DONALD QUINTIN CHEUNG AND OTHERS v. FESTER CORPORATION LIMITED AND OTHERS

IN THE COURT OF APPEAL

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JUDGMENT

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Fuad, J. A.:

1. This is an appeal from an Order made by Jones J. on 15 September 1986.

2. The history of the matter briefly is that on 29 July 1986, a petition was presented by three minority shareholders in a company under s.168A of the Companies Ordinance (Cap.32) on the grounds that the affairs of the company were being conducted in a manner unfairly prejudicial to them.

3. The three Petitioners were Mr. Donald Cheung, his wife, Loretta Cheung, and another Mr. Cheung who apparently is not related to either of them. The company concerned was the Fester Corporation Ltd. and, of course, was a necessary party to the petition. The 2nd Respondent was Chinachem Investment Company Limited, the 3rd Respondent was Chime Corporation Limited and the 4th and the 5th Respondents were Mr. and Mrs. Wang Teh Hui.

4. On 15 September, Jones J. made the following Order: -

"     UPON HEARING Counsel for the Petitioners and Counsel for the 2nd, 3rd, 4th and 5th Respondents

IT IS ORDERED :-

 

	1.	That the 2nd, 3rd, 4th and 5th Respondents be at liberty to file Affidavits in reply to the Affidavits filed on behalf of the Petitioners within 35 days of this Order.
	2.	That the Petitioners be at liberty to file an Affidavit or Affidavits in reply within 21 days of service of the Affidavits filed on behalf of the 2nd, 3rd, 4th and 5th Respondents.
	3.	That the deponents to the Affidavits (or Affirmations) so filed be at liberty to attend at the hearing of the Petition for the purpose of supplementing their evidence by viva voce evidence thereat.
	4.	That the deponents to the Affidavits (and Affirmations) filed herein do attend at the said hearing for the purpose of being cross examined thereat.
	5.	That the witnesses to be called by the respective parties hereto be limited to the persons having previously filed Affidavits or Affirmations herein except by consent or with the leave of the Court
	6.	That within 28 days from the date of service of the Petitioners' Affidavits or Affirmations in reply filed pursuant to paragraph 2 hereof
		(a)	the Petitioners do make and serve on the Respondents a list of the documents which are or have been in their possession, custody or power relating to any matter in question herein.
		(b)	the Respondents do each of them make and serve on the Petitioners a list of the documents which are or have been in their possession, custody or power relating to any matter in question herein.
	7.	That the parties hereto do within 14 days after the service of the List of Documents upon the opposing party or parties produce the documents so disclosed for inspection by the opposing party or parties and his or their solicitors in question and do permit them to peruse the same and to make copies thereof or to make note of their contents and supply them with copies thereof on payment of the appropriate copying charges.
	8.	That the hearing of the Petition be fixed in consultation with Counsel with an estimated length of hearing to be given by the parties to the Clerk of the Court.
	9.	That the Petition be heard before another Judge.
	10.	That the costs of today be costs in the Petition.
	11.	That there be liberty to apply."

5. It is common ground that on 1 February 1985, Jones J. had a summons before him for the appointment of a Receiver in a partnership action. The action was High Court Action No. 7812 of 1984. Mr. Donald Cheung was the Plaintiff and Mr. and Mrs. Wang were two of the five Defendants. At the hearing of the application, the judge decided that because of his friendship with Mr. Cheung, and the fact that his credibility would be in issue, he should disqualify himself from hearing the summons. He directed that it be heard by another judge.

6. On the same day, in another winding-up petition concerning a company called Beta Estates Limited (Winding-Up No. 399 of 1984) there was to be heard a summons for extension of time within which the Respondents should serve their affidavits of evidence in answer to the petition. The Petitioner in that petition was also Mr. Donald Cheung, and Chime Corporation Ltd. was the 3rd Respondent, while Mr. and Mrs. Wang were the 4th and 5th Respondents. The judge decided, it seems quite plainly for the same reason, that the matter should go before another judge.

7. There followed correspondence between the solicitors acting for the parties which showed that they were agreed that in view of what had happened, the Petition in the Beta Estates Ltd. winding-up and four other sets of proceedings concerning some or all of the same parties, should go before a judge other than Jones J...

8. There is further correspondence which is relevant to the matter. On 30 July 1986, the solicitors acting for the Petitioners in the case before us wrote to the solicitors acting for the other parties, sending them a copy of the petition and the affidavit in support.The last paragraph of that letter says this:

"     You will note that the return date of the Petition has been fixed before Mr. Justice Jones on 15th September 1986. At the time when the Petition was presented for filing, we drew the Clerk of the Court's attention to the fact that Mr. Justice Jones had previously disqualified himself from dealing with proceedings by the 1st Petitioner. We understand that the matter was drawn to the attention of Mr. Justice Jones who indicated that he would take the return date and make the necessary directions for the future conduct of the proceedings on that day."

9. Another letter, this time from the solicitors acting for the Respondents to the Petition (the present Appellants) to the Petitioners' solicitors, dated 12 September 1986, set out suggestions for the directions to be given on 15 September and invited them to seek instructions so that they could agree to asking Jones J. to give the directions that they had suggested in their letter as well as a direction that the actual hearing of the petition should come before another judge.

10. This letter went on to say that if the parties could not agree, or if there were any other dispute or argument as to the directions to be given on 15 September, Counsel instructed by them would invite Jones J. merely to adjourn the petition to another judge in the light of the fact that he had disqualified himself in 1985 from hearing other proceedings brought by Mr. Donald Cheung on the ground that he was personally acquainted with him. There was also reference to a practice direction by the Law Society which we have seen but which I do not think assists us in the decision that we have to make today. The letter also said that if agreement could be reached on the directions the judge would give, then it would only be left to apply to the judge that he should disqualify himself from hearing the petition after the preliminary directions had been given.

11. Then, there was a letter of 13 September from the solicitors acting for the Petitioners which enclosed draft directions which they suggested the learned judge should give on 15 September 1986, The writer of this letter said, inter alia:

"     As your Counsel had approached our Counsel directly, we authorised our Counsel to deliver to yours the suggested directions which we propose to seek from Jones J. on 15th September 1986. We enclose a copy of those draft directions and can see no reason why Mr. Justice Jones cannot give such directions (without prejudice to any application that The 2nd to 5th Respondents, or any of them, may decide to make to have the 'Petition stayed, struck out or dismissed and equally without prejudice to the Petitioners' right to challenge any such application on any grounds) all of which are, in our view, essentially noncontroversial and, as you will be aware, follow precisely the directions given by Mr. Justice Penlington in Companies Winding-up No. 399 of 1984 which, in respect of paragraphs 1, 2, 3, 4 and 5 at least, were not opposed by you in those proceedings - save as to the times inserted into paragraphs 1 and 2."

12. The writer also made the point that the matter which would come up for hearing on 15 September had only been placed before Jones J. because he was the Company Judge and it was so placed at his express direction, notwithstanding that the identity of the parties had been drawn to his attention at the time of the issue of the petition. The writer added: "As we stated above, we can see no reason why Mr. Justice Jones should not give the directions for the future conduct of the proceedings which we suggest.."

13. The draft that this letter enclosed was in almost identical terms to the Order eventually granted by Jones J. save that in paragraphs 1 and 2 the number of days within which the Respondents and the Petitioners had to file their affidavits had been left blank.

14. The Appellants before us are all the Respondents to the petition other than the company itself. That is to say, Chinachem, Chime and Mr. and Mrs. Wang. They complain that the judge should have acceded to an application by Counsel for the adjournment of the hearing at which directions were given on 15 September in the light of the objection that had been raised, and that in making the Order sought on behalf of the Petitioners the learned judge had "acted in breach of the fundamental (and universally recognised) principle that justice should not only be done but should also seen to be done". The other ground of appeal relates to the merits of the directions but we invited Counsel to address us first on the first ground of appeal and this part of my judgment is, of course, confined to that issue.

15. It is common ground that on 15 September, Mr. Benjamin Yu, who then was appearing for the Petitioners, told the judge that he was merely asking for directions. Counsel was obviously aware of what had occurred previously in relation to the other matters that the judge had declined to hear, and when asked by the judge whether there was anything non-controversial in the directions he could give, replied that the directions did not go to merit or credibility.

16. Miss Maria Yuen, who was then representing the present Appellants, referred to what had happened in the past and pointed out that there was a hot dispute between the parties about the time within which the Respondents should be permitted to file their evidence in reply to the Petitioners' affidavits. Miss Yuen was asking for ten weeks but the Petitioners were contending that three weeks would be enough.

17. The judge said that he saw no reason why he should not give directions and expressed the view that there was nothing controversial between the contending periods sought for. He went on to hear the matter and, as we have seen, made the Order I read out at the beginning of my judgment.

18. It is always a difficult matter to decide when friendship or acquaintance with one of the parties or a witness to a cause or matter before a judge should cause him to put down his pen and send the matter elsewhere. We do not know, and we do not need to know, what was the degree of the friendship between Mr. Donald Cheung and Jones J..  It seems quite clear, however, that it must have gone beyond mere acquaintance otherwise it is hardly possible that the learned judge would have disqualified himself.

19. We have been referred to a number of authorities but there is no real controversy between Mr. Stubbs and Mr. Martin Lee (who now appears for the Respondents to this appeal) as to the principles to be applied. These principles have been differently expressed in a number of cases. This is not surprising because the circumstances in which questions of disqualification arise can be so varied. However, Counsel were content to accept the formulation of Ackner L.J. (as he then was) in R. v. Liverpool City Justices [1983] 1 All E. R. 490, at page 494 where, in giving the judgment of the Divisional Court in England, he said:

"We conclude that the test to be applied can conveniently be expressed by slightly adapting the words of Lord Widgery C. J. in a test which he laid down in R. v. Uxbridge Justices, ex p. Burbridge (1972)Times, 21 June an referred to by him in R. v. McLean, ex p. Aikens (1974) 139 JP 261 at 266: would a reasonable and fair-minded person sitting in court and knowing all the relevant facts have a reasonable suspicion that a fair trial for the applicant was not possible?"

20. Mr. Lee contended that the proceedings before Jones J. did not involve the credibility of a witness or a litigant known to the judge as a friend. Nor were the proceedings in the nature of the trial. Therefore the judge was perfectly entitled to continue the hearing and give the directions he made.

21. The difficulty, as I see it, that has to be faced by the Respondents to this appeal is that the judge himself, without any application having been made to him, on two previous occasions where Mr. Donald Cheung was involved in proceedings before him, disqualified himself on the grounds of friendship. Of course, Mr. Stubbs was at pains to emphasize that he was making no suggestion that Jones. J. was in fact in any way biased in what he did and, if I may be permitted to say so, such a suggestion would be quite unreal; but that is not the test we have to apply.

22. A reasonable and fair-minded person who heard what took place, and who knew that the judge had considered his friendship to Mr. Donald Cheung to be close enough to warrant disqualifying himself from hearing the two matters on 1 February 1985 would wonder how it could be that he felt able to deal with the contested directions that came before him on 15 September 1985. The learned judge clearly considered that the matter before him on that occasion was uncontroversial but, with the utmost respect to him, I must take a different view: By the ordinary meaning of the word "controversial", as I understand it, since there was a dispute between the parties which could only be resolved by a decision made by the judge, the matter before him was controversial. The question of timing when affidavits have to be filed in petitions of this kind (even where there is liberty to apply for an extension of time) is an important matter.

23. I have reached the conclusion that the appropriate test was satisfied and that the learned judge's decision cannot be upheld. I would, therefore, set aside the Order dated 15 September 1986.

Kempster J. A.:

24. At the hearing on 15 September of this year, Jones J. unhappily came to the conclusion that a dispute as to the time within which evidence was to be filed was not controversial. This was an error and in the circumstances to which my Lord Fuad J. A. has alluded certain well known principles of law come into play. Those principles were elegantly expressed by Lord Esher M.R. in Allinson v. General Council of Medical Education and Registration [1894] 1 Q.B. 750, at page 758 in these terms:

"The question is not, whether in fact he was or was not biased. The Court cannot inquire into that...... In the administration of justice, whether by a recognised legal Court or by persons who, although not a legal public Court, are acting in a similar capacity, public policy requires that, in order that there should be no doubt about the purity of the administration, any person who is to take part in it should not be in such a position that he might be suspected of being biased."

25. I agree accordingly that the Order cannot stand and must be discharged.

[After further argument: Appeal allowed. The summons for directions remitted for hearing by another judge of the High Court.]