T v. Shiu Wai Tuen

CACV 255/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 255 OF 2010

(ON APPEAL FROM HCA NO. 2229 OF 2007)

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BETWEEN

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Before: Hon Tang VP, Kwan and Chu JJA in Court

Date of Hearing: 12 July 2011

Date of Handing Down of Judgment: 25 July 2011

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JUDGMENT

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Hon Tang VP:

1.I have had the advantage of reading Kwan JA's judgment in draft. I am in full agreement and have nothing to add.

Hon Kwan JA:

2.This is the plaintiff’s appeal from the judgment of Deputy Judge Carlson on 28 October 2010, after a five-day trial in June 2010.  The judge dismissed her claim against the defendant for repayment of $17.8 million and gave judgment in favour of the defendant on his counterclaim for malicious prosecution. He awarded the defendant general damages of $600,000 and special damages of $75,000.

3.There was no dispute that the plaintiff did pay the defendant $17.8 million on eight occasions between 8 October 2005 and 29 August 2007.  The plaintiff alleged that the first three payments of $9.5 million in just over four months were loans repayable on demand.  She made the other five payments of $8.3 million over a period of one year due to duress and threats by the defendant that he would publish photographs and video recordings of them having sexual intercourse if she did not pay him.  The defendant alleged all the payments were gifts from the plaintiff stemming from their sexual relationship and he had no legal obligation to repay.  It was all a question of whether the court should accept the plaintiff’s evidence or that of the defendant.

4.The plaintiff launched this appeal to overturn the findings of the judge that her evidence should be rejected and that the defendant’s evidence should be preferred.

The findings in the judgment

5.The relevant background may be stated as follows.

6.At all material times, the plaintiff was the mistress of a wealthy business man in Hong Kong with two children by him.  She had acquired sufficient means to make investments of her own on the Mainland and she was independently wealthy from the returns of her investments.  In 2005, she suspected that her boyfriend was having an affair with another woman and engaged the defendant to obtain evidence on this.  The defendant was introduced to her by a friend as a debt collector and private investigator.  After she had paid the defendant $400,000 to obtain video evidence for her, she changed her mind and asked him to stop his investigation.  She did not ask for the return of the money.  Nothing turned on this initial payment.

7.The plaintiff then started seeing the defendant socially and they had a sexual relationship.  She was aged 43 at the time and the defendant was aged 24 or 25.  The plaintiff claimed they had sex only about five or six times and the last time was at the end of 2005.  The judge rejected her evidence on this.  The judge found that the sexual relationship had continued into 2007, including the time when the parties met up in Singapore in August 2007.  The judge also found the plaintiff had failed to come up with a convincing explanation why she did not mention her meeting with the defendant in Singapore when she gave her first two police statements, before the defendant mentioned this meeting to the police when he was interviewed on 22 October 2007.

8.The plaintiff began paying the defendant the substantial sums in question a few months after meeting him.  As mentioned earlier, the first three payments totalling $9.5 million were paid in just over four months from October 2005 to February 2006.  The plaintiff claimed these were loans.  The judge did not accept her evidence that the defendant was obliged to repay.

9.For the next lot of payments which spread over a year, the plaintiff alleged that the defendant threatened her time and again he would make trouble with her boyfriend and show the latter the video recordings of them having sex.  She was frightened and dared not press for repayment of the $9.5 million and gave in to his demands for more money, totalling $8.3 million.  The judge rejected her evidence on this.

10.On 11 October 2007, the plaintiff reported the defendant to the police for blackmail.  The defendant was arrested by the police at his home on 22 October.  Charges of blackmail and criminal intimidation were laid against him on 23 October 2007. He spent two nights in custody and was granted bail on his court appearance on 24 October.  From 11 October to 26 November 2007, the plaintiff gave five statements to the police.  She issued the writ in this action on 24 October 2007 and obtained a Mareva injunction against the defendant on 26 October 2007 restraining him from disposing of his assets up to $17.8 million.  When the defendant’s criminal case was brought before the magistrate on 18 December 2007, the prosecution informed the court that no evidence would be offered against the defendant following legal advice.

11.The judge considered the conflicting accounts given on both sides, having reminded himself whilst the civil standard is applicable, the evidence required to satisfy that standard must measure up to the gravity of the plaintiff’s allegations.  He took the demeanour of the parties in giving evidence into account and gave it subsidiary weight.  He paid great heed to the inherent probabilities as he judged the content of the evidence against the whole of the relevant background.

12.The relevant findings appeared in the following paragraphs of the judgment:

“65. My analysis of the parties’ evidence taken as a whole is that the Plaintiff undoubtedly had become besotted with this younger handsome man. She was perhaps emotionally vulnerable at the time, having decided to break up with her boyfriend who was being unfaithful to her. I am satisfied that she was wealthy in her own right through her mainland business interests and decided to take on this young man as a lover who she could indulge with money. He says that he eventually felt that he became her pet. No doubt in giving him money she did so for him to use and invest in his own business ventures, instead of which he squandered it aimlessly on gambling, fast cars and expensive clothes. I am completely satisfied that she never expected that this relatively poor young man was going to be able to repay her unless by some chance, so remote that I can exclude it, he became wealthy enough out of any business that he might have ventured into which enabled him to repay her. This I am satisfied is no basis for any legal obligation by him to repay her. Whilst the payment of such large sums of money might be presumed to have been paid by her in the expectation that they would be repaid, the evidence in this case has persuaded me that these were outright gifts so that the Plaintiff might indulge herself in their relationship. The Defendant told the police that he repaid $3 to $4 million. On the evidence, I am not able to be sure about that and I make no finding on this. Nevertheless, in all the circumstances in which the $17.8 million was paid by the Plaintiff to the Defendant any such repayment would have been purely gratuitous and not indicative of any legal obligation by him to repay what she gave him.

66. Where the evidence of the Plaintiff and the Defendant conflicts, I prefer that of the Defendant. I am certain that at no time did the Defendant blackmail the Plaintiff in the way that she has suggested. Other than her own word, there is no evidence of this. …

68. My conclusion is that after the final payment of $2 million, following the return from Singapore, their relationship was still as it had been for the previous two years, although the Defendant who had married by now was trying to break loose from the Plaintiff. It was only in October when she found out that he had married that she turned against him. She felt betrayed and having regard to the amounts of money that she had plied him with she decided on a course of revenge by making up a false account of blackmail in her report to the police.”

The arguments on overturning the judge’s findings

13.Mr Bruce Lau, who appeared for the plaintiff on appeal but not at trial, submitted that the judge’s findings of primary fact and inferences of fact should be overturned for a number of reasons.

14.Firstly, Mr Lau said in assessing the plaintiff’s demeanour as she was testifying, the judge had made a mistake in his judgment (given four months after trial) that the plaintiff was wearing a baseball cap as well as large very dark sunglasses in giving evidence.  The plaintiff made an affirmation after judgment asserting that she only wore the sunglasses, with the permission of the judge.  She stated that throughout the two and a half days of her giving evidence, she was wearing a black jacket with a hood, and had taken off the hood and worn only the sunglasses when she was in the witness box.

15.Mr Lau drew our attention to various parts of the transcript, which indicated that the plaintiff was wearing sunglasses, there was no mention she had worn a cap as well.  Mr George Chu, who appeared for the defendant at trial, confirmed to us the plaintiff did not wear a baseball cap when she gave evidence, that she had worn a cap under a hood before she went into the witness box and she had taken them off when she gave evidence.  We will accept that the judge was mistaken in his recollection of the plaintiff wearing a baseball cap in giving evidence.

16.Mr Lau also complained that if the judge did not have the full benefit of being able to have a view of the plaintiff’s facial expressions, and could only see her lips move, in fairness to her, he should have given her a warning he was thus hampered in assessing her demeanour, so she could decide whether she should remove her sunglasses or keep them on to preserve her anonymity as best she could in view of the full press gallery. 

17.It is unfortunate the judge had made a mistake in his recollection that the plaintiff was wearing a cap.  I would also agree it would have been better if the judge had warned her there was a risk he might not be able to assess her demeanour properly when her face was hidden behind large very dark sunglasses.  However, I do not think the mistake and the failure to warn the plaintiff were sufficient for us to overturn the judge’s finding that she was an untruthful witness or to direct a re-trial.  As mentioned earlier, whilst the judge had taken into account the demeanour of the witnesses, he had only given this subsidiary weight.  Besides, in assessing the plaintiff’s demeanour, the judge said he had made “every allowance” that she “quite understandably” gave her evidence with her face well hidden in the manner as recollected by the judge.  It must also be borne in mind that the plaintiff had unsuccessfully applied to the judge to have the trial conducted in camera, and that she was represented by counsel who must be expected to advise her properly if she should keep her sunglasses on when giving evidence. 

18.There is nothing in the above grounds of appeal taken by Mr Lau. 

19.Next, Mr Lau pointed to a number of matters in support of his contention that the judge was wrong to believe the defendant’s evidence.

20.There was the defendant’s assertion in his police statement that he had repaid $3 to $4 million to the plaintiff, which was denied by her.  The judge was not able to come to a firm view if the defendant had repaid the plaintiff as alleged and made no finding on this.  Mr Lau submitted that this was patently inconsistent with the judge’s finding that the defendant’s evidence was to be believed, as whether the defendant had repaid any money to the plaintiff was not a peripheral issue.  I see no inconsistency about this.  The judge was perfectly entitled to believe the defendant on some but not all of the matters covered in his evidence.

21.Mr Lau submitted if the judge had found that the defendant had repaid the plaintiff $3 to $4 million, the defendant’s case that the monies were given to him by way of gift would collapse.  I disagree with this.  Even if some repayment was made, that did not mean the defendant was under a legal obligation to do so.  The judge was satisfied on the analysis of the evidence which he accepted there was no basis for any legal obligation by the defendant to repay the plaintiff. 

22.Mr Lau complained there were discrepancies in the defendant’s oral evidence with documentary evidence, which the judge had failed to consider.  There was a bill of costs issued by the defendant’s solicitors in his criminal case stating that he had made a payment of $25,000 to his solicitors being costs on account on 1 October 2007.  The defendant denied that he had paid his solicitors before his arrest on 22 October and said the date of payment was wrongly stated in the bill.  This evidence was mentioned in the judgment.  It had not been overlooked by the judge and he was entitled to give this matter such weight as he saw fit.

23.There was another bill of costs rendered by the defendant’s solicitors in the civil action stating that in February 2008 they took notes on a video tape in respect of the defendant’s interview by the police and that on 14 March 2008 they delivered the video tape to the defendant.  In cross-examination, the defendant was asked about his affirmation in these proceedings made in July 2008 in which he deposed that the “documents” in his criminal case “have been, but are not now” in his possession, custody or power, as since his criminal case was concluded on 18 December 2007, he had “then thrown away” the documents.  The defendant said in cross-examination the documents included the video tape of his police interview and since 18 December 2007 he had never seen it again.  It was then put to him he had received the video tape from his solicitors on 14 March 2008, and he declined to give an explanation about this.

24.In the closing submission at trial, the plaintiff’s counsel made great play of this apparent inconsistency in the defendant’s evidence with the solicitors’ bill and submitted there was perjury and suppression of evidence by the defendant in the destruction of his copy of the video tape.  The judge rightly refused to entertain this as such serious allegations were never put to the defendant and the relevant entries in the solicitors’ bill were not actually put to the defendant.  There is really nothing in this point.

25.Mr Lau submitted the judge had overlooked relevant evidence in the plaintiff’s favour being the police statement of the defendant’s colleague Lai Sze Miu.  According to Mr Lai’s statement, when the plaintiff went to look for the defendant in his office in mid September 2007, she had told Mr Lai that the purpose of her visit was to chase the defendant for repayment of the loan, and this was consistent with the plaintiff’s case.  Further, Mr Lai did not say in his police statement he had told the plaintiff about the defendant’s marriage, and this was inconsistent with the defendant’s allegation that the plaintiff found out about his marriage from Mr Lai.

26.I do not think Mr Lai’s statement would have the significance as contended by counsel.  The stated purpose of the plaintiff’s visit to the defendant’s office could be an excuse on her part.  And although Mr Lai did not mention specifically in his statement he had told the plaintiff of the marriage, he did say he had provided to her the “relevant information” concerning the defendant.

27.There is no substance in Mr Lau’s submission that the judge had not applied the correct standard of proof or that the judge had concluded that the plaintiff failed to establish her allegation of blackmail merely because the criminal charges were dropped against the defendant.

28.The complaint that the judge had ignored the text messages sent to the plaintiff and some posters put up near to her children’s school as evidence of blackmail by the defendant was equally without substance.  These matters were mentioned in the judgment and there is nothing to indicate that the judge did not consider them.

29.As for the judge’s acceptance of the defendant’s evidence he was told by his godmother Miss Hui that Mr Lai had tipped off the plaintiff about his marriage, which was multiple hearsay, Mr Lau submitted that although this evidence was admissible under section 49 of the Evidence Ordinance, Cap. 8, the judge had failed to allude to section 49(1) and (2) which set out in mandatory terms the matters the court shall have regard in estimating the weight to be given to such evidence, so his finding on this should be overturned.  He relied on Aqua-Leisure Industries Inc. & Anr. v. Aqua Splash Ltd. [2003] 1 HKLRD 142 at paras. 31 to 34.  That judgment was given in the early days of a new hearsay regime when amendments were introduced to the Evidence Ordinance providing for the admissibility of multiple hearsay in civil proceedings.  Since then, judges trying civil cases have become familiar with these statutory provisions.  It must not now be understood to mean that whenever there is no allusion to the statutory considerations in section 49 in a judgment, a judge must have failed to take those matters into account in estimating the weight to be given to hearsay evidence.

30.Lastly, Mr Lau relied on the presumption of resulting trust to submit that the evidential burden had shifted to the defendant to rebut the presumption.  The judge was able to resolve the conflicting evidence without resort to such a presumption which is merely a rule of evidence.

31.All the grounds advanced on behalf of the plaintiff to overturn the judge’s findings are without merit.  There is no basis to interfere with the judgment that her claim must be dismissed.

Liability for malicious prosecution

32.I turn to consider the plaintiff’s appeal on the counterclaim.

33.The judge quoted the following extract in Clerk & Lindsell on Torts, 20^th ed., para. 16-17 which sets out three conditions for an informant to be regarded as the prosecutor and be liable for malicious prosecution:

“(1) The defendant falsely and maliciously gave information about an alleged crime to a police officer stating a willingness to testify against the claimant and in such a manner as makes it proper to infer that the defendant desired and intended that a prosecution be brought against the claimant.

(2) The circumstances are such that the facts relating to the alleged crime are exclusively within the knowledge of the defendant so that it is virtually impossible for the police officer to exercise any independent discretion or judgment on the matter.

(3) The conduct of the defendant must be shown to be such that he makes it virtually inevitable that a prosecution will result from the complaint. His conduct is of a nature that ‘… if a prosecution is instituted by the police officer the proper view of the matter is that the prosecution has been procured by the complainant’.”

34.Mr Lau submitted that conditions (2) and (3) were not satisfied here.  He contended that the judge was in error in relying on the dropping of criminal charges against the defendant as the basis in finding that the plaintiff had made up a false account in her report of blackmail to the police.  He argued that as the judge had found the prosecution had decided to offer no evidence against the defendant entirely on the prosecution’s own assessment of the evidence it gathered, condition (2) was not established.  Condition (3) was also not established as what the plaintiff did throughout was only to report the matter to the police for their further investigation, and to assist the police by giving witness statements upon request.

35.There is no substance in any of the above contentions.  The judge’s finding that the plaintiff had made up a false account in her report of blackmail to the police was plainly not based solely on the fact that the police had subsequently decided to offer no evidence against the defendant.  Condition (2) was satisfied on the evidence and findings of the judge.  The alleged criminal acts rested on what was said by the defendant to the plaintiff in private, so it was “virtually impossible” for the police to exercise independent discretion or judgment on the matter.  That the charges of blackmail and criminal intimidation were dropped two months later after the prosecution had assessed its chance of securing a conviction did not alter the fact that the charges were laid against the defendant and he had the prosecution hanging over his head for two months.  Condition (3) was also satisfied as it was on the plaintiff’s false report that the police arrested the defendant, detained him for investigation, and brought charges against him.  She had abused and set in train the coercive powers of the prosecution authority.

36.The judge was entirely correct in ruling that all the ingredients of malicious prosecution have been proved and judgment should be entered for the defendant on the counterclaim.

Quantum of damages for malicious prosecution

37.Mr Lau took no issue with the special damages awarded in the sum of $75,000, being the legal expenses incurred by the defendant in his criminal case.  We are concerned only with the basic general damages of $600,000, as the defendant made no claim for aggravated damages.

38.In making this award, the judge stated as follows:

“In this case, I will have regard to the humiliating circumstances of the Defendant’s arrest at his home which was seen by his neighbours. Two nights spent by him in custody. The worry of the prosecution hanging over his head for two months before he was unconditionally released and the distress caused by the publicity in circumstances where he has had to endure the close attentions of the press. He has also lost his previous employment and is now in less well-paid employment. Doing my best, I propose to award him general damages of $600,000.”

39.There are three heads of compensation for damages for malicious prosecution.  As stated by Holt CJ in Savill v Roberts (1689) 12 Mod. 208:

“First, damage to his fame if the matter whereof he be accused be scandalous. Secondly, to his person, whereby he is imprisoned. Thirdly, to his property, whereby he is put to charges and expenses.”

40.These three elements of compensation were also mentioned by Roch LJ in Clark v. Chief Constable of Cleveland Police [1999] All ER (D) 473 in these terms:

“Compensation for malicious prosecution has three aspects. First, there is the damage to a person's reputation. The extent of that damage will depend upon the claimant’s actual reputation and upon the gravity of the offence for which he has been maliciously prosecuted. The second aspect is the damage suffered by being put in danger of losing one's liberty or of losing property. Compensation is recoverable in respect of the risk of conviction. McGregor on Damages 16th Edition paragraph 1862 considers that an award under this head is basically for injury to feelings, unless there has been a conviction followed by imprisonment. The third aspect is pecuniary loss caused by the cost of defending the charge.”

41.The above statements of Roch LJ were endorsed by the English Court of Appeal in Manley v. Metropolitan Police Commissioner [2006] EWCA Civ 879 at para. 26, whilst emphasising that some care must be taken in balancing the various elements.

42.These are matters of general principle.  I turn now to the amount of the award.

43.The judge referred to the decision of the English Court of Appeal in Thompson v. Commissioner of Police of the Metropolis [1998] QB 498, in which guidance was given for the award of various types of damages for false imprisonment and malicious prosecution, with suggested starting and maximum figures for awards that a judge could give to the jury when directing them on quantum.  These brackets of awards in the UK are not directly applicable to us, due to the differences in social and economic situations.  Local awards should be looked at.  Unfortunately, the parties here did not refer the judge, or us, to any local decision on the award of damages for malicious prosecution.  It was left to us to do our own research.

44.We found two local decisions on damages for malicious prosecution.  In addition, there was a helpful decision of A. Cheung J (as he then was) in A v. Director of Immigration (False Imprisonment: Damages) [2009] 3 HKLRD 44 in which he undertook a comprehensive review of awards in Hong Kong for damages for false imprisonment.  I consider it useful to look at awards for false imprisonment in comparison, as there are common compensatory elements with damages for malicious prosecution, being compensation for loss of liberty, and damage to reputation, humiliation, shock, injury to feelings, and so on which can result from the loss of liberty (R v. Governor of Brockhill Prison, ex p Evans (No. 2) [1999] QB 1043 at 1060A to B; A v. Director of Immigration (False Imprisonment: Damages) para. 53(3)).

45.The first local decision of our research in an award for damages for malicious prosecution was Tam Ping Lam & Ors. v. Law Hung, HCA No. 1181 of 1973, 2 August 1973.  Registrar Mayo (as he then was) described it as a serious case which should merit substantial damages.  False accusation of robbery was made which led to the plaintiffs’ arrest in a wedding banquet given by them in the presence of their guests.  They spent one to three days in custody.  The arrest was reported in three newspapers.  Two of the plaintiffs were charged with robbery and were acquitted at trial.  The registrar took into consideration the financial circumstances of the parties.  Bearing in mind the plaintiffs all occupied a fairly humble station in the community and the defendant was a poultry farmer, the registrar did not think the penalty imposed against the defendant should be excessive although the case was serious.  $25,000 was awarded to the three plaintiffs.

46.The other decision concerned a domestic helper and was decided by HH Judge Muttrie in 2004 (Godagan Deniyalage Prema C. v. Cheung Kwan Fong & Anr., DCCJ No. 2488 of 2003, 20 December 2004).  The plaintiff was falsely accused of theft, prosecuted in the magistrate’s court, convicted and sentenced to three months’ imprisonment.  She spent 19 days in prison.  Her conviction was set aside on appeal.  The criminal proceedings lasted almost a year.  The judge had regard to the authorities that malicious prosecution is treated in much the same way as false imprisonment.  He awarded the plaintiff $200,000 for her non-pecuniary loss.  The defendant appealed the judgment on liability for malicious prosecution (CACV No. 72 of 2005, 31 May 2005).  There was no appeal on the quantum of damages.

47.Lastly, I have regard to the awards made to the four torture claimants for damages for false imprisonment in A v. Director of Immigration (False Imprisonment: Damages).  They were in the sums of $80,000, $150,000, $180,000 and $100,000.  Their period of wrongful detention ranged from three months to over 21 months.

48.On the basis of the local awards mentioned above, I am of the view that the award of $600,000 by the judge is manifestly excessive and falls completely outside the range of awards that could reasonably be made.  The judge’s award of general damages must be set aside.  I would substitute an amount of $200,000 as appropriate compensation in this case, over and above the special damages of $75,000.

49.As the plaintiff has failed on all but one of her grounds of appeal and succeeded only to the extent in reducing the amount of damages, I propose to make an order nisi that the defendant be given 70% of the costs of this appeal.

Hon Chu JA:

50.I agree.

Mr Bruce Lau, instructed by Messrs Anthony Kwan & Co., for the Plaintiff/Appellant

Mr George Chu, instructed by Messrs Michael Pang & Co., for the Defendant/Respondent