Lam Rogerio Sou Fung v. Tan Soon Gin George
Read the full judgment text of HCA 2576/2005 on BabelCite. This High Court CFI judgment was delivered on 5 May 2011.
1. This action was brought by Mr Tan Soon Gin George (“Tan”) against Mr Lam Rogerio Sou Fong, also known as Roger Lam, (“Lam”) for injunction and damages for libel. By his counterclaim, Lam claims, in respect of five items of antique porcelain, declaratory and injunctive relief, damages in conversion and/or wrongful detention and an order for delivery up. Pursuant to the Order dated 4 June 2007, leave was given to Tan to withdraw his claim with costs to Lam and without prejudice to Lam’s right t
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HCA2576/2005 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 2576 OF 2005 -----------------------
Before : Hon Chu J in Court Date of Hearing : 7-10, 13-16, 24 September 2010 Date of Judgment : 5 May 2011 ------------------------ JUDGMENT ------------------------ 1.This action was brought by Mr Tan Soon Gin George (“Tan”) against Mr Lam Rogerio Sou Fong, also known as Roger Lam, (“Lam”) for injunction and damages for libel. By his counterclaim, Lam claims, in respect of five items of antique porcelain, declaratory and injunctive relief, damages in conversion and/or wrongful detention and an order for delivery up. Pursuant to the Order dated 4 June 2007, leave was given to Tan to withdraw his claim with costs to Lam and without prejudice to Lam’s right to proceed with the counterclaim. 2.This is the trial of the counterclaim. The parties 3.Lam is an architect by profession and is now a retired merchant. His family is an established and reputable Chinese banker in Hong Kong. Bylamson Enterprises Limited was a publicly listed company substantially owned by Lam and his family members. The company went into liquidation in about 1983. 4.Tan is formerly the chairman of the Carrian Group of companies, which included Carrian Investments Limited (CIL), a publicly listed company, and Carrian Holdings Limited (CHL), Tan’s personal holding company. The Carrian Group collapsed in the later part of 1983 with CHL and CIL and other companies in the group went into liquidation in November 1983. 5.The parties came to know each other in 1980. Lam and his associated companies were involved in business ventures with companies in the Carrian Group. There was the purchase of Gammon House (now known as Bank of America Tower) from CIL, the acquisition of shares in China Underwriter Limited (CUL), a listed company and a Carrian subsidiary, and also the purchase of shares in Union bank, another Carrian subsidiary. These were sizable transactions, involving millions and billions of dollars. It is common ground that Lam and Tan were in amicable relationship in the years of 1980 and 1981. The Disputed Antiques 6.Since early 1970s, Lam has been a collector of Chinese antiques, with special interest and expertise in Qing porcelain. He was appointed to the Managing Committee of the Art Museum of the Chinese University of Hong Kong (CUAM) in 1977 and became its senior consultant in 2006. He is also a permanent member of the Visiting Committee of the Freer Gallery of the Smithsonian in Washington, USA. According to Professor Peter Lam, the director of CUAM, whose evidence I accept, Lam is a much respected collector of Chinese ceramic and was instrumental in the building up of the permanent Museum collection of Imperial Qing porcelain through donations (both monetary and by gifts of works of art) given under his name and that of BY Lam Foundation. 7.It is common ground that between 1974 and 1976, Lam had purchased five items of Chinese antiques in London through two auction houses, Sotheby’s and Christie’s. Adopting the descriptions of the expert, Professor Lam, they are:
8.Items (1) to (3) and one of each of items (4) and (5) form the subject matter of the counterclaim and this trial. In this judgment, the subject matter in dispute will be referred to as “the Deep Dish”, “the Quail Dishes”, “the Guyuexuan Vase”, “the Stemcup” and “the Double Gourd” respectively and collectively as “the Disputed Antiques”. 9.In respect of the Deep Dish, it was purchased by Lam in the 1970s at an auction held by Sotheby’s in London. 10.The Quail Dishes were bought by Lam in 1976 from Sotheby’s by private treaty. 11.The Guyuexuan Vase was purchased at an auction held by Christie’s on 12 May 1975. It was subsequently consigned to Sotheby’s Hong Kong for sale with an estimated value of HK$320,000 to HK$350,000, but failed to sell at the auction on 21 May 1980. 12.As for the Stemcup, Lam acquired it together with a companion piece at an auction held by Sotheby’s on 9 July 1974. He bought the pair at the price of £40,000. The companion piece of the Stemcup was sold through Sotheby’s in November 1981 and the proceeds of sale were donated to the Chinese University Art Gallery. 13.In relation to the Double Gourd, it was purchased in a pair by Lam on 3 December 1974 through Sotheby’s. The price for the pair was £20,000. According to Lam, the other piece in the pair was sold in 1981 to a private collector by mistake when he lent the pair to an art shop for exhibition. He believes this piece is now in a museum in Tokyo. The auctions of the Disputed Antiques 14.In about mid-2005, Tan through his nominee company, Ironwood Overseas Limited (“Ironwood”), consigned the Disputed Antiques to Sotheby’s Hong Kong Limited (“Sotheby’s Hong Kong”) and Christie’s Hong Kong Limited (“Christie’s Hong Kong”) for sale. Ironwood is a BVI company with Tan as it sole member and director. 15.The Guyuexuan Vase, the Stemcup and the Double Gourd were consigned by Ironwood to Sotheby’s Hong Kong on 22 August 2005. They were sold at a public auction held on 23 October 2005. The Guyuexuan Vase was sold at HK$115,480,000. The Stemcup was sold for HK$3,256,000 whereas the Double Gourd was sold for HK$5,720,000. After deducting the expenses, the net proceeds for the three items are HK$103,000,000, HK$2,800,000 and HK$5,000,000 respectively. The net proceeds for the Stemcup and the Double Gourd had been paid to and received by Ironwood. As for the net proceeds of the Guyuexuan Vase (i.e. HK$103,000,000), they are now standing in court pursuant to an order made in HCA 2545 of 2005. 16.The Deep Dish and the Quail Dishes were consigned by Ironwood to Christie’s Hong Kong on 1 August 2005. They were put up for auction on 28 and 29 November 2005, but were not sold. The two items are now kept in the custody of Christie’s Hong Kong. The value of the Deep Dish and the Quail Dishes as shown in Christie’s Hong Kong’s catalogue for the auction was HK$8 million to HK$10 million and HK$80 million to HK$100 million respectively. HCA2545/2005 17.Shortly after the auction on 23 October 2005, report of the sale of the Guyuexuan Vase was carried in the local newspapers. On reading the newspaper report, Lam instructed his then solicitors, Messrs Samuel LC Yang & Co (“SLCY”) to write to Sotheby’s Hong Kong on 25 October 2005 to make a claim to the legal and beneficial ownership of the Guyuexuan Vase. In the letter, it was stated that sometime in 1982 or 1983, the Guyuexuan Vase was lent by Lam to Tan but was not returned and could not be located, in spite of Lam’s effort. It went on to say that Lam accepted Sotheby’s auctioned it without knowledge of the background and he did not object to the completion of the sale. Lam however required Sotheby’s to pay the sale proceeds to him and no one else. 18.At the time this letter was written, Lam did not know that the Stemcup and the Double Gourd had also sold at the same auction. This was because they were separately catalogued. Lam only found out the sale of these two items later on. 19.By letter dated 1 November 2005, Sotheby’s informed Ironwood of Lam’s claim and proposed to put the sale proceeds in a blocked account pending court determination or joint instructions for the release of the money. On 2 November 2005, Ironwood’s then solicitors, Messrs Fairbairn Catley Low & Kong (“FCLK”), wrote to Sotheby’s refuting Lam’s claim to the Guyuexuan Vase. In the letter, it was said that Tan bought the vase from Lam in 1981 or thereabout and it had since remained in his possession. The letter further pointed out that Lam had made no attempt to contact Tan, who had continuously resided in Hong Kong, and that in any event, any claim by Lam would be statue-barred. Sotheby’s was informed that Ironwood expected to receive payment of the sale proceeds in accordance with the Consignment Agreement. Permission was given to Sotheby’s to disclose the letter to Lam’s solicitors (which would in turn disclose the identity of Ironwood and Tan as the seller of the vase). 20.Sotheby’s replied by letter dated 2 November 2005, indicating it was not in a position to release the sale proceeds until it was satisfied that the dispute over the ownership of the Guyuexuan Vase had been resolved in Ironwood’s favour. Ironwood was asked if it could forward documents evidencing Tan’s acquisition of the vase. FCLK replied on 3 November 2005, indicating, inter alia, that because of passage of time, it was not possible for Tan to produce receipts or cheques to evidence the purchase and that the fact of his being in physical possession of the item for so many years was sufficient. By letter dated 6 November 2005, Sotheby’s advised FCLK that it would put the sale proceeds in a separate account pending joint instructions to release them or a binding court order. 21.On 19 December 2005, Ironwood commenced proceedings against Sotheby’s Hong Kong under HCA2545/2005 to claim the sale proceeds of the Guyuexuan Vase. Sotheby’s Hong Kong took out an interpleader summons naming Lam as a claimant. By an order dated 26 May 2006, the sale proceeds were ordered to be paid into court and Ironwood’s claim against Sotheby’s was dismissed with costs. The issue as to who is entitled to the HK$103 million was ordered to be tried between Tan and Lam. By an order dated 10 October 2006 made in HCA2545/2005, the issue was ordered to be tried immediately after this action. Both Mr Campbell and Mr Chain accepted that the outcome of the counterclaim herein will determine the entitlement to the HK$103 million standing in court under HCA2545/2005. This action 22.Meanwhile, Lam also learnt from reports in local newspapers of the public auction of the Deep Dish and the Quail Dishes to be held by Christie’s Hong Kong on 28 and 29 November 2005. By letter dated 28 October 2005 to Christie’s Hong Kong, SLCY on behalf of Lam made a claim to the two items and also another pair of Yongzheng gold-black small dishes with flower basket design. Christie’s replied on 1 November 2005 asking for more information. At the same time, it passed a copy of the letter to Ironwood. On 3 November 2005, Ironwood acted by FCLK wrote to Christie’s to refute Lam’s claim. The contents of this letter closely resembled those of the letter to Sotheby’s dated 2 November 2005. As with the case of Sotheby’s, Christie’s was given permission to disclose the letter to Lam’s solicitors. Christie’s wrote back on 9 November 2005 proposing to proceed with the auction and to hold the sale proceeds pending the resolution of the dispute. 23.Christie’s also wrote to SLCY on 10 November 2005 requesting for evidence in support of Lam’s claim and alluded to the issue of Lam’s claim being time barred. SLCY replied by letter dated 11 November 2005, which forms the subject matter of Tan’s libel claim in this action. The letter began by pointing out that the provenance of the Deep Dish had been set out in Christie’s sales catalogue for the upcoming auction and that a note from Mr Jim Lally to Lam was self-explanatory as to the provenance of the Quail Dishes. It then referred to Tan’s criminal conviction for fraud in late 1996 and claimed that Tan had deceived Lam of huge sums of money in transaction involving Bylamson and CUL. It further stated that Lam had no objection to proceeding with the auction of the Quail Dishes with the sale proceeds being kept in a blocked account pending the resolution of the dispute. He, however, objected to the sale of the Deep Dish on the ground that it was a rare item with a unique design and that his intention was to lend it to a museum for exhibition. A copy of this letter was passed by Christie’s to Messrs S H Chan & Co, who had replaced FCLK as Ironwood’s solicitors. 24.By letter dated 18 November 2005, Christie’s informed SLCY that, inter alia, there was no basis for withdrawing the auction and proposed certain arrangements for Lam’s consideration. Thereafter, Christie’s solicitors, Messrs. Stephenson Harwood & Lo, entered into correspondence with SLCY over the arrangement of the auction and the sale proceeds. As noted above, the auction of the Deep Dish and the Quail Dishes had proceeded as scheduled. However, the two items could not be sold. 25.At about the same time, Lam came to learn of the sale of the Stemcup. On 18 November 2005, Messrs John Ku & Co (“JK”) wrote to Tan on Lam’s behalf to make a claim and demand the return of “a pair of Gold black [sic] dishes with flowers basket design YONG ZHENG mark, ex-Barbara Hutton collection” and “a pair of stemcups with rising sun design, YONG ZHENG period and mark, ex-Edward Chow collection”. On 22 November 2005, Lam made a report of theft to the police in respect of the Deep Dishes and the Quail Dishes and he gave a statement to the police on 28 November 2005. This did not lead to any prosecution. 26.I pause here to note that Lam accepted in his evidence there were mistakes and imprecision in his statement to the police, notably with regard to the descriptions of the items reported to be stolen and whether he had lent other antique items to Tan. Lam explained that this was partly because he had provided the police with JK’s letter of 18 November 2005, which contained mistakes as to the descriptions of the items. In fact, Lam had in his evidence repeatedly complained about the service rendered by his previous legal team. In light of the findings and decision dated 23 December 2007 given in HCMP1916/2007, which involves the taxation of Lam’s own costs, I am inclined to accept there is truth in some of Lam’s complaints and that the errors in the correspondence and statement to police may not have originated from him. My view in this regard is reinforced by the rather amateurish descriptions of the antique used, such as calling the stemcup as “long leg cup”. Given Lam’s interest and expertise in porcelain antique, it is most unlikely that he had been consulted or informed before the correspondence or document in question was issued. 27.On 16 December 2005, Messrs Fred Kan & Co (“FK”) on behalf of Tan wrote separately to Lam and SLCY, indicating that action in libel would be commenced against them on the basis of SLCY’s letter dated 11 November 2005 unless each of them admitted liability, withdrew the defamatory remarks, tendered an apology and forwarded a proposal for damages and costs. SLCY wrote on 20 December 2005 to FK to clarify that they were merely discharging their duty as Lam’s solicitors and the contents of the letter did not represent their position. An apology was tendered, which was repeated in another letter dated 21 December 2005. As indicated in FK’s letter dated 23 December 2005, the apology was accepted by Tan. 28.Lam, on the other hand, replied through JK on 20 December 2005 that he maintained the views as expressed in the letter of 11 November 2005. 29.On 22 December 2005, Tan issued the writ in this action claiming against Lam injunctive relief and damages for libel in respect of the letter dated 11 November 2005. The claim was discontinued on 4 June 2007 with costs to Lam. Lam’s counterclaim 30.By way of counterclaim, Lam claims against Tan for damages for conversion and detinue in respect of the Disputed Antiques, declaratory relief in respect of the sale proceeds of the Guyuexuan Vase, the Stemcup and the Double Gourd, injunction restraining the sale or disposal of the Deep Dish and the Quail Dishes and also an order for the delivery up to him of these two items. It should be noted that the counterclaim was amended in June 2006 to include the Double Gourd. This is because in April 2006, as a result of discovery in HCA2545/2005, Lam came to learn of the auction and sale of the Double Gourd and a letter dated 6 April 2006 was sent by JK to Sotheby’s Hong Kong to give notice of Lam’s claim to the item. 31.Put simply, Lam’s pleaded case is that in about May 1982, at the request of Tan, he lent the Disputed Antiques to Tan for display at his office at Carrian Centre so as to impress his clients and customers. Despite demand for their return made in about 1987 through a Mr Lai Man Yee, who has since passed away, Tan did not return them. By the auction on 23 October 2005, Tan through Ironwood had wrongfully converted the Guyuexuan Vase, the Stemcup and the Double Gourd. As for the Deep Dish and the Quail Dishes, they have been wrongfully retained by Tan. It is also Lam’s case that the Stemcup and the Double Gourd were damaged while they were detained by Tan. Tan’s defence 32.Tan does not dispute that Lam was at one stage the owner of the Disputed Antiques. He however says that Lam had sold the Guyuexuan Vase, the Deep Dish and the Quail Dishes to him. . His case is that in about late 1981, the late Mr Fung King Hei approached him on behalf of Lam and asked him to purchase the three items together with a Chinese hand scroll so as to enable a donation to be made to the Chinese University of Hong Kong. He paid US$ 5million for the three items and another US$ 5 million for the Chinese hand scroll. As for the Stemcup and the Double Gourd, Tan’s pleaded case is that that they were purchased together from a private collector in Hong Kong in about 1982. In answer to Interrogatories administered by Lam, Tan stated that he could not remember the identity of the private collector nor the circumstances under which he came to know the private collector and of the fact that the items were available for sale. He also had no independent recollection of the manner of payment, but it was likely to be by personal cheques. Further, there were no receipts or documents evidencing the purchase. Tan denied that the Disputed Antiques were lent to him by Lam, and that Mr Lai Man Yee, whom he did not know, had approached him for their return. He also denied that the Stemcup and the Double Gourd were damaged while in his possession, although he admitted that Sotheby’s had revised their valuation of these two items after carrying out an inspection of them. Issues 33.Accordingly, the central issue in this trial is who was the rightful owner of the Guyuexuan Vase, the Stemcup and the Double Gourd in October 2005 when they were sold, and who is the rightful owner of the Deep Dish and the Quail Dishes. Underlying this core issue is the dispute of fact as to whether the Disputed Antiques were lent by Lam to Tan in 1982 or whether they were purchased by Tan from Lam and a private collector. Pivotal to the determination of the dispute is the credibility of Lam and Tan and the reliability of their evidence. The evidence of the other witnesses is peripheral, not really controversial and has very little bearing on the issue to be tried. The approach to assessment of the evidence 34.In approaching the issue of the credibility and reliability of the witnesses and their evidence, it is important to bear in mind several matters. Firstly, the events in question, namely, the lending of the Disputed Antiques (on Lam’s case) or the acquisition of them (on Tan’s case) took place in about 1982, which was more than 23 years by the time the dispute between the parties arose in 2005 and more than 28 years by the time of the trial. Faulty memory, problems in recollection and confusions as to dates, people and other details are bound to happen. They do not necessarily demonstrate that the witness is untruthful. Similarly, loss or non-availability of documentary support is also not unlikely. The court therefore should not readily draw adverse inferences on these bases alone. 35.Secondly, as Mr Chain submits, the court is to try issues and not personalities: Tradepower (Holdings) Ltd v. Tradepower (HK) Ltd (2009) 12 HKCFAR 417, 471 at para.140. I accept that sometimes witnesses are either because of their innate character or experience in life confrontational, argumentative or overly cautious and therefore cannot provide a straight answer, and yet being truthful in their evidence. The court should be careful in making adverse findings against a witness on account of these demeanours or attitudes. 36.In the present case, neither Lam’s nor Tan’s performance in the witness box can be regarded as impressive. Both of them were not prepared to give precise and direct answers. The hostility between them is abundantly clear. This is not surprising given the Carrian background and this piece of litigation. Probably because of their past dealings and their profound dislike for each other, there were occasions when they would make exaggerated, irrelevant or even extraordinary remarks. 37.In the case of Lam, because he is of the firm view that Tan had not acted honestly over the CUL deal, he is very keen to air his grievance and complaint about Tan over the matter. Consequently, on a number of occasions, he tried to bring out the CUL matter instead of answering the questions put to him. Lam is also not articulate and his evidence is sometimes not easy to follow and is at time confusing. An instance of this is his evidence on how the Disputed Antiques came to be lent and delivered to Tan. It was only after clarifications in the latter part of cross-examination and in re-examination that it became clear as to what he said happened, namely, in respect of the antique items he lent to Tan for the occasion of the visit of the mayor of Oakland, some of them had been returned and substituted by others so that in the end it was the Disputed Antiques that were on loan to Tan and that they were not delivered to the Carrian Centre at one go. Further, the occasion on which he was assisted by Mr Yu Tat Kong in making the delivery was the very first delivery of the antiques lent to Tan for the visit of the mayor. Admittedly, he does not have a very good memory. He was, for instance, mistaken as to the year in which the announcement relating to the acquisition of CUL, which leads him into error as to when it was that his trust for Tan began to waver and when their relationship started to turn sour. 38.As for Tan, he is evidently a man of strong character. He had placed before the court a doctor’s certificate certifying his severe hearing problem. He also testified that he did not enjoy good health. Nevertheless, he was fully alert and assertive, not only in cross-examination, but also in responding to his own counsel’s questions. He was deliberately repetitive over topics that he was determined to bring out and highlight. One example of this is his perception that Lam was not a man who would honour his promise in that he did not complete the Gammon House transaction in accordance with the contract. This was a recurring theme in many of his answers, whether in chief or in cross-examination. He, too, also suffered from imperfect memory and his evidence on the year in which the Gammon House transaction should be completed under the contract and when it was actually completed was confusing, to say the least. 39.In my view, it would not be a satisfactory approach to assess the credibility and reliability of Lam and Tan by reference to their demeanours or solely with regard to how they respond to questions and behave in the witness box. The appropriate approach is to assess their evidence in terms of their inherent probabilities or improbabilities. 40.Mr Chain has referred me to what Lord Devlin said extra-judicially in The Judge (Oxford University Press, 1979) at p.63, where he endorsed the words of Mr Justice MacKenna in a paper entitled “Discretion” read at University College, Dublin on 21 February 1973 (printed in the Irish Jurist, vol. IX, new series, p.1) as follows:
I respectfully agree. 41.I also agree what was said by Peter Smith J said in EPI Environment Technologies Inc & Anor v. Symphony Plastic Technologies plc & Anor [2005] 1WLR 3456, 3470-3471 at para.74, that it is essential to have regard to the entirety of a witness’ evidence. As he observed, witnesses can make mistakes, but the mistakes do not necessarily affect other parts of their evidence. Likewise, witnesses can regularly lie. However, lies themselves do not mean necessarily that the entirety of that witness’ evidence is to be rejected. A witness may lie in a stupid attempt to bolster his case, but the actual case nevertheless remains good irrespective of the lie. Assessment of the evidence 42.Bearing these principles in mind and weighing the entirety of their evidence against the undisputed background and facts, I have come to the view that the account of events given by Lam is to be preferred to that of Tan. I am driven to this conclusion for the reasons elaborated below. 43.Firstly, it is Tan’s evidence that the Stemcup and the Double Gourd are substandard or defective items (次貨) because the former has a chip at the rim of the mouth and the latter has an uneven surface, which is something like a birthmark. He said he knew of these defects at the time of the purchase and that he nevertheless bought them because the private collector was frank and sincere. Also, the amount he paid for them, which was HK$300,000 to HK$400,000 was a small sum to him, just like $30 or $40 (which he initially said was $3 or $4). I find this inherently incredible. In the first place, according to Tan, he has been collecting antique items since 1976 and was no short of collection since there were more than 100 pieces of porcelain and antique items in his collection, it is difficult to accept that the frankness and sincerity of the private collector in admitting these apparent defects would be sufficient to persuade him to make a purchase. This is leaving aside the doubt as to why the private collector, who was introduced by a friend, would offer to Tan, who was at least in 1982 famous and wealthy, some defective or substandard antiques. 44.In the second place, the manner in which he treated the Stemcup and the Double Gourd after he acquired them is inconsistent with his claim that they were sold to him as substandard or defective items. The two items together with the other items in the Disputed Antiques were shown to the Mayor of Oakland and his wife and the team of officials during their visit to the Carrian Centre on 5 May 1982. The defects in question are not latent, but apparent upon viewing. Why would Tan include them among the collection shown to these most important guests, when he had more than 100 items in his collection? It is also Tan’s evidence that the showing of the Disputed Antiques to the Mayor of Oakland came about because one of the guests present intimated that Tan was lucky to have acquired a few fine items of antique such that he should show them to the guests for appreciation. Mr Tin was then asked to retrieve the Disputed Antiques from the strong room. Given the apparent defects on the Stemcup and the Double Gourd, they can hardly come within the description of fine items of antique. 45.Additionally, Tan had produced a photograph of his study in his Yuen Long residence, where he said he resided after the collapse of the Carrian Group up to 1993. The photograph shows that the Stemcup and the Double Gourd were displayed on a shelf. It is difficult to understand why Tan would, among the many collection he had, choose to display these two substandard or defective items. It is not his evidence that he had any special liking or preference for the two items, and if he had, it would be difficult to reconcile with his case that he had no recollection about the material details of their acquisition, including the identity of the seller, the exact price paid and whether any receipt was given. 46.A second reason that renders Tan’s account improbable is the presence of several inexplicable features in his evidence about the purchase of the Guyuexuan Vase, the Deep Dish and the Quail Dishes from Lam. First, tan’s evidence is that it was some time between autumn and winter 1981 that the late Mr Fung King Hei first telephoned him to ask him to purchase the three items and a hand scroll for the purchase of a donation to CUHK. Tan repeatedly said Lam had to use Mr Fung as a go-between, or in his own words, a “match-maker” (媒人婆) because Lam was too ashamed to see him (無面見我) due to his default in the completion of the Gammon House transaction and the CUL deal. Tan even said Lam played a game of “disappearing from the scene” (玩失踪). Tan further repeatedly said the purchase of the three items and the hand scroll was subject to and conditional upon Lam completing the Gammon House transaction, settling the Union Bank shares transaction and obtaining the approval of the Securities authority over the announcement and he had related these terms to Mr Fung. However, it is also Tan’s evidence that the contractual completion date for the Gammon House transaction was 31 October 1980 and because Lam did not have money to complete, he was given an one-year extension on payment of an addition sum of HK$50 million. In fact, Tan’s evidence on this point had shifted. In chief and in the early part of his cross-examination, he said several times that the original completion date was 31 October 1981 and the extension was up to 31 October 1982. In the latter part of the cross-examination, he changed to say that he contractual completion date was 31 October 1980 and the extension was to 31 October 1981. Towards the end of his evidence when I asked him to clarify when exactly was the Gammon House transaction eventually completed, he answered it was summer or autumn of 1981. This means when the telephone conversations he had with Mr Fung and Lam over the purchase of the three items and the hand scroll took place, the Gammon House transaction had already completed. This casts grave doubts on the veracity of Tan’s evidence that Lam had to approach him through Mr Fung because he was still in default on the completion of the Gammon House transaction or that he had completely disappeared from the scene as well the evidence that he had stipulated the completion of the Gammon House transaction as one of the prerequisites for the purchase of the three items and the hand scroll. 47.Another disturbing aspect of Tan’s evidence on the purchase of these three porcelain items is his evidence that he did not ask for a receipt because Lam was a big or major client and it would be offensive to ask Lam for a receipt, since it would be an indication of distrust, hence an insult to Lam. He also stated that his relationship with Lam around this time was good. On the other hand, it is also his evidence that he complained to Mr Fung that Lam was bothering him all the time about the purchase of the antiques at a time when he was still in default over the Gammon House and the Union Bank shares transactions. Plainly, Tan did not at the time have any high regard for Lam, calling him a liar, and was further prepared to openly state his dissatisfaction with him. He even asked Mr Fung to relate to Lam the prerequisites for the purchase of the three porcelain items and the hand scroll. All of this is simply irreconcilable with his evidence that he did not want to offend Lam because he valued him as a big and major client. 48.Yet at the same time, Tan’s evidence is that he had deliberately used a crossed and “account payee only” cheque to pay for the three porcelain items and the hand scroll, so that subsequently he could, and in fact he did, obtain from the bank a certified true copy of the cheque. He explained he had his own worries in issuing the cheque, saying his father has taught him to take precautions against being cheated and that HK$50 million was in those days a huge amount of money. Clearly, this is at variance with the other part of his evidence that he was enjoying good relationship with Lam and having trust in him, who was a big client and closely involved with him in business ventures to the tune of many billions of dollars. It should also be noted that according to Tan, the purchase took place on the Chinese Year eve in 1982. By then, the Gammon House and the Union Bank shares transaction had been completed. 49.In my view, Tan’s evidence on the certified true copy of the cheque is an attempt to embellish his evidence. He had said nothing about this in his witness statements and affidavit in HCA 2454/2005. If he were only trying to be cautious about the matter as he said, he needed not go to the trouble of asking a certified true copy from the bank subsequently. He could have simply made and kept a photocopy of the cheque or even kept the relevant monthly bank statement. His justification that it would take up to one to one and a half month for the bank statement to be compiled and made available to him is a slim one. Among other things, he would not know for sure when Lam was to bank in the cheque and he would have to be kept in waiting for the certified true copy, which could only be made available to him after Lam presented the cheque. 50.It is additionally odd that if he would take precautions against Lam, whom he knew well in 1982, he had done nothing similar in relation to the purchase of the Stemcup and Double Gourd from a private collector whom he hardly know. 51.The inconsistent stance of Tan is also reflected by how and why he came to agree to buy from Lam. According to him, his first reaction when Mr Fung approached him was to ask whether the antiques were genuine or not. Yet, apart from going to Lam’s home to view the items, he had taken no step to satisfy himself as to the genuineness of the items. Neither Lam said or done anything to satisfy him on the point. It would also appear from Tan’s evidence that he showed no interest or concern as to whether he was making a purchase for charity as represented by Mr Fung. All of these, when viewed against his evidence that HK$50 million was a lot of money at the time, render his account rather improbable. Tan tried to explain he was placing his trust in Lam since they were engaged in very sizeable business ventures. But as noted above, this explanation has no substance when it is also his evidence that Lam failed to honour his promise to complete the Gammon House transaction and could not settle the Union Bank shares transaction, that Lam could not face him and had to approach him through Mr Fung and that he felt a need to take precautions against Lam by obtaining a certified true copy of his cheque to Lam. 52.A third major reason for finding Tan’s account inherently incredible relates to his evidence on the handover of the items he purchased from Lam. In chief, Tan said he went with his wife, three daughter and parents-in-law to Lam’s resident at 11 Coombe Road to hand over the cheque and collect the items. It is firstly curious that he would take the trouble to travel to Lam’s residence to collect the items if, according to him, it was Lam who was eager to sell and had repeatedly chased him up and that he was more or less doing Lam a favour. What is more strange is tan’s evidence in cross-examination that when he got to 11 Coombe Road, he got off leaving his family members and relatives in the car, and telephoned Lam from the management office to ask Lam whether he should go upstairs or Lam would come downstairs to deal with the handover. The evidence before the court, including the land search record and the photos, show that 11 Coombe Road was a house and not a multi-storey apartment building. The suggestion of a management office does not fit in. Further, it is improbable that Lam would volunteer to come downstairs to deal with the handover which means he had to bring out the items, hand them to Tan and collect a HK$50 million cheque at a management office, if there were one. Indeed it would be extraordinary for Tan to ask the question, whether he should go upstairs or Lam would come downstairs. It would only be natural for any handover of the kind to take place inside Lam’s residence instead of at a public place, like a management office. There is of course the evidence of Mr Yu Tat Kong, who handled the renovation of 11 Coombe Road that by Chinese New Year of 1982, the renovation work had in fact not completed. 53.The evidence of Tan as to what happened after the handover is equally suspect. Initially he said the three porcelain items and the hand scroll were kept at his home and on the following day, which was a Monday, were moved to the office at Carrian Centre. This is incompatible with his assertion that the handover took place on the eve of the Chinese New Year. Later in his cross-examination, on realising the difficulty, he changed to say that it was after the Chinese New Year that the items were moved to his office in Carrian Centre. There was a similar change in his evidence about the presentation of the HK$50 million personal cheque he gave to Lam for the purchase. He initially said the handover was on Sunday and Lam paid the cheque into his account on the following Monday. When he was reminded of his evidence that the handover took place on Chinese New year eve, he changed to say it was after the holiday that Lam presented the cheque. 54.A fourth reason for rejecting Tan’s account stems from his evidence on how and where he kept the items purchased from Lam Disputed Antiques, which is difficult to follow. His testimony in court is that after the handover, he kept them in the safe at home and on the following morning moved them to the string room in his office at Carrian Centre. Before the CCB raided the office in October 1993, the items had been moved back to his residence and he had kept them at home until 2005. He stated when he had a house warming party at his Stanley residence in September 1982, he moved all the Disputed Antiques back home because the guests wanted to have a look at them. However, what he stated in his witness statement and confirmed in chief is that since the purchase of the items from Lam, he had put them in his bank safety deposit box or the big safe in his house until 2005. When questioned about the discrepancy, he said he kept the items at home the evening he bought them from Lam and then moved them to his office at the Carrian Centre. Later on they were moved to his Stanley residence for the house warming party. Surprisingly, when he was further asked what items were moved to the Stanley residence, he said it was the Stemcup and the Double Gourd. 55.In my view, much of the difficulties in Tan’s evidence is caused by the fact that he made up his evidence as he went alone. A clear instance is when he raised for the time (when he was well into his cross-examination) that Lam, in a bid to persuade to buy the three porcelain items and the hand scroll, had told him that the four items could or would be his family trove. Tan went on to say that at that Chinese New Year eve dinner, he told his three daughters that each of them would be given one of the three porcelain items upon their attaining 21 years of age and getting married whereas the hand scroll would be given to them jointly. On the undisputed facts, he put them up for auction in 2005 and eventually sold them. He mentioned in his witness statement that this was because there was a change in his investment strategy. In cross-examination, however, Tan said he sold them because the hand scroll was not of the Tang Dynasty, but was in fact of the Yuan Dynasty. But his own case is that he learnt of this when Mr Benjamin Kong of Christie’s visited his home and viewed the hand scroll together with the other collection. It cannot be that the discovery of the hand scroll is of the Yuan Dynasty was the reason for the sale of what he called the family trove. 56.Mr Chain submits that Lam’s account is incredible in a number of aspects. The first is the fact that he has in all these years not taken any step to recover the Disputed Antiques. 57.Lam was cross-examined as to why he did not ask for the return of the Disputed Antiques until 2005. He stated that although his trust for Tan was wavering by mid-1983, the value of the antiques he lent to Tan was very small when compared to the size of the business ventures that they were engaged in and he did not really pay much attention to the antiques. He also had not expected the Carrian Group to go under. Later, when Tan and he himself were arrested in connection with the collapse of the Carrian Group; as compared to the criminal prosecution, the return of the antiques was a lesser concern. He was also advised by his lawyers to keep a distance from Tan. During the Carrian trial, he had not spoken to Tan. In fact he was excused from court attendance during most part of the trial. He did not recall seeing Tan during the committal stage. Lam further stated that it was in the 1990s that the entire Carrian saga was over. Since then, Tan was not in circulation and he had not met him. On the other hand, following the collapse of the Carrian Group, Bylamson Enterprises Limited went into liquidation, for which he was being looked down upon. There was no common friend or what he called “bridge” between Tan and him that he could turn to. Lam also explained that, while he was sure Tan had not returned the antiques borrowed from him, he was not sure whether Tan still had them in his possession, whether they had been seized by the liquidators of CIL or CHL or sold by Tan. He had been advised by lawyers that it would be very difficult to trace the location of lost antique items or mount a claim to recover them. 58.For my part, I will not say that these explanations are inherently incredible. 59.It is Lam’s evidence that he had asked Mr Lai Man Yee to approach Tan to seek the return of the Disputed Antiques and Mr Lai reported to him that “the door was closed”. Mr Lai was a car salesman. He said he asked Mr Lai to do this because there was no one else he could use and Mr Lai was willing to help. He however also stated that he did not know whether Mr Lai did as a matter of fact go to see Tan. 60.I can see the force of Mr Chain’s criticism that it is strange that Lam would leave the matter as it is. However, it is not improbable that as Lam repeatedly said, he was only determined to pursue the recovery when the items surface again. It is especially the case since Lam he did not keep an inventory of his collection. 61.Mr Chain also placed great emphasis on the visit of the Mayor of Oakland. Lam was asked about the reception for the Mayor of Oakland and his officials hosted by Tan at the Carrian Centre in May 1982, during which the Disputed Antiques were taken out and shown to the guests by Tan. Lam denied he was present at the occasion. He also denied one of the persons whose side view was depicted in the photographs was him. I am unable to agree with Mr Chain’s submissions that the court should have no difficulty in finding that Lam and his girlfriend were present together at the reception. Even if Lam was indeed present and he had lied about it, it is nor fatal to his case. Although Lam had said the purpose of lending the Disputed Antiques was for display at Tan’s office, the fact the items were in fact not put on display but had to be retrieved from the strong room is not critical since the use of these items was very much a decision and choice for Tan. The office was after all Tan’s office and the Mayor was Tan’s guests. Further even the items were handled in a rather casual way cannot go to prove that they must have been Tan’s and not Lam’s properties. As Lam had said, as a matter of social etiquette even if he were unhappy with the situation, he would not have raised it there and then. 62.In my view, there is a ring of truth in Lam’s account when the totality of the evidence is looked at. In particular, his account that he was happy to make the loan partly because this would be a gesture of trust and good will, and partly because he was at the time hoping to buy into CUL is a convincing one. 63.In addition, Lam had produced a temporary receipt which was a confirmation or record of a proposed sale through Sotheby’s of some of his collection. Among the items described in the document were the Deep Dish, the Quail Dishes and the Double Gourd. Lam said it evidenced a discussion he had with Mr James Lally, the president of Sotheby’s USA, in about May 1983 regarding putting up these items for sale in New York. It is also Lam’s evidence that this document was not kept by him, but was given to his solicitors by Mr Lally in 2007. He further said that prior to seeing this document, he had forgotten about this discussion. Although it was suggested that this was a fabrication and that the document did not exist before 2007, as Lam said, there was no basis to suggest that Mr Lally would be prepared to collude with Lam. 64.I find as a fact that the Disputed Antiques were lent by Lam to Tan in 1982 and that when they were delivered to Tan, they were in good condition. I reject Tan’s evidence and account that he acquired them by purchasing from Lam and a private collector. 65.In the circumstances, I find the counterclaim proved. Relief 66.This brings me to the relief to be granted to Lam. (A) Declarations 67.In respect of the sale proceeds of the Guyuexuan Vase, the Stemcup and the Double Gourd, there will be a declaration that Lam is entitled to the sale proceeds of them. 68.As for the Deep Dish and the Quail Dishes, there will be a declaration that they are the properties of Lam. (B) Order for delivery up 69.The Deep Dish and the Quail Dishes are presently kept in the custody of Christie’s Hong Kong; they should be released to Lam or his authorised representative. Mr Campbell had made a submission that if they were returned in other than good condition, there should be an award of damages. Given there is no evidence on which a conclusion can be made that the two items are not in good condition, I need not make any award on the basis submitted by Mr Campbell. (C) Injunction 70.With the declaration and order for delivery up, there is no necessity to grant the injunction sought by Lam to retrain Tan from selling, disposing or dealing with the Deep Dish and the Quail Dishes. (D) Damages for wrongful detention 71.As to damages for wrongful detention of the Deep Dish and the Quail Dishes, Mr Campbell does not dispute there is no evidence on which an assessment can be made and he accepts an award of nominal damages will be appropriate in the circumstances of this case. I make a nominal award of $100. (E) Damages for conversion 72.There is no dispute that upon the counterclaim being proved, Lam will be entitled to damages for conversion of the Guyuexuan Vase, the Stemcup and the Double Gourd. It is also common ground between counsel that damages for conversion should be assessed by reference to the article’s market value at as the date of conversion: Kuwait Airways Corporation v. Iraqi Airways Co (Nos 4 and 5) [2002] 2AC 883, 1090 at para.67. There is however disagreement as to what should be regarded as the market value of the three items. The dispute turns on whether the market value should be ascertained by reference to the price paid by the successful bidder(s) for the three items or should it be based on the net amount received or to be received by the seller. 73.The facts relevant to this point are these. The three items of porcelain were successfully sold at the auction held on 23 October 2005 at the respective price of HK$115,480,000, HK$3,256,000 and HK$5,720,000. The price paid by the successful bidders had, however, included a “buyer’s premium”. According to the Conditions of Business and Guide for Prospective Buyers issued by Sotheby’s, “buyer’s premium” is the commission payable by the buyer on the hammer price, at the rate of 20% on the first HK$1,500,000 of the hammer price and 12% on the amount by which the hammer price exceeds HK$1,500,000. Hence, the net amounts received or to be received by the seller on these three items, after deducting the buyer’s premium, are HK$103,000,000, HK$2,800,000 and HK$5,000,000 respectively. These net amounts would also represent the hammer price for the three items. 74.Mr Campbell submits that the full price paid by the successful buyer(s) is to be adopted as the market value of the three items at the time of conversion in 2005 because it represents Lam’s loss and he should be put back in the position as if the wrong was not done, citing the judgment of Hall v. Barclay [1937] 3 All ER 620. Mr Chain, however, argues that in assessing the market value of the three items, the amount of buyer’s premium should be excluded because this is not part of the price, but expenses incurred by the buyer. The case of Clark v. Nicholson (1835) 6 C&P 712 was relied on. 75.In Clark v. Nicholson, it was held that the expenses of the sale could be deducted from the amount of damages paid by the defendant to the plaintiff for wrongful interference with goods. It would appear from the short report that the rationale underlying the decision was that the plaintiff would have sold the goods if they had not been taken by the defendant. There is no such evidence in the present case. The case ought only to be regarded as an instance of expenses of sale not being reckoned as part of the price of the goods. 76.In my view, the issue falls to be decided on principles. The rationale for the award of damages in wrongful interference with goods is to compensate the plaintiff for the loss he suffered, which is the deprivation of the article converted. As Greer LJ identified in Hall v. Barclay (at 622),
77.What Lam has lost as a result of the act of conversion, namely, the auction sale on 23 October 2005, was the Guyuexuan Vase, the Stemcup and the Double Gourd and he should be restored to the position as if the wrong had not been done. The amounts paid by the buyer(s) represent what he (they) was (were) prepared to pay for the items. In the absence of evidence suggesting otherwise, the natural inference is that these amounts represent what the buyer(s) considered to be the worth of the items together with the commission for the auctioneer. Thus analysed, the market value of the three items at the time of conversion should be ascertained by reference to the hammer price and should exclude the buyer’s premium. 78.In sum, damages for conversion of the Guyuexuan Vase, the Stemcup and the Double Gourd are assessed and awarded at HK$103,000,000, HK$2,800,000 and HK$5,000,000 respectively. (F) Damages for diminution in value 79.Lam also claims damages for diminution in value in respect of the Stemcup and the Double Gourd. It is Lam’s case that they were in fine condition when lent to Tan, but were damaged while being detained by Tan. Accordingly, he claims damages for the diminished value of these two items as a result of the damage to them while they were kept in Tan’s possession. Two issues arise on this head of claim: (i) Whether it is proved that the Stemcup and the Double Gourd were damaged while in Tan’s possession: and (ii) If so, what is the difference in the market value of the two items in fine condition and that in damaged condition. 80.In respect of the first issue, I have found that the Stemcup and the Double Gourd were in fine condition in 1981 when they were lent to and returned by CUAM. A reasonable inference, and which I am prepared to draw, is that the items remained to be in fine condition when delivered and loaned to Tan. I do not consider the mere fact that when Lam delivered items he lent to Tan, he had placed them in the boot of his car can lead to an inference that the Stemcup and the Double Gourd were in damaged condition when delivered to Tan. Given that the loaned items were intended to be shown to Tan’s important guests, there is no reason for Lam to lend and for Tan to accept the Stemcup and the Double Gourd if they were damaged. It is Lam’s evidence, which I accept, that he had on Tan’s request replaced some of the items loaned to Tan. Hence, if the Stemcup and the Double Gourd were damaged, it is only logical that Lam would arrange for replacement. Moreover, it is most improbable that Tan would have shown the two items to the Mayor of Oakland and the visiting party if they were in damaged condition. 81.On Tan’s own evidence, he accepts that the Stemcup has a chip in its rim and the Double Gourd has an uneven surface. The email dated 26 July 2005 from Miss Tsang Chi Fan of Christie’s Hong Kong to Tan’s daughter also referred to a stemcup in Tan’s cupboard to have a chip in its mouth- rim. The only inference and conclusion is that the Stemcup was damaged when it was kept by Tan. 82.In the case of the Double Gourd, there is no evidence of its condition subsequent to it being delivered to Tan in 1982. Tan’s evidence that it has a “birthmark” of an uneven surface is rejected for reasons stated in the preceding part of this Judgment. There is evidence that Sotheby’s had given a valuation of HK$20 million to HK$30 million on 10 August 2005 after viewing a photograph of it, but revised it substantially to HK$3 million when the consignment for sale was signed on 22 August 2005, which was after a physical inspection of the Double Gourd had taken place. In my view, the revised valuation by itself, without more, does not support an inference that the Double Gourd is in a damaged condition. There are a variety of possible reasons for a downward adjustment of the valuation of a piece of antique, and its physical condition is but one of them. The burden of proving the Double Gourd is in damaged condition is on Lam. On the evidence available in this trial, I do not consider he has discharged the burden. 83.It follows that the second issue does not arise for consideration in the case of the Double Gourd. Regarding the Stemcup, Lam relies on the estimated value given by Sotheby’s in its letter dated 10 August 2005, which was HK$8 million to HK$ 12 million and on the assumption that it was in fine and undamaged condition. Sotheby’s estimation was made after being shown photograph of the Stemcup. When the consignment for sale was entered into on 22 August 2005, which was after Sotheby’s had conducted a physical inspection of the Stemcup, the valuation was revised to HK$2 million. As in the case of the Double Gourd, there is no evidence on the basis for the two valuations or the reason for the downward revision. Mr Campbell asks me to draw an inference that the revised valuation came about as a result of the presence of the chip in the rim. Having regard to the state of available evidence, noting in particular the first estimated price was based on a viewing of the photograph of the Stemcup and there is no evidence to explain the substantial revision to HK$2 million, I do not accept it has been proved to the required standard that the estimation of HK$8 million to HK$ 12 million represents the market value of the Stemcup when in fine and undamaged condition. 84.In the premises, while accepting that Lam is in principle entitled to be compensated for the diminution in value of the Stemcup occasioned by it being damaged, no award can be made in the absence of evidence to prove the actual loss suffered. Costs 85.Applying the usual rule of costs follow event, the costs of the counterclaim, including the trial, will fall to be paid by Tan to Lam. There are however several unsuccessful interlocutory applications made on behalf of Lam in the course of the trial. They are: (i) application for leave to Mr Robinson to amplify on his witness statement (made on the 1st day of the hearing up to 11:55am); (ii) application to insert in Professor Peter Lam’s expert report, paragraph 7 of his second supplemental witness statement, which has the same effect of seeking to retain paragraph 9.1(c) of his expert report (made on the 2nd day of the hearing up to 11:20 am); (iii) application for leave to Professor Lam to clarify his witness statements (made on the 2nd day of the trial up to lunch break); and (iv) applications relating to the evidence-in-chief of Lam, including that he be allowed to read out verbatim the parts of his witness statement and supplemental witness statement that were to stand as evidence-in-chief (instead of just adopting them). 86.Having regard to this, I am of the view that Lam should only be awarded 75% of the costs of the trial. I therefore make an order nisi that Tan pays Lam the costs of the counterclaim, save that the costs of the trial is limited to 75%.
Mr James W Campbell instructed by Messrs H.H. Lau & Co for the Plaintiff by Counterclaim. Mr Benjamin Chain instructed by Messrs Yu Tsang & Loong for the Defendant by Counterclaim. Defendant's applications to stay execution of the judgment as well as application for an interim stay pending a renewed application to Court of Appeal dismissed. Please refer to HCA2576 & 2545/2005 dated 27 July 2011 | ||||||||||||||||||||
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