Bruce James Stinson v. Gu Ming Gao

HCMP 16/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 16 OF 2017

(ON AN INTENDED APPEAL FROM HCA NO 2352 OF 2012)

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BETWEEN

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J U D G M E N T

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Hon Kwan JA (giving the judgment of the court):

Introduction

1.This is an application of the plaintiff for leave to appeal to the Court of Appeal against the judgment of Deputy High Court Judge Kwok, SC given on 15 June 2016 (“the Judgment”).  The judge refused leave to appeal by his decision on 21 December 2016 (“the Leave Decision”).

2.The plaintiff renewed his leave application to this court by a summons issued on 4 January 2017.

3.We do not propose to set out the background which was mentioned in some detail in several submissions of the plaintiff placed before the judge in the hearings in December 2015 and December 2016.  Suffice it to say the parties were former partners in a horseracing betting operation using a mathematical model (“the Mathematical Model”) to provide accurate probability estimates for Hong Kong horse races.  The plaintiff alleged that in breach of the partnership agreement and the obligations as a partner, the defendant had been making private bets using the Mathematical Model.  The plaintiff brought this action for delivery up of the Mathematical Model, damages for breach of the partnership agreement, an account of profits and other reliefs.  The defendant does not deny private betting.  The issue is whether he had (on the plaintiff’s case) used the Mathematical Model (based on a logit model), or, on his own case) the probit model.

4.The judge dealt with three summonses in a hearing which lasted 4 days in December 2015 and February 2016.  They were referred to as “P’s November 2014 Summons”, “P’s December 2015 Summons” and “D’s December 2015 Summons”.  He dismissed the first two summonses and made no order on the third.

Application for an oral hearing

5.Under Order 59 rule 2A(5)(a), the Court of Appeal is empowered to determine an application for leave to appeal to it without a hearing on the basis of written submissions only.

6.The plaintiff sought an oral hearing for the present application.  The reasons as stated in the letter of his solicitors to the court dated 4 January 2017 are that “there are quite a number of applications forming the subject matters of this application, and there are also quite a number of issues, which may require extensive arguments from the parties.”

7.We do not regard the above as valid reasons.

8.Although the parties had each served a submission of 5 pages for the present application in accordance with the Practice Directions, there is no doubt that the plaintiff has had more than adequate opportunity to make submissions in writing, and had in fact made copious submissions in writing to advance his arguments.

9.Annexed to the summons for leave to appeal is a draft notice of appeal.  The grounds of appeal alone took up 15 pages and this document reads like a submission.  In the 5-page submission the plaintiff placed before us, there are many references to his earlier submissions before the judge: the submission dated 16 December 2015 (of 25 pages), the submission dated 29 November 2016 (of 30 pages), and the reply submission dated 2 December 2016 (of 18 pages).

10.In terms of written submissions, the plaintiff has placed before the court a total of 93 pages.  We do not think anything is to be gained by hearing oral submissions on arguments which have been repeated in writing more than once.  We will determine the leave application on paper.

11.It is unnecessary to recite the principles for granting leave to appeal.  They are not in dispute and have been set out in the submissions and the Leave Decision.

Granting of leave to appeal

12.We exercise our discretion to grant leave to appeal only in respect of the following grounds in the draft notice of appeal:

Ground 3 (which relates to the refusal of leave to amend the statement of claim)

Ground 4 (which relates to the refusal of leave to adduce expert evidence)

Ground 6 (which relates to the refusal of an unless order for the defendant to produce a clean unencrypted copy of the Mathematical Model which is capable of being executed on a computer and being studied, analysed and verified)

Ground 7 (which relates to the refusal of an unless order for the defendant to produce documents comprising the discrete elements of the Model as mentioned above).

13.We direct the plaintiff to file a notice of appeal comprising only the reliefs sought with the relevant grounds of appeal for which we have granted leave, within 7 days of the handing down of this judgment.

14.We estimate the hearing of this appeal to be three hours, and limit written submissions to no more than 15 pages.

Refusal of leave to appeal

15.We exercise our discretion to refuse leave to appeal in respect of grounds 1, 2, 5, 8 and 9.  Our reasons for refusal of leave follow.

Ground 1

16.This is a complaint that the judge was wrong in dismissing P’s December 2015 Summons on the ground that the application had been barred by the unless order of Registrar Lung dated 22 August 2014, which provided that “unless the plaintiff by 4:00 pm on 28 November 2014 takes out all interlocutory applications that may be advised, the plaintiff is debarred from taking out further interlocutory applications.”

17.Mr John Yan, SC[1] contended on behalf of the plaintiff there was breach of natural justice in that he was not afforded an opportunity to deal with this point prior to the dismissal of P’s December 2015 Summons.  Had he been given the opportunity, he would have submitted that on a proper construction of the unless order, P’s December 2015 Summons was not debarred by that order.  And if the judge should rule against him on the proper construction, he would have applied for an extension of time to take out P’s December 2015 Summons or sought relief from the sanction imposed under the unless order.

18.The judge had fully addressed and rejected these arguments in the Leave Decision at §§5 to 22.  We are in entire agreement with him.  The construction of the unless order contended by Mr Yan is untenable.  Whatever comments the judge had made in the course of the hearing are immaterial as such comments cannot be taken as the unalterable view and decision of the court.  What matters is whether counsel has been given the opportunity to advance his arguments.  Mr Yan can hardly complain he was not given opportunity to deal with the unless order when it was his own considered decision not to draw the court’s attention to it.  There is no reasonable prospect of success for this ground of appeal.

Ground 2

19.The complaint here is that the judge was wrong to refuse to rely on 6 affirmations filed on behalf of the plaintiff after 10 December 2015, on the basis that they were filed without leave in breach of Master Chow’s order dated 6 August 2015, and without any application for leave.  The master’s order provided that any affirmation of the plaintiff in reply should be filed and served on or before 4 pm 10 December 2015. 5 of the affirmations were filed a day late, and the remaining one was filed on 16 December.

20.The judge noted that in another hearing in this action before Au-Yeung J in October 2015, the plaintiff had also purported to file evidence after the evidence in the application was closed.  In her decision on 26 February 2016, Au-Yeung J commented on the plaintiff’s lack of discipline and declined to rely on such evidence save where it was not objected to by the defendant.  The judge decided to adopt a similar course and declined to rely on the affirmations filed by the plaintiff after the evidence was closed under Master Chow’s order.

21.This was a case management decision of the judge in the exercise of his discretion.  In accordance with established principles, there is a high hurdle to meet for a party to successfully challenge that decision on appeal.  He would need to establish that the judge had clearly gone wrong and made orders which clearly involved an injustice or had erred in principle or was plainly wrong.  The appeal court would only interfere where the decision exceeds the generous ambit within which reasonable disagreement is possible.  And even when there is reasonable prospect of success, the appeal court has a residual discretion to refuse leave to appeal in the interest of procedural economy and proportionality[2].

22.Mr Yan referred to exchanges with the judge in the hearing.  He made the point that the defendant had not opposed the subject affirmations on the basis they were late but had sought (unsuccessfully, in D’s December 2015 Summons) to expunge various parts of some of those affirmations.  We agree with Miss Winnie Tam, SC for the defendant[3] that it is not accurate to say the defendant had not taken the issue of late filing of these affirmations.  That it was not a vigorous objection of lateness is immaterial.  Whatever comments made by the judge in the course of the hearing cannot be treated as the decision of the court.  We do not agree with Mr Yan there was inconsistency for the judge to refuse to make an order in terms of D’s December 2015 Summons and yet to refuse to rely on the subject affirmations.

23.We do not think the judge was plainly wrong or that his decision exceeds the generous ambit within which reasonable disagreement is possible.  We see no basis to interfere with his exercise of discretion.  We would also exercise our residual discretion to refuse leave to appeal even if there were reasonable prospects in this ground.

Ground 5

24.This relates to the plaintiff’s application for disclosure of documents under Order 24 rule 10 on the basis that reference was made to these documents in the defendant’s affirmations and pleading, being the “Probit Model” referred to in §9 of his affirmation filed on 31 October 2013 and §4 of his 2^nd affirmation filed on 13 December 2013, and the “Logit mathematical model along with the necessary programs for Hong Kong horse racing probability estimation” referred to in §11(c) of the defence and counterclaim.

25.In respect of the “Probit Model” referred to in the defendant’s 2 affirmations, Mr Yan contended the judge was wrong in accepting Miss Tam’s submission that the reference was to probability distribution functions, not documents.  We disagree with Mr Yan.  In our view Miss Tam is right in that the “Probit Model” in this context is not a direct allusion to programs, files and source codes which implement the mathematical model.  We accept her submission that when read in context, the defendant in those parts of his affirmations was referring to the underlying mathematical probability model, not the software, implementation or other elements of the wagering system.  Order 24 rule 10 may not be invoked as there is no reference to any document, which would include any form of record of information capable of being retrieved and converted into readable form (Derby & Co Ltd v Weldon (No 9) [1991] 1WLR 652 at 654B to C).

26.The reference in the pleading to “Logit mathematical model along with the necessary programs for Hong Kong horse racing probability estimation” is somewhat different.  Here, there is direct allusion to computer programs and would come within the meaning of documents in Order 24.  But the defendant has deposed in §38 of his 9^th affirmation that “the Logit Model’s “necessary programs for Hong Kong horse racing probability estimation” in paragraph 11(c) of [his] Defence and Counterclaim, once existed more than 10 years ago, but had since been modified and developed into the Partnership Model.  Insofar as they are not already included in the disclosure made of the Partnership Model pursuant to the Varied Disclosure Order[4], they therefore no longer exist and are not in my possession, custody or power.” We see no basis to doubt the defendant’s sworn evidence.

27.We do not think there are reasonable prospects of success in the contention that the judge was in error in refusing to order production of documents under Order 24 rule 10.

Grounds 8 and 9

28.The defendant complains that the judge was in error in making no order in respect of D’s December 2015 Summons instead of dismissing it.

29.How the judge chose to dispose of the summons when he was disinclined to grant the orders sought is a matter within his discretion.  There is no basis for the appeal court to interfere.

Costs

30.We make the following order nisi on costs.

31.The defendant is partially successful in resisting the leave application and so should have part of his costs.  We would order the plaintiff to pay the defendant one-third of the costs of this application.  We assess the defendant’s costs summarily at $124,262, one-third of which is to be paid by the plaintiff forthwith.  We have taken into account most of the arguments advanced in this court are substantially similar to the arguments before the judge in the leave application.

32.The remaining two-thirds of the costs would be in the cause of the appeal, to abide by the outcome of the appeal.  So if the plaintiff is successful wholly or in part in the appeal, he may recover all or some of this part of the costs in the leave application.

Written submissions by Mr John Yan SC and Mr Dominic Pun, instructed by Chin & Associates, for the Plaintiff (Applicant)

Written submissions by Miss Winnie Tam SC and Mr Jason Yu, instructed by Baker & McKenzie, for the Defendant (Respondent)