Ku Ming Fong Katherine and Others v. Chu Chia Chin Charles

CACV 427 /2024, [2026] HKCA 1252

On appeal from [2024] HKCFI 2309

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 427 OF 2024

(ON APPEAL FROM HCA NO 1757 OF 2018)

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BETWEEN

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REASONS FOR JUDGMENT

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Hon Kwan VP (giving the Reasons for Judgment of the Court):

1.This is an appeal by the 1^st to 4^th plaintiffs against the judgment of Wilson Chan J handed down on 13 September 2024 (“Judgment”)[1], after a trial on liability which lasted for eight days in March 2024.

2.The plaintiffs claimed that a trust of some shares in Lully Corporation (“Lully” and “Lully Shares”)  was declared and constituted by a conversation between the 4^th plaintiff and the defendant in 1995 (“1995 Conversation”).  This trust was for the benefit of the 1^st plaintiff, the 2^nd and 3^rd plaintiffs (being the 1^st plaintiff’s two children by her first marriage to Mr Leung Lai Yuen; “Leung Children”)  and the 1^st plaintiff’s three children from her second marriage to the defendant; “Chu Children”), with the defendant as the trustee.  The plaintiffs claimed that the defendant had breached the alleged trust and his fiduciary duties towards the 1^st to 3^rd plaintiffs, by converting the Lully Shares for his own use, by failing to hold the trust property for the benefit of the beneficiaries and/or for the upbringing of the Leung Children and the Chu Children.  The alleged trust, which was established orally, was mentioned by the 4^th plaintiff for the first time 22 years later in 2017, and he did not tell any of the beneficiaries about this trust before 2017.  The present action was brought by the plaintiffs in July 2018.

3.The 1^st to 3^rd plaintiffs claimed against the defendant these reliefs: a declaration that he holds the Lully Shares and/or what have become of them on trust for the benefit of the beneficiaries; a declaration that he was in breach of the trust in respect of the Lully Shares; an inquiry as to whether the Lully Shares had been disposed of by the defendant and what have become of them; an account for all profits and proceeds derived from the Lully Shares and what have become of them, directions for an account and inquiry and payment arising therefrom; an order that the defendant do reconstitute and restore the trust property and a new trustee be appointed; damages and equitable compensation.

4.Alternative to the claim of the 1^st to 3^rd plaintiffs, the 4^th plaintiff alleged that the 1995 Conversation gave rise to a Quistclose trust[2] against the defendant and, as a result of the defendant’s breach of trust and fiduciary duties, the purposes of the Quistclose trust had failed and the defendant holds the Lully Shares and/or what have become of them on resulting trust for the 4^th plaintiff.  The 4^th plaintiff claimed against the defendant a declaration that he holds the Lully Shares and/or what have become of them on resulting trust for the 4^th plaintiff, an account and inquiry and orders of payment, further and other remedies including tracing.  This alternative claim was expressly abandoned in the closing submissions of the plaintiffs at the trial[3].  It was submitted that “After hearing viva voce evidence of P4, Ps do not further pursue the claim of Quistclose trust.”

5.The defendant’s case was that the plaintiffs’ claim should be dismissed on the following bases and any one of them would suffice:

(1)  the 1995 Conversation is plainly not proved and it never took place;

(2)  the alleged trust failed for want of subject matter by reason of the defendant’s sale of the Lully Shares to his friend Mr Tan 談智隽 (“Tan”)  in 1992 (“1992 Disposal”); further, the defendant had informed the 4^th plaintiff of the 1992 Disposal in about the end of 1992;

(3)  even if the 1995 Conversation had taken place, the claim of the 1^st to 3^rd plaintiffs in trust cannot be sustained in view of the evidence given by the 4^th plaintiff on the trust; and

(4)  in any event, the plaintiffs’ claim against the defendant must be barred by laches and/or acquiescence.

6.As recognised by the plaintiffs, this is a case essentially in factual dispute[4]. The 1^st, 2^nd and 4^th plaintiffs gave evidence for the plaintiffs at the trial.  The defendant was the only witness for the other side.

7.The judge found in favour of the defendant that:

(1)  the 1995 Conversation did not take place;

(2)  the defendant sold the Lully Shares to Tan in 1992 at a consideration of about $4 million and informed the 4^th plaintiff about this at or about the time the defendant was appointed as an independent non-executive director (“INED”)  of Nam Tai Electronics Inc (re-named Nam Tai Property Inc in 2014; “Nam Tai”);

(3)  no trust was created over the Lully Shares because of the 1992 Disposal and because the 1995 Conversation did not take place; and

(4)  the plaintiffs’ claim against the defendant is in any event debarred by reason of laches and/or acquiescence.

8.In light of the above holdings, which are largely findings of fact, the judge dismissed the plaintiffs’ claim in the entirety.

9.At the forefront of this appeal is the complaint of impermissible judicial copying (Ground 2 of the grounds of appeal). Almost 95% of the Judgment comprises passages copied from the opening and closing submissions of the defendant’s counsel.  The notice of appeal sought an order that the issue of liability be determined in favour of the plaintiffs, alternatively there be a re-trial on the issue of liability before another judge.

10.Mr Bernard Man, SC, who appeared for the defendant on appeal and below[5], submitted that as the 4^th plaintiff has abandoned his only personal claim against the defendant based on Quistclose trust, he has no locus standi to pursue this appeal in his own right.  The 4^th plaintiff was merely a witness and has no interest in the claim pursued by the 1^st to 3^rd plaintiffs.  We do not agree.  Findings of fact were made against the 4^th plaintiff in the Judgment, which he contended were plainly wrong and compounded by impermissible judicial copying.  Nor do we think he has no interest in the plaintiffs’ claim in view of the assertion that the alleged trust was set up through him.  He clearly has locus standi to pursue this appeal.

11.The plaintiffs changed their team of counsel on appeal.  They appeared by Mr Denis Chang, SC[6].

12.At the conclusion of the hearing, we allowed the plaintiffs’ appeal and ordered a re-trial before another judge on the issue of liability.  These are the reasons of the court.

Background

13.The relevant background matters for present purposes may be related as follows.

(1)  General background

14.The 4^th plaintiff is the elder brother of the 1^st plaintiff.  He is the founder of the Nam Tai group of companies.  Nam Tai was incorporated in the British Virgin Islands in August 1987 and has been a listed company since March 1988, first on Nasdaq and subsequently on the New York Stock Exchange.  At all material times, the 4^th plaintiff has been the executive chairman of the board of directors of Nam Tai.  At the time Nam Tai completed its initial public offering on Nasdaq in 1988, Lully (incorporated in Liberia)  held 55.6% of the shares of Nam Tai and the majority of the shares in Lully was owned by the 4^th plaintiff.

15.The defendant was admitted as a solicitor of the High Court of Hong Kong in March 1983.  He became a partner of Messrs Y T Chan & Co, solicitors in April 1986.  At the invitation of the 4^th plaintiff, the defendant quit the partnership of Messrs Y T Chan & Co and joined Nam Tai in about June 1987 as the executive vice president, the company secretary and a director.  He resumed his full-time practice as a solicitor in Hong Kong in June 1988.  On 14 September 1989, he resigned as an executive officer and executive director of Nam Tai and in December 1989, he commenced his own legal practice in the name of Charles Chu & Co, solicitors, which was later named Charles Chu & Kenneth Sit, and he has remained a partner of his law firm ever since.

16.The 1^st plaintiff married the defendant in October 1983.  At the time of their marriage, the 2^nd plaintiff was eight years old and the 3^rd plaintiff six years old.  In 1985, the 2^nd plaintiff moved to Canada to live with her biological father Mr Leung who came from a wealthy family.  The 3^rd plaintiff did likewise in 1989.  Since then, Mr Leung had resumed care and control of the Leung Children and had supported them financially.

(2)  Transfer of Lully Shares to the defendant

17.On 7 July 1987, the 4^th plaintiff transferred two out of 12 shares in Lully to the defendant.  There were four shareholders of Lully at the time, with the 4^th plaintiff holding seven shares, Shum Chi Fung (vice president of operations of Nam Tai at the time)  holding two shares and Tam King Ching Kenny (vice president of finance and chief financial officer of Nam Tai at the time)  holding one share.

18.In about August 1990, further shares of Lully were issued to the respective shareholders of Lully.  The defendant’s shareholding in Lully was increased to four out of 36 shares.

19.It is the plaintiffs’ case that the two shares and subsequently four shares in Lully were a gift from the 4^th plaintiff to the defendant in consideration of the defendant’s marriage to the 1^st plaintiff.

20.The defendant denied that the Lully Shares constituted a gift to him from the 4^th plaintiff on account of his marriage to the 1^st plaintiff.  He claimed that the transfer of the Lully Shares, which was more than three years after his marriage, was due to the 4^th plaintiff’s invitation to him to work in Nam Tai in 1987 to facilitate its listing.  The 4^th plaintiff offered to appoint him a director and vice president and to issue shares in Nam Tai to him.  He received the two Lully Shares in 1987 as a result of accepting this offer.  He alleged that Shum Chi Fung and Tam King Ching Kenny were also awarded shares of Nam Tai through Lully by the 4^th plaintiff prior to the listing of Nam Tai in recognition of their contribution to the company.

21.The defendant’s assertions were denied by the 4^th plaintiff, who alleged that the defendant only played a minor role in the legal matters of Nam Tai at the time and specialist qualified lawyers were engaged for the matters at hand by the company.  The 4^th plaintiff maintained the Lully Shares were gifted to the defendant as a result of his marriage to the 1^st plaintiff, not because the defendant gave up his legal practice to join Nam Tai.

22.The 4^th plaintiff and the defendant were cross-examined at some length on this issue, but the judge made no finding on this dispute.

23.Ground 5 of the grounds of appeal is that §§9 to 15 of the Judgment merely copied from the defendant’s opening submissions in setting out the circumstances in which the defendant was given the Lully Shares, and the judge failed to consider or deal properly with the evidence to the contrary which was discussed in some detail in the closing submissions of the plaintiffs[7]. Mr Chang invited us to resolve this in favour of the plaintiffs, contending that the judge had no basis for not accepting the 4^th plaintiff’s evidence as credible in this regard and had plainly erred.

24.Mr Man submitted that the judge did not overlook this dispute or ignore the evidence, as the judge had received the parties’ submissions on this issue.  As for the judge making no finding on this, the natural inference is that he did not regard the dispute as material to warrant separate treatment.  Mr Man also asked us to find in favour of the defendant on this issue.

25.We do not agree with Mr Man that this dispute is not material.  If the Lully Shares were indeed gifted to the defendant as a result of his marriage to the 1^st plaintiff, this may affect the inherent probabilities of the defendant agreeing to the trust as alleged by the plaintiffs.  This factual dispute is emblematic of the difficulties the appeal court has regarding the other factual disputes in this situation.  One party’s case may seem weak on paper but we do not find it feasible to resolve sharp conflicts of fact on the papers by reading the witness statements and selected parts of the transcript[8].

(3)  The 1992 Disposal

26.The resolution of this issue in the defendant’s favour is fatal to the plaintiffs’ claim.  There was no documentary evidence in support of the alleged sale of the Lully Shares to Tan for $4 million.  Tan, a long-time friend of the defendant, had passed away in January 2017, a few months before the 4^th plaintiff openly mentioned the alleged trust. The defendant approached Tan’s sons after the commencement of these proceedings to see if they could locate records of the 1992 Disposal but to no avail.  The evidence in support came from the defendant alone.  He alleged that Tan bought the Lully Shares from him as a gesture of friendship as he was experiencing grave financial stress both domestically and professionally in 1992.

27.There was a fax dated 18 November 1992 from the 4^th plaintiff to the defendant referring to their telephone conversation in which the defendant agreed to join Nam Tai as an INED and requesting the defendant to arrange for the transfer of the Lully Shares to the 1^st plaintiff, as the 4^th plaintiff understood that to become an INED of Nam Tai, the defendant’s shares and directorship in Lully had to be cancelled.

28.The defendant was appointed an INED of Nam Tai in December 1992.  He alleged that at about the time of his appointment, he had informed the 4^th plaintiff of the 1992 Disposal after he received the fax dated 18 November 1992.

29.The plaintiffs disputed the 1992 Disposal and denied that the defendant had informed the 4^th plaintiff of this in 1992.  The judge rejected the 4^th plaintiff’s case for the reasons set out in the defendant’s closing submissions[9], which were incorporated in the Judgment at §§80 to 119.  A substantial part of Ground 3 of the grounds of appeal was that the judge failed to consider or deal properly with evidence to the contrary that had been highlighted in the plaintiffs’ closing submissions.

(4)  The divorce of the 1^st plaintiff and the defendant

30.In early 1993, the defendant met his current wife and began a relationship with her.  He admitted this relationship to the 1^st plaintiff and moved out of the matrimonial home with the Chu Children.  The 1^st plaintiff presented a petition for divorce in 1994.  They agreed to a clean break.  The divorce was traumatic for both of them.

31.On 14 December 1994, a decree nisi for divorce was granted.  Custody of the Chu Children was granted to the defendant, who was responsible for their care and support.  The defendant made no claim against the matrimonial home registered in the 1^st plaintiff’s name which was sold for a very substantial sum prior to the divorce.  The parties’ claim for ancillary relief against each other was dismissed.  The decree absolute of divorce was made on 26 January 1995.

(5)  The 1995 Conversation

32.The 4^th plaintiff gave evidence that in about 1995, he had a meeting with the defendant in the office of Nam Tai, during which the defendant told him as he was to be divorced from the 1^st plaintiff, there was no reason for him to retain the gift of the Lully Shares and he suggested to return them to the 4^th plaintiff.  The 4^th plaintiff counter-proposed that although the defendant could give up the Lully Shares, he could continue to hold them for the upbringing of the Leung Children and the Chu Children and for looking after the needs of the 1^st plaintiff.  The 4^th plaintiff mentioned that it would be contrary to the original purpose of the gift of the shares to the defendant if he were to give up the shares and causing those who would have benefited from the gift of the shares to lose out.  The defendant agreed to the 4^th plaintiff’s proposal and continued to hold the Lully Shares, on the basis of a trust for the beneficiaries as mentioned.  There was no contemporaneous document evidencing the trust.

33.By 1995, the 2^nd plaintiff was around 20 years old and the 3^rd plaintiff was 18 years old.  They were living with and supported by Mr Leung in Vancouver, Canada.

34.The defendant denied there was any discussion with the 4^th plaintiff about the Lully Shares as alleged.  He had only discussed with the 4^th plaintiff in late 1994 whether he should resign from his directorship of Nam Tai because of his divorce and the 4^th plaintiff told him that would not be necessary.

35.The judge accepted the defendant’s submissions there was “fundamental unreliability and inconsistency” in the plaintiffs’ case as to whether the 1^st plaintiff was a beneficiary of the alleged trust and that the 2^nd and 3^rd plaintiffs could not have been named as beneficiaries.  He held that the 1995 Conversation did not take place for the reasons given in §§63 to 79 of the Judgment, which were copied from the defendant’s closing submissions[10]. Another part of Ground 3 of the grounds of appeal related to this and complained of the judge’s failure to consider or deal properly with evidence to the contrary analysed in the plaintiffs’ closing submissions.

(6)  The 1996 distribution sheet

36.In December 1996, the shares in Nam Tai held by Lully were distributed to the shareholders of Lully on a pro rata basis. Lully was eventually dissolved in June 2000.

37.According to a distribution sheet relating to this prepared by Mark Klein (the lawyer of Nam Tai responsible for regulatory and compliance matters, replaced by Julian Lin in 2017), 19% of the shares of Nam Tai held by Lully was distributed to Uniglobe Investments Ltd (“Uniglobe”). This did not tally with the percentage of the defendant’s shareholding in Lully, which was 11.11% being four out of 36 shares.  On this sheet, the defendant’s name did not feature among the shareholders of Lully that would receive Nam Tai shares.

38.The plaintiffs’ case was that Uniglobe was under the defendant’s control and it was the defendant who had requested the 4^th plaintiff to distribute Nam Tai shares to Uniglobe.  There was no record made by Mark Klein on the ownership of Uniglobe.

39.The defendant denied he had made any request as alleged to the 4^th plaintiff.  It was his case that the 1996 distribution sheet strongly supported his assertion that the 1992 Disposal had taken place and that the 4^th plaintiff had been informed of the same, hence he did not receive any Nam Tai shares in 1996.

40.The judge rejected the allegation that Uniglobe was owned or controlled by the defendant.  He found there was no truth in the plaintiffs’ case and the defendant had, to the knowledge of the 4^th plaintiff, already disposed of his Lully Shares by December 1996.  His reasons at §§91 to 95 of the Judgment were copied verbatim from the defendant’s closing submissions[11].  This featured in Ground 3 of the grounds of appeal as another instance of improper judicial copying.

(7)  The 2014 Arrangement

41.In May or June 2014, an arrangement (“2014 Arrangement”)  was reached among the 4^th plaintiff, the defendant, one of the 1^st plaintiff’s sisters, the 2^nd plaintiff and the Chu Children to set up a fund for the support of the 1^st plaintiff, who was in financial difficulties.  Under this arrangement, the 4^th plaintiff, the defendant and one of the 1^st plaintiff’s sisters would each pay $10,000 to the 1^st plaintiff each month.  The 2^nd plaintiff and the Chu Children would each pay $2,000 to the 1^st plaintiff each month.  The 1^st plaintiff agreed to surrender her affiliate membership in a club in exchange for this arrangement.

42.At the time of the 2014 Arrangement, the 4^th plaintiff did not mention the alleged trust or ask about the administration of the trust by the defendant.

43.The judge found such conduct by the 4^th plaintiff inconsistent with the existence of the alleged trust, making his evidence on this wholly incredible.  His reasoning in §§78 to 79 was copied from the defendant’s closing submissions[12].  This formed part of the complaint in Ground 3 of the grounds of appeal that he failed to consider the evidence mentioned in the plaintiffs’ closing submissions. 

(8)  The circumstances in which the alleged trust was raised

44.On 1 June 2017, the 4^th plaintiff sent an email to the board of directors of Nam Tai stating that he agreed to sell his stake in Nam Tai to a developer in Mainland China, Kaisa Group Holdings Limited (“Kaisa”), and sought the approval and consent of the board for a due diligence exercise to be performed by Kaisa on Nam Tai.  A special committee was set up to consider whether the board should facilitate the due diligence exercise.  The defendant was a member of the special committee. 

45.The special committee resolved to authorise Nam Tai to enter into a non-disclosure and standstill agreement with Kaisa for the due diligence exercise to be conducted.  The 4^th plaintiff considered that the conditions in the resolutions of the special committee required modifications.  On 22 June 2017, he sent an email to the board of directors at 12:22 hours on the subject of “Form 20F disclosure of director’s beneficial ownership”, reminding the directors they were required to disclose the title and amount of their shareholding in Nam Tai, whether held in their own name or through nominees, as Nam Tai was “currently under an investigation” which required all directors and the management to declare and clarify their shares ownership in the company.  He singled out for mention the defendant stating as follows:

“Charles, as I recalled in many years ago, I gave you one lot of Company shares. However, I did not realise or read any of your reports being made and disclosed regarding your shares ownership. So far there was no report showing whether you have sold any of the shares; or any of the shares was being kept under different name(s). I hope you will declare the details of your shares ownership since the shares were given to you. Please clarify and indicate the number of shares if being sold/transferred to any person, the recipients of the shares being sold/transferred to and the selling/transfer price of the shares. Kindly remember that you also have committed to myself that there was a special purpose concerning any funds or proceeds from the shares that I gave you under trust.” (emphasis supplied)

46.This was the first mention by the 4^th plaintiff openly of the alleged trust.

47.The 4^th plaintiff sent an email to the defendant on the same date at 18:30 hours copied to all directors, in which he questioned the defendant’s work in the special committee (in particular instructing the new CEO Julian Lin to look for other potential investor apart from Kaisa)  and whether there was inappropriate interference with the management.  In response, the defendant sent an email to the 4^th plaintiff at 20:11 hours stating that he had not referred Julian Lin to any potential investor and he was to resign from the board with immediate effect.  He tendered a letter to the 4^th plaintiff dated 22 June 2017 resigning his position as an INED of Nam Tai, with a letter of confirmation of the same date confirming the number of common shares of Nam Tai that he owned beneficially, whether directly or indirectly, and the outstanding stock options available for exercise as at 31 January 2017.  The stock option certificates were returned by the defendant for cancellation on 17 July 2017.  Nam Tai approved his resignation as a director on 22 September 2017.

48.On 28 June 2017, the 4^th plaintiff asked Lorne Waldman (director of Nam Tai and member of the nominating/corporate governance committee)  to make inquiries with the defendant regarding “the receipt of a gift (ie one lot of shares)  on trust to [the defendant] from [the 4^th plaintiff]”.  As a result, emails were exchanged between Waldman and the defendant in July and August 2017 and Waldman reported back to the 4^th plaintiff.  In those exchanges, the defendant mentioned the Lully Shares, claiming that he had disposed of them as he was then under grave financial pressure and it was difficult to recount the details given the long lapse of time.  From 14 September 2017, Julian Lin took over from Waldman the responsibility of making such inquiry and reporting back to the 4^th plaintiff.

49.The 4^th plaintiff’s solicitors wrote to the defendant on 24 January 2018 alleging a trust of the Lully Shares and seeking information of the defendant’s alleged disposal of them.  The writ in this action was issued by the plaintiffs on 30 July 2018.

Impermissible judicial copying

50.Of the main holdings the judge found in favour of the defendant concerning the 1995 Conversation, the 1992 Disposal and laches, the reasoning and findings are copied almost verbatim from the defendant’s closing submissions.  As in other instances, the aggrieved party has provided a copy of the Judgment highlighting the extent and quality of the copying and matching them with coloured parts of the defendant’s opening and closing submissions.  There is nothing in the Judgment to show that the judge had considered the competing evidence and submissions of the plaintiffs (other than those mentioned and dealt with in the defendant’s submissions)  before he made the findings. 

51.Mr Man does not dispute the relevant principles in the authorities cited by the plaintiffs[13]. In determining whether a judgment should be impugned on the ground of judicial copying, the material question is whether a fair-minded observer would conclude that the judge had brought an independent mind to resolve the issues and been seen to have done so.  Mr Man argued that this question should be answered in the affirmative for these reasons[14]:

(1)     The judge did not adopt the defendant’s submissions wholesale.  Mr Man pointed to three instances in the Judgment: (i)  in §112, the judge summarised the plaintiffs’ extensive queries as to the circumstances surrounding the 1992 Disposal and their criticism of the defendant’s evidence, this paragraph was not copied from the defendant’s submissions; (ii)  in §§120 to 121, he rejected the defendant’s submission that no viable trust, whether a fixed trust or discretionary trust, could have arisen from the 1995 Conversation; and (iii)  he declined to make any finding on the circumstances in which the defendant received the Lully Shares, notwithstanding both sides had made detailed submissions on this topic.  These instances indicated that the judge had considered the issues independently and impartially[15].

(2)     The judge had actively engaged with counsel’s submissions and shown a firm grasp of the issues at the hearing[16]. He took an active interest throughout the trial and would appear to have mastered the issues before him.

(3)     Where matters are common ground or undisputed, a judge’s substantial adoption of one party’s expression of them does not show any unwillingness to bring an independent mind to the issues requiring decision[17]. In adopting the defendant’s opening submissions in Section B of the Judgment (headed “Relevant Factual Background”, §§3 to 60), the matters there were either undisputed, or on which the judge found it unnecessary to rule (being the circumstances in which the defendant received the Lully Shares).

52.We do not accept the above submissions.

53.The three instances in the Judgment that Mr Man referred to in (1)  must be viewed in the context of the entirety of the Judgment, almost 95% of which was incorporated from the submissions of the defendant.  Apart from the extent of the copying, the quality of the copying leaves one in little doubt it could not have been apparent that the judge had applied an independent mind to bear on the important issues he was required to decide.  The three instances singled out by Mr Man are relatively immaterial to the reasoning process and the final conclusion in the Judgment.  They are not sufficient to cause a fair-minded observer to have doubts on the overall appearance of the lack of an active, independent and impartial judicial mind in this instance.

54.The other two matters raised by Mr Man are of no or little consequence.  In the more recent decisions of the Court of Appeal on this topic, emphasis has been placed on the importance of appearances and the impression that may be given by the extensive incorporation of the winning party’s submissions that a judge had not performed the task of considering both parties’ cases independently and even-handedly.  We hope to lay this to rest and be spared from being taken through the transcripts of proceedings showing that the judge had taken an active interest in the proceedings by putting questions to the witnesses and having exchanges with counsel in their submissions.  As mentioned in Lo Kai Shui v HSBC International Trustee Ltd at §14, the good impression created by the display of judicial temperament and active engagement with counsel throughout the hearing cannot effectively displace the impression given by a judgment of extensive copying that the judge has subsequently abdicated his core judicial responsibility to think through for himself the issues he has to decide.  The judge’s task in bringing his own mind to bear on the issues and demonstrating it by expressing in his own language how he reached a finding cannot be substituted by his expressions of interest in or engagement with the issues during the hearing (Wong To Yick Wood Lock Ointment Ltd v Singapore Medicine Co at §26).

55.On the ground of impermissible judicial copying, this appeal must be allowed.

Laches

56.We will consider this issue first before we deal with the submissions on the substantive findings, as it is the defendant’s position that he should succeed if the plaintiffs are debarred from pursuing the claim by reason of laches.

57.The judge reproduced substantially the defendant’s submissions on this issue and considered the extreme delay in the commencement of this action solely from the 4^th plaintiff’s perspective, because “all of the plaintiffs’ claims are based on the 4^th plaintiff’s evidence and contentions as the alleged settlor of the Alleged Trust” and “as the 1^st plaintiff confirmed, it was the 4^th plaintiff who had control of the direction of these proceedings” (at §128).  He found that “on the 4^th plaintiff’s case, he would have sufficient knowledge to act earlier” in that he could have asked for an account or at least some form of update since the alleged declaration of trust in 1995, he should have raised queries by 2001 when the defendant had disclosed he only held minimal interest in Nam Tai, and latest by May/June 2014 when the 2014 Arrangement was entered into (at §129).  “As the 1^st to 3^rd plaintiffs are only claiming through the 4^th plaintiff’s allegations, it cannot be right that the defendant is then made to suffer from all the difficulties resultant from this extreme delay” (at §133).

58.We do not think this is right.

59.For the 1^st to 3^rd plaintiffs to be barred from pursuing their claim against the defendant on the ground of extreme delay, this must be premised on the assumption they could and should have acted much earlier.  They could not have done so when they had no knowledge of the alleged trust and no suspicion of any breach of trust of the defendant until this was mentioned by the 4^th plaintiff in July 2017.  It is wrong to attribute the knowledge of the 4^th plaintiff to them and find them at fault for the failure of the 4^th plaintiff to act.  Laches cannot be raised against the 1^st to 3^rd plaintiffs.

If there should be a re-trial

60.In light of the impermissible judicial copying, we need to consider the issues in dispute afresh without the benefit of the judge’s input.  Both sides made elaborate submissions with the view of avoiding a re-trial.

61.Mr Chang urged us to make findings on the main issues in favour of the plaintiffs and referred the court to those parts of the transcript of proceedings that would appear favourable to the plaintiffs, as raised in the plaintiffs’ closing submissions but not dealt with by the judge. Mr Man sought to repeat the submissions he made below to persuade us that we ought to come to the same view as the judge on account of the strength of the evidence in the defendant’s favour.

62.We are keenly aware that a re-trial is a remedy of last resort which should be avoided if justice can be done to the parties otherwise, as this involves a waste of time, money and resources and is inherently undesirable[18]. In assessing whether it is in the interests of justice that a re-trial should take place, the appeal court can take into account and balance many factors, including the nature and apparent strength of the appellant’s case at first instance; whether the court had been able properly to adjudicate on the case which the party presented at trial; the circumstances in which the error at first instance arose; the passage of time since the events which would be the subject of evidence in a re-trial and the likely effect of that on witnesses’ recollection; the time, money and resources which a re-trial entails[19].

63.In this instance, the case which the plaintiffs presented to the judge had not received a proper adjudication, as it did not appear from the Judgment that the judge had considered properly the evidence that may appear favourable to the plaintiffs and the submissions of their counsel before making the material findings of fact.  This is not a situation where findings of fact can be made by the appeal court by drawing inferences from undisputed facts and objective evidence without resolving any conflict of oral evidence, or where a party has no positive case on the relevant issue and the court does not have to resolve conflict of evidence of witnesses[20], or where the impugned findings are relatively minor and do not permeate the entire judgment.  We are not in as good a position as the trial judge to assess the oral evidence and make findings.  We are simply not able to make primary findings of fact and resolve the conflicting evidence without a proper assessment of the credibility of the 4^th plaintiff and the defendant as witnesses, and justice would require a fresh assessment of their credibility in a re-trial.  We are in no position to decide that the plaintiffs’ case is bound to fail on inherent improbability or insurmountable evidential difficulties, as contended by Mr Man. It would not be appropriate for us to make further observations on the merits despite the detailed submissions of both parties. 

64.We have considered Mr Man’s submissions regarding the impact of a re-trial. Leaving aside the time and costs involved, we recognise that the memory of the witnesses of events (some of which took place 30 years ago)  might be further dimmed.  The witnesses had been cross-examined vigorously and extensively.  With the transcripts of evidence available to them and the benefit of the points made against them in counsel’s closing submissions, they might seek to tailor their evidence to avoid similar pitfalls at the re-trial.  We do not think these are insurmountable difficulties that should weigh against a re-trial. We have canvassed with the parties the feasibility of fixing new dates for the re-trial as soon as practicable and were given to understand that the case is ready for trial on liability with no further directions required.  As for the concern that witnesses might change tactics to put their case in a favourable light, this would not escape the attention of counsel on the other side and could be dealt with in the re-trial appropriately.

65.We have weighed various factors urged upon us and are satisfied that justice requires a re-trial in this instance.  We therefore exercised our discretion to order a re-trial on liability before another judge.

Orders and costs

66.We allowed the plaintiffs’ appeal for the reasons above.

67.We ordered a re-trial before another judge on liability with eight days estimated and that an early hearing date be given.  We gave leave to fix a hearing date in consultation with counsel’s diaries and should there be difficulty arising out of this, leave to seek further directions from the court.

68.For the costs below and on appeal, both parties are in agreement that a similar costs order should be made as in §35 of Wong To Yick Wood Lock Ointment Ltd v Singapore Medicine Co.  We therefore ordered the plaintiffs’ costs of the appeal with a certificate for two counsel and the parties’ costs below be in the cause of the re-trial on liability, so if the plaintiffs should succeed at the re-trial, the defendant would have to pay their costs of this appeal.

Mr Denis Chang SC, Ms Isabel Tam and Mr Anson Wong Yu Yat, instructed by Wilkinson & Grist, for the Plaintiffs (Appellants)

Mr Bernard Man SC and Mr Lai Chun Ho, instructed by Charles Chu & Kenneth Sit, for the Defendant (Respondent)