Yeung Lui Ming and Lai Kar Yan As the Joint and Several Trustees of the Property of Wong Yuk Tung (A Bankrupt) v. Tang Mo Lin, Irene and Another

CACV 387/2019

[2022] HKCA 674

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 387 OF 2019

(ON APPEAL FROM HCA NO. 1197 OF 2015)

________________________

________________________

________________________

D E C I S I O N

________________________

Hon Cheung JA (giving the Decision of the Court) :

I.  Leave to appeal

1.This is the defendants’ application for leave to appeal against our judgment dated 23 July 2021. According to section 24 of the Hong Kong Court of Final Appeal Ordinance (Cap. 484), applications to the Court of Appeal or the Court of Final Appeal for leave to appeal shall be made by motion. The 1^st and 2^nd defendants (‘defendants’) made the application by means of an ‘Application for leave to appeal’ instead of a notice of motion. Given that this is a minor misnomer we will waive such procedural error but practitioners are reminded to use the correct form of application before they take out applications to the Court. We will deal with the application on paper.

1)  Ground 1

2.The defendants are relying on the following question said to be of great general public importance :

‘ When a party produces evidence at trial accompanied by a hearsay notice issued pursuant to section 47A of the Evidence Ordinance (Cap. 8), and where such evidence is relied on for the truth of its content by the other party, if the party producing the evidence then challenges the truth of the contents thereof, do sections 48 and 49 of the Evidence Ordinance operate such that the evidential burden rests on the party disputing the contents of the document or the party relying on the contents?’

2)  Ground 2

3.The defendants are also relying on the ‘or otherwise’ limb :

‘ The Court of Appeal erred in making its own finding which is clearly contrary to the evidence adduced at trial and not justified by any factual basis.’

II.  Our view

1)  Ground 1

4.We will not grant leave under the ground.

5.First, if the issue identified by the question arises at all, it must have already arisen at the hearing before Deputy High Court Judge To. Yet no point was taken on appeal that somehow there was a misplacement of the burden of proof as a result of the plaintiff issuing the hearsay notice on the Panyu Perfecta audited financial statement. While hearsay notice was mentioned in arguments, the issue of burden of proof was not raised as a ground of appeal before us at the hearing. It has not been shown that this is an exceptional case that leave should be granted on a matter that has not been argued : The Law Society of Hong Kong v A Solicitor, CACV 78/2014, 10 July 2015 at [4].

6.Second, and more importantly, the question is not engaged at all on the facts of the case. The plaintiff’s case is that Panyu Perfecta, Perfecta and Silver Yield were insolvent, and the plaintiff relied on the audited financial statements of these three companies to support its contention. It had not challenged the accuracy of those statements at all, in particular, that of Panyu Perfecta. On the contrary, it was the defendants who alleged that these entities were solvent because there were errors in their audited financial statements. As stated by us in our judgment [4.12], Judge To was clearly entitled to hold that he attached no weight to this argument in the absence of testimony from the auditors. There was no misplacement of the burden of proof at all.

2)  Ground 2

7.Whilst generally this Court will defer to the Court of Final Appeal to decide whether the ‘or otherwise’ limb is satisfied, we have to say that this point is totally unmeritorious.

8.The defendants are incorrect in suggesting that Judge To did not make a finding on the solvency of Panyu Perfecta and we had erred in substituting our own findings which is contrary to the evidence adduced below.

9.The lack of finding by Judge To on the issue of solvency of Panyu Perfecta (together with Perfecta and Silver Yield) was argued before us : our judgment [4.4]. Judge To had clearly made findings on the issue of insolvency : [92], [99], [102] and [105] of his judgment and we were of the view that Judge To had made such findings : our judgment [4.4]‑[4.7].

10.We also made a finding that Panyu Perfecta was insolvent : our judgment [4.9]. Thus, there were concurrent findings of fact by both Judge To and this Court. We reject the contention that our finding is contrary to the evidence. The defendants placed great emphasis on the Note to the figure of $163,950,000 which stated ‘There are neither audited accounts nor management accounts obtained for the verification and no consolidated group accounts are prepared.’ But as pointed out by the plaintiff, the issue in the present case was never whether the auditors had obtained all the information and explanations but whether Panyu Perfecta (and in turn Silver Yield and Perfecta) was insolvent. As Panyu Perfecta was clearly insolvent, its shares would be worthless. Hence, even if the auditors or accountants of Silver Yield attributed a value of $163 million to the shares of Panyu Perfecta as a result of the lack of Panyu Perfecta audited financial statement or any documents, under no circumstances would the value of Panyu Perfecta be stated to be worth RMB911 odd million because its shares were simply worthless.

11.Ultimately, our judgment and that of Judge To were judgments based on findings of fact and the defendants have not demonstrated that there has been some miscarriage of justice or some other violation of some principle of law or procedure which is the threshold for granting leave under this ground : Osman Mohammed Arab and Wong Kwok Keung v Ng Shui Ching Irene & Anor, unrep FAMV 95/2021, 15 July 2021 [15].

12.The reference to the exchange between this Court and counsel during the hearing does not carry the matter any further. The case of Gill Gurbux Singh v Dah Sing Insurance Services Ltd (2016) 19 HKCFAR 454 is distinguishable.

III.  Conclusion

13.Accordingly, the application is dismissed.

IV.  Costs

14.The application is totally unmeritorious. We will order costs against the defendants on an indemnity basis with certificate for two counsel.

Mr Victor Joffe, Ms Yvonne Fong and Mr Kurt Ng, instructed by Cheung & Yip, for the Plaintiffs

Mr Edward Tang and Mr Ryan Chan, instructed by SSW & Associates, for the 1^st and 2^nd Defendants