The Hongkong & Shanghai Banking Corporation v. Fung Wing-king

HCA001419A/1972

IN THE SUPREME COURT OF HONG KONG

(ORIGINAL JURISDICTION)

ACTION NO. 1419 OF 1972

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Coram: Leonard J. in Chambers.

Date of Judgment: 26th June, 1974.

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JUDGMENT

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1. This is an appeal from the decision of Mr. Registrar Silke when he granted an application under 0.39 r.2 for the examination in Canada on behalf of the defendant of a witness FUNG Kai-sui. The prospective witness is the father of the defendant and the widower of TANG Siu as whose executor the defendant is sued. The proceedings in which the evidence of Mr. Fung is desired are for a sum of $1,939,542.13 with interest at $541.81 per day which sum is claimed by the plaintiff under a deed dated 31st May 1955 according to the tenor of which the deceased TANG Siu pledged to the plaintiff shares already deposited with the plaintiff or which might thereafter come into the plaintiff's possession on account of the deceased as security for the repayment to the plaintiff of advances made or to be made to Hang Tai & Fung's Company Ltd. (the company) and guaranteed repayment of all moneys at any time due from that company to the plaintiff.

2. The said company was essentially a one-man company owned and controlled by Mr. Fung in the running of which members of his family (but not the deceased) took some part. It is not in dispute that the company became insolvent and has virtually ceased operations since 1965 when the proposed witness went to Canada. Nor is it disputed that the sum claimed is due by the said company to the plaintiff. The deceased died in January 1969 and there is no evidence on the file that prior to her death the plaintiff ever demanded from her the sum now claimed from her estate under the deed. This action commenced in June 1972 and on the 12th July 1972 the plaintiff applied for final judgment under 0.14 r.2 supported by the usual affidavit of indebtedness. The affidavit filed in reply did not dispute the deceased's signature to the deed which was witnessed by Mr. Fung and the substantial defence raised was that the deceased who could not read English did not know the nature of the document which she was signing; that it had been represented to Mr. Fung by an official of the plaintiff's (unidentified) that by it she was pledging shares to the plaintiff and that prior to its signature this representation had been repeated to the deceased by the proposed witness Mr. Fung - that is to say the defence was non est factum, the mistake as to the identity of the document executed being caused by a misrepresentation repeated to the deceased by Mr. Fung. It is not necessary or desirable for me to comment on the prospects of the parties in the action save to remark that I have no reason to doubt the bona fides of the defendant in putting forward the defence which has been put forward. The deed itself seems to be in standard form. It is headed "Hypothecation B" simpliciter and only on the second page of it do the words :

"We jointly and severally (sic) undertake to pay you on demand and guarantee to you the repayment of all money at any time due to you from the customer alone or jointly in respect of any account whatever."

[The deceased was the only party purportedly executing this document - hence the reference to a joint and several undertaking is meaningless.] At the time this deed was purportedly executed by the deceased the amount owing by the company was approximately half million dollars but the value of the shares then pledged by the deceased was approximately $150,000 only. To my mind the defendant would have been failing in his duty to his co-beneficiaries of the estate of the deceased had he failed to raise the defence in question. The bona fides of the proposed witness in another matter on which I do not feel called to comment at this stage. On the affidavit filed by the defendant in the 0.14 application and notwithstanding an affidavit in rebuttal filed by the plaintiff an order was made by consent whereby the defendant was granted unconditional leave to defend.

3. The Defence and Counterclaim admitted that the deed had been signed by the deceased "honestly believing it to be a document pledging the shares with the plaintiff ... and nothing else." and raised the plea of non est factum. The deceased had at the date of her death further shares in a deposit box of the deceased at the plaintiff. These shares were sold by the plaintiff and the proceeds of their sale applied by the plaintiff in reduction of the deceased's alleged indebtedness under the deed. By virtue of the plea of "non est factum" the defendant disputes the plaintiff's right so to apply the proceeds of sale which form the subject of the counterclaim.

4. It will be seen from this brief resume of the questions in dispute that the proposed witness FUNG Kai-sui will be a most important witness for the defendant. His evidence may well be vulnerable to cross-examination as was suggested most forcibly by Mr. Ching before me but to my mind to prevent his evidence being made available would be tantamount to depriving the defendant of his right, arising inter alia from the consent order I have mentioned, to defend this action.

5. I am told by an uncontradicted affidavit the deponent to which has not been cross-examined or sought so to be that the witness will not come to Hong Kong for the purpose of giving evidence before the court here. The witness' reasons for not coming are somewhat tenuous; he is over 70 year of age, he has a spinal injury - unspecified, he has other creditors in Hong Kong and there is an unsatisfied judgment against him so that there is a possibility of proceedings against him under 0.44A or 0.49B. These may not be very good reas ns for his refusal to come but notwithstanding the fact that there is evidence that he is supported by his children, there is that he is supported by his children, there is no evidence whatsoever before me that the plaintiff can compel him to come and certainly not one iota of evidence that it has been suggested to him by anyone having an interest in these proceedings that he should stay away.

6. Mr. Ching has suggested that the authorities show that before this application can be successful the applicant must show either that the witness cannot come here or that he will not come for some good reason. In other words the motive of the witness is refusing to come is the motive to be examined. I do not so interpret the words "necessary for the purposes of justice" nor so read the authorities cited.

7. In Re Boyse⁽¹⁾ was decided on a very narrow point - that of the procedure followed in a French Court, the witness having refused to appear before an English Commissioner.

8. In Berdan v. Greenwood ⁽²⁾ the proposed witness was not only a party but the plaintiff who had chosen his venue (I would parse to remark that while the applicant - not the witness - here may be in the position of a plaintiff by reason of the burden of proof cast on him and by reason of his counterclaim he is not a plaintiff who has chosen his venue).

9. In Lawson v. Vacuum Brake Co.⁽³⁾ Baggallay, L.J. said :

"The Court, in considering an application of this nature will ... take into consideration the difference between the expense of the witness being brought over ... but ... it is the duty of the party making the application, when making it to bring before the court such circumstances as will satisfy the Court that it is for the interest of justice that the witness should be examined abroad. Now the only evidence that was before the Vice-Chancellor which tended in that direction is contained in the affidavit of John Battams ... Anything more vague than this testimony one can hardly imagine ... All we have to rely on is the affidavit of the clerk of the solicitors in England as to information received and derived from letters. In my opinion such evidence is insufficient. But we cannot shut our eyes to the peculiar position of this witness ... he originally took an active part in the transaction impeached as fraudulent ... Now I can hardly conceive a case in which it is more essential that the testimony of the witness should be given in Court at the trial."

10. That case is as close to Mr. Ching's contention as any that we are likely to find but to my mind and I note to the learned Registrar's the reasons for the refusal of the witness to come are more cogent in our case than those mentioned in that case. Furthermore in the course of his judgment Cotton L.J. observed :

"It is most desirable that such a witness should be examined in open Court. If, however, it could be shown that he could not be induced to come here or that the plaintiff could not be reasonably expected to bring him here, I think it would be right to give leave to examine him abroad ..."

It is true that he goes on to say :

"where it is important that the witness should be examined in Court, a heavy burden lies on the party who wishes to examine him abroad, to show clearly that he cannot be reasonably expected to come here."

In our case we are told that he will not come. All the evidence before me suggests that he will not and I consider I may take judicial notice of the fact that even in these permissive days the children of aged Hong Kong Chinese do not dictate to their fathers - even though they may be able to impose economic sanctions on them. I cannot find that the witness' refusal to come is completely unreas table although the reasons proffered do him little credit. Even if I were so to find that is not to say that the applicant has failed to show that the witness cannot be reasonably expected to come. The witness has said he won't come so no one can reasonably expect him to come until and unless he can be induced to change his mind. There is no evidence that he can be so induced.

11. The onus of proving non est factum is not to be lightly discharged. The defendant may well find it impossible to discharge it if he has to rely on evidence taken on commission. The case for the defendant may well be fatally injured by the absence of the witness and the fact that court here is unable to assess his demeanor but this is not to say that the defendant should be deprived of his consensual right to defend the action.

12. I appreciate that I approach this application de nevo but there does not appear to have been any argument raised before me which was not raised before and adequately and properly dealt with by the learned Registrar. I have read his decision and I cannot fault it. I have had no additional evidence except for correspondence (admitted by consent) between the solicitors for the parties (photostats of which are in a bundle marked "A"), which indicates that in the early stages the solicitors for the plaintiff viewed with equanimity the suggestion that Mr. Fung's evidence be taken abroad. For the reasons advanced by the learned Registrar and for those set out above I consider it necessary for the purposes of justice that the order made by the learned Registrar should stand.

13. This application is accordingly dismissed with costs. Certified fit for counsel.

Representation:

Mr. Charles Ching, Q.C. (J.S. & M.) for Plaintiff/Appellant.

Mr. Oswald Cheung, Q.C. & Mr. Andrew Li (F. Zimmern & Co.) for Defendant/Respondent.

(1) 20 Ch.D.760.

(2) 20 Ch.D.764.

(3) (1884) 27 Ch.D.137.