China Treasure Co Ltd v. Rich Long Ltd
Read the full judgment text of HCA 70/2003 on BabelCite. This High Court CFI judgment was delivered on 30 June 2006.
1. On the 2 nd day of trial, I gave:-
Cited by 1 case
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HCA 70/2003 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 70 OF 2003 ______________________ BETWEEN
______________________ Before : Mr Recorder Kwok, SC in Court Dates of Hearing : 27-30 June 2006 Date of Judgment : 30 June 2006 Date of Reasons for Judgment : 21 July 2006 __________________________________ REASONS FOR JUDGMENT __________________________________ Orders made 1.On the 2nd day of trial, I gave:-
2.At the end of the 4-day trial, I ordered that:-
3.I said that reasons for my judgment would be handed down. The million dollar claim 4.I start by giving my reasons for dismissing the plaintiff's claim. 5.The plaintiff is a company registered under the Companies Ordinance, Cap. 32. Mr Huang Ching Yi ("Huang") was a director. The directors were Taiwanese and were seldom in Hong Kong. 6.The defendant is a company registered under the Companies Ordinance. Mr Kao Shih Yi ("Kao") and one Mr Lin ("Lin") were shareholders and directors. Kao, a Taiwanese, was seldom in Hong Kong. 7.The defendant was a service company and provided services to the plaintiff which included filing of statutory documents, paying fees for business registration and arranging preparation and auditing of financial statements. 8.On about 27 December 1996, the plaintiff opened a savings account with Hang Seng Bank Limited. Lin was one of the four authorised signatories. Any one of the authorised signatories signing alone could operate the account provided that he had the plaintiff's company chop. 9.Until October 2002, the business of the defendant was run and managed by Lin. 10.Lin had signed a number of forms in blank. These included Hang Seng Bank's withdrawal slips and telegraphic transfer application forms of Bank of China (Hong Kong) Limited. 11.On about 10 October 2002, Lin was not in Hong Kong and Kao took physical control of the defendant's office. 12.By using telegraphic transfer application forms signed by Lin in blank, 2 applications for telegraphic transfers were made to the Bank of China (Hong Kong) Limited on about 17 October 2002. The bank made the transfers and deducted the amounts remitted from the account of Rich Long Shipping (HK) Limited of which Kao was the controlling and majority shareholder. Particulars of the transfers are as follows:-
13.By using a withdrawal slip signed by Lin in blank, the defendant helped itself to $1,000,000 by withdrawing the amount from the Hang Seng Bank savings account of the plaintiff. 14.The plaintiff commenced this action claiming $1,000,000 from the defendant. 15.The parties agreed that the defendant should begin. Kao was the only witness called by the defendant and Huang was the only witness called by the plaintiff. 16.In his testimony, Huang accepted that:-
17.Thus, a total of $1,000,000 had been remitted by Rich Long Shipping (HK) Limited to the plaintiff and the plaintiff's supplier. The plaintiff did not take any point on the remitter being Rich Long Shipping (HK) Limited instead of the defendant. Properly understood, this case is simple and straight forward. All that the defendant has done was to reimburse itself in the sum of $1,000,000, no more and no less. 18.The plaintiff allowed itself to be involved in an internal dispute between the Kao and Lin. Indeed, the plaintiff's solicitors were also Lin's solicitors. 19.The plaintiff's case was that the services provided by the defendant were confined to secretarial services; that Lin was authorised in his personal capacity to handle payments on behalf of the plaintiff; and that Lin was the source of funds for the remittances of $400,000 and $600,000. I rejected the plaintiff's case on the grounds of inherent probabilities and inconsistency with previous conduct and statements. 20.The plaintiff's pleaded case is that the services provided by the defendant to the plaintiff included "arranging accountants to prepare annual audit". The plaintiff made no attempt to explain why it retained the defendant, instead of Lin, to arrange "accountants to prepare annual audit" if Lin, not the defendant, was operating the savings account. 21.By fax dated 25 November 2002, Huang referred to his visit to the defendant's office on 12 November to take away savings account passbook and ledger. The plaintiff made no attempt to explain why Huang collected the ledger from the defendant instead of from Lin if Lin was the person operating the savings account on a personal basis. 22.In a statement made on about 20 December 2002 to the police, Huang stated that the defendant handled collection of money, payment of fees and expenses, retaining accountants and handling company accounts. It is clear from the context of the statement, i.e. collection of money, followed by payment of fees and expenses, that the defendant was handling the plaintiff's trade income and expenses. Moreover, there should be no money for the defendant to collect if the defendant was providing no more than secretarial services as Huang asserted in his amended witness statement. 23.Lin was only one of the shareholders of the defendant which charged the plaintiff an annual fee of $10,000. In my judgment, it is inherently improbable for Lin to agree to handle the plaintiff's trade income and expenses on a personal and complimentary basis. There is no reason why he should agree to be the provider of services when the other shareholders stood to benefit more from his services. Further, Lin would need to have the defendant's facilities and staff to provide the services. More so when Lin was out of Hong Kong. 24.By fax dated 29 November 2002, Huang wrote on behalf of the plaintiff to the defendant asserting that Lin had produced a receipt to demand payment relating to 2 remittances of which the $400,000 remittance was one. 25.In his testimony, Huang identified the telegraphic transfer application form for $400,000 as the document he was referring to in his fax. He retracted the assertion in the fax that Lin had produced a receipt and said that Lin had not produced any receipt. 26.More importantly, if Lin had been the source of funds for the 2 sums totalling $1,000,000 remitted on about 17 October 2002, the inherently probabilities are that Lin would have demanded payment by the time of trial in June 2006. Huang's testimony was that Lin had not demanded payment. Costs Order 27.I turn now to reasons for my costs order. 28.By Order dated 31 August 2004, Master J. Wong ordered, among others, that:-
29.In the defendant's Check-List dated 30 December 2005, Messrs Peter Mo & Co., solicitors for the defendant, stated that there would be expert evidence at trial; that there would be one witness on factual issues; and that one expert witness would be called. 30.Mr K.M. Chong, counsel for the defendant, signed the "Certificate of counsel for the defendant as to estimation of length of time for trial" dated 30 December 2005 certifying the following:-
31.It was stated in the defendant's check-list that there would be one factual witness and one expert witness. Yet Mr K.M. Chong gave "N/A" as the answer to time for examination in chief. Mr K.M. Chong accepted that the defendant should begin. Yet he gave "N/A" as the answer to time for opening. Fact Finding Report/Expert Report of the Defendant 32.On 25 October 2005, solicitors for the defendant filed a document described by them as "Expert Report of the Defendant". Needless to say, more than 56 days had by then elapsed since 31 August 2004. 33.A copy of this document ("the Document") is at pp 56 – 362 of the Bundle of Pleadings and Witness Statements. 34.The Document is extraordinary in many respects. 35.It is entitled:-
36.The Document itself is unsigned but there is a cover sheet stating that:-
37.The Document starts off with a page described as "Report Index". It reads as follows:-
38.The Report Index is followed by a 4-page "Argument point #1 for China Treasure legal case" (pp. 59 – 62). A large number of exhibits follows. I had no joy trying to locate any exhibit. The exhibit number takes the form of something like "Exhibit 3.1.c.1.1.1 p. 1/1". There is no index of the exhibits and solicitors for the defendant did not take the trouble to prepare one. Buried among the exhibits are a 4-page "Argument point #2 for China Treasure legal case" (pp. 164 – 167), a 7-page "Argument point #3 for China Treasure legal case" (pp. 273 – 279) and a 1-page "Argument point #4 for China Treasure legal case" (p. 356). 39.Another copy of the exhibits is reproduced in the Bundle of Documents. 40.Kao stated in paragraph 77 of his original witness statement dated 17 May 2005 that:-
41.In his original Supplemental Witness Statement, Kao referred to documents by using the exhibit numbers in the Document. I declined to waste any more time trying to locate documents using 10-digit or so reference numbers and told Mr K.M. Chong to revise it using the hearing bundle page reference. Hearing was adjourned for the defendant's legal team to do what they should have done in the first place. 42.The Document seemed to me to be an attempt to usurp my fact finding function. It is a basic principle of our legal system that in a trial by a judge sitting alone, questions of fact are for the judge. 43.I doubt whether any lawyer familiar with the duties and responsibilities of expert witnesses would have sought to produce the Document which excels in the breach of those duties and responsibilities. To quote from the oft-cited passage by Cresswell J. in The Ikarian Reefer [1993] 2 Lloyd's Rep 68 at page 81, these include the following:-
44.Further, there was the preliminary question of the competency of Mr U Wing Tsun Ulfred, see Phipson on Evidence, 15th Edition, paragraph 37-46. It would be for me to decide whether he had sufficient knowledge or expertise to qualify as an expert, and there was no need for it to have been acquired professionally, Halsbury's Laws of England, 4th edition, volume 17(1), paragraph 751, footnote 9. Apart from the claim that he is a certified public accountant, nothing is said about his knowledge or expertise. 45.When Mr K.M. Chong referred to the Document in his opening, I asked him to satisfy me that it was admissible. 46.Not only did he make no attempt to argue that it was admissible expert evidence, Mr K.M. Chong asserted that it was factual evidence. I permit myself to wonder how he felt it proper to make such an assertion. 47.In the course of his submission on costs, he stated that the only reason why he did not call the accountant was that any judicial officer was in as good a position as an accountant to deal with the matter and that the trial was not lengthened as a result of the Document. 48.The only reason why the trial was not further lengthened was that Mr K.M. Chong made no attempt to satisfy me that the Document or the oral evidence of the maker was admissible. What should have been a simple and straight forward case was unnecessarily lengthened by seeking to rely on the Document. The plaintiff had incurred costs dealing with it and had applied by summons dated 19 June 2006 for leave to file the "Expert Witness Statement of Luk Shu Kuen". The defendant must pay for messing around. 49.Taking a global approach and instead of ordering the defendant to pay the plaintiff part of the plaintiff's costs, I ordered the plaintiff to pay 1/3 of the defendant's taxed costs. 50.I should add that time was wasted by numerous red herrings introduced by Mr K.M. Chong and by his reliance on book entries as evidence of actual payment.
Mr Kenneth CL Chan & Mr Roland Lau, instructed by Messrs Kong & Tang, for the Plaintiff Mr KM Chong, instructed by Messrs Peter Mo & Co., for the Defendant Appeal allowed: see CACV279/2006 dated 13 December 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Further hearings and rulings under HCA 70/2003