LONG HAI HONG v. CHAN YU LYDIA AND OTHERS

HCMP 3179/2013

[2024] HKCFI 362

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 3179 OF 2013

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D E C I S I O N

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1.  This case is one of the four sets of proceedings (“the Proceedings”)  ordered to be tried together by the same judge pursuant to the decision made by B Chu J on 28 January 2022 (“the 2022 Decision”). The background has been succinctly summarized by the learned judge in the 2022 Decision at [1]-[2], [11]-[42]. I gratefully adopt that summary and shall not repeat the same in this decision. For ease of reference, the abbreviations used in the 2022 Decision are also adopted herein.

2.  On 26 July 2023, Madam Liu sought leave under Order 52 rule 2 to bring committal proceedings against Madam Long for making and relying on false statements in her affirmations filed in this action.  In support of that application, Madam Liu filed a statement pursuant to Order 52 rule 2(2)  and a supporting affirmation.  On 28 July 2023, I granted leave to Madam Liu.

3.  On 11 August 2023, with the leave granted by the court, Madam Liu issued an Originating Summons and commenced committal proceedings against Madam Long (ie HCMP 1295/2023, the Committal Application).

4.  On 9 October 2023, Madam Long made an application for an order to set aside the leave so granted (“the Setting Aside Application”)  and filed evidence in support of the application.

5.  This is the substantive hearing of the Setting Aside Application.  In this hearing, Madam Long is represented by Mr Derek JY Chan, and Madam Liu is represented by Mr Mike Lui SC, leading Mr Jun Lee.

6.  In his written submissions dated 19 January 2024, Mr Chan argues that the leave granted to Madam Liu should be set aside, for granting the leave at the interlocutory stage of this case would adversely impact on the fairness of the trial in this case.  Further or alternatively, the leave should be set aside, as there have been material non-disclosures by Madam Liu in her ex parte application for the leave.  On the other hand, Mr Lui has put forward counter arguments in his written submissions dated 23 January 2024, and Mr Lui is arguing that the Setting Aside Application should be dismissed.  Mr Lui further submits that if the leave has to be set aside because of the material non-disclosures as submitted by Madam Long, leave to bring the Committal Application should be re-granted. 

7.  On 23 January 2024, I directed the parties to provide further written submissions to address the following question (“the Directions”):   

“From the case management perspective, whether it is desirable to stay HCMP 1295/2023 (including Madam Long’s Setting Aside Application)  pending the outcome of the trial in HCMP 3179/2013, and HCMP 1295/2023 (including Madam Long’s Setting Aside Application)  be determined after the conclusion of the trial in HCMP 3179/2013. ”

Subsequently, the parties have provided me their supplemental written submissions.  Both Mr Chan and Mr Lui have also made some oral submissions on this matter in this hearing.

8.  By the Committal Application, Madam Liu is seeking an order to convict Madam Long for contempt for giving one false statement at [5] of her first affirmation filed herein, one false statement at [8] of her second affirmation filed herein, and another false statement at [9] of her second affirmation.  In her witness statement filed in this case, Madam Long said that these statements (“the Subject Statements”)  are incorrect, but Madam Long at the same time has offered some explanations (“the Explanations”).  Madam Long explained that she made these incorrect statements because she was a housewife with little work experience and had no experience in interacting with lawyers.  The lawyer who prepared Madam Long’s first and second affirmations had failed to explain the contents of those affirmations to her.  Further, two other lawyers advising Madam Long had made some assumption when giving advice to Madam Long. All these led to the appearance of the Subject Statements in Madam Long’s affirmations.

9.  There is no dispute that whether to have contempt proceedings determined before or after the main trial is a case management decision, which turns on the facts of the particular case.  A key (albeit not only)  consideration is whether there is real risk of serious prejudice leading to injustice if the contempt proceedings are not deferred until after the trial in the substantive action.  See Chu Kong v Sun Min [2020] HKCFI 2022, per Marlene Ng J at [92].

10.  In his written submissions, Mr Lui for Madam Liu argues that there is no reason for the Committal Application and the Setting Aside Application be stayed.  Mr Lui submits that:

(1)  There is no overlap of issues between the Committal Application and the trial in this action.  With Madam Long’s admission of falsity of the Subject Statements, the issues to be decided in the Committal Application are (a)  whether the false Subject Statements would likely have interfered with the course of justice and (b)  whether Madam Long knew or was reckless about such falsity and likelihood of interference with justice.  On the other hand, the real issues to be decided in this action are (i)  who was the beneficial owner of AJK Ltd, and in particular the Disputed Shares, before the 2011 Transfer – whether Winston or Madam Liu – and in this connection, who provided funding for the investments in AJK Ltd; (ii)  if Winston was the beneficial owner, whether Madam Long acquired the beneficial ownership of the Disputed Shares by way of gift from Winston; (iii)  if “yes”, whether Madam Long remained as the beneficial owner despite the 2013 Transfer.  The truthfulness of the Explanations is simply irrelevant to the real questions to be tried in this action and will therefore not arise at trial.

(2)  That being the case, there will be no real risk of inconsistent findings made in the Committal Application and in the trial.  Even if Madam Liu seeks and is allowed to cross-examine Madam Long at trial on her knowledge as to the falsity in the Subject Statements and their likelihood of interference with justice (just to attack Madam Long’s credibility), the court need not make any finding on those matters in order to decide the real issues in this action.

(3)  It is difficult if not impossible to see any real risk of serious prejudice if the Committal Application is allowed to proceed.  There is simply no basis to say that there would be undesirable satellite litigation if the Committal Application is not stayed.

(4)  Even if the Committal Application may lead to satellite litigation, the strong public interest in bringing home the importance of honesty in filing or using sworn evidence and promoting the integrity of the legal process and respect for it in the future must outweigh any such risk.

(5)  The outcome of the Setting Aside Application does not depend on the outcome of the trial of this action.

11.  Mr Lui further submits that the best option is to have the Committal Application to be heard at the trial of this action.  An argument in favour of having a stay is that the truthfulness of the Explanations may be tested and adjudicated upon by the court at the trial, and hence it is undesirable to hear the Committal Application before the trial.  Mr Lui submits that on that premise, the more appropriate course will be to order the Committal Application to be heard at the trial.  Mr Lui also submits that “[u]nless Madam Long persists in pursuing the other (erroneous)  grounds raised in support of the Set Aside Application, such “heard at trial” course indeed disposes also of the Set Aside Application (which therefore should be dismissed).”  See Madam Liu’s Supplemental Submissions dated 25 January 2024, [14].

12.  With respect, I am not persuaded by Mr Lui.  In his written submissions, Mr Lui mentions that Madam Long may well be

13.  In his oral submissions, Mr Lui submits that questions solely concerning the credibility of Madam Long and having no relevance to the issues in this action would not be allowed at the trial, and even if such questions are asked, the trial judge would not and should not make a determination as a result of those questions.  I ask Mr Lui whether Madam Liu would offer an undertaking that Madam Liu would not cross-examine Madam Long on the truthfulness of the Explanations at the trial, and Mr Lui says that he has no instruction on this matter.  So the situation remains as that Madam Liu may seek to cross-examine Madam Long on the truthfulness of the Explanations at the trial of this action.  Once there is cross-examination on this matter, the trial judge may make a factual finding on the matter in his or her judgment.

14.  I am also of the view that the “heard at trial” approach suggested by Mr Lui may lead to difficulties in handling evidence in this case and in the Committal Application.  Evidence relevant and admissible in this case may not be evidence relevant and admissible in the Committal Application, and vice versa.  This point can be illustrated by the Category 2 Documents (as defined below), discovery of which has been sought by Madam Liu in this case by an application for specific discovery, but the application was dismissed.

(1)  On 3 April 2023, Madam Liu’s solicitors wrote to Madam Long’s solicitors seeking, inter alia, specific discovery of communications between Madam Long and her former Hong Kong solicitors and Mainland lawyers relating to the Subject Statements (ie, the Category 2 Documents).

(2)  On 19 April 2023 and 10 May 2023, Madam Long’s solicitors replied and refused to accede to Madam Liu’s request.  Madam Long’s stance is that (a)  the Category 2 Documents are covered by legal and professional privilege; and (b)  discovery solely for the purpose of impeaching credit will not be ordered.

(3)  On 23 June 2023, Madam Liu issued a summons for specific discovery seeking disclosure of, inter alia, the Category 2 Documents.  On 29 September 2023, Master Grace Chow dismissed the discovery application in respect of the Category 2 Documents primarily on the ground that they did not relate to the matters in question between the parties and that discovery solely for the purpose of impeaching credit was not permitted.

15.  The Category 2 Documents are not relevant for the purpose of this case. However, the same documents may well be relevant for the purpose of the Committal Application.  For the purpose of the Committal Application, those documents can be evidence in that application.  If the Committal Application is heard at the trial of this case, the trial judge would have to bear the burden of differentiating which evidence is relevant and admissible in which set of proceedings.  That would certainly complicate the trial and increase the risk of having errors in the judgment to be given by the trial judge.

16.  By staying the Committal Application pending the outcome of the trial in this case does not mean that the court would not adjudicate on the Committal Application.  The stay would only mean that the court would make the adjudication at a later time.  By reason of the matters set out in the above, I am of the view that it would be practical and indeed it is necessary to wait for the outcome of the trial in this case before proceeding to consider the Committal Application.

17.  In his oral submissions, Mr Lui has put forward two further points to try to persuade me why there should not be a stay:

(1)  If a stay is ordered, there would be a delay in having the substantive hearing in the Committal Application.  The memories of the relevant witnesses would fade away.  The delay would certainly cause prejudice to Madam Liu.

(2)  Madam Long is living in Mainland China.  If the Committal Application is heard after the trial in this case, and if Madam Long is unsuccessful in the trial, there is a risk that Madam Long may not come to Hong Kong to face the Committal Application.

18.  With respect, I am unable to accept these submissions.

19.  Madam Long has not resisted the discovery application concerning the Category 2 Documents on the ground that those documents do not exist.  That being the case, there would be some documents recording the communications between Madam Long and her lawyers relating to the Subject Statements.  The documentary evidence would not fade away as time passes. Further, if there is any witness who may give relevant evidence in the Committal Application, there is nothing preventing Madam Long and/or Madam Liu to approach the witness to ask him or her to make a witness statement or an affidavit/affirmation as soon as practicable for the purpose of preserving his or her memory.   For these reasons, in my view, the time factor submitted by Mr Lui would not be sufficient for outweighing the benefits of having a stay as stated in the above.

20.  As to the risk that Madam Long may not come to Hong Kong to face the Committal Application if she loses in the trial of this action, as submitted by Mr Chan, this point has never been made by Madam Liu before.  Had such point been raised, Madam Long would have had put in evidence to deal with this point.  In my view, it would not be fair for Madam Liu to raise this point for the first time in the hearing to try to argue that there should not be a stay of the Committal Application.  Further, Mr Chan has also drawn me to the undisputed fact that Madam Long is the administratrix of the Estate, and the Estate is holding 3% of the total issued shares of AJK Co (a company incorporated in Hong Kong).  Madam Long is a beneficiary of the Estate.  Bearing these facts in mind, in my view, it cannot be said that there is a real risk that Madam Long would sever her connection with Hong Kong and would never come to Hong Kong if she loses in the trial of this action.

21.  With all the aforesaid in mind, I am of the view that the Committal Application (including the Setting Aside Application)  should be stayed pending the outcome of the trial in this case.  I so order.

22.  As to costs, Madam Long has successfully persuaded me to grant the aforesaid case management stay.  That being the case, the costs incurred in relation to the case management stay should be paid by Madam Liu to Madam Long forthwith.  Those costs would be summarily assessed.  Save that, costs of the Setting Aside Application should be reserved.

23.  For avoidance of doubt, the costs awarded to Madam Long are limited to the costs incurred in relation to the case management stay only.  The issue of case management stay was raised in the Directions issued on 23 January 2024, and hence the costs awarded to Madam Long should be costs incurred from 23 January 2024 until this hearing in relation to the case management stay. Further, the brief to counsel should be a brief in relation to the Setting Aside Application.  I appreciate that counsel have spent time to deal with the issue of case management stay as a result of the Directions issued on 23 January 2024.  I would apportion one-third of the brief fees as the fees concerning the case management stay, and the remaining two-thirds as the fees concerning the Setting Aside Application.

24.  The summary assessment would be conducted within the aforesaid parameters.  There be leave to Madam Long to file and serve a bill of costs for summary assessment within 3 working days (excluding Saturday, Sunday and public holiday), and leave to Madam Liu to file and serve a written reply to the said bill within 3 working days (excluding Saturday, Sunday and public holiday)  thereafter.

25.  I thank all counsel for the helpful assistance provided to the court.