the relevance or significance of this because according to Mr Choi, he did not admit in the Taiwan courts that the signature was his as the Plaintiff had asked him to do but had contested the issue vigorously and lost. Mr Choi seemed to have regarded this alleged promise given by the Plaintiff (which I do not believe) as some sort of justification on his part not to respond in any way to a letter sent by the Plaintiff's Taiwan lawyer to him by registered post on 14 November 1996 (i.e. after the Defendant's appeal was eventually dismissed by the Taiwan Supreme Court on 3 October 1996) demanding payment of the judgment sum within 7 days of the letter. I am wholly unable to see how and why the alleged conversation with the Plaintiff in the Taiwan courts (even if it had taken place) could be regarded as any kind of justification for Mr Choi not to satisfy the judgment debt when the appeal was finally dismissed by the Taiwan Supreme Court after at least 4 years of litigation and 6 rounds of appeal.

14. I reject Mr Choi's evidence on the IOU. I do not find him to be a truthful witness. His evidence is unsatisfactory in a number of respects:

(1) Mr Choi claimed that the signature on the IOU which purported to be his signature was a forgery. Notwithstanding that an order was made by Yeung J on 27 October 1999 giving leave to the Defendant to adduce expert evidence from one hand-writing expert at the trial and to file and serve the report of this expert within 21 days of the Order, the Defendant had not adduced any expert evidence on hand-writing at this trial. What the Defendant's counsel did was to invite me to compare the signature which purported to be that of Mr Choi on the IOU with various sample signatures of Mr Choi referred to in the report compiled by the Military Police School considered by the Taiwan courts. This I decline to do as it is out of the question for me, without the assistance of expert evidence, to make any such comparison and to reach a conclusion different from the expert of the Military Police School, as the Defendant's counsel has urged me to do. According to that expert, the signature on the IOU corresponded with the signature of Mr Choi on a court document in Taiwan being No.286 Ta Tze of 78, which was one of the sample documents with Mr Choi's signature that the expert had examined for comparison. The resemblance of Mr Choi's signature in that court document with the signature on the IOU was not challenged in the Taiwan courts. The defence taken by Mr Choi in Taiwan was that the court document referred to was not signed by him but by his friend Ng Hung Mo or by his lawyer Chung Wing Shing. In this court, he added that the court document could have been signed by someone from the lawyer's office, not necessarily by Mr Chung. If Mr Choi is to be believed that the court document was signed either by Mr Ng, Mr Chung or by someone from Mr Chung's office, it would be quite inexplicable that this signature on the court document should resemble the signature on the IOU, as found by the expert in the report of the Military Police School.

(2) Mr Choi said that he returned to Taiwan legally in 1989, contrary to the findings of the Taiwan courts which was to the effect that according to the computer records, he had only returned to Taiwan from Hong Kong on 4 September 1990. The judgment of the Taiwan High Court on 27 September 1993 referred to various instances in 1989 in which Mr Choi had attended the Taipei District Court and to Mr Choi's evidence in which he admitted that he had entered Taiwan illegally prior to 4 September 1990. In this court, Mr Choi denied that he had made any such admission in the Taiwan courts and claimed that he had returned to Taiwan legally in 1989. However, the fact remains that according to his passport which was adduced in evidence, there was no stamp of the immigration showing that he had entered Taiwan at any time in 1989. The only stamp of arrival relevant for present purposes is the one bearing the date of 4 September 1990. Mr Choi did not explain how he had entered Taiwan legally in 1989 as alleged without going through the immigration. I find that Mr Choi had entered Taiwan not through legal channels in 1989. I do not regard it as significant that according to his passport, it would appear that Mr Choi was not in Taiwan on 15 January 1984, as it had been demonstrated that Mr Choi had methods of entering Taiwan not via immigration in 1989.

(3) Mr Choi denied that he had changed his address repeatedly to evade execution on his property by the Plaintiff's Taiwan lawyer. When it was pointed out to him that he had given an address in Chung Hua 2nd Road in Kaohsiung City according to the judgment of the Taipei District Court in July 1992 and the judgment of the Taiwan High Court in September 1993, which was different from his address according to the land registration records of Kaohsiung in December 1993, he denied that he had ever used the address referred to in the judgments. However, he could not explain why an address which was not his address was stated in the judgments of the Taiwan courts.

(4) Mr Choi claimed that other than the letter of the Plaintiff's Taiwan lawyer dated 14 November 1996, he did not receive any other letter from the Plaintiff demanding payment of the debt. He claimed that he was given 40 days to repay according to the letter of the Plaintiff's lawyer. When it was pointed out to him that the letter of the Plaintiff's lawyer had mentioned 7 days, he changed his evidence to 7 days. The mention by Mr Choi of 40 days to repay is significant because 40 days was mentioned, not in the letter of November 1996 but in a much earlier letter sent by the Plaintiff to Mr Choi by certified mail dated 3 July 1991, a letter which Mr Choi denied was ever received by him. I think it improbable that Mr Choi could have mixed up the deadlines for repayment of 40 days and 7 days if he had not received the first letter in July 1991.

Was the foreign judgment obtained by the Plaintiff's fraud

15. I reject the evidence adduced by the Defendant entirely. Fraud must be established by cogent evidence even though the standard of proof remains proof on the balance of probabilities. I do not think the Defendant has come anywhere near towards discharging that burden of establishing fraud on the Plaintiff's part.

Was execution levied on Mr Choi's property

16. According to Mr Choi, he had substantial landed properties in Taiwan at the material time being a property of 7 storeys and 2 pieces of land in Kaohsiung and the Plaintiff had not levied execution on any of his properties. The argument was that as it was required by the judgment of the Taiwan courts that execution must first be levied on Mr Choi's property and as the Plaintiff had not done so, the Plaintiff could not enforce the judgment against the Defendant.

17. As stated earlier, I do not accept Mr Choi's evidence that he had not changed his address in an attempt to defeat the levy of execution on his property, which was a matter complained of by the Plaintiff's Taiwan lawyer in the letter to him dated 14 November 1996. Further, it would appear from Mr Choi's evidence that the landed properties held by him had been transferred to a bank within 2 years of the certificate from the Taiwan land registry which was issued in January 1994. This matter was not mentioned in his witness statement. The Plaintiff's answer to this is to rely on a certificate issued by the Taipei District Court dated 11 February 1997 which stated that "the debtor now has no property to be executed." It is contended by the Defendant's counsel that this certificate is evidence that execution was levied only on the property of the Defendant, not on the property of Choi, according to clause 1 of the certificate. That is indeed the certified English translation of the certificate but I do not think the translation of clause 1 is correct. I accept the submissions of the Plaintiff's counsel that reading the certificate as a whole, it must be apparent that the characters "等二人" referred to in clause 1 were a reference to the two individuals being the Defendant and Mr Choi and that has not been translated correctly in the certified English translation. In clause 3 of that certificate, the names of the 2 debtors, being the Defendant and Mr Choi, as well as their addresses, were set out. In the section of the certificate headed "the basis for execution", the case numbers of the 7 judgments given in the Taiwan courts were stated. This was followed by the section bearing the heading "the content of the basis for execution and the amount claimed for execution" and it was stated clearly under this section that "if the mandatory execution upon the property of Choi Man Wan has no effect, the debt [i.e. NT$1,300,000.00] should be paid off by the debtor Wu Cho Ching [i.e. the Defendant]." Thus, it would appear from that certificate that the authority which was requested to levy execution should be clearly aware of the requirement that execution should first be levied on the property of Mr Choi and only if Mr Choi had failed to pay should the judgment be enforced against the Defendant. I am satisfied that this was what had taken place when the Plaintiff had sought to enforce the judgment in Taiwan and that there was an attempt to levy execution against Mr Choi's property but the execution was unsuccessful.

Is there an abuse of process

18. The allegation of fraud raised in this court had been litigated in the Taiwan proceedings with the result that findings were made against the Defendant and Mr Choi. As stated earlier, the matter went through 6 rounds of appeals between September 1993 and October 1996. No new evidence was raised by the Defendant in this court. From an examination of the judgments in the Taiwan courts, it would seem that the Defendant had adduced far less evidence in this court to substantiate his allegation.

19. The Plaintiff's counsel referred me to two cases being House of Spring Gardens Ltd v. Waite [1991] 1 QB 241 at 251G-252A and 254E-255D and Owens Bank Ltd v. Etoile Commerciale SA [1995] 1 WLR 44 at 48 to 51. The dictum of Stuart-Smith LJ in House of Spring Gardens was approved of and applied by Lord Templeman in the latter case, which is a decision of the Privy Council on an appeal from St Vincent. It was held by the Privy Council that where allegations of fraud have been made and determined abroad, summary judgment or striking out in subsequent proceedings are appropriate remedies in the absence of plausible evidence disclosing at least a prima facie case of fraud. The Privy Council concluded that a defence of fraud put forward by the appellant was an abuse of process and should be struck out. In my judgment, what the Defendant has sought to do in this case in re-litigating the issue of fraud when his allegations had been examined extensively and thoroughly and determined against him by the Taiwan courts after 6 rounds of appeal does amount to an abuse of process. I do not think this conclusion I have reached has contravened in any way the judgment of our Court of Appeal in WFM Motors Pty Ltd v. Maydwell [1996] 1 HKC 444 at 449C-D, in which the Court stated that where fraud is alleged in respect of a decision of the foreign court, it would be permissible to examine the evidence to consider whether or not the evidence given at the trial was fraudulent even though the very points put forward in the Hong Kong courts had already been considered and dismissed by the foreign court. The Court of Appeal in Maydwell was not considering the question whether there was any abuse of process. Further, it did not appear that the Privy Council decision was considered by the Court of Appeal as no mention was made of this in the judgment.

Conclusion

20. For the above reasons, I give judgment to the Plaintiff as claimed in the sum NT$1,300,000.00 or its HK dollar equivalent at the time of payment. I order that there be interest on this amount at the rate of 5% per annum from 4 October 1991, as ordered by the Taiwan courts, until judgment and thereafter at the current judgment rate until payment.

21. As for the costs of this action, in view of my finding that it is an abuse of process for the Defendant to re-litigate the issue of fraud, I make an order nisi that the Defendant is to pay the Plaintiff his costs of this action on an indemnity basis to be taxed if not agreed.