Petroliam Nasional Berhad and Others v. George Tan Soon Gin

CACV000057/1989

BETWEEN

BETWEEN

BETWEEN

Coram: Cons, Ag. C.J., Clough & Power, JJ.A.

Dates of hearing: 25 - 28 July 1989

Date of delivery of judgment: 31 July 1989

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J U D G M E N T

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Cons, Acting C.J. delivered the judgment of the Court:

1. The collapse of the Carrian empire in 1983 may well have been the greatest individual financial disaster ever to have occurred in Hong Kong. It is certainly so within the last forty years. So swiftly and successfully had the empire grown, into so many different forms of business had it spread its activities that by that year "Carrian" had become a household word throughout the territory. The group commanded support from the greatest banks to the smallest investor in the market. The repercussions of the crash were thus widespread. They continue to felt to this day.

2. It is not surprising in these circumstances that the subsequent trial, on a charge of conspiracy to defraud, of George Tan Soon Gin, the Managing Director of the group, three of his co-directors and two accountants who had conducted the group's audit for 1981, was followed and reported in considerable detail by all forms of the media, both here and in Malaysia, from the commencement of the trial in February 1986 to its premature demise in September 1987 when all the defendants were acquitted upon a submission of no case to answer.

3. The story does not end there however. Twenty three other charges remain outstanding against Tan. Nine allege that he conspired, together with named defendants and others, to defraud by various means the Bumiputra Malaysia Finance Limited (BMFL). BMFL is, or was, a licensed deposit taking company, the wholly owned subsidiary of Bank Bumiputra Malaysia Berhad (BBMP), a nationalised bank in Malaysia. Other named defendants include Lorraine Esme Osman, the chairman of BMFL, and Mohammed Hashim Shamsuddin and Rais Saniman, two directors. At one time the general manager of the company, Ibrahim Jaafar, was also included but he has since been granted immunity from further prosecution so that he can, in due time, give evidence for the Crown against the others. The remaining eleven charges are against Tan alone, alleging the he gave bribes to Osman and Shamsuddin.

4. When the trial of these charges will take place is very much a matter of conjecture. There is no difficulty as regards Shamsuddin, he is in Hong Kong, serving a term of imprisonment. But Saniman is believed to be in France and Osman is in custody in England, fighting an apparently never-ending battle to set aside an order returning him for trial in this jurisdiction. Recent newspaper reports, suggest that he may intend to set yet further proceedings on foot there in October and a final appeal to the European Court of Human Rights would not seem to be beyond the bounds of probability. The Crown does not wish to proceed against Tan until Osman is safely back.

5. The Crown has also instituted proceedings to obtain evidence in Malaysia. We understand that these have not yet commenced effectively, and that even when they do they are likely to raise matters that will be hotly contested. Despite these complications, or perhaps because of them, the public, through the media, has continued a keen and attentive interest.

6. There are as well, civil Proceedings. We are concerned at the moment with seven of them. The first is a consolidation of two actions and brought against others as well as Tan. It is principally a claim for damages, alleging two conspiracies connectd with a loan of US$40 million from BMFL to Carrian Nominees Limited, declarations that the money, or such of it as may still be left, is held on constructive trust for the plaintiffs, and injunctions to aassist tracing in certain Swiss bank accounts. Alternatively the claim is put against Tan alone, upon a guarantee given to cover the loan in question. The original plaintiffs were BMFL and BBMP, but now include Petroliam Nasional Berhad (Petronas) to whom BMFL has since assigned its rights. The other six actions concern only Tan. They too are put upon guarantees, given by him in respect of other Carrian companies to a total of just over US$135 million.

7. The earlier of the two actions now consolidated, that is the guarantee action, was launched in December 1983. Application was made for summary judgment in February 1984, but withdrawn when Tan filed an affidavit in reply. The next step was not taken until April last year, i.e.1988, with the filing of an Amended Defence, followed soon by a lengthy request for further and better particulars thereof, which has not yet been answered.

8. The second of the two actions, which introduced the further claims we have set out above, was not launched until also last year, in Dcember. A few months earlier, in August, the remaining six actions had been commenced. No defences have been filed, but Order 14 summonses are pending.

9. On the 28th of February this year Tan applied to Nazareth J. for an order that each and every one of the actions "be stayed until verdicts have been returned by any jury trial in the criminal proceedings against the Defendant in respect of the same subject matter as the proceedings herein". The applications were argued before him for four days. On the 9th of March he made the orders requested. By these appeals we are asked to set them aside.

10. At some stage in the proceedings below Nazareth J. made an order with regard to Section 5 of the Judicial Proceedings (Regulation of Reports) Ordinance, Chapter 287, i.e. an order prohibiting publication of all information relating to the proceedings. When the appeals were opened we were asked by Mr. Hamilton, leading counsel for Tan, who had in this the support of Mr. Ching, leading counsel for the Plaintiffs, to make a similar order or to hear the appeals in camera. Following submissions by both we felt that there was insufficient at that stage to warrant the making of any order, but suggested that if, as the appeals progressed, it became apparent that we were moving into areas which, if publicity was not restrained in some way, might prejudice Tan, we would then be prepared to accept a renewal of the application. None has in fact been made.

11. It is common ground that the subject matter of the criminal charges and the civil claims is the same. It is further common ground that the principles upon which the discretion to stay the civil claims, which the Court in that circumstance undoubtedly possesses, until the criminal charges have been heard are to be exercised are to be found in the judgment of Megaw L.J. in Jefferson Ltd v. Bhetcha (1979) 1 W.L.R. 898.

12. We pause here to point out, in view of the pubic, interest we have mentioned, what is otherwise well known to every lawyer and would not normally need repetition, namely that where a discretion of this nature is entrusted by the law to a judge at first instance, the responsibility for its exercise is entrusted to him alone. It is immaterial that this Court, albeit a Court of Appeal from decisions at first instance, would have exercised the discretion in a different way. This Court cannot merely for that reason substitute its own decision. It can only interfere if, put simply, the judge went wrong in law, acted on matters which he should have ignored, or vice versa, or if his decision was one to which no reasonable judge could sensibly have come. Naturally the notice of appeal in the present instance, although it has been formulated, in a somewhat unusual and we think, in the end, unhelpful fashion, does allege that the judge below went wrong in these ways.

13. The crux of the decision in Jefferson Ltd, v. Bhetcha is to be found in a passage at p. 905C:

"while each case must be judged on its own facts, the burden is on the defendant in the civil action 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."

Megaw L.J. continues, while declining "to attempt to define in the abstract what are the relevant factors" to be considered, by suggesting two possible examples of factors that might tell in the defendant's favour. The first is:

"that the civil action, or some step in it, would be likely to obtain such publicity as might sensibly be expected to reach, and to influence persons who would or might be jurors in criminal proceedings."

and the second:

"that there was some real - not merely notional - danger that the disclosure of the defence in the civil action, would, or might, lead to a potential miscarriage of justice in the criminal proceedings, by, for example, enabling prosecution witnesses to prepare a fabrication of evidence or by leading to interference with witnesses or in some other way."

Earlier the Lord Justice had referred to the need for "the balancing of justice between the parties".

14. The judge below quoted at length from the judgment, including the passages we have just set out. He then immediately referred to "the balancing of the factors to be taken into account in this case". He referred later in passing to "the balancing exercise" and finally, after considering various factors in detail, made use of the same words "the balancing of justice between the parties" when he announced his conclusion.

15. The error of the judge at first instance in Jefferson v. Bhetcha was to accept the view:

"that there is an established principle of law that if criminal proceedings are pending against a defendant in respect of the same subject matter he the defendant, is entitled to be excused (the emphasis is our own) from taking in the civil action any procedural step, which step would in the ordinary way, be necessary or desirable for him to take in furtherance of his defence in the civil action, if that step would, or might, have the result of disclosing, in whole or in part, what his defence is, or is likely to be, in the criminal proceedings."

16. We had for a while some anxiety whether the judge below may not have fallen into a similar trap. He referred, by way he said of "judicial guidance", to the judgment in Guiness plc v. E.W. Saunders, an unreported decision of the Vice-Chancellor, 19 January, 1988, which arose from the takeover in 1986 of Distillers plc by Guiness plc of which at that time Mr. Saunders was the Chairman and Chief Executive. The defence of Guiness to Mr. Saunders' counterclaim in the action included allegations of misconduct on his part and for which prosecutions were pending. Nazareth J. quoted the following passage from the judgment:

"I certainly do not think it is proper for the counterclaim to be prosecuted at this stage. it would be enough that Mr. Saunders would in pleading to the defence of counterclaim and in giving pariculars, reveal and put on record a defence that currently he has not stated."

and then the judge continued:

"That is not to say that the Vice Chancellor bypassed the balancing exercise... But clearly in the circumstances before him, he gave disclosure of the defence to the criminal charges decisive weight."

17. With every respect to the learned judge, the choice of the word "decisive" was not the happiest, for it is often used in the sense of "conclusive", the very meaning rejected in Jefferson. But in view of the immediately preceding reference to the "balancing exercise", and the other similar references we have already mentioned, we do not think the judge was in fact labouring under any misapprehension. We take this remarks to be in tended merely to indicate that the Vice-Chancellor having though that the premature disclosure of the defence was a matter of importance "in the circumstances before him", which presumably, and not surprisingly the judge found to be somewhat analogous to those before him, it would be appropriate for the judge himself to do the same.

18. And so he did. He said that it was a factor to which he attached "particular weight" It is suggested now that that was wrong as a matter of principle, that the need to reveal the defence to a criminal charge should be given no, or at least no appreciable, weight unless at the same time it gave rise to a real danger of causing injustice in the criminal proceedings.

19. We do not agree. The right to reserve one's defence up to the last minute, that is until the prosecution has completed its evidence, except perhaps so far as it may be necessary to put matters in cross-examination, is such a basic fundamental of the criminal process that we think it cannot be so lightly dismissed. We accept that breach of the right does not necessarily amount to an injustice. It may at times be no more than a disadvantages: see Charles of the Ritz v. Jory, 1986 F.S.R. 14 and at others there may be factors by which it is completely outweighed. But in our opinion it is always a matter for some consideration, the precise weight to be determined by the individual judge in all the circumstances as he sees then. We take this view to be implicit in the requirement imposed by Megaw L.J. at 904H that the judge should take

"into account the principle, which applies in the criminal proceeding itself, of what is sometimes referred as the 'right of silence' and the reason why that right, under the law as it stands, is a right of a defendant in criminal proceedings"

and of the comment of Saiughton L.J. in Guiness plc v. E.W. Saunders, when that case reached the Court of Appeal, unreported 17th October,1986, who, after referring to the "sometimes great advantage to a defendant not to have to disclose what the defence is or the names of the defence witnesses" said:

"It was a matter for consideration that the process of discovery and pleading in this action might reveal some such information, so far as concerns three of the charges in the criminal proceedings. That was, a matter for the Vice-Chancellor to take into account in the exercise of his discretion just as Mr. Justice Scott took it into account in the exercise of his discretion in the Charles of the Ritz case. It is not for this court to interfere with the conclusion reached by the Vice-Chancellor."

Unless we were prepared to say that Nazareth J.'s decision was one to which no reasonable judge could have come, which we are not, this Court likewise is in no position to interfere.

20. We should add, for the sake of completeness, that although Mr. Ching did not bring forward any argument that the Defendant's right of silence could be otherwise protected by way of suitable undertakings, at our request both he and Mr. Hamilton addressed us on the question. It is sufficient to say that we are satisfied that no adequate undertaking could be devised in the circumstances.

21. We should also mention two further grounds of appeal. The first is that the judge ignored the real and substantial difficulties that the Plaintiffs encountered in their way to pursuing the actions. The second is that the judge gave insufficient consideration to the fact that, without knowledge of the factual allegations that Tan would be making by way of defence, the Plaintiffs would be unable to take the necessary steps with regard to their own evidence. In our view neither ground is made out. The judge did not overlook either aspect. He simply gave it less significance than the Plaintiffs would have liked.

22. For these reasons we dismiss the appeal in so far as we are asked to set the stays aside. Nevertheless we are concerned that injustice may well be done to the Plaintiffs if they are precluded from pursuing their actions for an undue length of time. While we appreciate the difficulties which confront the prosecuting authorities, we would not think it unreasonable, if, in say six months from now, they are still not ready to go ahead with the criminal charges that the lower court should then re-consider the situation.

23. The further question of costs below shall Stand adjourned to a date to be fixed.

Representation:

Mr. Charles Ching Q.C. & Mr. J. Bleach (M/s Robert W.H. Wang & Co.) for the Plaintiffs

Mr. G. Hamilton Q.C. & Mr. Winston Poon (M/s Fairbairn Catley Low & Kong) for the Defendant