Chen Jinhui v. Wong Kam San (黃錦新), By His Guardian Ad Litem, Huang Yuexia (黃月霞) and Others

CACV 173/2021 &

CACV 178/2021

[2023] HKCA 513

On Appeal From [2022] HKCFI 1829

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS 173 & 178 OF 2021

(ON APPEAL FROM HCA NO 1524 OF 2012)

________________________

____________

(Heard together)

________________

J U D G M E N T

________________

Hon Chow JA (giving the Judgment of the Court):

INTRODUCTION

1.There are before the Court 2 applications for leave to appeal against the Court’s earlier judgment refusing to grant leave to the 1^st to 3^rd Defendants and the 4^th to 6^th Defendants to adduce various items of proposed new evidence in their respective appeals.

THE APPLICATIONS

2.On 4 November 2022, this Court gave its judgment (“the CA Judgment”) granting leave to the 1^st to 3^rd Defendants and the 4^th to 6^th Defendants to adduce one item of proposed new evidence (referred to as Item 23) for the purpose of their respective appeals against the judgment of Deputy High Court Judge Leung dated 19 March 2021 (“the CFI Judgment”), but not the remaining items of proposed new evidence (referred to as Items 1 to 22 and Exhibit “ZRW-32”[1]) (“the Excluded New Evidence”).

3.The basic facts of the case and the issues in the appeals have been set out in the CA Judgment and will not be repeated here. The abbreviations used in the CA Judgment will be adopted in the present judgment.

4.The Excluded New Evidence consists of 3 categories:

(1)  Category 1 (the Receipt in Item 10 and Items 16-22) concerns the authenticity of the 8/9/2005 Letter on which was appended what the Defendants allege to be the old company chop of Shunfeng which ought to be have destroyed in or about July 2004.

(2)  Category 2 (Items 1-15, save for the Receipt in Item 10) -

(a)  Items 1 to 14 concern the underlying debts owed by Wong to Chen as particularised in the Debt Acknowledgement List; and

(b)  Item 15 is said to be relevant to the evidence contained in the Receipt that Chen received 5 pieces of blank letterheads signed by Wong.

(3)  Category 3 (Exhibit “ZRW-32”) concerns an interview of Tian, recorded in a DVD-Rom, by the 4^th to 6^th Defendants’ lawyers in an office of the Beijing Public Security Bureau (北京市公安局東城分局東花市派出所) on 26 January 2022. Tian made a witness statement in 2014 and was named as a witness for Chen, but did not attend court to give evidence at the trial.

5.The Court refused to grant leave to the Defendants to adduce the materials in Category 1 as new evidence on the grounds that:

(1)  The 1^st Ladd v Marshall Condition (“Condition 1”) was not satisfied, in that the Defendants had failed to discharge the burden of showing that the proposed new evidence could not have been obtained for use at the trial with reasonable diligence (§§41 and 42 of the CA Judgment).

(2)  The 2^nd Ladd v Marshall Condition (“Condition 2”) was not satisfied in so far as the Receipt in Item 10 was concerned, because the relevance of the Receipt to the authenticity of the disputed documents was at best tangential (§43 of the CA Judgment).

6.The Court also held that the possible relaxation of the reasonable diligence requirement in fraud cases should not be applied in relation to Category 1, because the new documents, taken at their highest, did not show any dishonest conduct in the trial on the part of Chen, and were not sufficient to show a “reasonable prospect of success” that the CFI Judgment was obtained by fraud for which Chen should be held responsible (§44 of the CA Judgment).

7.The Court refused to grant leave to the Defendants to adduce the materials in Category 2 as new evidence on the grounds that:

(1)  Condition 1 was not satisfied, for the same reasons as in relation to Category 1 (§55 of the CA Judgment).

(2)  Condition 2 was not satisfied (§56 of the CA Judgment).

Pausing here, it may be noted that, as mentioned at §53 of the CA Judgment, the 4^th to 6^th Defendants did not in fact advance any submissions in support of the application for admission of the materials in Category 2.

8.In respect of Category 3 (Exhibit “ZRW-32”), in view of the fact that the proposed new evidence came into existence after the trial, the Ladd v Marshall Conditions have no application. As earlier mentioned, Exhibit “ZRW-32” concerns an interview of Tian which took place in Beijing after the trial. In the interview, Tian made clear it that he was not prepared to give evidence in court to support what he had said orally, and thus he would not be available for cross examination by Chen’s lawyers in Hong Kong proceedings. The Court considered that Tian’s credibility would obviously be in issue, and no weight could be given to his out-of-court interview, the veracity of which could not be tested by cross examination. Accordingly, the Court declined to exercise its discretion to admit Exhibit “ZRW-32” as new evidence (§§61-62 of the CA Judgment).

9.On 2 December 2022, the 1^st to 3^rd Defendants issued a Notice of Motion seeking leave to appeal the CA Judgment to the Court of Final Appeal. In the Notice of Motion, the 1^st to 3^rd Defendants identified the following questions (“Question 1”, “Question 2” and “Question 3” respectively) as being questions of great general or public importance which ought to be submitted to the Court of Final Appeal for determination:

“(1) In seeking a relaxation of the reasonable diligence requirement for the admission of new evidence on appeal (‘Condition 1’ in Ladd v Marshall), whether the appellant is required to show a ‘reasonable prospect of success’ that (a) the judgment was procured by fraud; and (b) that the respondent was complicit or responsible for, or knowingly relied upon, the fraud; or, rather, it is sufficient that the judgment was procured by fraud, even if the respondent was not himself responsible for, or aware of, the fraud.

(2) In showing whether there is a ‘reasonable prospect of success’ that the respondent has obtained the judgment by fraud or that he knowingly relied upon the fraud for the purpose of seeking a relaxation of the reasonable diligence requirement for the admission of new evidence on appeal (without prejudice to Question (1) above), whether the appellant is confined to the evidence sought to be admitted, or whether he is entitled to rely on the totality of the evidence before the Court, including evidence that came into existence after the judgment.

In particular, in considering the admission of the Receipt and Items 16-20 in the appeal (§44 of the CA Judgment), whether the Court should also have taken into consideration Item 23, given its potential importance in the appeal in showing the respondent’s dishonest conduct and/or responsibility for the fraud, as the basis for relaxing the reasonable diligence requirement.

(3) Conversely, in considering what weight is to be accorded to an alleged admission of fraud by the respondent (i.e., Item 23) at the substantive hearing of the appeals, whether the Court is entitled to and should also consider evidence in support of the existence of the fraud (i.e., the Receipt and Items 16-20), which would be relevant to the authenticity and reliability of the alleged admission.”

10.On the same date, the 4^th to 6^th Defendants also issued a Notice of Motion seeking leave to appeal the CA Judgment to the Court of Final Appeal. In the Notice of Motion, the 4^th to 6^th Defendants identified the following question (“Question 4”) as being a question of great general or public importance which ought to be submitted to the Court of Final Appeal for determination:

“In a Ladd v Marshall application, in order for the ‘reasonable diligence’ requirement to be relaxed on the basis of a reasonable prospect of success that the judgment below was obtained by fraud, (i) does the fraud have to be that of the respondent or at least suborned by or knowingly relied upon by the respondent, or (ii) is it sufficient that the judgment was procured by fraud, without the additional requirement that the fraud should be that of, or known by, the respondent?”

DISCUSSION

11.Under s 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, Cap 484, an appeal shall lie to the Court of Final Appeal at the discretion of the Court of Appeal or the Court of Final Appeal in any civil cause or matter if, in the opinion of the Court of Appeal or the Court of Final Appeal (as the case may be), the question involved in the appeal is one which, by reason of its great general or public importance, or otherwise, ought to be submitted to the Court of Final Appeal for decision.

12.As stated by Kwan VP in Leung Ping Chiu Roy v Wai Chen [2022] HKCA 1730, at §63, appeals to the Court of Final Appeal against interlocutory orders of the Court of Appeal are rare and exceptional. Leave will generally be refused unless it can be clearly seen that: (1) the proposed appeal genuinely raises a question of law of great general or public importance; (2) the result of the appeal would indeed turn on how that question is answered; and (3) such result is likely to make a significant contribution to the just disposal of the litigation in this court.

Question 1 and Question 4

13.Question 1 and Question 4 raise the same point, namely, whether, in order for the “reasonable diligence” requirement under Condition 1 to be relaxed in an application for admission of new evidence where the judgment below is alleged to have been obtained by fraud, it is necessary to show that the respondent was complicit in or responsible for, or knowingly relied upon, the fraud (as put in Question 1), or the fraud was that of the respondent or at least suborned by or knowingly relied upon by the respondent (as put in Question 4).

14.We have summarised what we consider to be the relevant principles for the admission of new evidence in appeal in fraud cases in §34 of the CA Judgment. Importantly for the present purpose is the distinction between (i) an action brought to set aside a judgment obtained by fraud, and (ii) an application for admission of new evidence in a fraud case. In the former situation, the Ladd v Marshall Conditions are not relevant or applicable. In the latter situation, the general rule is that the Ladd v Marshall Conditions should be applied in their full vigour for the admission of fresh evidence, subject to a possible relaxation of the reasonable diligence requirement under Condition 1 where an applicant can demonstrate a reasonable prospect of success that the judgment below was obtained by fraud (as opposed to fraud in relation to the general underlying merits of the case) in accordance with the principles summarized by Aikens LJ in Royal Bank of Scotland plc v Highland Financial Partners [2013] 1 CLC 596 (at §106) and reiterated by Kwan VP in Mayer Corporation Development International Ltd v Alliance Financial Intelligence Ltd [2019] HKCA 777 (at §72):

(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 demonstrates 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 thus the conscious and deliberate dishonesty must be causative of the impugned judgment being obtained in the terms it was; 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.

15.In the present case, the thrust of the Defendants’ complaint is that the documents relied upon by the Plaintiff, including in particular the 10/1/2003 Confirmation, the 6/9/2005 Letter and the 8/9/2005 Letter, in support of his claim were not authentic, or were forgeries. In other words, their complaint is about fraud in relation to the underlying merits of the case. On this footing, the question of relaxation of the reasonable diligence requirement does not arise. However, to the extent that the Defendants’ case is that the CFI Judgment was obtained by fraud, the Court considered that the new documents were not sufficient to show a reasonable prospect of success that the CFI Judgment was obtained by fraud for which Chen should be held responsible, and thus the reasonable diligence requirement should not be relaxed (§44 of the CA Judgment). It is at this point that the Defendants propose to argue, under Questions 1 and 4, that the reasonable diligence requirement may be relaxed so long as it is shown that a judgment was obtained by fraud, and it is not necessary to show that the respondent was himself responsible for, or aware of, the fraud (as put in Question 1), or the fraud was that of, or known by, the respondent (as put in Question 4).

16.To make good the argument that the CFI Judgment was obtained by fraud, Mr Paul Shieh, SC, on behalf of the 4^th to 6^th Defendants, now argues that the forgery in relation to the 8/9/2005 Letter was at least known to Zheng who committed perjury and as Zheng was a witness for Chen and had a financial interest in the outcome of these proceedings (as he would stand to receive RMB 2 million if Chen’s claim is successful and the Letter of Undertaking is enforced), the two of them had a “common foe” and Zheng was a “comrade in arms” of Chen who adopted his perjury[2].

17.On behalf of the 1^st to 3^rd Defendants, Mr Douglas Lam, SC likewise argues that Chen can be implicated in one of 2 ways without showing his knowledge of Zheng’s fraud:

(1)  Chen produced and positively adopted the contents of the 8/9/2005 Letter, which he relied upon to show the existence of the 10/1/2003 Confirmation.

(2)  Zheng has a financial interest in the outcome of the trial as he was one of the designated persons to be paid pursuant to the Letter of Undertaking, the success of which depended on Chen’s claim[3].

18.As correctly pointed out by Mr Eugene Fung, SC for the Plaintiff, this factual case that the relevant fraud was perpetuated by Zheng (by giving false evidence) and the same was adopted by Chen has never been put forward hitherto. In the application for admission of new evidence before the Court, the 4^th to 6^th Defendants’ argument (adopted by the 1^st to 3^rd Defendants[4]) was that “Chen had forged the 8/9/2005 Letter using blank papers pre-signed and pre-stamped by Wong”[5]. Further, the allegation that Zheng was guilty of fraud in relation to the 8/9/2005 Letter lacked evidential foundation. Whilst he did give evidence concerning the sending out of that letter[6], none of the Defendants pleaded or argued that Shunfeng’s chop on the 8/9/2005 Letter was forged, or adduced any evidence as to the authenticity of Shunfeng’s chop on that letter, at the trial[7]. The authenticity of the signature of Wong on the 8/9/2005 Letter was strongly supported by the evidence of Mr Radley (the handwriting expert called by Wong, Line Power and Trengei, ie the 1^st to 3^rd Defendants) and Ms Yang (the handwriting expert called by Chen)[8]. That it was upon the instruction of Wong that the 8/9/2005 Letter was sent to Chen was also supported by the evidence of Mr Radley[9]. We do not consider that it is open to the Defendants to run a new factual case in their intended appeals in the Court of Final Appeal which was not pursued before the Court of Appeal (see Leung Ping Chiu Roy, ante, at §§64-67, per Kwan VP).

19.The 4^th to 6^th Defendants also argue that the “Fraud of a Party Requirement” is unsound in principle, and there should be a relaxation of the reasonable diligence requirement whenever a judgment is obtained by fraud for reasons of public policy[10]. In view of the discussion in §§15-18 above, this argument does not arise for consideration. In any event, it overlooks the fact where a judgment is obtained by fraud, an action may be brought to set aside the judgment, and the Ladd v Marshall Conditions are not applicable in such an action. It is only where a party applies to adduce new evidence in an appeal that the Ladd v Marshall Conditions are relevant in the exercise of the Court’s discretion whether to admit the new evidence. We do not see that there is any compelling public policy reason to extend the fraud exception in the way suggested by the 4^th to 6^th Defendants.

Questions 2 and 3

20.They are not questions of great general or public importance, but are specific to the facts and circumstances of the present case. We would add that:

(1)  In respect of Question 2, as submitted by Mr Fung, the Court admitted Item 23 on the basis of its “potential significance” to the appeal and expressly reserved the question of what weight (if any) ought to be accorded to the documents comprised in Item 23[11]. In the CA Judgment, the Court pointed out that there were obvious questions to be asked as to whether Chen in fact made the alleged admission, and whether such admission (if made) was voluntary[12]. It should also be noted that the documents in Item 23 came into existence after the CFI Judgment, and the Ladd v Marshall Conditions do not apply to the Defendants’ applications for their admission as new evidence. There is no finding by the Court in the CA Judgment that the evidence comprised in Item 23 is apparently credible under the 3^rd Ladd v Marshall Condition. We do not consider the materials in Item 23 to constitute sufficient evidence to demonstrate that “fraud to the requisite standard” has been demonstrated such that the reasonable diligence requirement should be relaxed.

(2)  In respect of Question 3, if the materials in Category 1 could not properly be admitted as new evidence, we do not consider they should become admissible for the purpose of supporting the authenticity or reliability of the alleged admission or confession made by Chen in Item 23.

“Or otherwise”

21.Insofar as the 1^st to 3^rd Defendants and 4^th to 6^th Defendants are seeking leave to appeal under the “or otherwise” limb in s 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, it is the well-settled practice of the Court of Appeal to defer consideration of such matter to the Appeal Committee of the Court of Final Appeal.

22.Mr Shieh argues that: (i) the Court’s finding that there is no reasonable prospect of success that Chen should be held responsible for the forgery of the 8/9/2005 Letter is fundamentally inconsistent with the Court’s admission of Item 23, by which the Court must have accepted that it raises a reasonable possibility of forgery of documents (including, inter alia, the 8/9/2005 Letter) by Chen, (ii) the failure of the Court to consider Item 23 is a manifest error, and (iii) this makes the present case a truly exceptional one such that the Court of Appeal should grant leave to appeal on the “or otherwise” limb[13]. Mr Lam likewise argues that the Court was manifestly wrong to hold that there is no reasonable prospect of success that Chen should be held responsible for the forgery of the 8/9/2005 Letter as he did not have the requisite knowledge[14].

23.Whether the Court has made a manifest error as contended by the Defendants is a matter for consideration by the Appeal Committee in the 1^st to 3^rd Defendants/4^th to 6^th Defendants’ applications to the Court of Final Appeal for leave to appeal (if any). We see no reason to depart from the well settled practice of the Court of Appeal to defer consideration of the “or otherwise” limb to the Appeal Committee of the Court of Final Appeal in the present case.

24.Lastly, it is clear that Questions 1, 2 and 4 only concern the reasonable diligence requirement under Condition 1, while Question 3 concerns the question of whether the Category 1 materials should be admitted to support the authenticity and reliability of Chen’s alleged admission or confession in Item 23. They do not have any impact on the Court’s finding that Condition 2 is not satisfied in respect of Category 2, or the Court’s decision to refuse to exercise its discretion to admit Category 3 as new evidence (in respect of which the Ladd v Marshall Conditions have no application). Hence, there would, in any event, be no basis to grant leave to appeal in so far as Category 2 and Category 3 are concerned.

25.The 2 Notices of Motion are dismissed with costs to the Plaintiff, with certificate for 2 counsel. We summarily assess the Plaintiff’s costs in the amounts of (i) HK$130,000 in relation to the 1^st to 3^rd Defendants’ Notice of Motion, and (ii) HK$150,000 in relation to the 4^th to 6^th Defendants’ Notice of Motion. These orders as to costs are orders nisi, which will become absolute unless an application is made to vary the same within 14 days from the date of this judgment.

Mr Eugene Fung, SC, Ms Andrea Yu and Ms Jennifer Fan, instructed by Adrian Yeung & Cheng, for the Plaintiff

Mr Douglas Lam, SC and Mr Chow Ho Kiu, instructed by C L Chow & Macksion Chan, for the 1^st, 2^nd and 3^rd Defendants

Mr Paul Shieh, SC, Ms Eva Sit, SC and Mr James Man, instructed by Baker & McKenzie, for the 4^th, 5^th and 6^th Defendants