Mayer Corporation Development International Ltd v. Alliance Financial Intelligence Ltd and Others

HCCL 2/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO 2 OF 2016

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D E C I S I O N

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Background

1.Numerous authorities have been cited to this court by counsel for the parties in this case, but they all and unanimously refer to the same fundamental principles.  There should be finality in litigation.  A judgment which brings litigation to an end should not be easily disturbed.  The general rule is that a party should not be permitted to challenge a final decision against him by a court of competent jurisdiction, and the course of setting aside a final and binding judgment is exceptional, to be rarely permitted, and must be justified.  The only room for argument may be in the formulation of the test to be applied in the justification of such an exceptional course.

2.In this action which was commenced in January 2016, Mayer Corporation Development International Limited (“Mayer”) seeks to set aside: (1) the judgment of Reyes J dated 16 July 2012 (“Reyes Judgment”) after a trial of 4 days in HCA 238/2012 consolidated with HCCL 3/2012 (together referred to as the “Former Actions”); (2) the judgment of the Court of Appeal in CACV 162/2012 (“CA Judgment”), in Mayer’s appeal against the Reyes Judgment (“Appeal”); and (3) the judgment of the Court of Final Appeal in FACV 17/2013, in Mayer’s appeal against the refusal of the Court of Appeal to permit Mayer’s production of further evidence in the Appeal.  Mayer claims that the judgments in question (together referred to as “Judgments”) should be set aside on the ground that they were obtained by fraud.

3.In support of this action to set aside the Judgments, Mayer relies on what it claims to be new evidence obtained since the dates of the Judgments (“Fresh Evidence”), and alleges that such Fresh Evidence is highly material to demonstrating that the Judgments were obtained through the fraud of the defendants in the Former Actions, which include the 4^th and 5^th Defendants named in these proceedings (“B&A”).

4.This is the hearing of B&A’s application to strike out Mayer’s claims against them in these proceedings, on the ground that the Statement of Claim discloses no reasonable cause of action, and/or that Mayer is estopped, and/or that it is an abuse of the process of the court.

The originally pleaded case

5.Mayer claims at all material times to be the owner of 300 million shares in Mayer Holdings Limited (“Mayer HK”), from June 2004 until June 2009. 

6.According to the Statement of Claim filed in these proceedings (“SOC”) and to the pleadings filed in the Former Actions, each of B&A had purported to purchase from Capital Wealth Finance Company Limited (“Capital Wealth”) 100 million shares in the capital of Mayer HK (“Shares”).  The 200 million Shares were represented by share certificates 70 and 71 (“Certificates”), for 100 million shares each.  The purported sale and purchase between B&A and Capital Wealth took place in December 2011.  When B&A applied to register their ownership of the Shares, the share registrar of Mayer HK refused to do so, on the ground that the Shares had been reported by Mayer to have been lost.  Mayer claims that at all material times, it was the owner of the Shares, represented by the Certificates. 

7.As a result, HCA 238/2012 was commenced by B&A against Mayer in February 2012, in which B&A claim that they had properly purchased the Shares, since Capital Wealth had been authorized by Mayer to sell the Shares in any way and at any price as Capital Wealth saw fit.  In March 2012, Mayer commenced HCCL 3/2012 against Alliance Financial Intelligence Limited (“AFIL”), Charles Chan (“Chan”), Lam Chin Chun (“Lam”), and B&A as defendants (together referred to as “HCCL 3/2012 Defendants”), claiming that Mayer had never authorized Capital Wealth to sell the Shares on its behalf, and that accordingly, B&A were not entitled to ownership of the Shares.

8.By the Reyes Judgment, Reyes J found in favor of the HCCL 3/2012 Defendants, holding that B&A were the true beneficial owners of the Shares represented by the Certificates.  It is unnecessary to repeat the intricate details of the dispute between the parties in the Former Actions, or the polarized version of the facts and evidence presented and relied upon by the parties.  As apparent from the Reyes Judgment and as pleaded in the SOC in this action, the findings made by the judge were that: (1) Mayer (acting through its sole director Lai Yueh Hsing (“Lai”)) and Capital Wealth (acting through Lam) had made oral agreements respectively at the beginning of  June 2009 (“1^st Oral Agreement”) and on or before 24 June 2009 (“2^nd Oral Agreement”) - as the HCCL 3/2012 Defendants so alleged; (2) the 2^nd Oral Agreement varied and superseded the 1^st Oral agreement, so that AFIL had been entitled to release the Certificates to Lam, in consideration for the release of HK$42.5 million, in the form of “promise money”, to Mayer or its nominees; and (3) Mayer’s evidence in relation to a 2^nd Custodian Agreement made between AFIL and one Wang Ing Jye (“Wang”) on 19 June 2009 (“2^nd SCA”) was rejected, the 2^nd CSA relied upon by Mayer being found by the judge to be “on the balance of probability...  a fake”.

9.On the foregoing basis, Reyes J held that Capital Wealth had been entitled to sell the Shares to B&A.  On Mayer’s case, put succinctly, the premise and essential basis of the Reyes Judgment was the existence of the 1^st Oral Agreement and 2^nd Oral Agreement, and the 2^nd SCA being improbable and “a fake”.

10.By the CA Judgment, the Court of Appeal dismissed Mayer’s appeal against the Reyes Judgment, finding that there was no basis to overturn the factual findings made by the judge and the conclusions he reached.  The Court of Final Appeal dismissed Mayer’s further appeal and upheld the factual findings in the Reyes Judgment.

11.Mayer claims in these proceedings (paragraphs 23 to 25 of the SOC) that since July 2015, it discovered the Fresh Evidence to substantiate Mayer’s claims that the 2^nd SCA was genuine, and that the 1st Oral Agreement and 2^nd Oral Agreement had never been entered into, and further, that the signatures appearing in the 2^nd SCA were not forged, but were genuine.  It is Mayer’s case that the Fresh Evidence were not before the trial judge, and were material to the Reyes Judgment.  Mayer further claims that the Judgments were obtained by fraud, in that the case of the HCCL 3/2012 Defendants in relation to the 1^st Oral Agreement and the 2^nd Oral Agreement was dishonest and untrue, and that the facts purportedly supporting the existence of the 1^st Oral Agreement and the 2^nd Oral agreement were untrue.  On the basis that the Judgments were obtained by the fraud of the HCCL 3/2012 Defendants, Mayer claims that the Judgments should be set aside as being void and of no legal effect.

Whether the SOC discloses a reasonable cause of action

12.It was argued on behalf of B&A that the SOC discloses no reasonable cause of action against B&A, that the Judgments were obtained or procured by B&A’s fraud.  On behalf of B&A, Counsel emphasized, and I accept, that where an allegation as serious as fraud is alleged, the claim must be pleaded distinctively and with the utmost particularity (ADS v Wheelock Marden & Co [2016] HKEC 52).  This is trite.

13.The originally pleaded case of Mayer was set out in paragraph 22 of the SOC, which reads:

“22. The Judgments were obtained by fraud in that the Defendants’ case as set out in paragraph 12 above was dishonest and untrue. In particular:-

(1) Neither the 1^st Oral Agreement nor the 2^nd Oral Agreement was ever entered into, as the Defendants well knew at all material times.

(2) Further and in particular, the following alleged facts purportedly supporting the existence of the 1^st Oral Agreement and the 2^nd Oral Agreement were untrue, as the Defendants well knew at all material times:-

(a) That Lai engaged Lam to find a buyer for 400 million Mayer HK shares, consisting of 300 million Mayer HK shares held by Mayer BVI and a further 100 million shares “owned by Lai beneficially through nominees” (CFI Judgment paragraph 28).

(b) That Charles Chan and Ku never met Wang on 19 June 2009 (or, in the case of Ku, at all), and that Wang never deposited 99 million shares with AFIL for the benefit of the 7 Investors (or at all) (CFI Judgment paragraph 61).

(c) That Ku never signed the 2^nd SCA or the relevant transfer documents and that such documents were forgeries (CFI Judgment paragraph 61).

(d) That the release of the HK$42.5 million was Intended to be paid to Lai’s nominees for the benefit of Lai (who was in urgent need of funds), rather than to the relevant investors amongst the said 7 Investors Independently (CFI Judgment paragraphs 70-75).

(e) Each of paragraphs 22(2) (a)-(d) above was material to the Judgments and in particular to the trial Judge’s conclusion that the 1^st and 2^nd Oral Agreements had been entered into, and that therefore Aspial and Bumper were the true beneficial owners of the 200 million shares represented by the Share Certificates. The Plaintiff relies on the facts and matters pleaded at paragraphs 18 and 19 above.

Particulars of Knowledge

(3) The Plaintiff will rely upon the facts and matters set out in this Section (in particular paragraphs 22(2)(a)-(d) and 24) as self-evidently demonstrating that the Defendants were aware that the case they put forward was factually inconsistent with that put forward by the Plaintiff (as corroborated by the Fresh Evidence pleaded below).

(4) In particular, as the Fresh Evidence supports the authenticity of the 2^nd SCA, this necessarily negatives the existence of the 1^st and 2^nd Oral Agreements.

(5)  In the premises, the Defendant each knowingly and dishonestly put forward a case during the Aspial and Bumper Actions that the parties had concluded the 1^st and 2^nd Oral Agreement when no such agreements had ever been concluded.”

14.As B&A highlighted, the claims of knowing receipt made in the Former Actions against B&A, on the basis of their actual or constructive knowledge of a breach of trust by AFIL or Lam, were dismissed by the judge.  Even in the proposed Amended SOC (put forward by Mayer in its application to amend the SOC), Mayer’s pleaded case in this action is that only the 1^st to 3^rd HCCL 3/2012 Defendants (and not B&A) knew that the 1^st Oral Agreement and the 2^nd Oral Agreement were never entered into, and that the case put forward by them in HCCL 3/2012 was factually inconsistent with the case put forward by Mayer.  The alleged 1st Oral Agreement and 2^nd Oral Agreement, and the alleged 2^nd SCA, were all made in June 2009, before B&A purchased the Shares from Capital Wealth in December 2011.  In the Reyes Judgment, the judge found that there was no evidence to suggest that the sales of the Shares to B&A were anything but genuine.  There is no claim made in the present action that B&A gave perjured evidence in the Former Action in relation to the 1^st Oral Agreement, 2^nd Oral Agreement or the 2^nd SCA.

15.In answer to B&A’s application to strike out on the basis that the SOC discloses no cause of action against B&A that they had knowledge of the dishonest and untrue nature of the case put forward on the basis of the 1^st Oral Agreement and the 2^nd Oral Agreement and the non-existence of the 2^nd SCA, Mayer seeks to amend the SOC to plead, in the proposed paragraphs 27A and 28 of the Amended SOC, that the perjured evidence and the fraud of the 1^st to 3^rd HCCL 3/2012 Defendants had been “adopted” by B&A at the trial of the Former Actions.  Counsel relied upon Cinpres Gas Injection Ltd v Melea Ltd [2008] Bus LR 1157, to argue that having relied upon and adopted the evidence of the other defendants in the Former Actions, it would be unjust for B&A to be permitted to receive the benefits arising from the fraud, or the Judgments obtained by the fraud of the other HCCL 3/2012 Defendants. 

16.The parties do not appear to dispute that for a judgment to be set aside on the ground of fraud, the judgment must have been obtained by the fraud of the party to the proceedings, or procured by that party.  Perjury by a mere witness is not sufficient (Odyssey Re (London) Ltd v OIC Run-Off Ltd, The Times, 17 March 2000). 

17.On behalf of Mayer, Mr Hollander argued that in Cinpres, where the perjury was made by a witness who could be regarded as having “a common foe” as the party in the action, his fraud by perjury can be regarded as having been adopted by the party who was his “comrade in arms”, and can be regarded as that party’s perjury, since the witness and the party had made “common, and completely intermixed cause” against the other “common foe” party.  In the Former Actions, B&A had adopted the evidence of the 1^st to 3^rd HCCL 3/2012 Defendants in the closing submissions made by their counsel.  They had urged the trial judge to prefer the evidence proffered by AFIL and the other 1^st to 3^rd HCCL 3/2012 Defendants.  As in Cinpres, the 1^st to 3^rd HCCL 3/2012 Defendants and B&A shared a “common foe”, namely Mayer, in the Former Actions.

18.The decisions in Cinpres and Odyssey show that it is a question of fact and degree, depending on the facts and circumstances of the case, whether the perjured evidence of a witness can be said to have been adopted by the party in the proceedings, to be treated as the evidence of the party itself.  In the case of Odyssey, the witness who gave perjured evidence was a director and general manager of the corporate party in the action.  The court considered the status and authority of the person who gave evidence on behalf of the company, to decide whether the act of the witness should be treated as that of the company itself.  On the facts of the case, the court took into account not only the fact that the success of the company’s case depended on the evidence of the witness, but also that the witness in question (as a director of the company) had made decisions as to how the corporate party’s case was to be presented at trial.  Not surprisingly, Nourse LJ held that the director of the company had the necessary status to make his evidence the evidence of the company, and that he could be treated as the company itself for the purposes of the trial, not simply because his evidence related to the transaction for which he had been personally responsible as part of the company’s directing mind and will at the time, but also because in the 6 months before the trial, the director had been a committed member of the team which made decisions as to how the company’s case was to be presented.

19.The court in Cinpres applied the principles set out in Odyssey. In Cinpres, Hendry claimed to have invented the subject process when he was an employee and working for Ladney.  The plaintiff in the case claimed that Hendry had acquired knowledge of the process, of which he was not the sole inventor, while working as a consultant for the plaintiff.  The patent was eventually granted to the assignee and successor in title to Ladney, with Hendry named as the inventor.  The plaintiff, having subsequently learned that Hendry had perjured himself in the patent proceedings, brought an action to seek a declaration that it was entitled to be registered as proprietor of the patent.  At first instance, the judge found that the process had been invented while Hendry was working as a consultant at the plaintiff company, and that Hendry had perjured himself in the earlier proceedings, but that Ladney neither knew of nor knowingly took advantage of Hendry’s perjury, such that Ladney was not precluded from relying on the doctrine of res judicata to defeat the claim of the plaintiff, because the exception to the doctrine based on the fraud of the party was limited to the party concerned, and in relation to Ladney’s claim to the patent, Hendry had been merely a witness.  On appeal, it was held that although Ladney did not know of and was not complicit in Hendry’s perjury at the time of the earlier patent proceedings, Hendry had been more than a mere witness in relation to Ladney’s claim, and had made common cause with Ladney in the same proceedings as against the plaintiff, such that his fraud should be treated as having been adopted by Ladney.  On the facts of the case and the relationship between Hendry as Ladney’s employee claiming to be the inventor of the process, the court found that Hendry’s evidence should be regarded as also that of Ladney.  At paragraph 106 of the judgment, Jacob LJ observed:

“Both Hendry and Ladney were actually parties to the 1^st proceedings. Hendry was seeking to justify his claim to be the inventor, to be named on the patent as such and to have had the right to have assigned the property in the invention to Ladney. Ladney was claiming to be the owner of the right to apply for the patent by virtue of assignment from Hendry. They had a common foe, Cinpres, and made common, and completely intermixed cause against it. One could not succeed without the other. True it is that Ladney’s claim was much the more valuable commercially, but we do not see that value has anything to do with it. Besides even Hendry had a commercial interest in the patent belonging to Ladney for he would be entitled to royalties if that were so. Not so if the patent belonged to Cinpres.”

20.The references to “common foe” and “comrade in arms” in Cinpres were made in the context of the case.  I do not agree that so long as parties in the action have a “common foe” in the action, one party must necessarily have adopted the perjured evidence and fraudulent case of the other.  The relationship between the parties and their respective case, the conduct of their case and the nature of the evidence and the pleadings must be considered in the entirety.  As the court pointed out in Cinpres, it is not sufficient that the evidence of the witness is vital to the case presented on behalf of a party. 

21.On behalf of B&A, Mr Litton referred to the following passage in the judgment of Buxton LJ in Odyssey (under Part XII), which I find to be pertinent and helpful:

“It will be convenient to recall the terms of this submission: that, on the assumption that it is necessary to establish a connection between the perjured witnesses and the party calling him, the question should be whether

‘the witness responsible for misleading the court was so closely connected with the party calling him or with that party’s conduct of the case that it is unjust that the party should be allowed to retain the benefit of the judgment... The perjury or subornation of perjury must be that of a person who has, in relation to the particular proceedings, a connection with the party calling him that is so close as to make it unjust that that party should be entitled to disavow his actions, even if he did not realize that perjury had been committed.’

It is necessary, when considering this submission, to have well in mind a preliminary difficulty. The rule on which this court acted in Boswell v Coaks, which I have held to continue to be the law, is that the fraud or perjury must be that of the party himself, or at least be suborned by or knowingly relied on by that party.” (Emphasis added)

22.On the pleaded facts and evidence in the Former Actions, bearing in mind particularly the fact that B&A were not related to the other HCCL 3/2012 Defendants in any way apart from being joined in the same proceedings, but had separately and independently purchased the Shares from Capital Wealth and had been found by the trial judge to be genuine buyers with no notice of any breach of trust, I do not accept that B&A can be said to have knowingly adopted the fraudulent case of the other HCCL 3/2012 Defendants, with knowledge that the case presented by them was dishonest and untrue, or to have knowingly consented to and relied on the presentation of the perjured evidence of the other HCCL 3/2012 Defendants.  As B&A have highlighted, whilst they claimed in the Former Actions to be the beneficial owners of the Shares, they had made it clear in their Defence in the Former Actions that the facts and matters relating to the alleged share custodian agreement between Mayer and AFIL, and the alleged breach of such agreement by AFIL’s wrongful release of the Certificates to B&A, were not matters which were within B&A’s knowledge.

23.Mr Litton also highlight the fact that B&A had pleaded a defence in the Former Actions which was separate from and distinct to the case advanced by the 1^st to 3^rd HCCL 3/2012 Defendants: that even if there was any breach of trust by the other HCCL 3/2012 Defendants, B&A were bona fide purchasers for value without notice, and were entitled to possession of the Certificates.  On B&A’s pleading in the Former Actions, I cannot agree that their case is “completely intermixed” with the cause of the 1^st to 3^rd HCCL 3/2012 Defendants.

24.On the facts and in the circumstances of the Former Actions as are relevant to this case, I reject the suggestion that any fraud or perjured evidence of the other HCCL 3/2012 Defendants should be treated as B&A’s fraud by virtue only of the fact that B&A’s counsel had, at trial, (1) adopted without challenge the evidence-in-chief of the other HCCL 3/2012 Defendants as to the facts and matters occurring before BNA’s acquisition of the Certificates and their purchase of the Shares as bona fide buyers; and (2) made submissions to the court as to which witness’s evidence should be preferred, that the evidence adduced by the witnesses called by Mayer should be rejected, and that the evidence of the other HCCL 3/2012 Defendants should be preferred and accepted.  There is no pleading in the SOC, and no evidence to suggest, at any time, that B&A had knowledge that the factual evidence presented by the other HCCL 3/2012 Defendants in the Former Actions was untrue, and which constituted perjury and a fraud on the court, such that the adoption of such fraud and perjury would be misleading the court.  In the absence of any pleading as to B&A’s knowing adoption of the false evidence as to the facts occurring before B&A’s purchase of the Shares, there is no case that the Judgments obtained or procured by any fraud of the 1^st to 3^rd HCCL 3/2012 Defendants should not, in fairness, be enforced in favor of B&A.

25.Accordingly, I find that neither the SOC nor the proposed Amended SOC disclose a reasonable cause of action against B&A, and should be struck out on that basis, and as an abuse of process.

The Fresh Evidence sought to be relied upon

26.If I am wrong that there was no adoption by B&A of the fraud of the other HCCL 3/2012 Defendants in procuring the Judgments, I turn to consider the Fresh Evidence which Mayer seeks to rely upon as evidence that the Judgments were obtained or procured by fraud, and should be set aside.

27.It is Mayer’s case that since the date of the Judgments, it discovered the Fresh Evidence which Mayer says supports and substantiates its case in the Former Actions: that the 2^nd SCA was genuine, and that the 1^st Oral Agreement and the 2^nd Oral Agreement had never been entered into, as the HCCL 3/2012 Defendants claimed in the Former Actions.  The Fresh Evidence is said to comprise: (1) handwriting evidence from 2 experts, to the effect that the signature of AFIL’s representative (“Ku”) appearing on the 2^nd SCA is genuine (“Reports”); and (2) evidence that there were 7 investors from Taiwan (“Taiwanese Investors”) who had acquired a total of 99 million Shares in Mayer HK, and that the Taiwanese Investors had each approached Wang in 2009, and asked him to arrange for their shares to be sold in Hong Kong (“Investors Evidence”).  According to Mayer, the Reports strongly support the fact that Ku had perjured in claiming, at the trial in the Former Actions, that the signatures on the 2^nd SCA were not his, and hence, support Mayer’s case as to the existence of the 2^nd SCA.  Mayer also claims that the Investors Evidence demonstrates that, contrary to the case of the HCCL 3/2012 Defendants (and as found by the trial judge in the Former Actions), the Taiwanese Investors did not hold the 99 million shares as nominees of Lai, but had each independently acquired their Mayer HK shares and instructed Wang to sell such shares on their behalf.  According to Mayer, the Investors Evidence negatives the existence of the 1^st Oral Agreement and the 2^nd Oral Agreement, as alleged by the HCCL 3/2012 Defendants and as found by the trial judge.

28.According to Mr Hollander, the Fresh evidence is material, demonstrating that the previous relevant evidence, statement or concealment was an operative cause of the decision of Reyes J to give judgment in the way he did, or would have entirely changed the way in which Reyes J approached and came to his decision in the Former Actions (the test set down in RBS v Highland Financial Partners LP (2013) 1 CLC 596).  Mr Hollander submits that the Highland test does not require a party who challenges a judgment on grounds that it was obtained by fraud to demonstrate that he had used reasonable diligence before the trial to discover and obtain the evidence on which he now relies.

29.If the court should reject the above Highland test, Mr Hollander argued that Mayer has also satisfied the reasonable diligence requirement set out in Ladd v Marshall [1954] 1 WLR 1489, in that the Fresh Evidence was evidence which could not have been obtained by reasonable diligence in the Former Actions.  In any event, it was argued that where there is clear evidence of fraud, the reasonable diligence requirement should be applied “flexibly” to avoid any miscarriage of justice (Johnson Electric Int’l Ltd v Bel Global Resources Holdings Ltd [2014] 5 HKC 504).

Is the Fresh Evidence new evidence?

30.I do not agree that either the Reports or the Investor Evidence can properly be said to be new evidence which was only obtained after the date of the Judgments.

31.As the Court of Appeal had observed in the CA Judgment, the authenticity of Ku’s signature on the 2^nd SCA was an issue in dispute between the parties even before the trial of the Former Actions.  Yet, Mayer elected not to adduce any expert handwriting evidence for use at the trial.  It was only after the Reyes Judgment, and the trial judge’s finding that the 2^nd SCA was “a fake”, that Mayer applied, on the first day of the hearing of the appeal against the Reyes Judgment, for leave to adduce fresh evidence, in the form of 2 handwriting experts’ reports obtained in August and September 2012, to support the authenticity of Ku’s signatures on the 2^nd CSA executed by Ku and Wang.  The Court of Appeal refused leave for the production of such expert evidence, on the ground of delay and that conditions 2 and 3 of the Ladd v Marshall test had not been satisfied.

32.The only feature of the Reports now relied upon by Mayer which can arguably be considered “new”, is that the Reports rely on further control signatures obtained by Mayer from Ku after the Judgments.  It is on the basis of such further, original sample signatures that the handwriting experts expressed their opinion in the reports that there was “strong evidence” that Ku’s signatures on the 2^nd SCA were genuine and “unlikely to be forged”, and that the signatures in question “were written by Ku”.

33.Even in the “preliminary” handwriting report procured by Mayer in August 2012, which Mayer sought to produce before the Court of Appeal, the expert Mr Radley was able to opine, despite the restrictions in the number and quality of the comparison signatures, that there was “strong evidence” that Ku wrote the questioned signatures on the Custodian Agreement, and that the possibility of these being simulations was “unlikely”.  Likewise, according to the other expert report dated 7 September 2012, the conclusion made by the expert was that the signatures of Ku were made by him. 

34.The Reports now obtained in 2016 are therefore, in my view, simply additional evidence to improve and further elaborate on the earlier reports and expert evidence already available to Mayer in 2012, and which was held inadmissible by the Court of Appeal in the Former Actions. 

35.As for the Investors Evidence, the SOC filed in this action pleads that this was discovered since around July 2014.  According to the SOC, the Investors Evidence demonstrates that the Taiwanese Investors were not mere nominees of Lai (as alleged by the HCCL 3/2012 Defendants and as found by Reyes J in the Reyes Judgment), but that each of them had independently acquired their shares in Mayer HK, had instructed Wang to sell such shares on their behalf, and that after the sale, one investor (Jan) had received his share proceeds paid into a bank account of his friend in Hong Kong, and that the remaining unsold shares were returned to Wang, and received by 2 of the Taiwanese Investors.  According to Mayer, the effect of the Investors Evidence is to show that the Taiwanese Investors had independently subscribed for the shares, at least some of them had paid for the shares from their personal bank accounts, that they had approached Wang in 2009 and asked him to dispose of the shares, that some of the sale proceeds were confirmed to be received by some of the Taiwanese Investors, and at least 2 of the Taiwanese investors received the share certificates representing a portion of the unsold shares.  These, allegedly, show that there was never any 1^st Oral Agreement or 2^nd Oral Agreement.

36.The trial judge had in fact heard evidence from Wang as to the Taiwanese Investors for whom Wang allegedly acted at the material time, as to the alleged meetings and dealings between Wang and Charles Chan, Ku and AFIL, and as to the remittances made to the Taiwanese Investors.  The Reyes Judgment referred to such evidence in paragraphs 55 to 67: to Wang’s deposit of 7 share certificates corresponding to 99 million Mayer HK shares, which were in the names of various persons said to own the shares beneficially, or to be holding the shares for others.  Annex 1 to the Reyes Judgment, produced in evidence at the trial, set out the names of persons who had subscribed for the shares, and the beneficial owners of the same 99 million shares.  These include the Taiwanese Investors, now referred to in the Investors Evidence.  The Reyes Judgment referred to bought and sold notes signed by the persons in whose names the Mayer HK shares were registered, and to Wang’s evidence that he was acting for the owners of the 99 million shares, who were interested in selling their shares at a reasonable price.  In paragraphs 63 and 130 of the Reyes Judgment, the trial judge referred to Lam’s evidence that he was told by Tommy Chan that the registered owners of the 99 million shares and the persons in Annex 1 held their shares as nominees of Lai.  In paragraph 65 of the Reyes Judgment, the trial judge referred to the eventual sale of the 52 million shares in the names of Jan Uen-he, Chen Wen Ching and Brocheng International Ltd, and (in paragraphs 154 to 168) considered the evidence adduced as to the remittance of the sale proceeds.  Reference was made to the explanation given by Wang for the remittance of various amounts to the designated bank accounts in question at Fubon Bank (Hong Kong) Limited and Fortis Wealth Management Hong Kong, that this was done “because most of the Taiwanese Investors did not have any available bank account in Hong Kong”, and that foreign exchange control in Taiwan posed difficulties in remittance of the payments back to Taiwan. 

37.The so-called fresh Investors Evidence is accordingly not new, nor evidence which was hitherto unknown to Mayer.  Properly considered, the Investors Evidence is, again, further details of the evidence which had been presented to and considered by the trial judge in the Former Actions.  The attempt to introduce the Investors Evidence is only to improve and elaborate on the evidence formerly adduced by Wang and Mayer, to re-argue the probabilities of Mayer’s case on the 2^nd SCA, the 1^st Oral Agreement and the 2^nd Oral Agreement.  This cannot be permitted, as an exceptional course to justify the departure from the general rule, that a party should not be permitted to challenge a final decision made against him by a court of competent jurisdiction, and to set aside a final and binding judgment.

38.To conclude, I do not consider that there is any new evidence, properly so called, discovered after the trial in the Former Actions, which can justify Mayer’s attempt to reopen the Judgments or to set them aside.  Mayer is simply seeking to re-argue the entire case concerning the probabilities of the 1^st Oral Agreement, the 2^nd Oral agreement and the 2^nd SCA.  In my view, this is an abuse of process.

Whether the Fresh Evidence can impugn the Judgments

39.If I am wrong in finding there is no new evidence discovered since the trial of the Former Actions, and that the Reports and the Investors Evidence can be considered to be new evidence, I will deal with the question of whether such evidence can be considered in an action to set aside the Judgments for fraud.

40.In the Court of Appeal decision of Iu Po Cheung v Commissioner for Census and Statistics [2015] HKEC 1883, the relevant principles have been summarized by Lam VP:

“17. ... The Plaintiff is attempting to impugn the outcome of earlier cases by alleging fraud against the Commissioner and the government counsel conducting the defence for the Commissioner.

18. The relevant principles for considering the Plaintiff’s efforts in that regard can be taken from the speech of Lord Simon in The Ampthill Peerage [1977] AC 547 at p 591 B-H, applied by Le Pichon J in Re Maydwell, ex p WFM Motors Pty Products Group Ltd [1999] 3 HKLRD 339 and G Lam J in Zebra Industries Ltd v Wah Tong Paper Products Group Ltd HCMP 436/2013, 27 October 2014. For present purposes, they can be summarized as follows:

(a) As a matter of law, the judgments in the 2 previous actions are binding on the Plaintiff so that he could not bring the same claim again in a third action unless he can bring himself within the exception where the court would set aside the previous judgments on the ground that those judgments were obtained by fraud; and

(b) In respect of the exception, a party who wishes to impeach a previous judgment must prove that the court was deceived into giving that judgment by means of a false case known by the other party to be false or not believed to be true or made recklessly without any knowledge on the subject. For present purposes, it should be noted that there are two essential elements:

(i) The party alleged to have committed fraud must have the requisite intent to deceive the court. It is not enough to show that he or she made an inaccurate statement without showing that he will she did not believe it (or was reckless as to) the truth of that statement; and

(ii) The deception has caused the court to make the impeached judgment.

(c) In respect of the first element, the relevant fraud must be alleged with particularity and proved distinctly with cogent evidence commensurate with the seriousness of the allegations. Bald allegations and suspicions are not enough. ‘A person is not permitted merely to allege fraud in the hope of discovering it as the case develops.’

(d) A reasonable prospect of establishing such a fraud must be shown before the court will go into the merits of the underlying judgments. ‘The impugner of a judgment ... must adduce evidence of facts discovered since the judgment which show a reasonable probability of such fraud as would invalidate the judgment, before he can call on the person whose judgment he seeks to nullify to make any sort of disclosure.” (emphases added)

41.I have already concluded that the Fresh Evidence cannot properly be regarded as facts discovered since the Judgments.  In the event that there is any novelty in the Fresh Evidence, in the form of the further sample signatures obtained or the fact of how the Taiwanese Investors subscribed for and purchased their Mayer HK shares, B&A argued that before Mayer can challenge any of the Judgments for fraud, Mayer must show that the Fresh Evidence could not have been produced with reasonable diligence before the trial (“Reasonable Diligence requirement”) (Dicey, Morris & Collins: Conflict of Laws (15 Ed) at 14- 138; Hunter v Chief Constable of the West Midlands Police [1982] AC 529, 545B; Owens Bank Ltd v Bracco [1992] 2 AC 443, 483F-H; Chodiev v Stein [2015] EWHC 1428).  These principles appear to me to be clearly established.

42.On behalf of Mayer, Mr Hollander argued that the Reasonable Diligence requirement is only applicable in a case where a party seeks to adduce fresh evidence on appeal in circumstances concerning fraud, and not where a party brings a new action to set aside a previous judgment on grounds that it was obtained by fraud (such as the present action).  In the case of a new action commenced to set aside a previous judgment for fraud, Mr Hollander argued that the proper test to be applied is the one in Royal Bank of Scotland plc v Highland Financial Partners LP [2013] 1 CLC 596 (at para 106 of the judgment of Aikens LJ) (“Highland test”).  This requires that:

(1)    there must be conscious and deliberate dishonesty in relation to the relevant evidence given;

(2)    the fresh evidence must be material, in that it must demonstrate that the previous relevant evidence, action, statement or concealment was an operative cause of the court’s decision to give judgment in the way it did, or that it would have entirely changed the way in which the first court approached and came to its decision; and

(3)    the question of “materiality” of the fresh evidence is to be assessed by reference to its impact on the evidence supporting the original decision, not by reference to its impact on what decision might be made if the claim were to be retried on honest evidence.

43.Mr Hollander submitted that whilst Mayer accepts that it must still be shown that Mayer did not have the evidence of fraud at the original trial, there is no Reasonable Diligence requirement.  Once it has been established to the requisite standard, the fraud “unravels all”.  In support, Mr Hollander relies on Takhar v Gracefield [2015] EWHC 1276 (Ch), where Newey J referred to Owens Bank Ltd v Bracco [1992] 2 AC 443, Owens Bank Ltd v Etoile Commerciale SA [1995] 1 WLR 44 and Boswell v Coaks (No 2) (1894) 86 LT 365n, but declined to follow this line of authorities, on the basis that English authorities do not in fact lend any support to the view that a judgment cannot be impeached for fraud in the absence of evidence that was not reasonably discoverable before the trial.  Newey J referred instead to the New South Wales Court of Appeal decision in Toubia v Schwenke [2002] NSWCA 34, (2002) 54 NSWLR 46, where Handley JA observed that in an action for fraud, a plaintiff must prove that he was deceived but need not prove that he was diligent, as “contributory negligence is not a defence to an action for fraud whether the relief claimed is rescission or damages” (paragraph 37 of his judgment).  Handley JA explained thus:

“Where the action seeks the judicial rescission of a judgment, the plaintiff must prove that he and the Court were deceived and he can only do this by showing that he has discovered the truth since the trial. Where this is done, and the fresh facts are material, fraud is established. Lord Buckmaster said [in Hip Foong Hong v H Neotia and Co [1918] AC 888] that if fraud was proved the judgment was vitiated, and he can only have meant that nothing else had to be proved apart from fraud. That means there is no need to prove due diligence as well.”

44.After considering the reasoning in various Australian and Canadian cases, the conclusion reached by Newey J in Takhar v Gracefield was that “finality in litigation is obviously of great importance, but ‘fraud is a thing apart’”.  At paragraph 41 of his judgment, the learned judge concluded that a judgment can be set aside if the Highland test is satisfied, and it is not necessary to show that the new evidence could not reasonably have been discovered in time for the original trial. 

45.The text in para 17.05 of Spencer Bower and Handley: Res Judicata (4^th ed, 2009) repeats the proposition held by Handley LJ in Toubia v Schwenke [2002] NSWCA 34, (2002) 54 NSWLR 46.

46.In Hong Kong, I am of course bound by the Court of Appeal’s decision in Johnson Electric International Ltd v Bel Global Resources Holdings Ltd [2014] 5 HKC 504, that in relation to appeals, there is no general exception to the rule of Ladd v Marshall in cases involving allegations of fraud. The rule of Ladd v Marshall including the Reasonable Diligence Requirement is applicable to fraud, such that fresh evidence cannot be admitted without special grounds.  Lam VP only pointed out that the standard of diligence required of a defendant preparing his case in opposition to a summons for summary judgment, especially if under pressure of time, would not be so high as that required in preparing for trial.  At paragraph 12 of his judgment, Lam VP referred to Karaha Bodas Co v Persusahaan Pertambangan Minydak Dan Gas Bumi Negara [2007] 5 HKC 91 and the conclusion reached in that case:

“What can be derived from (the relevant English authorities examined) is that where there is clear evidence of a judgment being obtained by fraud (in that conditions 2 and 3 of Ladd v Marshall are met), the court will apply condition 1 with flexibility to avoid any miscarriage of justice. An allegation of fraud per se is neither here nor there, much depends on the strength of the case as to fraud and its relevance.”

47.Having reviewed the authorities to which counsel have referred, I am not persuaded that there should be any material distinction between fresh evidence being sought to be introduced on appeal in an existing action, and fresh evidence being sought to be considered in a separate new action brought to set aside an earlier judgment.  The basis and rationale for not permitting this to be done, in both cases, is that there has been a judgment on the merits which have been argued before the court and is binding on the parties, and which should be considered as final, and not to be re-opened. 

48.As for the decision of the English court in Takhar v Gracefield, this was further considered and reviewed in the later decision of Burton J in Chodiev v Stein [2015] EWHC1428 (Comm).  Here, Burton J analyzed the cases relied upon by the editors of Spencer Bower and Handley, and drew particular attention to the decisions of the House of Lords and of the Court of Appeal in Hunter v Chief Constable of the West Midlands Police [1982] AC 529 and Owens Bank v Bracco [1992] 2 AC 443, as clearly establishing the Reasonable Diligence requirement.

49.At paragraph 14 of Burton J’s judgment in Chodiev v Stein, the learned judge considered the Reasonable Diligence requirement.  He referred to the decision of Handley LJ in Toubia v Schwenke, and to the passage in para 17-05 of Spencer Bower and Handley, where the editors suggested that “despite dicta from eminent judges”, the Reasonable Diligence requirement was not necessary in seeking a new trial where fraud can be established.  Burton J then continued:

“Those dicta from eminent judges were however made in decisions of the Court of Appeal and the House of Lords and in any event do not seem to me to be capable of challenge. In Dicey, Morris & Collins Conflict of Laws (15^th Ed) at 14-138, though noting the doubts in Toubia, Lord Collins as editor at 14-138 said that ‘a party against whom an English judgment has been given may bring an independent action to set aside the judgment on the ground that it was obtained by fraud; but this is subject to very stringent safeguards, which are found to be necessary because otherwise they would be no end to litigation and no solemnity in judgments. The most important of these safeguards is that the second action will be summarily dismissed unless the Claimant can produce evidence newly discovered since the trial, which evidence could not have been produced at the trial with reasonable diligence, [my underlining] and which is so material that its production at the trial would probably have affected the result, and (when the fraud consists of perjury) so strong that it would reasonably be expected to be decisive at the rehearing and if unanswered must have that result”.

50.Burton J continued from paragraphs 15 to 17 of his judgment, thus:

“15 Hip Foong Hong v H Neotia & Co[1918] AC 888, upon which Spencer Bower appears to rely, does not in terms address the Reasonable Diligence requirement, and its impact was in any event doubted by Langely J in Sphere Drake Insurance Plc v The Orion Insurance Co Plc (unreported, 11 February 1999) at 182-3.

16. The authorities in the House of Lords and the Court of Appeal, which seem to me clear and compelling, are Hunter v Chief Constable of the West Midlands Police [1982] AC 529 and Owens Bank Ltd v Bracco in the CA and HL [1992] 2 AC 443. I shall underline in what follows the references to the Reasonable Diligence requirement. Hunter was a case where the decision of a criminal Court was sought to be reopened by way of challenge in a subsequent civil action, where, at 545B, in a passage with which Lords Russell, Keith, Roskill and Brandon agreed, Lord Diplock expressed himself in full agreement with the judgment in the Court of Appeal of Goff LJ, who had concluded that the challenge failed in limine because the “so called ‘fresh evidence’ on which they seek to rely on the civil action was available at the trial, or could by reasonable diligence have been obtained then”. He approved that proposition, and also Goff LJ’s adoption of the test “as to the character of fresh evidence which would justify departing from the general policy by permitting the plaintiff to challenge a previous final decision against him by a court of competent jurisdiction” as being that the new evidence must be such as “entirely changes the aspect of the case”.

17. In the Court of Appeal in Owens Bank Parker LJ records at 459G that: “Our law had long permitted the party against whom an English judgment had been given to bring an independent action to set aside the judgment on the ground that it had been obtained by fraud, but strict limits were imposed in order to preserve the principle that a judgment which brings litigation to an end should not be too easily disturbed. In particular the Court would not permit the new action to proceed unless the plaintiff would put forward fresh evidence, discovered since the first trial, being evidence which could not have been produced then with reasonable diligence and which is such that, if it had been put forward at the trial, it would in probability have caused a different conclusion to be reached”. Lord Bridge’s speech in the House of Lords is significant, because he records that their Lordships were “taken, in the course of argument, through the many authorities” in which the rule he was expressing had been developed and applied, which he sets out at 483F-H:

‘The common law rule that the unsuccessful party who has been sued to judgment is not permitted to challenge that judgment on the ground that it was obtained by fraud unless he is able to prove that fraud by fresh evidence that was not available to him and could not have been discovered with reasonable diligence before the judgment was delivered … is the rule to be applied in an action brought to set aside an English judgment on the ground that it was obtained by fraud.  The rule rests on the principle that there must be finality in litigation which would be defeated if it were open to the unsuccessful party in one action to bring a second action to re-litigate the issue determined against him simply on the ground that the opposing party had obtained judgment in the first action by perjured evidence. Your Lordships were taken, in the course of argument, through the many authorities in which this salutary English rule has been developed and applied and which demonstrate the stringency of the criterion which the fresh evidence must satisfy if it is to be admissible to impeach a judgment on the ground of fraud.  I do not find it necessary to examine these authorities.  The rule they establish is unquestionable and the principle on which they rest is clear.” 

51.After such a review, Burton J observed, in the Postscript of his judgment, that he had considered the decision of Newey J in Takhar v Gracefield, but disagreed with it, as Newey J had not referred to the House of Lords decision in Hunter which was binding on him.

52.With respect, I agree with and have little to add to the analysis of Burton J in Chodiev v Stein, and consider that the Reasonable Diligence requirement remains a test to be satisfied, where a party seeks to set aside an earlier binding judgment on the ground of fraud.

Whether the Reasonable Diligence requirement is met

53.On the facts of this case, bearing in mind the observations made by the Court of Appeal in the CA Judgment, that the potential need for Mayer to produce expert handwriting evidence to support the authenticity of Ku’s signature on the 2^nd SCA would have been self evident before trial, I am not satisfied that had reasonable diligence been exercised before either the trial or even the appeal, the Reports including further and proper sample signatures of Ku could not have been obtained by Mayer for use in the Former Actions.  The Court of Appeal already indicated in the CA Judgment that Mayer’s delay in its application to adduce the handwriting expert reports was unjustified in 2013.  Had Mayer and its lawyers exercised reasonable diligence before the trial, they could have obtained, with the assistance of the court if necessary, the requisite sample signatures to produce the handwriting expert evidence which they now seek to rely upon.

54.Similarly, for the Investors Evidence, Mayer accepts that the original of the 2^nd SCA had come to light a few months before the trial of the Former Actions, and that the authenticity of the 2^nd SCA was disputed no later than mid-May 2012.  There has been no satisfactory explanation as to why the evidence from the Taiwanese Investors, as to their acquisition of the Mayer HK shares, the remittance of the proceeds of the sale to them, and their receipt of the share certificates, could not have been obtained, with reasonable diligence, in time for the trial in the Former Actions.  There is only the feeble explanation that contact with Wang had been lost, although Mayer had been able to “reconnect” with Wang subsequently, to obtain the details of the Taiwanese Investors. 

55.In any case before the courts, it is for the litigants to decide how much effort, expense, time and resources to put into a case in preparation for its trial.  Having made a deliberate and conscious decision in 2012 to have directions for a speedy trial, and having decided on the resources and efforts to be put into locating the Taiwanese Investors and other relevant witnesses to give evidence in the trial of the Former Actions, it is not open to Mayer now to reopen and re-argue the issues determined at trial, or to seek to call further evidence to fill in the gaps identified by its opponents and considered by the trial judge in the overall assessment of the merits of the case.  Finality will never be achieved in litigation, if parties are permitted to look for new evidence, after judgment is given and shortcomings in their case are identified, and to reargue the matter in a new action, after further and better evidence is found.  This is effectively what Mayer is seeking to do, and it cannot be permitted.

The materiality of the Fresh Evidence

56.Leaving aside the question of reasonable diligence, the courts have emphasized that the new evidence sought to be relied upon must be sufficiently strong, material, or decisive, in order to justify the exceptional course of setting aside a judgment as allegedly obtained by fraud.  Burton J set out a useful summary of the tests which have been applied by the courts, in paragraph 21 of his judgment in Chodiev v Stein:

“In the course of my citation of the significant judgments above, the words which have been previously adopted have been quoted: ‘so strong that it would reasonably be expected to be decisive at the rehearing and if unanswered must have that result’ (Dicey, Morris & Collins), ‘such that it would in probability have caused a different conclusion to be reached’(Parker LJ in Owens), then as per Hunter, as interpreted by Langley J at 182 (3) and by David Steel J in his further KAE v IAC judgment [2005] EWHC 2524 (Comm) (colloquially called ‘Perjury II’) at 197-8, that the ‘disparity between the concealed (or perjured) evidence and the new evidence would be material if it ‘entirety changed the nature of the case’ ... [which] at least requires material which was likely to be decisive of the outcome’. The most recent articulation has been that of Aikens LJ in RBS v Highland ... at paragraph 106.” (Emphases added)

The articulation of Aikens LJ has been set out in paragraph 42 above.

57.When deciding in favor of the HCCL 3/2012 Defendants, by finding the existence of the 1st Oral Agreement and 2nd Oral Agreement, and dismissing the existence of the 2nd SCA, the trial judge took into account many factors in the balancing of the probabilities and improbabilities of the case, as clearly expressed in the Reyes Judgment.  The trial judge had heard all the evidence of the witnesses including Lai and Wang, and had considered all the documents which were produced.  In the Reyes Judgment, the judge referred to the documents which supported the case of AFIL, Charles Chan and Lam, the lack of documents to support Mayer’s case, the testimony of Wang and Tommy Chan of Mayer which the trial judge considered to be unreliable, the evidence of So in relation to the remittance of the proceeds of sale of the shares, and the letter evidencing the payment and release of the $42.5 million after the sale.  In rejecting Mayer’s case on the 2nd SCA, the trial judge considered and assessed Ku’s own testimony as to the signatures and the circumstances surrounding the making of the agreements at the relevant time. 

58.The evidence of the dealings between Wang and the Taiwanese Investors had been put before the trial judge.  Annex I to the Reyes Judgment was the sheet setting out the names of the parties said to be the beneficial owners or who were holding the shares in Mayer HK for others.  These were the Taiwanese Investors.  The letter dated 24 June 2009 as to how the proceeds of sale of $50 million were to be distributed was before the court, and duly considered by the trial judge in the Reyes Judgment. 

59.At paragraphs 111 to 136 of the Reyes Judgment, the judge reviewed the evidence and explained why he accepted the existence of the 1^st Oral Agreement and the 2^nd Oral agreement, by which Lam was to sell Mayer’s 300 million shares for at least $100 million.  The issue of the $50 million cheque itself was considered by the judge to be evidence supporting the case of the HCCL 3/2012 Defendants.  The judge considered that Lai, Lam and Charles Chan were all “practical, rough and ready businessmen searching for deals in the difficult environment of the global financial crisis”, who spoke of trusting each other in negotiating and reaching understanding without lawyers, and were not persons with an eye for details. 

60.The evidence of Wang and the Taiwanese Investors had been put before the court.  Even if the details contained in the Investors Evidence had been presented at the trial of the Former Actions, it is unlikely to have any practical or material effect on the overall impact of the evidence and the decision made by the trial judge.  Pertinently, in paragraph 130 of the Reyes Judgment, the judge explained:

“Insofar as the 99 million shares are concerned, there is nothing implausible in Lam’s evidence that Tommy Chan told him that, despite appearances to the contrary, Lai was the beneficial owner of the same. Lai may or may not have been the true beneficial owner of those shares. But it is possible that (rightly or wrongly) Lam was informed (and so came to believe) that Lai was the true owner...”

In short, irrespective of whether the Taiwanese Investors had subscribed and paid for the shares, the trial judge accepted the evidence that Lam was told that Lai was the beneficial owner of these shares.

61.The conclusion made by the trial judge on the 1^st issue, of whether Mayer had entered into an agreement with Capital Wealth in or about June 2009 relating to the sale of 300 million shares held by Mayer in Mayer HK, was set out in paragraph 135 of the Reyes Judgment:

“On balance, therefore, on Issue 1, I am not persuaded that the gaps in Lam’s account of his agreement with Lai, especially in relation to Zhang’s role, outweigh the evidence favoring the version put forward by the Charles Chan faction. I attach particular weight on the existence of the $50 million cheque. I note in this respect that the 3 June letter from AFIL to Capital Wealth acknowledging receipt of the cheque is decried by the Lai camp as a fabrication essentially for no reason other than that it does not fit the Lai camp’s case.”

62.On Issue 3 as framed for the trial judge, as to whether Wang had entered into the share custodian agreement with AFIL on 19 June 2009 (ie the 2^nd SCA) for 99 million shares in Mayer HK, and an agreement with Charles Chan to sell those shares on behalf of 7 individual investors, paragraphs 146 to 182 of the Reyes Judgment set out the findings made by the trial judge and the reasons therefor.

63.Whether or not the Taiwanese Investors had indeed subscribed for the shares in Mayer HK, and whether some or all of them had paid for such shares, the trial judge did not accept Wang’s evidence as to the alleged making of the 2^nd SCA between Wang and AFIL, and the alleged payment of the sum of $42.5 million by Charles Chan as security for the deposit of the 99 million shares.

64.In making his findings on Issue 3 as to the non-existence or improbability of the 2^nd SCA, the trial judge had considered not just the evidence of Wang (which he rejected as being implausible) but also the independent evidence of Tommy Chan and of Flora Kao (Lai’s personal assistant and the named associate director of Mayer HK).  The trial judge considered their evidence, but rejected it as unreliable.  He preferred the evidence of an independent witness, Maria Kwok who was a secretary at Capital Wealth.

65.It was upon consideration and review of the entirety of the evidence from different witnesses, including the evidence of Ku as to the disputed signatures on the 2^nd SCA, which the trial judge accepted, that he concluded (in paragraph 180) that “in all likelihood no Custodian Agreement was executed by Wang and Ku and there was no agreement that Charles Chan should sell 99 million shares on behalf of Wang”.

66.For all the above reasons, I am not satisfied that the Fresh Evidence would have satisfied any of the tests propounded for setting aside the Judgments on the ground of alleged fraud, whether the one in Johnson Electric International Ltd v Bel Global Resources Holdings Ltd, or the Highland test, as propounded by counsel for Mayer, or the Ladd v Marshall test as propounded by counsel for B&A.  Neither the Reports nor the Investors Evidence could have entirely changed the way in which the trial judge or the Court of Appeal approached and came to their decision (RBS v Highland Financial Partners).  They would not have an important influence on the result of the Judgments, “such that it would in probability have caused a different conclusion to be reached” (Owens Bank Ltd v Bracco).  They were certainly not “so strong that it would reasonably be expected to be decisive at the rehearing and if unanswered must have that result” (Dicey, Morris & Collins).  In particular, the Investors Evidence cannot show a reasonable probability of fraud to invalidate the Judgments.

Conclusion

67.In my judgment, Mayer has not pleaded a case that the Judgments were obtained or procured by the perjured or false evidence of B&A, or that the perjured evidence or alleged fraud was suborned or knowingly relied on by B&A, or adopted by them with knowledge of its falsity to constitute “conscious and deliberate dishonesty”.  There is no pleading that the allegedly false facts were known by B&A to be false or not believed by B&A to be true, or that B&A was reckless as to their truth.

68.There is no fresh evidence discovered after the Judgments, which have any material effect on the Judgments such that it would probably have an important influence on the result of the Judgments, or would have entirely changed the nature of the case or be likely to be decisive of the outcome.

69.The alleged Fresh Evidence could with reasonable diligence have been discovered before trial of the Former Actions. 

70.The alleged Fresh Evidence does not by its nature justify the exceptional departure from the general rule, that the Judgments are binding and conclusive and should not be reopened for argument.

71.The action is accordingly struck out, for disclosing no reasonable cause of action, and as an abuse of process.  Mayer is to pay to B&A the costs of the action and of the application to strike out, including the costs of Mayer’s summons dated 21 November 2016 for leave to amend its Statement of Claim. 

Mr Charles Hollander leading Mr Justin Ho, instructed by K & L Gates, for the plaintiff

Mr John Litton QC, instructed by CL Chow & Macksion Chan, for the 4^th & 5^th defendants