YUI CHUNG YIN v. NG KIT SUM

CACV 25/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 25 OF 2013

(ON APPEAL FROM HCA NO. 1826 OF 2009)

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J U D G M E N T

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1.  This is the plaintiff’s application for leave to adduce further evidence on his appeal from a judgment of DHCJ Cheng SC given on 11 January 2013 in HCA 1826/2009. Before I deal with the application, it is necessary to give a brief summary of the action.

Background

2.1.  The action concerned two disputes.  The first and main dispute involved the sale of goods from the defendant to the plaintiff, being laptop computers intended by the manufacturer Lenovo for sale to students at a reduced “student price”.  This dispute was called “the Computer Dispute”.

2.2.  The chain of supply of the computers was as follows:

- from Lenovo to Synnex Technology International (HK) Ltd (“Synnex”);

- from Synnex to Helix Distribution (HK) Ltd and Helix System (HK) Ltd (“Helix System”), both companies of the defendant;

- from Helix System to the defendant himself;

- from the defendant to the plaintiff.

3.1.  From the middle to the end of 2008, the defendant supplied a number of computers to the plaintiff, for which the plaintiff paid various sums, and in the words of the learned judge, “the issue is one of final accounting” between the parties (para. 18 of the judgment).

3.2.  The issues in this dispute were (para. 16 of the judgment):

- how many computers were delivered/sold (“the Quantity issue”), and

- what was the unit price (“the Price issue”).

3.3.  The other dispute in the action was called “the Insurance Dispute” which had nothing to do with the Computer Dispute.  The Insurance Dispute is not relevant to the application before me.

Trial and Judgment

4.1.  The trial took 8 days.  Both the plaintiff and the defendant gave oral evidence and were cross-examined by each other’s counsel.

4.2.  In relation to the Computer Dispute, the judge found that:

- in relation to the Quantity issue, the issue centered on five disputed transactions; and

- in relation to the Price issue, the issue was whether it had been agreed that the defendant would receive a mark-up of $450 per unit from the student price as his profit.

5.1.  The judge noted that

“the plaintiff did not produce any invoice in support of any of its figures, whether they be the number of computers delivered or the unit price” (para. 30)

whereas

“the defendant produced three sets of invoices, two of which were challenged by the plaintiff. The invoices set out the number of computers delivered as well as the unit price to be paid by the plaintiff” (para. 31).

5.2.  The three sets of invoices produced by the defendant were

(i) invoices issued by Synnex to Helix (“Synnex invoices”);

(ii) invoices issued by Helix System to the defendant (“Jack invoices”); and

(iii) invoices issued by the defendant to the plaintiff (“I_MY invoices”).

- The defendant’s case on the invoices

6.1.  The defendant’s case was that

- he had delivered the I_MY invoices to the plaintiff from time to time during the period of transactions, whereas

- the Jack invoices were internal invoices which were not delivered to the plaintiff.

6.2.  More importantly, in his oral evidence the defendant said that generally he would issue the I_MY invoices before the Jack invoices, with the latter being prepared by his partner Mr Ching possibly with reference to figures that the defendant had written down on memorandum paper (Transcript internal page p449-450, B/243-244).  I have not been referred to any direct evidence to contradict this testimony on the sequence of preparation of the invoices.

- The plaintiff’s case on the invoices

7.1.  The plaintiff denied that he had received any I_MY invoices at all.

7.2.  He challenged both the I_MY invoices and the Jack invoices.

7.3.  It was submitted on his behalf that the I_MY invoices were “prepared after the event and the Jack invoices issued by Helix System to the defendant were also prepared at the same time” (para. 38 of the judgment).

7.4.  The plaintiff sought to draw support for this submission from the orientation of Helix’s company stamp on 27 Jack invoices bearing dates from 26 August 2008 to 13 October 2008.  His point was that the orientation of the round stamps appeared to be identical (with the word “System” at the top), even though the stamps were said to have been placed on the different dates when the invoices were prepared (for ease of reference, this submission is referred to below as “the orientation point”).

7.5.  When the defendant was cross-examined on this, he said he had no explanation for the similarity in orientation (Transcript 452-P, B/246).  I have not been referred to any evidence from Mr Ching on this matter.

7.6.  The plaintiff submitted that it could be inferred from the “orientation point” that

- all the Jack invoices were prepared at the same time, and not on or about the dates appearing on them, and

- the I_MY invoices “were also prepared at the same time”.

The judge’s findings

8.  The judge was obviously aware of this submission. In the judgment she commented that “the allegation that this documentary evidence was created ex post facto is a serious contention suggesting effectively that the defendant manufactured evidence to support its case” (para. 38).

9.1.  The judge rejected the plaintiff’s evidence that he had never received the I-MY invoices on the following grounds:

(1) the amount of transactions involved was not insignificant and it was unlikely that invoices were never issued;

(2) the defendant testified that the invoices were handed over from time to time when the parties met;

(3) the plaintiff did not say that he had never seen I-MY invoices when they were referred to in the defendant’s letter to him in May 2009 and in the letter before action from the defendant’s solicitors in June 2009;

(4) the plaintiff said he had records of incoming goods, so some documentation must have passed between the parties; and

(5) in any event, the judge found the plaintiff not credible in giving evidence in this aspect (para. 39).

9.2.  The judge found that “the issuances of these I-MY invoices are contemporaneous documentary evidence of the transactions.  They not only record the number of units sold but also the amount that was to be charged against the Defendant for those units” (para. 41).  It is obvious from the context that “the Defendant” meant the plaintiff.

9.3.  Pausing here, it would be noted that for the judge’s finding that the I_MY invoices were contemporaneous documentary evidence, the Jack invoices did not feature as one of the grounds.

10.  As for the plaintiff’s allegation that the defendant had fabricated evidence, the judge noted (when discussing one of the transactions for which some documents produced by the defendant did not match): “if the Defendant had wished to fabricate evidence, he could easily have used the number ordered, 377, instead of 370 units” (para. 55).

11.  Further, in relation to another transaction where there was a discrepancy between the Jack invoice and the I_MY invoice, she noted that these two invoices “illustrate that it is not correct to assume that the I_MY invoices were prepared at the same time with the Jack invoices as submitted by the Plaintiff” (para. 62).

12.  In my view, it is clear that

(1) the judge concluded the I_MY invoices were contemporaneous documentary evidence for the five reasons set out in para. 9.1 above;

(2) irrespective of the “orientation point”, she did not find the defendant had fabricated evidence; and

(3) she found the plaintiff’s assumption that the I_MY invoices were prepared at the same time as the Jack invoices was incorrect.

13.1.  It is not necessary to consider the rest of the judgment for present purposes, save to say that the judge found, after carrying out a final accounting exercise set out in an annex attached to the judgment, that the plaintiff should pay the defendant $730,147 in respect of the Computer dispute.

13.2.  The judge also found the plaintiff liable to the defendant for US$25,641 in respect of the Insurance dispute.

Appeal

14.  The plaintiff filed a notice of appeal on 7 February 2013 in relation to the Computer dispute only.  The second ground of appeal states:

“The Honourable Deputy High Court Judge Cheng SC erred in law and in fact in drawing the inference that the I_MY Invoices were issued and delivered by the Defendant to the Plaintiff in person [Judgment 40] without considering the evidence that these 28 I_MY invoices together with the corresponding Jack Invoices were prepared by the Defendant ex post facto [Judgment 39 and 40]:

a) The 28 Jack invoices were admitted by the Defendant to be prepared by him and his partner Mr Ching after each and every transaction [Judgment 38]. Therefore, it cannot be a mere coincident that the orientation of the 28 company stamps in each and every 28 Jack Invoices had the same orientation with very minor discrepancy.

b) The I_MY Invoices were admitted by the Defendant to be prepared by him and with the original passed to the Plaintiff in person after each transaction while the Defendant exhibited in the Defendant’s List of Document Item 4 were also the originals”.

15.  For reasons which are not relevant to this application, the appeal was stayed.  The stay was lifted on 4 December 2014 and the appeal has now been set down for hearing on 3 November 2015.

Application for leave to adduce further evidence

16.1.  On 16 April 2015 the plaintiff issued a summons seeking leave to adduce in evidence on appeal:

(1) a Report on Measuring Angles of Stamps prepared by Professor Raymond H Chan (a mathematician) dated 19 December 2014; and

(2) a Statistical Analysis Expert Report prepared by Professor Shao Qiman (a statistician) dated 30 December 2014.

16.2.  The summons was supported by two affirmations of the plaintiff.  Briefly, it is said that the reports show that on Prof Chan’s measurements, there were 12 consecutively dated invoices with increasing angle measurements (although the rate of increase was not uniform), and based on “the premises of personal behaviour and the random perturbations, Professor Shao calculated the probability in relation to 12 or more consecutively increasing angle measurements would be:

(1) 1 out of 28,000 assuming the 27 stamps were imprinted by two different persons at 27 different occasions; and

(2) 1 out of 25,000,000 if the 27 stamps were imprinted by one person at 27 different occasions”.

16.3.  The plaintiff seeks to adduce this further evidence to support his submission that the Jack invoices were stamped on only one or two occasions.  The defendant has opposed the application.

Principles

17.1.  It is not disputed between the parties that the three conditions set out in Ladd v Marshall [1954] 1 WLR 1489 must be satisfied for the court to exercise its discretion to permit further evidence to be adduced on appeal.

17.2.  The conditions are:

(1) the further evidence could not have been obtained with reasonable diligence for use at the trial;

(2) the further evidence is such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; and

(3) the evidence is such as is presumably to be believed.

Discussion

18.1.  For present purposes, I am prepared to assume, in favour of the plaintiff, that the third condition is satisfied.  Although the defendant’s counsel Mr Felix Ng had referred me to various procedural requirements before expert evidence may be adduced, in my view these are relatively minor matters which can be rectified if necessary should the court give leave to adduce the further evidence.

18.2.  In my judgment however, neither the first condition nor the second condition has been satisfied.

The first condition

19.  The Jack invoices had been annexed as exhibits to the defendant’s supplemental witness statement filed on 30 November 2011, more than a year before the start of trial on 17 December 2012.  They are simple documents of one page each.  One can see at a glance that on each, the round stamp has been affixed so that the word “System” is at the top.

20.1.  The plaintiff alleged that as the Jack invoices were not arranged consecutively at the time when he saw the exhibits, he did not notice “the orientation point” then.  And although they had been arranged in consecutive order in the trial bundle, he did not pay attention to them as he had seen them before.

20.2.  The plaintiff alleged that it was only on the 5^th day of trial that he noticed the “orientation point”, and that his “first reaction was that it could not be a coincidence … and my common sense dictated that the coincidence could only be explained if they were being prepared at the same time” (para. 37, Yui 5^th aff).  On his instructions, his counsel cross-examined the defendant on the point and made submissions to the judge (see paras. 7.5 and 7.3 above).

20.3.  So even on the plaintiff’s own case, the “orientation point” was apparent to him and his legal advisers at trial (even if not earlier).

21.  It is well-established that all the evidence that a litigant can marshal in relation to the issues in a case should be adduced at trial.  At trial the plaintiff advanced “the orientation point” on the strength of the existing evidence.  He did not ask for an adjournment to produce further evidence (such as these reports) to strengthen his case.  In my view, having made that choice, he must live with it.  It is inimical to the proper fair and efficient administration of justice if a litigant is allowed to produce fresh evidence like these to try to bolster his argument after he has lost the case.

22.1.  Miss Ebony Ling, the plaintiff’s counsel, submitted that it was “not inevitable” that the court would refuse an application to adduce further evidence on appeal simply because the party did not seek an adjournment to adduce the evidence in the court below.  She referred to the decision of this court (Kwan JA and McWalters J, as he then was) in Oriental Generation Ltd v Town Planning Board [2013] HKC 364.

22.2.  I agree with Miss Ling that refusal is “not inevitable”.  It depends on the circumstances of the case.

22.3.  In the quoted case, the TPB had refused to consider raising the Building Height Restriction on Oriental’s site.  Oriental issued judicial review proceedings, challenging the TPB’s decision on a number of grounds set out in its application Form 86.

22.4.  However at the hearing before Reyes J, Oriental advanced a new ground which had not been set out in the Form 86, nor did it apply to amend the Form 86 so that the ground could be properly formulated.  However the TPB did not object or ask for an adjournment, and Reyes J found in favour of Oriental on that ground.

22.5.  The TPB sought to adduce further evidence on appeal.  Oriental objected.

22.6.  This court granted leave to adduce the further evidence.  It held that the first condition of Ladd v Marshall was satisfied.  Since Oriental had not set out this ground in its Form 86, nor had sought leave to amend the form to do so, TPB was facing an entirely new ground (amongst many grounds) at the hearing with no forewarning from Oriental.  The court found that the TPB’s failure to react at the hearing before Reyes J by objecting to the new point or seeking an adjournment was not material to the application to adduce the further evidence.

22.7.  In my view it can immediately be seen that the circumstances in Oriental were very different from the present application.  In our case, it is not the situation that the defendant had sprung a new point on the plaintiff at trial.  The Jack invoices were not new documents.  They had been produced for the plaintiff’s inspection more than a year before the start of trial.  Therefore the plaintiff cannot blame the other party for his failure to prepare his case with all the necessary supporting evidence in good time before the trial.

23.1.  As for Miss Ling’s proposition that the judge had not given a clear indication that the existing evidence was not sufficient to support the plaintiff’s case, I do not read the judgment in Oriental as holding that this was a relevant consideration.  The passage in para. 16 (p369F-G) was the court’s record of the explanation given by the TPB’s counsel for their failure to react at the hearing before Reyes J, which the court accepted as understandable (paras. 18-19).

23.2.  In any event I would find it very surprising if it is said that a trial judge is obliged to give indications to a party as to the strength (or weakness) of his evidence.  Further I have not been referred to any passages in the transcript in which the judge is said to have given indications that the plaintiff had adduced sufficient evidence to prove that the Jack invoices were prepared at the same time and together with the I_MY invoices ex post facto.

24.1.  Miss Ling then submitted that the first condition is relaxed in cases where fraud, deception or other impropriety is alleged.  She submitted there has been “willful deception” in the present case.  That is a serious allegation for which (as Miss Ling accepts) the plaintiff must show a prima facie case (Hamilton v Brodie Brittain Racing Ltd [1996] CLY 654).

24.2.  I do not see how a prima facie case of willful deception has been established.  The Jack invoices were shown to the judge who could obviously see the way the stamps were affixed.  There is nothing inherently remarkable about a stamp of a name being affixed in such a way that the words can be read the right way up.  The only thing the reports add to the plaintiff’s submission is to give measurements of angles and calculations of probabilities.  But to pick out 12 out of 27 documents to show a feature of increasing angles in this batch (albeit not at a uniform rate) does not establish that all 27 had been prepared on one or two occasions only.  I do not see how the plaintiff has thereby established a prima facie case of “willful deception”.

25.  For the reasons set out above, I do not find the first condition of Ladd v Marshall has been met.

The second condition

26.  In case I am wrong, I shall also discuss the second condition briefly.  The plaintiff must show that the further evidence would probably have an important influence on the result of the case, though it need not be decisive.

27.1.  As noted earlier, the issue was the final accounting between the parties.  The quantity of goods and unit prices were shown in the I_MY invoices.  The Jack invoices were merely internal records of the defendant.

27.2.  More importantly, the defendant’s evidence was that he would prepare the I_MY invoices before the Jack invoices.  I have not been pointed to any evidence to contradict this testimony, and the judge has also pointed to other evidence showing that they were not prepared at the same time.

27.3.  Therefore, how and when the Jack invoices were prepared is of peripheral relevance.  The issue was not how and when the stamps on the Jack invoices were affixed, but whether the I_MY invoices were delivered.  For the five reasons given at para. 39 in the judgment, the judge found the I_MY invoices were delivered.

27.4.  In light of this “big picture”, how and when the stamps were physically affixed on the Jack invoices had little import, and I do not think that the further evidence would have an important influence on the result of the case.

Order

28.  For the reasons set out above, I would dismiss the application.  Counsel having agreed that costs should follow the event, I would order that the plaintiff pay the defendant’s costs of the application. The plaintiff’s own costs are to be taxed in accordance with Legal Aid Regulations.

29.  Finally I would like to thank both counsel for their thorough submissions and able assistance.