GLOBAL FAIR INDUSTRIAL LTD v. GLOBAL FAIR INDUSTRIAL LTD AND OTHERS

HCMP 397/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 397 OF 2012

(ON AN INTENDED APPEAL FROM HCA NO. 4200 OF 1995)

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BETWEEN

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J U D G M E N T

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1.  This is the application of Mr Yung Ka Po (“Yung”) for leave to appeal out of time against the Judgment of Deputy Judge To (as he then was) given on 1 December 2009 in HCA4200/1995.

2.  In HCA 4200/1995, Goldmark Agents Limited and World Champ Limited sued a number of defendants for breach of fiduciary duty and for dishonest assistance in the breach of duty and for knowing receipt of the companies’ properties.  Amongst the defendants were Yung (who is the 2^nd defendant) and his wife (who is the 7^th defendant).  The action was originally commenced by the Official Receiver as the provisional liquidators of the companies.  Subsequently, the rights and interests of the companies in the action were assigned to Dr Menno Leendert Vos (“Vos”), who was then substituted as the plaintiff in the action.

Applicable principles

3.  The principles governing applications for leave to appeal out of time are well settled.  It is entirely in the discretion of the court to grant or refuse an extension.  The factors which are normally taken into account in deciding how to exercise the discretion are: (i) the length of the delay; (ii) the reasons for the delay; (iii) the chances of the appeal succeeding if time for appealing is extended; and (iv) the degree of prejudice to the potential respondent if leave is given: Hong Kong Civil Procedure 2012 volume 1 para. 59/4/9.

Delay

4.  In the present case, the application for leave to appeal out of time was issued on 6 March 2012, more than 2 years 3 months after the Judgment was given.  It is by any standard a very substantial delay.

5.  Attached to the summons applying for leave is a document entitled “Reason for delay”.  Contrary to well established requirement, Yung did not in his affidavit in support of the application deposed to or verified the truth of what was stated in this document.  Mr Lam for Vos understandably was critical about this.

6.  In gist, the reasons given by Yung for failing to appeal within the time limit are: (i) he was in Canada when the Judgment was handed down; (ii) he was waiting for a copy of the full transcript of the trial in order that his lawyers could advise or assist him; (iii) owing to enforcement proceedings that Vos had taken against him, he had to apply to the Canadian court to mortgage his family assets in Canada in order to obtain funds for carrying out the appeal; (iv) there had been delay in arranging the mortgage as Vos had been difficult with approving the terms; (v) when he managed to put his Hong Kong lawyers in funds, his counsel went on maternity leave; and (vi) he was later informed by his Hong Kong lawyers that he had to put up more funds before they could proceed.  It was also stated that despite having incurred HK$1.3 million, there was no progress; hence the application was eventually made by Yung acting in person.

7.  Mr Lam submitted, and I accept, that Yung has not been entirely forthcoming about his delay and the reasons for it.

8.  Admittedly, in December 2009, Yung already had a copy of the Judgment and had studied it in detail.  Within that same month, he had decided to appeal and had instructed his Canadian lawyer to research and study the appeal procedures.  The fact that he was not in Hong Kong is thus no obstacle to his taking steps towards launching an appeal.  Further, by as early as January 2010, Yung was fully aware that his appeal was out of time and that he required leave from the court before he could appeal.

9.  From the evidence filed by Vos, it is tolerably clear that while Yung explained that the initial period of delay was because he needed the transcript of the trial to proceed with the appeal and he was waiting for it, it was the 6^th defendant in the action, and not him, who had requested for transcript and recording of the proceedings.  It was not until 24 September 2010 that Sidney Austin, the solicitors that Yung was consulting, wrote to the court indicating that they acted for Yung and requested for transcript of the hearing.  The court record shows that the court on 30 September 2010 replied, asking Sidney Austen to file a Notice to Act and to provide reasons for the request.  Sidney Austen neither filed a Notice to Act nor responded to the court’s enquiry and the matter was thereafter not pursued.

10.  It is obvious from the evidence before the court that Yung had been dragging his feet about the appeal.  He was more interested in fending off the enforcement proceedings than in dealing with the Judgment. Three days after the Judgment was delivered (4 December 2009), he transferred his properties in Washington, USA to his sister. Mr Justice Harris in the Canadian proceedings referred to the transfer as being made at either no value or a substantial undervalue.  Yung disagreed and argued that one of the properties was held by him as nominee for his sister and the other property was sold to his sister at a price above the market value.  None of these explanations that he offered was mentioned in his affidavit or supported by objective evidence.  Vos had brought proceedings in the USA to set aside the transfers and to enforce the Judgment.  On 30 April 2010, the US court imposed a preliminary injunction against Yung, who then began unavailable for service of proceedings.  On 9 August 2010, Vos obtained from the Supreme Court of British Columbia a worldwide Mareva injunction against Yung and his wife.  Yung acted swiftly to apply to discharge the injunction, which was unsuccessful.  He then applied in January 2011 to vary the injunction, in the course of which he intimated, through his Hong Kong lawyers, that he had identified leading and junior counsel to apply for leave to appeal out of time.  The legal fees quoted for the work were HK$2.6 million. During all this time, he was well aware that the time for appeal had long lapsed, and while he acted swiftly to unlock his assets, he took no step to extend the time for appealing.  Even after the Canadian court allowed him to raise funds by mortgaging his property and CAD40,000 was made available to him on 25 October 2011, Yung took no step to deal with the Judgment.  It should also be noted that his Hong Kong counsel only commenced maternity leave in December 2011.  In the end, Vos had to apply to the Canadian court for summary judgment and a peremptory order was made against Yung.  The present application was issued one day before the deadline imposed by the Canadian Court.

11.  The irresistible inference is that all along Yung has no genuine intention to appeal against the Judgment and the present application was brought because of the peremptory order made in the Canadian proceedings.

12.  I find the delay inordinate and inexcusable.

Merits of the appeal

13.  I turn next to consider the merits of the appeal.  Yung had attached to the summons a draft Notice of Appeal containing 12 grounds of appeal.  In summary, they complain about the trial judge’s: (i) findings on credibility, in accepting Vos’ evidence and rejecting Yung’s evidence (Grounds 1(a), 2(a) to (e), 3(a) to (l) and 8) ; (ii) findings of fact (Grounds 1(b), (c), 4, 7 and 9(a), (d), (e) & (g)); (iii) drawing of inferences (Grounds 5 and 9(b), (c) & (f)); (iv) adoption and use of the Jones-Lang-Wotton Index and in finding a 15% downward adjustment (Ground 6); (v) finding on the limitation issue (Ground 10); (vi) award of interest (Ground 11): and (vii) award of indemnity costs (Ground 12).

14.  Yung and all other defendants were unrepresented at the trial which lasted 24 days.  The Judgment consisting of 476 paragraphs is a full and carefully considered one, in which the trial judge not only set out the parties’ case, evidence and arguments on each issue, but also analysed them in great length before making findings and conclusions.  It can be readily seen that in coming to the view that Vos was credible and Yung was not, the trial judge had regard to the inherent probabilities of their evidence as well as the objective evidence and circumstances.

15.  In Tang Kwok Ming v. Daxprofit Scaffolding Ltd [1999] 1 HKC 657, paras. 24 to 29, Godfrey JA pointed out that:

“24. The approach of an appellate court to appeals on fact is well-established. An appeal to this court is by way of re-hearing. Accordingly, it is the duty of this court to re-consider all the materials before the judge, to make up its own mind, not disregarding the judgment below but carefully weighing and considering it, not shrinking from overruling it, if on full consideration, it comes to the conclusion that the trial judge's finding was wrong.

25. But that does not mean that this court will re-try the case. The re-hearing is a re-hearing on the papers. This court will not usurp the function of the trial judge, i.e. to find the facts. It will certainly not disturb his findings of primary fact where these are based on the credibility of the witnesses or the preference of the evidence of one witness for that of another (although of course it may be willing to disturb inferences of fact drawn from the primary facts, because an appellate court is in as good a position as the trial judge to draw such inferences).

26. It is important for counsel and solicitors (and for the legal aid authorities) to remember the very limited extent to which this court will interfere in a case in which the appellant seeks to dispute the judge's findings of fact. If it is necessary to disturb an adverse finding of primary fact, the appellant has to demonstrate either (1) that there is no evidence to support it; or (2) that it is contrary to documentary or other incontrovertible evidence which the judge overlooked. It is not enough to show there is little evidence to support the judge's finding, or that it was "contrary to the weight of the evidence". The weight of the evidence is a matter for the trial judge. It does not matter how many witnesses say one thing, and how few say the contrary. The judge is perfectly entitled to prefer the evidence of the few to that of the many.

27. The important consideration for an appellant who seeks to challenge the judge's findings of fact is the judgment itself. It is for the appellant to show why he says the judge was wrong. The present case is another example of a practice, all too common in Hong Kong, of trying to pick holes in the judgment, and treating these as grounds of appeal. There is simply no point in setting out in 20 numbered paragraphs (as here) every conceivable error of which the appellant accuses the judge.

28. Members of this court are not impressed by being told that "the learned judge" misdirected himself, or "the learned judge" misunderstood the evidence, or "the learned judge's" findings were unsupported by any evidence, or were "against the weight of the evidence", or "the learned judge" misunderstood the authorities, or "the learned judge" wrongly preferred the respondent's submissions to those of the appellant.

29.       The reaction of members of this court to that sort of thing is to say to themselves, "Well, if the judge really made all those errors, he cannot be so learned after all." There is simply no point in trawling through a judgment in order to find any statement of fact which can possibly be controverted. It is essential for the appellant to identify concisely and precisely exactly what went wrong with the judgment. Only if that is done can this court's business be sensibly and efficiently dispatched.”

16.  Further, in Ting Kwok Keung v. Tam Dick Yuen & Ors (2002) 5 HKCFAR 336, Bokhary PJ (with whom other members of the Court of Final Appeal agreed) observed that the appellate court would give due respect to findings of primary fact made by trial judges who enjoy the advantages which come from receiving the evidence at first hand.

17.  Applying these well established principles, notwithstanding Yung’s eloquent oral submissions, I am not persuaded that Yung has come anywhere close to showing that the trial judge was plainly wrong in his findings on the credibility of the witnesses and the findings of primary fact which were based on it.  Nor has Yung demonstrated that the inferences drawn by the trial judge could not be properly drawn upon the primary facts that he had found.

18.  As to Ground 6, it relates to the valuation evidence for the purpose of determining whether the sale of Units 1A and 1D was at an undervalue.  The complaint is that the trial judge should not have referred to the Jones-Lang-Wotton (JLW) Index in the Judgment when it had not been referred to at the trial and that he was wrong about the 15% downward adjustment.  The complaint has to be understood and viewed in context.  What happened was the trial judge considered that in the light of the differences in size between the two units and the comparables used by the expert, there should be downward adjustment in arriving at the appropriate market value of the two units.  In the process, the trial judge referred to the JLW Index to arrive at an adjustment that was greater than that suggested by Mr Paul Varty, the expert called by Vos.  The reference to the JLW Index is therefore to the benefit of Yung.

19.  In his submissions, Yung further criticises the trial judge for allowing Mr Varty to give oral evidence when he was not the author of the valuation reports produced by Vos.  It is also said that Mr Varty was biased and deliberately chose to refer to the valuation report that has the highest valuation, ignoring a valuation report that gave the lowest valuation.  There is nothing improper for a trial judge to allow independent expert to comment on previous valuation reports produced by another expert, especially when the latter was unavailable to give oral evidence.  The trial judge was aware that there was other valuation evidence, aside from the 1993 and 2002 Vigers Reports, and had dealt with it in paragraph 224 of the Judgment.  There is no impropriety in the trial judge’s approach to and treatment of the expert evidence on the value of the units.  It is also within his power to adopt a greater percentage for the downward adjustment, having regard to all the materials before the court.  There is no merit in Ground 6 and the matters raised in Yung’s oral submissions.

20.  As for Ground 10, given that the events that form the subject matter of the claim took place between 1990 and 1993 and the action was brought against Yung in 1995, there is no issue of limitation.  The complaint that the trial judge did not differentiate between the issues when considering the issue of limitation is without merit.

21.  Concerning finally the grounds on awards of interest and indemnity costs, they are within the discretion of the court. Yung has given no basis for contending that the court should not have awarded interest.  As for indemnity costs, the trial judge said in paragraph 472 of the Judgement:

“This case involves serious breach of fiduciary duty by Yung and dishonest assistance in a serious breach by Cheung and knowing receipt of the Companies’ properties by Global Fair and Start Win. Yung and Cheung have been most recalcitrant in their defence. They put forward numerous arguments on the facts, which are frivolous, vexatious and factually incorrect. In particular, Yung gave false evidence and acted with glaring dishonesty. He tried every trick to mislead the Court. Cheung supported him and reinforced his arguments. An order for costs against them to be taxed on an indemnity scale is appropriate.”

On the facts and issues as found by the trial judge, the indemnity costs order was made on sound principles: see Town Planning Board v. Society for the Protection of the Harbour (No. 2) (2004) 7 HKCFAR 114.

22.  In short, the intended appeal does not have any real prospect of success.

Prejudice to Vos

23.  In the circumstances, it is not necessary to consider the question of prejudice to Vos if time to appeal were to be extended.  It suffices to say that the degree of prejudice to Vos is substantial, having regard to the long lapse of time since the Judgment and the fact that Vos has been put to considerable expenses in seeking to enforce the Judgment against Yung.  Among other matters, to avoid further delay, Vos had lent CAD40,000 to Yung on account of a mortgage on Yung’s Canadian properties.

Conclusion

24.  For the above reasons, I consider that the discretion should be exercised against granting a time extension.  Accordingly, I dismiss the application for leave to appeal out of time.  Applying the normal rule of costs follow event, I further order that Yung pays Vos the costs of the application.

25.  Mr Lam asks for the costs to be paid on indemnity basis for the reason that there has been substantial delay and the application is entirely without merits.  Yung opposes the order, arguing that he is exercising his right of appeal.

26.  Where a party has acted unreasonably in pursuing an unmeritorious and hopeless application, costs may be awarded on indemnity basis.  I have found that there has been inordinate and inexcusable delay in making the application and that Yung took out the present application for the purpose of fending off the enforcement proceedings in Canada rather than a genuine attempt to pursue an appeal.  In the circumstances, it is appropriate that Yung pays Vos’ costs of this application on indemnity basis.  I so order.