Yeung Siu Yung v. Fan Pui Wan, Margaret and Others

HCA 1211/2018

[2019] HKCFI 2460

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1211 OF 2018

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BETWEEN

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Before: Deputy High Court Judge Raymond Leung SC in Chambers

Date of Hearing: 16 September 2019

Date of Decision: 15 October 2019

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DECISION

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1.By a Summons dated 19 July 2019, the 1^st and 4^th Defendants (collectively “the Defendants”) apply for leave to appeal against my decision handed down on 5 July 2019 (the “Decision”) dismissing their appeal against the Order of Master Phoebe Man dated 5 March 2019 refusing their application for a stay of the proceedings herein on the ground of the potential adverse effects on the parallel criminal proceedings arising from the same set of facts. Further, the Defendants apply for a stay of execution under the Summons.

2.Mr Roy Chui, for the Defendants, served a written submission dated 11 September 2019.  Thereafter, Miss Katy Chung, for the Plaintiff, lodged her submission dated 12 September 2019.  Probably, due to the intervening public holiday, Mr Chui only managed to serve a supplemental submission less than an hour before the hearing on 16 September 2019.

3.Miss Chung did not take any issue as to the lateness of the Mr Chui’s supplemental submission and dealt with it the best she could. However, it does not detract from the fact there is no reason why the numerous arguments canvassed in the supplemental submission (citing various Australian authorities) should not be included in Mr Chui’s first written submission. 

BACKGROUND FACTS

4.The backgrounds facts are sufficiently set out in paragraphs 2 to 19 of the Decision.  There is hardly any need to repeat the same here.

5.In essence, the Plaintiff’s case against the Defendants is that she was introduced to the 1^st Defendant in May 2014 and since then she was enticed by various misrepresentations of the 1^st Defendant to incur expenses and monies (totalling the equivalent of HK$71,969,689.35) on various investment vehicles or opportunities, which never materialized.

6.Of the money invested, only three sums (totalling the equivalent of HK$5,853,780) were returned to her between 7 May 2015 and 7 June 2016.  On a rough-and-ready approach, the Plaintiff’s claim is about HK$66.12 million (ie HK$71,969,689.35 − HK$5,853,780) on the grounds of (1) breach of fiduciary duty; (2) deceit; (3) fraudulent misrepresentation; and/or (4) unjust enrichment as pleaded in paras 85 and 86 of the Statement of Claim (referred to in paragraph 14 of the Decision).

LEGAL PRINCIPLES

7.It is not disputed that the leave application herein concerns an intended interlocutory appeal and the burden is on the Defendants to show “reasonable prospect of success”, which means more than fanciful, without having to be probable (see section 14AA of the High Court Ordinance (Cap 4) and Le Pichon JA in SMSE v KL [2009] 4 HKLRD 125 (at para 17).

8.It is also trite that the leave application herein is not a de novo hearing of the previous appeal, which has cumulated in the Decision.

9.Further, the Decision concerned an exercise of discretion by a judge and an appeal therefrom would only be entertained if it is shown that the discretion was exercised (1) under a mistake of law; (2) under misapprehension of facts; (3) by taking into account irrelevant matters; (4) outside the generous ambit of reasonable disagreement; or where the Decision is plainly wrong (Hong Kong Civil Procedure 2019 §59/0/54 and Woo JA (as he then was) in Ho Siu Pui v Yue Sheng Finance Ltd [2003] 1 HKC 621 (at 628D) referring to Nazareth JA (as he then was) in Greenwood Ltd v Pearl River Container Transportation CACV 27/1994 (unreported, 25 May 1994) applying The Abidin Daver [1984] 1 AC 398 at 420A – C).

10.There is also no dispute between the parties as to the guiding principles as to exercise of discretion by the court to stay a civil action in the face of a parallel criminal proceedings arising from the same factual matrix. It is emphasized that the “right of silence” (sometimes described as the “right to silence”) as such does not apply in civil cases.

11.Importantly, Mr Chui, for the Defendants, acknowledges there is no right to a stay of the civil proceedings and the burden is on the Defendants to show that “it is just and convenient that the plaintiff’s ordinary rights of having his claim processed and heard and decided should be interfered with” (see Jefferson Ltd v Bhetcha [1979] 1 WLR 898 as discussed in paras 21 to 22 of the Decision).

12.In other words, it is incumbent upon the Defendants seeking a stay of the civil action to adduce “cogent evidence” (see Poon J (as he then was) in Wharf Ltd v Lau Yuen How [2008] 6 HKC 333 (at para 28) to show that “there is a real risk that the continuation of the [civil action] would cause serious prejudice to the criminal trial” otherwise the court needs not proceed to the balance of justice in the second stage of the test propounded in Jefferson Ltd (supra) (see also Patrick Li J in A v Securities and Futures Commission [2015] 1 HKLRD 47, at paras 67 and 93).

LEAVE TO APPEAL

13.Against the foregoing background, Mr Chui advances three grounds of appeal in support of the leave application of the Defendants.

Ground (1) — Misapprehension of facts

14.This ground is covered by paragraphs 11 to 15 of Mr Chui’s first submission and paragraphs 4 to 6 of his supplemental submission. With due respect, the arguments therein are not exactly coherent and no misapprehension of facts has been identified. In any case, the arguments may be summarized as follows:

(a)  In the 1^st Defendant’s affirmation (at para 5), she admitted that she had “no other commercial dealing with the Plaintiff other than those pleaded in the Statement of Claim”.

(b)  As such, it is argued that the 1^st Defendant has deprived herself of various other defences originally available to her in the criminal proceedings, such as that there has previously been ongoing business relationship between the Plaintiff and herself, and that things have all along been working out, that the Plaintiff only made these allegations because she wanted to recoup from these failed investments;

(c)  The Plaintiff has been “fishing” by pleading a catalogue of causes of action (see paragraph 6 hereinabove).

(d)  While Jefferson Ltd (supra) is good law, there is a limit as to the details the Court should expect from the Defendants. In handicapping the defences available to her in the criminal proceedings, the Defendants have done more than a “bare assertion” (see para 38 of the Decision).

(e)  The court ought to have followed the approach of the High Court of Australia in Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46 (discussed in paras 30 to 33 of the Decision).

(f)  There is no requirement that a stay would only be granted where the defendant’s property is at stake (for example, forfeiture by the police in the case of Zhao) as borne out by the recent decision of Registrar Clayton JR of the Supreme Court of Victoria in Stocks v Johns [2019] VSC 584 (unreported, 28 August 2019) applying Zhao.

15.Importantly, Mr Chui does not seek to dispute the observation of Reyes J in Asia Energy Logistics Group Ltd v Chat Tat Chee HCA 870/2009 (unreported, 5 August 2010) that it is incumbent upon the defendant applying for a stay to “sketch out any details of alleged prejudice” (see para 38 of Decision).

16.Further, there is a difference between putting in a defence and being compelled to answer interrogatories or make discovery of documents. In V v C [2001] EWCA Civ 1509 (not referred to by the parties), Waller LJ said:

“ 37. In considering whether the defendant was being constrained from putting forward a defence in the civil proceedings, the following would be material considerations. First, as Megaw LJ [in Jefferson Ltd] put it, there is no right to silence in the context of civil proceedings. Of the six rights to silence analyzed by Lord Mustill [in R v Director of Serious Fraud Office [1993] AC 1], what I would understand Megaw LJ to be referring to are the following. First that in a civil trial there is no immunity against adverse comment or adverse inference from a failure to provide answers before the trial or to give evidence at the trial. I say that because in a civil trial a defendant does not have to put in a defence or give evidence, but, if he does not, the court can draw an inference because in a civil trial it is not his ‘right’ not to do so. Megaw LJ also supports the distinction which in my view exists between putting in a defence in relation to which there is no right to invoke the privilege against self-incrimination and a defendant being interrogated or being compelled to produce documents in relation to which the privilege against self-incrimination can be invoked. This is important in the summary judgment context because if the claimant can establish his claim without interrogatories or disclosure then a privilege against self- incrimination is not in fact relevant.” (emphasis added)

17.As to paragraph 14(a) to (d) above, in so far it is so argued, I do not see how the 1^st Defendant by merely admitting in her 1^st affirmation that she had no other dealings with the Plaintiff apart from that pleaded in the Statement of Claim should be regarded as having (a) sufficiently sketched out details of alleged prejudice; and (b) deprived herself of the various defences, which would otherwise be available to her in the criminal proceedings. 

18.It is extraordinary that upon enquiry, Mr Chui said he did not have instructions so that he was unable to confirm whether the defences set out in paragraph 14(b) above, if defences they be at all, are real or hypothetical.

19.Further, the assertion that the Plaintiff is “fishing” for a cause of action is not borne out by any evidence, still less cogent evidence. Suffice to say that if the Plaintiff succeeds in establishing the facts alleged in the Statement of Claim, she may well succeed in one or more of the causes of action (as pleaded in paragraph 86 of the Statement of Claim).

20.As to paragraph 14(e) and (f), Mr Chui acknowledges that Zhao is just an instance of how the court exercised its discretion to stay the forfeiture proceedings (as discussed in paragraphs 30 to 32 of the Decision). The expression in paragraph 35 of the Decision that the case of Zhao is distinguishable is no more than pointing out that each case must be decided on its own facts. 

21.Nowhere in the Decision is it suggested that as a condition or criteria for the court to grant a stay of the civil action, there has to be defendant’s property at stake.

22.Likewise, the decision of Stocks v Johns (supra) by Registrar Clayton is just another instance of how the discretion was exercised. It involved a personal injury claim against the defendant driver, who had been convicted, after trial by a jury before the county court, of “recklessly causing serious injury in circumstances of gross violence” in which she did not give evidence and in respect of which an appeal was pending.  The decision of the learned Registrar does not create any rule of law and in any event not binding.

Ground (2) — Failure to consider prejudice and exercise discretion

23.This ground is covered by paragraphs 16 to 28 of Mr Chui’s first submission and paragraphs 7 to 18 of his supplemental submission. The arguments thereunder are wide-ranging but may be summarized as follows:

(a)  The right to silence is a constitutional right conferred by Article 8 of the Basic Law.

(b)  The delay in the application for stay should not be attributed to the Defendants.

(c)  The 1^st Defendant’s previous conviction for an offence involving dishonesty is irrelevant or should not be taken into account since it arose from different facts.

(d)  The 1^st Defendant should be presumed to be innocent until proven guilty in respect of the current offence of “obtaining property by deception” under section 17 of the Theft Ordinance (Cap 210) for which she has been charged (ESCC 1210/2018).

(e)  There is substantial overlap between the facts of civil action and the elements of the offence of “obtaining property by deception”.

(f)  The tendering of any meaningful defence in the civil action would invariably involve “substantial arguments and explanation” as asserted in paragraph 29 of the 1^st affirmation of the 1^st Defendant.   

(g)  Even the identification of contemporaneous documents (as suggested in paragraphs 29(b), 40 and 41 of the Decision) in sketching out the details of the potential prejudice would invariably infringe the 1^st Defendant’s right to remain silence.

(h)  The Defendant would be forced to prematurely disclose her defence in the criminal proceedings, bearing in mind that she had “already handicapped herself in making those admission in her 1^st affirmation”.

(i)  The Plaintiff was already protected by a Mareva injunction notwithstanding that no assets have been located to answer the injunction.  In any case, there is no evidence of dissipation of assets.

(j)  To allow the civil action to proceed would give an unfair advantage to the Plaintiff as a witness in the criminal prosecution and there would be a risk that she might be coached.  

(k)  The civil proceeding would provide opportunity for a “dressed rehearsal” for the criminal proceedings.

(l)  To allow the civil claim to proceed would render the intended appeal, even if successful, a nugatory.

24.As to paragraph 23(a) hereinabove, the reference to Article 8 of the Basic Law is probably a misnomer.  The “right of silence” is enshrined in Article 11(2)(g) of the Bill of Rights and Article 14(3)(g) of the International Covenant on Civil and Political Rights (as entrenched by Article 39 of the Basic Law).

25.However, it does not add anything to the analysis.  Bokhary J (as he then was) in Prime Computer (Hong Kong) Ltd v Frank Sham Tak Leung & Ors [1992] 1 HKLR 115 said:

“ [10]  On behalf of the 1st defendant, his counsel has placed reliance on the Bill of Rights.  He has done so in connection with the presumption of innocence in favour of the 1st defendant and his right of silence.  In my judgment, it is quite unnecessary for the 1st defendant to rely on the Bill of Rights.  The presumption of his innocence is there rooted in the Common Law; and so is his right of silence.  There is no statutory or other inroad attempted against either of those rights, which are fundamental rights of his, just as the plaintiff’s right of access to the courts is a fundamental right of its.  So there is no need for him to rely on the Bill of Rights or anything else in their defence.  If any such inroad were attempted, no doubt the Bill of Rights would have to be looked at to see what protection it affords against the same.  The decision of the Court of Appeal in England in Jefferson Ltd v. Bhetcha (supra) and that of our Court of Appeal in Petroliam Nasional Berhad v. Tan Soon-gin (supra) make no inroad into anyone’s fundamental rights.  They recognize the rights on both sides; and they provide guidance as to how such rival rights are to be balanced so as to achieve a just result.  They are consistent with the Bill of Rights.”

26.As to paragraph 23(b) hereinabove, there is simply no reference to delay on the part of the Defendants in the Decision. 

27.As to paragraph 23(c) to (d) hereinabove, the previous conviction of the 1^st Defendant, which is not disputed, was only referred to in paragraph 16 of the Decision by way of background.  Likewise, the fact that 1^st Defendant having been charged is part of the relevant facts or else there would have been no need for the stay application.  Nowhere in the Decision suggests that the discretion was exercised on the assumption that she was guilty as charged.

28.As to paragraph 23(e) to (g) hereinabove, it is emphasized that the overlapping of the facts in the civil action and the criminal proceedings is a matter of degree and does not automatically justify a stay of the civil action. 

29.Mr Chui rightly accepted that 1^st affirmation of the 1^st Defendant was defective in that it only sought to make an assertion (at paragraph 29 thereof) that the “substantial argument and explanation” required to plead a defence would substantially prejudice her right to silence in the criminal proceedings.

30.In a last-ditch effort to salvage the defects, Mr Chui made a belated attempt to identify the commonalities between the civil case and the elements of the criminal charge in paragraphs 9 to 12 of the supplemental submission.  However, that is to draw a comparison in a vacuum and it does not add anything.

31.Just because there are overlaps or potential overlaps between the facts alleged in the Statement of Claim and the elements of the criminal charge of “obtaining property by deception” does not discharge the Defendants’ burden to adduce cogent evidence to show “real risk” of substantial prejudice in the criminal trial. 

32.The Statement of Claim covers a catalogue of events over a period of one to two years.  Matters such as whether the Defendants in fact received the various payments allegedly made by the Plaintiff would be neutral to and independent of the allegations of fraud or deception.  These are matters, which would in any event be borne out by documents such as bank statements or records of transfer available to the Plaintiff in any case.

33.Bearing in mind that there is no “right of silence” as such in civil action, it is difficult to see how the Defendants could be prejudiced by sketching out the details in a defence, which presumably would contain, if anything, exculpatory materials.   

34.Putting the Defendants’ case at its highest, even if it is assumed that the substantial overlap between the issues in the civil case and that of the criminal proceedings would give rise to a real risk of prejudice, it is not determinative of the stay application since the court will still have to balance it against the other factors and the right of the Plaintiff.

35.Mr Chui prayed in aid the case of McLachlan v Browne (No 9) [2019] NSWSC 10 (17 January 2019) wherein McCallum J ordered a stay of two defamation actions in respect of which a four-week trial before a jury was due to commence on 4 February 2019. 

36.The case arose from certain publications of sexual misconduct allegedly perpetrated by the plaintiff in the defamation actions, which were also subject matter of certain criminal charges against the plaintiff before the Magistrates’ Court on 8 February 2019 (ie four days from the commencement of the civil trial).  The parties agreed that the charges were likely to be proceeded with in due course by way of indictment before a jury.

37.In the main, McCallum J’s decision in ordering a stay of the civil actions stemmed from her concerns as to the possible effects on the two separate juries in the civil proceedings and the criminal proceedings respectively.  The learned judge explained as follows:

“ 37. Further considerations raised by the defendants were the jury issues, to which I have already referred to some extent. I have already indicated my acceptance that it will be some distance until any criminal trial and that, in accordance with the principle stated in Kanaan, it may be assumed that a jury could be directed in terms that would protect Mr McLachlan against publicity surrounding the civil trial. However, there are a number of considerations which must be taken to qualify any comfort derived from that principle.

38. First, as submitted by Mr Littlemore, there is an exact overlap between the criminal allegations and the issues raised in the particulars to the truth defences in these proceedings. It follows that, if a stay is not granted, the civil action will in effect be a ‘dress rehearsal’ for the criminal trial, as it was put by Mr Littlemore. It would follow that the cross‐examination of Mr McLachlan in the defamation proceedings is likely to become a feature of his cross‐examination in the criminal proceedings. In saying so, I make the assumption, as submitted by Mr Littlemore, that he is likely to make a choice to give evidence in both proceedings or else be unsuccessful in the relevant proceeding in which he chooses not to give evidence. The prospect of the cross‐examination in the criminal trial being informed by statements made by Mr McLachlan in the civil trial is the very jeopardy protected by the privilege against self‐incrimination.

39. Separately, accepting the principles in Kanaan, this is not merely a case of pre‐trial publicity concerning the events the subject of the criminal trial. Two juries will be called upon in separate forums to decide the same questions of fact. In my view, it would be very difficult for the jury in the criminal trial to put out of its mind the verdict reached by the jury in the civil trial. If the allegations made in the truth defences are found by the civil jury to be proved, that would obviously be prejudicial to Mr McLachlan in his defence of the criminal charges. If they are found not to be proved, that would be prejudicial at least in some way to the interests of the Crown in those criminal proceedings. Whatever direction might be given in the criminal proceedings, I think it would be difficult for the jury not to have regard at some level to those factors.

40. … It follows that, in order to mount a reply to the truth defences in the defamation action, Mr McLachlan would have to choose either not to give evidence, from which it would likely follow that he would lose the action; to give evidence and claim the privilege against self‐incrimination, which would entail obvious prejudice to the strength of his case; or to waive the privilege. I note that, contrary to a submission made by the defendants, I would not understand Mr McLachlan to have waived his right to silence already by statements he has made in public. In the investigation and prosecution of the criminal matters, he has plainly exercised his right to silence, refusing to participate in an interview with police.

41. Mr McLachlan’s position may accordingly be likened to that posited by the Court in Lee at para [12]. He is on the horns of a dilemma. If the stay is not granted he will either have to conduct the defamation action with one hand tied behind his back, and likely lose, or waive his privilege against self‐incrimination. That reflects the real dilemma the Court found in Lee at [41] to exist in that case.” (emphasis added)

38.However, each case must be assessed on its own facts.  In the present case, the civil case will be tried before a judge without a jury.  As for the criminal case, the venue of trial is not yet known.  In the absence of proper identification as to nature of the prejudice, I remain unconvinced that the Defendants would be prejudiced by pleading a defence.

39.As to paragraph 23(h) hereinabove, I do not see how the 1^st Defendant can be said to have “handicapped” herself by filing an affirmation herein (see paragraphs 17 to 18 hereinabove).

40.As to paragraph 23(i) hereinabove, it is emphasized that the Mareva injunction has not resulted in the identification or preservation of any asset of the Defendants. If anything, that is all the more reason to allow the Plaintiff to proceed with her claim so that any judgment obtained can be executed in a timeous fashion. 

41.For the sake of completeness, there has been no appeal against the granting of the Mareva injunction, which must have been premised on the risks of dissipation having been established (cf paragraph 22 of Mr Chui’s first submission). 

42.Mr Chui also submits that the Plaintiff could have proceeded by way of an application for summary judgment under Order 14 or judgment in default of pleading under Order 19 (see paragraph 15 of supplemental submission).

43.Quite apart from the fact that summary judgment is not available in a case of fraud (see Order 14, rule 1(2)(b) of the Rules of the High Court), even if the Plaintiff were to proceed to obtain interlocutory judgment, the Defendants would bear the same burden to adduce cogent evidence to show “real prejudice” in the criminal proceedings in order to avoid having judgment entered against them (see Megaw LJ in Jefferson Ltd at 905A and Waller LJ in V v C (supra)).

44.As to paragraph 23(j) to (l) hereinabove, the Plaintiff has fully pleaded her case in the Statement of Claim.  She has also given various statements to the police and a detailed account of her dealings with the Defendant in her affirmation.  Therefore, the risk of the Plaintiff “tailor-making” her evidence is minimized.  Again, there is a lacking of cogent evidence to support such allegation (see Poon J in Wharf Ltd (supra)at para 25).

Ground (3) — The conclusion of no infringement of the right of silence‌ was “outside the generous ambit within which a reasonable disagreement is possible”

45.This ground is covered in paragraphs 29 to 32 of the first written submission lodged by Mr Chui. 

46.The principle as to the exercise of discretion by the Court canvassed by Mr Chui is not in dispute (see paragraph 9 above).  In support of this ground Mr Chui seeks to rely the same arguments canvassed under Ground (1) and Ground (2) and add that the effects of adverse publicity (as set out in paragraph 43 of the Decision) has been underestimated.

47.For the reasons set out hereinabove, I find that Ground (3) does not add anything to the analysis.

DISPOSAL

48.In summary, I do not find any merit in any of Grounds (1) to (3) whether collectively or individually. No reasonable prospect of the intended appeal has been shown.  There is no valid ground to grant a stay of execution either.

49.Accordingly, the Summons is dismissed with costs to the Plaintiff, which is summarily assessed at HK$65,000.

Ms Katy Chung, instructed by Chan Ching Man & Co, for the plaintiff

Mr Roy Chui, instructed by Wong Poon Chan Law & Co, for the 1^st and 4^th defendants