Pacific Electric Wire & Cable Co Ltd v. Harmutty Ltd and Others

HCCL17/2009, HCCL18/2009,
CACV208/2008, CACV210/2008,
CACV211/2008, CACV212/2008,
CACV351/2008 & CACV352/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 17 OF 2009

(TRANSFERRED FROM CIVIL ACTION NO. 2746 OF 2004)

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COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 18 OF 2009

(TRANSFERRED FROM CIVIL ACTION NO. 2763 OF 2004)

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COURT OF APPEAL

CIVIL APPEAL NO. 208 OF 2008

(ON APPEAL FROM CIVIL ACTION NO. 2763 OF 2004)

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COURT OF APPEAL

CIVIL APPEAL NO. 210 OF 2008

(ON APPEAL FROM CIVIL ACTION NO. 2203 OF 2004)

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COURT OF APPEAL

CIVIL APPEAL NO. 211 OF 2008

(ON APPEAL FROM CIVIL ACTION NO. 2746 OF 2004)

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COURT OF APPEAL

CIVIL APPEAL NO. 212 OF 2008

(ON APPEAL FROM CIVIL ACTION NO. 2763 OF 2004)

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COURT OF APPEAL

CIVIL APPEAL NO. 351 OF 2008

(ON APPEAL FROM CIVIL ACTION NO. 2746 OF 2004)

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COURT OF APPEAL

CIVIL APPEAL NO. 352 OF 2008

(ON APPEAL FROM CIVIL ACTION NO. 2763 OF 2004)

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Coram: Master de Souza in Chambers (Open to the Public)

Date of Hearing: 16-18 August, 5 & 9 November 2010

Date of Decision: 9 November 2010

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D E C I S I O N

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Background

1.These are applications dated 13 and 16 August 2010 by the Plaintiff, PEWC, for leave to amend its list of objections filed in CACV208, 210, 211, 212, 351 and 352 of 2008 on 8 January 2010, and its list of objections filed in HCCL17 and 18 of 2009 on 8 January 2010.

2.The substantial amendments sought in respect of the costs of the two commercial list cases, namely, HCCL17 and 18 of 2009, appear as item 125 of the proposed amended list of objections.  In respect of the remaining six appeals, the proposed amended objection is principally item 131 of the list of objections.

3.Mr Hu Hung-chiu (“Mr Hu”) is the 4th defendant in the commercial actions and in the CACV actions except in CACV210 of 2008 as the 8th defendant. 

4.Similar submissions and objections are advanced as respect the proposed amendments and I have been invited to adjudicate upon them together.

5.In essence, the proposed amended objections now seek to argue that Mr Hu should not be entitled to his costs for his defence and evidence filed in the aforementioned proceedings as he has been convicted on 30 July 2010 in the Taiwan Criminal Court of various forgery offences against the Plaintiff and sentenced to 18 years’ imprisonment and fined NT$1 billion.  The Plaintiff was, as it admitted in correspondence dated 13 July 2010, one of the complainants in the criminal suit.

6.It is said, upon a detailed analysis of the Taiwan judgment by Mr To, then acting for the Plaintiff (now latterly represented by Mr Yen), that Mr Hu’s Taiwan defence, so thoroughly discredited by the Taiwan Court and so closely mirroring his defence and evidence raised in the Hong Kong actions and appeals, as to have become highly relevant and admissible if a proper and just disposal of the taxation of his bills of costs is to be achieved.

7.The Plaintiff has raised a number of arguments in support of its applications to amend.  I shall address these in turn:

(i) Relevance and admissibility of the Taiwan conviction and judgment to the taxation of these bills

8.This necessarily brings into focus the time-honoured rule in Hollington v Hewthorn [1943] 1KB 587.  It is conceded by the Plaintiff that the rule prevents it from adducing Mr Hu’s conviction in Taiwan in these taxation proceedings.  However, it nonetheless seeks to argue that the foreign conviction is relevant and therefore admissible as “evidence of bad character” and “evidence to show propensity in Hu’s defence in the actions”.

9.In support of this contention, the Plaintiff has sought reliance on the House of Lords’ decision in O’Brien v Chief Constable of South Wales Police [2005] 2WLR 1038, a case dealing with the test of admissibility of similar fact evidence in a civil suit.  Mr To for the Plaintiff contended that the Hollington v Hewthorn rule had somehow been overruled by the O’Brien decision. 

10.One must necessarily start at the source of this line of jurisprudence.

11.The Court of Appeal decision in Hollington v Hewthorn concerns the admissibility of a certain conviction in a civil suit arising out of a motor vehicle accident.  In giving the judgment of the Court of Appeal, Goddard LJ observed at page 594:

“In truth, the conviction is only proof that another court considered that the defendant was guilty of careless driving. Even were it proved that it was the accident that led to the prosecution, the conviction proves no more than what has just been stated. The court which has to try the claim for damages knows nothing of the evidence that was before the criminal court. It cannot know what arguments were addressed to it, or what influenced the court in arriving at its decision. Moreover, the issue in the criminal proceedings is not identical with that raised in the claim for damages.”

further down the page:

“It is admitted that the conviction is in no sense an estoppel, but only evidence to which the court or a jury can attach such weight as they think proper, but it is obvious that once a defendant challenges the propriety of the conviction the court, on the subsequent trial, would have to retry the criminal case to find out what weight ought to be attached to the result. It frequently happens that a bystander has a complete and full view of an accident. It is beyond question that, while he may inform the court of everything that he saw, he may not express an opinion on whether either or both of the parties were negligent. The reason commonly assigned is that this is the precise question the court has to decide, but, in truth it is because his opinion is not relevant. Any fact that he can prove is relevant, but his opinion is not. The well‑recognised exception in the case of a scientific and expert witness depends on considerations which, for present purposes are immaterial. So on the trial of the issue in the civil court, the opinion of the criminal court is equally irrelevant.”

at P. 596, Goddard LJ continues:

“It is for this reason that we have stressed the question of relevancy, and indeed it is relevancy that lies at the root of the objection to the admissibility of the evidence. Other reasons can, of course, be given for the rule, and in other cases would have great force. A judgment obtained by A against B ought not to be evidence against C, for in the words of the Chief Justice in the Duchess of Kingston’s case, it would be unjust to bind any person who could not be admitted to make a defence, or to examine witnesses or to appeal from a judgment he might think erroneous: and therefore... the judgment of the court upon facts found, although evidence against the parties, and all claiming under them, are not in general, to be used to the prejudice of strangers.’ This is true not only of convictions, but also of judgments and civil actions. If given between the same parties they are conclusive, but not against anyone who is not a party. If the judgment is not conclusive we have already given our reasons for holding that it ought not to be admitted as some evidence of a fact which must have been found owing mainly to the impossibility of determining what weight should be given to it without retrying the former case. A judgment, however, is conclusive as against all persons of the existence of the state of things which it actually affects when the existence of that state is in fact an issue.”

12.The conviction of Mr Hu by the Taiwan Criminal Court on 30 July 2010 falls to be considered, as it has been the basis, as we have noted, for fuelling and justifying the somewhat late application to amend the list of objections.

13.Mr Kwan for Mr Hu has taken me carefully through Hollington v Hewthorn and he observed quite pertinently that the rule in Hollington v Hewthorn bites even where the parties are identical in the civil and the prior criminal proceedings.  In Hollington v Hewthorn, the driver featured in both sets of the proceedings, whereas the owner appears only in the later civil suit.  That is a point which is of some relevance, in my opinion, and quite justifiably brought to the court’s attention.

14.In any event, the rule is quite clear that the prior conviction is irrelevant, as also the judgment, they being the opinion of another court.  That applies with equal force, in my view, to the Taiwan proceedings in this case.

15.I have had considerable assistance from the submissions submitted by the parties during the course of the hearing lasting several days, particularly from Mr Kwan.  It will be apparent from my subsequent rulings that much of what he said has found favour with this court. 

16.The rule in Hollington v Hewthorn was followed, adopted and further explained by the Privy Council on appeal from Hong Kong in Hui Chi-ming v R [1992] 1AC 34.  Lord Lowry, delivering the advice of the board said (at page 42H to 43A):

“...the verdict reached by a different jury (whether on the same or different evidence) in the earlier trial was irrelevant and amounted to no more than evidence of the opinion of that jury.” He also commented: “It is the irrelevance of the outcome of the earlier trial... that makes evidence of that outcome inadmissible.”

17.I have no hesitation in holding that the rule in Hollington v Hewthorn is of equal application. It applies with equal force then, as it does now, to proceedings in Hong Kong. Section 62 of the Evidence Ordinance, Cap. 8, has modified the rule so that the admissibility in evidence of a conviction “by or before any court in Hong Kong” in civil proceedings is addressed.  There are of course stringent conditions which have to be met.  Aside from this modification, I do not see any changes in the application and the ambit of the rule in Hollington v Hewthorn in so far as they affect proceedings in Hong Kong.

18.The Plaintiff contends that the rule in Hollington v Hewthorn has been overridden by the House of Lords’ decision in O’Brien.  Has the Hollington v Hewthorn principle been abrogated as suggested?  Mr Kwan, for Mr Hu, submitted that this cannot be so on a plain reading of the case.  He referred me to page 1039 of the decision, where the cases relied upon by the House of Lords, or had been cited to it, were set out.  Hollington v Hewthorn does not appear at all in the decision.  The only case which has some resemblance to Hollington is Hollington v Head, but that is an entirely different case.  It has been submitted by Mr Kwan that had the House of Lords been minded to deal with the time honoured rule in Hollington v Hewthorn, it would have been specifically addressed it in their decision.

19.I turn now to the decision in O’Brien.  It suffices to read the head note of that decision, as the facts are very succinctly summarised:

“The claimant’s conviction of murder was quashed after he had served 11 years of a life sentence. He began proceedings against the Chief Constable claiming damages for misfeasance in public office and malicious prosecution. He alleged in particular that in conducting the investigations which led to his criminal trial, named police officers used specific operational methods which were oppressive, dishonest and unprofessional. At a case management conference he sought to support his allegations by adducing evidence to show that the same officers had used the same or similar methods in two earlier cases. The Chief Constable resisted admission of the evidence on the grounds that it did not meet the test of admissibility, that it should be reasonably conclusive of an issue in the case or have advanced relevance or substantial probative value, and that in any event, if admitted, it would add unjustifiably to the length and complexity of the trial. The judge reviewed the evidence and ruled that the greater part should be admitted. The Court of Appeal dismissed the Chief Constable’s appeal and, allowing the claimant’s cross-appeal, concluded that the remainder of the material should be admitted.

On the Chief Constable’s appeal-

Held, dismissing the appeal, that the test of admissibility of similar fact evidence in civil actions was of relevance only, namely that material to be adduced was potentially probative of an issue in the action; that where the test was met the judge with management of the litigation would then consider whether to admit the evidence, having regard to the overriding objective of achieving a correct result through a trial process that was fair to all parties, and would assess the potential significance of the evidence in the context of the case as a whole, weighing its potential probative value against its capacity both to cause unfair prejudice and to increase disproportionately the length and complexity of the trial; that the judge would not admit the evidence unless satisfied that its probative cogency justified any risk of prejudice and, where it concerned collateral matters, that it would not distract attention from the central issues; that the judge and the Court of Appeal were correct in concluding that the test of admissibility was satisfied; that the judge had carefully considered the relevant matters and the Court of Appeal’s decision was unimpeachable; and that accordingly there was no ground on which an appellate court should interfere.”

20.Mr Kwan observed, again, quite justifiably and correctly, that the court is not concerned with the bad character of a party in taxation proceedings; rather one is only concerned with a recognised binding costs order, and, if necessary, the interpretation of that order, and under the taxation exercise on a party and party basis to consider whether or not the costs engendered were necessary or proper for the attainment of justice between the parties.

21.In my judgment, the purpose for which the Plaintiff seeks to introduce the conviction cannot begin to satisfy the test of relevance as expounded in the O’Brien decision. There has been no demonstrated proper basis on the ground of relevancy to permit the judgment of the Taiwan Court and the underlying evidence of that court to be admitted as similar fact evidence in this case.  The Plaintiff’s application to amend on this ground must therefore fail.

(ii) The argument of waiver and/or estoppel

22.The Plaintiff’s contention arises consequent upon Mr Hu’s application for retrospective leave to use certain documents disclosed in the Plaintiff’s list of documents in criminal and ancillary civil proceedings against Mr Hu in Taiwan.  The application was canvassed before Reyes J in July 2010 at the case management conference.  Certain documents had indeed been used by Mr Hu without leave in the Taiwan proceedings, as consent sought from the Plaintiff by him had not been forthcoming.  The learned judge duly granted leave.

23.In applying for leave, Mr Kwan for Mr Hu disclosed to the court that Mr Hu had been convicted, sentenced to a substantial term of imprisonment and heavily fined by the Taiwan Criminal Court.  Accordingly, the Plaintiff now contends that Mr Hu cannot be heard to say that the conviction or finding of the Taiwan Court is inadmissible.  In short, there has been waiver by Mr Hu; alternatively, he is estopped from doing so.

24.Mr Kwan submitted that there was indeed no reliance on the Taiwan conviction or the opinion or the findings of the Taiwan Criminal Court before Reyes J by his client.  All Mr Hu was concerned with at that stage was to inform the court that he had been convicted and was facing dire consequences.  It was against this background that retrospective leave was urgently sought.  In those circumstances, I find that the argument of waiver and estoppel cannot be sustained.  The application to amend on this basis therefore fails.

(iii) The ambit of the Court of Appeal costs order

25.The Order 14 proceedings were heard by Saunders J.  Mr Hu was not a party in those proceedings.  However, the court, in giving summary judgment for the plaintiff against the corporate defendants on 18 January 2008, ordered Mr Hu to personally pay the costs of those proceedings.  In order to demonstrate that those costs orders were unfounded, Mr Hu sought to intervene in the corporate defendants’ appeal and to adduce evidence in support.  In so doing, he produced, in all, three affidavits, the second of which is the substantial affidavit which apparent from the bill of costs accounted for some $9 million.  In any event, it cost a great deal of money to adduce that piece of evidence.

26.It was argued by Mr To for the Plaintiff that Ladd v Marshall came into play in the appeal process.  As I understand Mr To, on account of the principle in Ladd v Marshall, Mr Hu would have had to seek leave to adduce fresh evidence that he could have adduced in the court below.  The fact of the matter is that Mr Hu was not a party to the Order 14 proceedings.  He could not have participated in those proceedings and he could not have made representations on the question of costs which ultimately lay at his doorstep.  It is for the purpose of intervening on the appeal that he had to adduce evidence before the Court of Appeal.

27.Much time was spent on going through the costs orders of the Court of Appeal.  Different interpretations were advanced on each side.  Mr Kwan has also latterly taken me through the transcript of the proceedings before the Court of Appeal. Before turning to the costs orders, it bears mention that the appeal essentially collapsed on the first day when the Court of Appeal found that, as fraud was raised against the defence, it fell without the scope of Order 14 proceedings.  So in essence, the appeal was won by Mr Hu and the corporate defendants; the Order 14 proceedings should not have been started.  It was not appropriate to have launched it.

28.I turn now to the costs orders themselves, and one needs to look at, for example, the order in CACV208 of 2008.  This is a sealed order of the Court of Appeal.  Paragraphs 8, 9 and 11 are relevant and are as follows:

“(8) The 4th defendant (i.e. Mr Hu) be at liberty to intervene in this appeal and attend by counsel the hearing of this appeal and address such arguments to the court as may be permitted by the Court of Appeal.

(9) The 4th defendant’s appeal under CAC352 of 2008 be heard together with this appeal.

(11) No order be made in respect of the 4th defendant’s summons dated 23 January 2009 and dated 10 February 2009, save as aforesaid in paragraphs 8 and 9 above and save that costs of and occasioned by and consequential to the said summonses, including the costs in relation to the third affirmation of Hu Hung-chiu filed in CACV212 of 2008 on 25 February 2009 and the affirmation of Leung Yiu-kiu filed in CACV212 of 2008 on 12 February 2009 and the exhibit referred to therein be paid by the Plaintiff to the 4th defendant, to be taxed if not agreed.”

29.It is quite clear from this order that, just as Mr Whitehead S.C. on his behalf (as evident in the notes of proceedings) before the Court of Appeal has sought, Mr Hu has got all his costs.  There can be no doubt, even on a plain reading of this order, that that must be the consequence.  In sum, therefore, the Plaintiff’s argument based on the alleged ambiguity in the costs order is unfounded.

(iv) The costs orders in HCCL 17 and 18 of 2010 and the slip rule

30.It is the Plaintiff’s contention that somehow there had been a slip in the Court of Appeal order.  If so, that should have been discoverable and should have been brought to the attention of the parties at an earlier date than was the case here.  I do not consider that there has been any difficulty with the costs order.  Latterly, Mr Kwan handed up a copy of the costs order, as well as the correspondence passing between the Defendant and Tanner de Witt, then acting for one of the corporate Defendants.  There was some discussion concerning the query from Mr Justice Rogers VP and it was decided that the order as drafted was correct and the order was accordingly sealed.  Again, there is no substance in this argument and any application to amend based upon the alleged slip must also fail. 

(v) Delay in the making of the applications to amend

31.Lastly, and this is the fifth dispute, there cannot be any argument by the Plaintiff that its applications to amend the list of objections had been brought otherwise than at a very late stage; in fact, days before the hearing before this court.  Mr Hu’s conviction by the Taiwan Court had been known to the parties for some considerable time, and any application to amend based on that conviction and the ensuing judgment ought to have been brought at a much earlier time.  There has been no explanation which I consider to be satisfactory for such a late application.

32.The court is enjoined in handling its business to ensure that cases are dealt with in a timely and speedy fashion, consistent with the just disposal of litigation.  I consider that in the circumstances of this case, the delayed applications, even if justified on merits alone, cannot be justified at this very late stage of the proceedings.  The amendment should have been brought, as I have said, much earlier.  For this reason, too, the application to amend should be rejected.

33.In summary, I have found essentially in favour of Mr Hu and the applications for leave to amend the list of objections are refused.  They are accordingly dismissed.

(Submissions on costs)

34.I do not consider that an indemnity costs order is appropriate.  I assess the costs of this failed application at $130,000 and order that they be paid forthwith to Mr Hu.

Mr Steven Kwan, instructed by Messrs Haldanes, for the 4th Defendant in HCCL17 and 18 of 2009 & CACV208, 211, 212, 351 and 352 of 2008 and for the 8th Defendant in CACV210 of 2008

Mr W K To, of Messrs W K To & Co., for the Plaintiff in Commercial Actions & Plaintiff/Respondent in all appeals on 16-18 August 2010

Mr C P Yen, of Messrs Lo & Lo, for the Plaintiff in Commercial Actions & Plaintiff/Respondent in all appeals on 5 and 9 November 2010