Non-no Fashion Wholesale Ltd. v. Chung Kam Wing and Another

CACV000168/2001

CACV168/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 168 OF 2001

(ON APPEAL FROM HCA NO 20335 of 1998)

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Coram: Hon Rogers V-P, Woo JA and Le Pichon JA in Court

Date of hearing: 24 July 2001

Date of handing down of judgment: 8 August 2001

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J U D G M E N T

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Hon Woo JA:

Introduction

1.This is an appeal against the judgment of Cheung J (as he then was) given on 12 January 2001 in HCA No 20335 of 1998. Chung Kam Wing ("Chung") and Shu Man Lee ("Shu") were at all material times the registered owners of the premises known as Workshop B5 on the Ground Floor of Block B, Hong Kong Industrial Centre, Nos.489-491, Castle Peak Road, Kowloon, Hong Kong ("the premises"). The plaintiff by original action, Non-No Fashion Wholesale Limited ("Wholesale Limited"), claimed against Chung and Shu that in February 1996, it together with another company called Non-No Fashion Garment Limited ("Garment Limited") entered into a tenancy agreement ("the 1996 Tenancy Agreement") with Chung and Shu, whereby the owners agreed to let the premises to the companies for a term from 1 March 1996 to 31 December 2003. Wholesale Limited initially sought specific performance of the 1996 Tenancy Agreement. However, this was not pursued at the trial before Cheung J, and instead, damages for breach of the 1996 Tenancy Agreement to be assessed was sought.

2.Chung and Shu denied that they had ever entered into the 1996 Tenancy Agreement with Wholesale Limited or Garment Limited. Their case was that the signature of Chung on the 1996 Tenancy Agreement was a forgery. They counterclaimed against Wholesale Limited, the 1st defendant by counterclaim, Kwan Sing Kwong ("Kwan") the 2nd defendant by counterclaim, and Leung Lai Kuen ("Leung"), Kwan's wife and the 3rd defendant by counterclaim, for practising a fraud on them by forging the signature of Chung and making use of the 1996 Tenancy Agreement to delay the recovery of possession of the premises by Chung and Shu. It was not disputed that Kwan was at all material times a director and shareholder of Wholesale Limited and Garment Limited.

3.The key issue before the Judge was therefore whether the 1996 Tenancy Agreement was a forgery in that the signature on it, purported to be that of Chung, was a forgery.

4.Four witnesses gave evidence before the judge, namely, Chung, Kwan, Professor Cheung Kwong Yue ("Professor Cheung") and Mr Hung Pui Shing ("Mr Hung"). The latter two gentlemen were handwriting experts called respectively by Wholesale Limited on the one hand and Chung and Shu on the other. After assessing their testimonies and all the documentary evidence before him, the Judge found that Chung's signature on the 1996 Tenancy Agreement was a forgery. He gave judgment against Wholesale Limited and Kwan, declaring that the signature was a forgery, with costs on an indemnity basis in respect of both the claim and the counterclaim,. He also granted injunctions to restrain them from occupying the premises, damages for trespassers and other relief based on his findings of fraud and forgery. He, however, dismissed the claim of Chung and Shu against Leung with no order as to costs. Wholesale Limited and Kwan now appeal. They are the appellants and Chung and Shu are the respondents.

The facts

5.Although the issue is simple, the facts relevant for the Judge's consideration spanned over several years and were of some complexity.

(a) The facts not in dispute

6.By a Tenancy Agreement dated 13 September 1991 ( "the 1st Tenancy Agreement") made between Garment Limited and Chung and Shu, the premises were let to Garment Limited for a term of three years from 1 December 1991 to 30 November 1994. The rent was $95,000 per month from 1 December 1991 to 30 November 1993 and $100,000 per month from 1 December 1993 to 30 November 1994. Garment Limited was given an option to continue with the Tenancy for a term of two years from 1 December 1994 to 30 November 1996 at $120,000 per month. The premises were held under government Conditions of Sale. Special Condition (3) provides that except with the consent of the Governor, the premises shall only be used for a factory. Condition (15) permits the government to re-enter and recover possession of the premises in the event that the purchaser fails to observe or comply with the Conditions of Sale.

7.On 26 August 1994, Chung and Shu commenced HCA No A8575 of 1994 ("the 1994 Action") against Garment Limited seeking recovery of the possession of the premises on the ground that Garment Limited had, in breach of the 1st Tenancy Agreement, used the premises as a showroom and not for industrial purpose. By an Amended Statement of Claim, it was further pleaded that Garment Limited had sublet the premises and it was in arrears of rent from 1 September 1994 and also in arrears of rates. The fact that the 1st Tenancy Agreement had come to an end by effluxion of time on 30 November 1994 was also pleaded.

8.In January 1995, there were discussions between Kwan and Chung to compromise the 1994 Action. That resulted in a consent order dated 7 February 1995 made by a Deputy High Court Judge Wong, in the following terms:

"1. Judgment be entered against the Defendant by the Plaintiffs for the following reliefs:-

(i) The Defendant do forthwith deliver vacant possession of the premises known as Workshop B5, Ground Floor, Block B, Hong Kong Industrial Centre, 489-491 Castle Peak Road, Kowloon, Hong Kong ('the said Premises') to the Plaintiffs;

(ii) The Defendant do forthwith pay to the Plaintiffs the arrears of rent and rates in the total sum of $317,528.75;

(iii) An injunction restraining the Defendant whether by itself, its directors, servants, agents, tenants or licencees from using or continuing to use the said Premises otherwise than as a factory, or doing or suffering to be done any act in breach of the Conditions of Sale No 4268 relating to the said Premises;

(iv) Damages for breach of the Tenancy Agreement (as defined in paragraph 2 of the Amended Statement of Claim herein);

(v) The Defendant do pay to the Plaintiffs mesne profits at the market rent of the said Premises from 1st December 1994 until vacant possession shall have been delivered up by the Defendant;

(vi) There be an assessment of the damages and mesne profits referred to in paragraphs (iv) and (v) of this Order;

(vii) Costs of this action including costs of the application for summary judgment be paid by the Defendant to the Plaintiffs."

9.On 8 October 1996, the above judgment was sealed. Thereafter a writ of possession pursuant to the judgment was issued to all occupiers of the premises.

10.On 25 November 1996 Garment Limited commenced an action, HCA No A13493 of 1996 ("the 1996 Action") against Chung and Shu, claiming a declaration that Garment Limited was a tenant under the 1996 Tenancy Agreement, which has been the bone of contention between the parties. On 4 March 1997, Master Chu (as she then was) granted a stay of execution of the judgment entered in the 1994 Action pending the outcome of the 1996 Action.

11.In the meantime, Chung and Shu applied for interim payment from Garment Limited in respect of the use and occupation of the premises. On 3 December 1997, an order for interim payment was made by Master Chung (as he then was) in favour of Chung and Shu. Garment Limited appealed to Sears J who dismissed their appeal on 2 January 1998. Further appeal by Garment Limited to the Court of Appeal was also dismissed on 30 April 1998.

12.On 2 June 1998, Garment Limited commenced another High Court Action, HCA No 8912 of 1998 ("the 1998 Action") against Chung for the return of deposit of $240,000 under the 1996 Tenancy Agreement.

13.On 6 May 1998, Chung and Shu petitioned to wind up Garment Limited on the ground that it had failed to pay the interim payment ordered by Sears J. On 16 June 1998, a winding up order was made against Garment Limited. The Official Receiver decided not to defend the 1994 Action or to proceed with the 1996 Action and the 1998 Action commenced by Garment Limited. On 7 October 1998, with the consent of the Official Receiver, a joint application was made to lift the stay of execution of the judgment of 8 October 1996 on the possession of the premises.

14.On 27 November 1998, Wholesale Limited commenced the instant action against Chung and Shu, relying on the 1996 Tenancy Agreement.

(b) Case of Wholesale Limited and Kwan

15.According to Wholesale Limited, Chung, acting on his own behalf and on behalf of his wife Shu, in around January 1995 represented to both Garment Limited and Wholesale Limited that if Garment Limited consented to judgment in the 1994 Action and if both Garment Limited and Wholesale Limited reimbursed Chung and Shu for all costs incidental to the application for the change of user, Chung and Shu would grant a further lease for a term from 1 March 1996 to 31 December 2003 and would not execute the judgment to be entered in the 1994 Action.

16.In the result, the 1996 Tenancy Agreement was entered into between Garment Limited and Wholesale Limited of the one part and Chung, acting on behalf of himself and Shu, of the other part containing the following terms:

(1) The tenancy is for a term from 1 March 1996 to 31 December 2003;

(2) For the period from 1 March 1996 to 17 March 1998 ("the first period"), the monthly rental shall be $120,000;

(3) For the period from 18 March 1998 to 31 December 2003 ("the second period"), the monthly rental shall be $150,000;

(4) Wholesale Limited and Garment Limited may sublet the premises; and

(5) Wholesale Limited and Garment Limited may use the premises for such purpose as they deem fit.

17.Pursuant to the 1996 Tenancy Agreement, Wholesale Limited and Garment Limited paid $240,000 as the deposit for the first period, and they further paid cash of $600,000 as deposit for the second period. Wholesale Limited also claimed that it was an implied term of the 1996 Tenancy Agreement and also an implied term of the collateral agreement reached between the parties in January 1995 that Chung and Kwan would apply to government authorities for the change of the use of the premises to that of a showroom.

18.By taking action for possession in October 1998, Chung and Shu evinced an intention to repudiate the 1996 Tenancy Agreement. On this basis, in the instant action, Wholesale Limited claimed a declaration that Wholesale Limited was a tenant of Chung and Shu under the 1996 Tenancy Agreement. Wholesale Limited initially sought specific performance of the 1996 Tenancy Agreement, but did not pursue this claim at the trial before Cheung J. Instead, it asked for damages for breach of the 1996 Tenancy Agreement to be assessed.

(c) Case of Chung and Shu

19.Chung and Shu denied that they had ever entered into the 1996 Tenancy Agreement with Wholesale Limited or Garment Limited. They said that the signature of Chung on the agreement was a forgery. They further counterclaimed against Wholesale Limited, Kwan and Leung. Leung is the wife of Kwan and was also a director and shareholder of Wholesale Limited. They alleged that Kwan and Leung had made use of the corporate vehicle of Wholesale Limited to practise a fraud on them by forging the signature of Chung and making use of the 1996 Tenancy Agreement to delay the recovery of possession of the premises by Chung and Shu. The counterclaim was for, among other things, a declaration that the 1996 Tenancy Agreement is void and of no effect and an injunction to restrain Wholesale Limited, Kwan and Leung from remaining in occupation of the premises and also for damages.

The judgment

20.In his 32-page Reasons for Judgment handed down on 31 January 2001, Cheung J examined the evidence before him in great detail. He came to the conclusion that:

"Kwan is not a credible or trustworthy witness. His evidence is full of inconsistencies. The only explanation is that he had given so many false information that he was unable to keep up with his lies."

21.On the other hand, in respect of Chung, the Judge said :

"Chung is not a sophisticated person. He operated a metal factory at the premises before he let the premises to Garment Limited. I find him to be a credible and truthful witness."

22.The Judge also gave detailed reasons for his view that the 1996 Tenancy Agreement was inherently improbable. He related the history of the legal proceedings taken by the parties since 1994 and the fact that Garment Limited, Wholesale Limited and Kwan were hard pressed by Chung and Shu's applications for possession. The Judge came to the view that there was good reason for the former to resort to forgery to delay repossession of the premises by the owners. He also dealt with the discrepancies in Kwan's evidence, relating to the alleged cash deposit of $600,000, the exact terms of the compromise in January 1995, whether the parties had agreed to the premises being used as showrooms and not a factory, who were occupying the premises and whether there was subletting, and the veracity of alleged sums of payment in the light of the alleged 1996 Tenancy Agreement. As said before, he came to the conclusion that Kwan was telling a pack of lies before him.

23.He also examined the evidence of Professor Cheung called by Wholesale Limited and Mr Hung called by Chung and Shu, as experts of handwriting in their examination of the alleged signature of Chung on 1996 Tenancy Agreement. He assessed in some detail the various aspects of the evidence relating to these experts.

24.Professor Cheung's specialization is in the research and teaching in Chinese etymology (the study of the history of words and their meanings), semasiology (the deciphering of ancient texts) and palaeography (the study of ancient words, writings and documents). He had not received any formal training in forensic handwriting comparison. On the other hand, Mr Hung was a document examiner in the Questioned Documents Section, Forensic Science Division of the Government Laboratory. He specializes in the examination of forged and counterfeit documents, typescripts, handwriting and signatures.

25.Professor Cheung obtained Chung's signatures by photocopying from the title deeds of the premises, the Tenancy Agreement and court documents with a digital camera. Mr Hung obtained Chung's signatures by asking him to sign on sample sheets.

26.The instruments Professor Cheung used in comparing the signatures with the questioned signature on the 1996 Tenancy Agreement were magnifying glass, digital camera and computer. The scientific instrument used by Mr Hung was the stereomicroscope which was the standard instrument in signature comparison.

27.The conclusion that Professor Cheung reached was that because of the different writing styles of Chung in the sample signatures that he had, he could not dismiss the possibility that the questioned signature was written by the same person who wrote the sample signatures. He said that this was particularly supported by the similarities seen when comparing the questioned signature with the sample signatures. He said that the percentage of similarity was over 50%. He stated that after seeing the third report of Mr Hung he could assess the similarity as more than 50%. On the other hand Mr Hung's conclusion was that the questioned signature was written in a cursive style and barely legible. Detailed examination revealed delicate retouching of strokes, which suggested that the questioned signature was unnaturally written. Although the questioned signature was superficially similar to the sample signatures of Chung, discrepancies in terms of proportion, slant and writing movement were found. His conclusion was that the questioned signature was probably not written by Chung. He assessed that the probabilities were 80% that the questioned signature was not Chung's signature.

28.The Judge accepted the evidence of Mr Hung and rejected the evidence of Professor Cheung. He said (at pp 27-29 of his Reasons for Judgment):

"The inadequacy of the digital camera used by Professor Cheung is that this is an ordinary, family type camera. Distortions may appear on the screen of the computer because of the nature of the computer itself. Furthermore, the inadequacy of using photocopies is that when enlarged, all that the image will show is a group of carbon dust. It is apparent that Professor Cheung made the comparisons based on penmanship and the style of the writing. With respect to Professor Cheung, the methods he used are only superficial methods of comparison. His conclusion that it is possible that the questioned signature was written by the same person who wrote the sample signatures because of the different writing styles of the sample signatures is not a logical conclusion. Certainly, it is not one which requires the expertise of an expert.

In my view, it is more reliable to concentrate on the quality of the signatures rather the penmanship and style of the writing. After all, the similarity of a forged signature can be based on a genuine signature. Mr Hung stated that the sample signatures of Chung supplied to Mr Hung and Professor Cheung exhibited a wide range of variation in structural form rather than in different writing styles. They were written in a cursive style, exhibiting fluency and spontaneous writing movements. However, the questioned signature when enlarged, clearly revealed that there were hesitation, pen lift and retouching of writing strokes. In other words, the strokes were not written in a carefree and natural manner and probably they were executed by way of drawing. Furthermore, one distinguishing feature of all Chung's signatures is that an eyelet, opened or closed, was found before the bottom angular turning of the right radical "重" of the of the first character "鍾". This is not found in the questioned signature.

I find Mr Hung to be an impressive witness and I accept his evidence. Certainly, his expertise is based on forensic training and experience in this field aided with modern technology of document examination. Although Mr Hung used the words "qualified opinion" in his report on his conclusion that the questioned signature was probably not written by Chung, it does not lessen the weight that one can attach to his evidence. I accept his explanation that the words 'qualified opinion' mean that he was not completely sure and he had a little reservation on this matter, but on balance, the probability was much higher that the questioned signature was not written by Chung. In my view, Professor Cheung had exaggerated when he said it was the report of Mr Hung which caused him to conclude that it was more than 50% that the questioned signature belonged to that of Chung. Any fair reading of Hung's report would not cause such an opinion to be formed."

29.In respect of the claim and the counterclaim, the Judge's conclusions can be found in the following passages at pp 24, 29-30 of his Reasons for Judgment:

"In my view, Kwan had failed to show that Chung had agreed with him on the 1996 Tenancy Agreement. This is sufficient to dispose of the case of Wholesale Limited."

"In respect of the counterclaim by Chung and Shu, their case is based on fraud. In finding for Chung and Shu, I had borne in mind that although the standard of proof when Kwan is alleged in a civil trial is still that of the civil standard, because of the serious allegation, I would require strong evidence before I can be satisfied that the allegation is established on a balance of probability. In my view, such strong evidence is clearly present in this case. Kwan is clearly the mastermind in ensuring that Chung and Shu would not be able to recover their premises. Wholesale Limited is merely his corporate vehicle in carrying out the fraud. It is obvious that right from the beginning of the tenancy in 1991, Kwan had been in charge. He admitted that he was in control of Garment Limited and Wholesale Limited. He alone conducted the negotiation with Chung in January 1995. There is no doubt whatsoever that Garment Limited and Wholesale Limited are merely the means in which he took control of the premises and sublet to others, making huge gains in the process. After the winding-up of Garment Limited and after the Official Receiver had decided not to continue with the various litigations involving Garment Limited, Kwan was determined not to let Chung and Shu have possession of the premises. It is obviously fraudulent to allege Chung had agreed on a new tenancy agreement and arranged for a forgery of Chung's signature on the 1996 Tenancy Agreement."

The law on challenge as to facts

30.It is pertinent to refer to some authorities on appeals against decisions of questions of fact. Paragraph 59/1/48 of the Hong Kong Civil Procedure 2001 contains a summary of the law, as follows:

"On an appeal in an action tried by a judge alone, the burden of showing that the trial judge was wrong in his decision as to the facts lies on the appellant and if the Court of Appeal is not satisfied that he was wrong the appeal will be dismissed (Savage v. Adams [1895] W.N. 109, per Lopes L.J.; Colonial Securities Trust Co. v. Massey [1896] 1 Q.B. 38, per Lord Esher M.R. at 39. But, as was said by Lindley M.R. in Coghlan v. Cumberland [1898] 1 Ch.704; 'Even where ... the appeal turns on a question of fact, the Court has to bear in mind that its duty is to rehear the case, and the Court must reconsider the materials before the Judge, with such other materials as it may have decided to admit. The Court must then make up its own mind, not disregarding the judgment appealed from but carefully weighing and considering it, and not shrinking from overruling it if one full consideration it comes to the conclusion that it is wrong.' 'Great weight is due to the decision of a judge of first instance whenever, in a conflict of testimony, the demeanour and manner of witnesses who have been seen and heard by him are material elements in the consideration of the truthfulness of these statements. But the parties to the cause are nevertheless entitled as well on questions of facts as on questions of law to demand the decision of the Court of Appeal, and that Court cannot excuse itself from the task of weighing conflicting evidence, and drawing its own conclusions, though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect.' (The Glannibanta (1876) 1 P.D. 283 at 287; and see Bigsby v. Dickinson (1876) 4 Ch.D. 24, per James L.J. at 28). A distinction must be drawn between the judge's view of conflicting testimony, and the inferences to be drawn from facts not in controversy (per Lord Denedin in Dominion Trust Co. v. New York Life Insurance Co. [1919] A.C. 254 at 255, PC) or between facts deposed to by witnesses and found by the court, and inferences of fact drawn therefrom (see Benmax v. Austin Motor Co. Ltd [1955] 1 All E.R. 326, per Viscount Simonds at 327). 'The judge sees the demeanour of the witnesses and can estimate their intelligence, position and character in a way not open to the courts who deal with later stages of the case' (Khoo Sit Hoh v. Lim Thean Tong [1912] A.C. 323 at 325, PC). Not to have seen the witnesses puts appellate judges in a permanent position of disadvantage against the trial judge, and unless it can be shown that he has failed to use or has palpably misused his advantage - for example has failed to observe inconsistencies or indisputable fact or material probabilities (ibid. and Yuill v. Yuill [1945] P.15; Watt v. Thomas [1947] A.C. 484) - the higher court ought not to take the responsibility of reversing conclusions so arrived at merely as the result of their own comparisons and criticisms of the witnesses, and of their own view of the probabilities of the case (per Lord Sumner in S.S. Hontestroom v. S.S. Sagaporack [1927] A.C. 37 at 47). ..."

31.The approach of this Court to such appeals is well established. In Carrian Holdings Limited (In liquidation) v Crestflame Estates Limited & others, (CACV 205/1993, 30 Aug 1994, unreported), Power V-P, giving the judgment of this Court, said at p. 16-17 of the judgment as follows:

"The approach of this Court is not in doubt. We express it in this way:

(1) An appellate court has jurisdiction to try the case and find the facts on the transcript. It is a re-hearing.

(2) Nevertheless, not having seen and heard the witnesses, it is in a position of permanent disadvantage as against the trial judge.

(3) Therefore, this Court will reverse a trial judge on a finding of fact when that finding depended upon the credibility of a witness or witnesses only if:

(a) It is shown that the judge failed to use, or culpably misused his special advantage, and

(b) The witness's evidence is vitiated either by such a glaring improbability or by an objective fact or conclusive document which shows that the judge's finding was wrong.

See the Hontestroom [1927] AC 37 at 49-50 per Lord Sumner and Powell v Streatham Manor Nursing Home [1935] AC 243 at 265-268 per Lord Wright.

Further, in a case such as this which turns on the judge's opinion of the witness formed in all the circumstances of the trial, if we are to reverse his decision on the facts, we 'must not merely entertain doubt whether the decision below is right, but be convinced it is wrong'. The Julia (1860) 14 Moo. PC 210 at 235 per Lord Kingsdown."

32.In Lobo v Kripalani [1998] 2 HKLRD 325, at p. 327J Godfrey JA said:

"It is not a proper ground of appeal that the judge preferred the evidence of the respondent's witnesses to the evidence of the appellant's witnesses. It is for the judge, not for us in this court, to weigh the evidence, and to decide whose case is to be preferred. All we consider is the judgment, and the evidence before the judge. Unless an appellant can show that the judge had misunderstood the evidence, or failed to appreciate its effect, or has overlooked some documentary evidence, or other indisputable evidence, which should have compelled him to a different conclusion, this court will not interfere with his findings of primary fact.

In the present case, it has not been possible for the appellant to do any more than to contend that the judge should have preferred his case to that of the respondent. As I have said, that is not enough."

33.In Tang Kwok Ming v Daxprofit Scaffolding Ltd [1999] 1 HKC 657, at p. 663D, Godfrey JA again stated:

"This appeal demonstrates the need for a re-statement of the function of the Court of Appeal in cases of this nature.

The approach of an appellate court to appeals on fact is well-established. An appeal to this court is by way of re-hearing. Accordingly, it is the duty of this court to re-consider all the materials before the judge, to make up its own mind, not disregarding the judgment below but carefully weighing and considering it, not shrinking from overruling it, if on full consideration, it comes to the conclusion that the trial judge's finding was wrong.

But that does not mean that this court will re-try the case. The re-hearing is re-hearing on the papers. This court will not usurp the function of the trial judge, ie to find the facts. It will certainly not disturb his findings of primary fact where these are based on the credibility of the witnesses or the preference of the evidence of one witness for that of another (although of course it may be willing to disturb inferences of fact drawn from the primary facts, because an appellate court is in as good a position as the trial judge to draw such inferences).

It is important for counsel and solicitors (and for the legal aid authorities) to remember the very limited extent to which this court will interfere in a case in which the appellant seeks to dispute the judge's findings of fact. If it is necessary to disturb an adverse finding of primary fact, the appellant has to demonstrate either (1) that there is no evidence to support it; or (2) that it is contrary to documentary or other incontrovertible evidence which the judge overlooked. It is not enough to show there is little evidence to support the judge's finding, or that it was 'contrary to the weight of the evidence'. The weight of the evidence is a matter for the trial judge. It does not matter how many witnesses say one thing, and how few say the contrary. The judge is perfectly entitled to prefer the evidence of the few to that of the many."

34.In the most recent case of Chung Fai Engineering Co. v Maxwell Engineering Co. Ltd, CACV 981/2000 (15 June 2001, unreported), the same principles were followed by this Court. In para 32 on p 9 of the judgment, Mayo V-P said:

"It is clear from the issues which are ventilated in this appeal that to a very large extent this court is being invited to interfere with findings of fact made by the judge at the trial. It is no part of the function of the Court of Appeal to retry cases. It is only in the most exceptional circumstances that appeals based on findings of fact will be successful."

The grounds of the appeal

35.Two grounds of appeal are raised in the notice of appeal. The first ground is that the judge erred in finding that the 1996 Tenancy Agreement was not signed by Chung and was a forgery. Under this ground, it is alleged that the judge had erred in giving undue or excessive weight to what he regarded as inconsistencies in Kwan's evidence and failed to give sufficient and proper weight to the explanations given by Kwan, that he failed to consider properly the inherent probability of the respective versions of events given by Chung and Kwan, that he wrongly preferred the evidence of Chung to that of Kwan, and that the evidence in support of Chung's allegations of fraud and forgery was not strong enough.

36.The second ground of appeal is that the Judge erred in preferring the expert's evidence of Mr Hung to that of Professor Cheung. It is alleged that the Judge erred in placing undue and excessive weight to the fact that Professor Cheung had not received any formal training in forensic handwriting comparison, that he placed undue and excessive weight to the fact that Professor Cheung had used a family type digital camera and computer to examine the question and specimen signatures, that he failed to give sufficient and proper weight to Professor Cheung's evidence on writing style and penmanship, that he erred in finding that the methods used by Professor Cheung was "superficial methods of comparison", that he failed to consider properly or at all that the "hesitation, pen lift and retouching of writing strokes" suggested by Mr Hung could probably be due to the circumstances under which Chung appended his signature on the 1996 Tenancy Agreement, that he failed to consider properly or at all the 1996 Tenancy Agreement was signed in February 1996 whereas the control signatures of Mr Hung based on which he made comparison with the questioned signature were all obtained on one occasion in around June 1997 and when Chung was conscious of the fact that he was lodging a complaint of forgery to the police, and that he failed to consider properly or at all that the police controlled signatures themselves displayed marked differences in writing style and penmanship.

37.As Mr Erik Shum, for the respondents, has pointed out in his Skeleton Argument, and in my view correctly, that the grounds of appeal do not allege that the Judge took into consideration irrelevant matters or facts or misapplied facts or evidence. What is complained of in the grounds of appeal is that the Judge had given undue weight to the evidence against the appellant's case or correspondingly had given too little weight to the evidence in support of the appellant's case. The gist of the complaint is that the judge wrongly preferred the evidence in favour of the respondents to the evidence in favour of the appellants. In view of the well-established principles adopted by this Court in dealing with appeals on questions of fact, which Mr Rimsky Yuen, for the appellants, has fairly accepted to be applicable to this appeal, it is unnecessary for me to recite all his arguments on various facets of the evidence before the Judge. In my judgment, such arguments do not remotely get close to the high threshold required to mount a successful attack on the Judge's findings.

38.Mr Yuen submits that the main thrust of the appeal relates to the inherent probability of the appellants' case and accepts that if he fails to persuade us on this, the appeal must fail. He refers us to the judgment of Litton JA (as he then was) in R v Ng Wing-ming [1995] 1 HKCLR 64, at p 65:

"Demeanour is a notoriously uncertain guide to the truth for obvious reasons. A witness comes into court as a total stranger to the judge who can hardly be expected to read from his or her facial expressions or 'body language' indications as to truthfulness or otherwise. The inherent probabilities in most cases would be the first point of reference for the trial judge in seeking to ascertain the truth. Demeanour could only be a point of last resort."

39.The Judge did make inherent probabilities as the first point of reference in his Reasons for Judgment. He found it inherently improbable that Chung had agreed to the 1996 Tenancy Agreement. Mr Yuen's argument that the 1996 Tenancy Agreement existed and that Chung's signatures on that agreement was genuine is that there was no reason for Kwan, a businessman, with alternative premises available in February 1996, to go all the way to forge Chung's signature. Mr Yuen submits that even if Kwan and his companies could obtain some profit, in the region of $100,000 to $200,000 a month from the subletting of the premises to various subtenants as shown in the evidence, and even if they would have to incur decoration expenses if they were to move to alternative premises, that would not have been a sufficient reason for Kwan to have Chung's signature forged.

40.The Judge has given various reasons, which are in my view cogent, to find that the case presented by Wholesale Limited and Kwan was inherently improbable. Apart from those reasons, which I do not think need to be repeated, a simple answer can be given to Mr Yuen in response to his arguments on inherent probability. What he submits as no or no sufficient reason for the appellants to have Chung's signature forged applies all the same to Chung in his allegation that his signature was forged. If alternative premises were available so that the appellants could simply move their operations there instead of remaining on the premises, but for the 1996 Tenancy Agreement, Chung, as a rent-earner, must know that as well. There was no reason for Chung to take steps to recover possession of the premises, and go to the extent of reporting (allegedly falsely) to the police about the forgery. There was little financial gain involved for him to make such a serious allegation if it was not true. Why did he not just simply allow the appellants to stay in the premises, who had admittedly promised to bear all the forbearance fees and deposits charged by the government for not repossessing the premises despite the breach of the user condition in the conditions of sale? Mr Yuen told us that, before the Judge, Chung testified that if and when he could recover possession, he could carry out an operation (similar to what the appellants had been doing) to let the premises to people like the appellants' subtenants and thus obtain a higher rental return. However, the purpose could similarly be achieved if Chung were to rent alternative premises and divide them up into small showrooms for subletting purposes. Mr Yuen had to concede that there would only be convenience that could be gained by Chung by recovering possession of the premises instead of renting alternative premises for the same purpose. Would it not, then, be highly improbable that Chung had to go to the extent of falsely reporting to the police and alleging his signature being forged not for making a large financial gain but purely for the convenience?

41.None of the grounds and arguments raised by Mr Yuen is capable of raising any doubt in my mind that the judgment of the Judge was correct.

Respondents' notice

42.By the Respondents' Notice dated 24 February 2001, the respondents contended that the Judge's decision should be affirmed on the ground that even assuming that there was an oral collateral agreement in January 1995, such agreement was made by Garment Limited and not Wholesale Limited. Wholesale Limited was therefore not the tenant of the respondents and had no right to use or occupy the premises. This fact was mentioned by the Judge in his Reasons for Judgment, although he did not rely on it as a reason for rejecting the claim of Wholesale Limited. In view of my decision on the findings of the Judge being correct, it is unnecessary for me to deal with the Respondents' Notice.

Conclusion

43.For the reasons given above, the appeal is entirely without merit. The Judge, knowing the strong proof required, was fully satisfied that the signature on the 1996 Tenancy Agreement alleged to be Chung's was not Chung's. He was convinced that there was fraud perpetrated by Chung and Wholesale Limited on Chung & Shu. He also directed that the papers of the case be sent to the Secretary for Justice. It is obvious that this appeal has the consequence of fortifying a hope that there would be no criminal proceedings brought against the appellants. It might also be considered as another attempt to delay the delivery of possession of the premises to Chung and Shu, which possession is an avenue of profit to the appellants. The Judge ordered indemnity costs against Wholesale Limited and Kwan, and I am of the opinion that he was fully justified in doing so. This appeal does not differ. I would dismiss the appeal with an order nisi that costs be borne by the appellants on an indemnity basis.

Hon Le Pichon JA:

44.I agree.

Hon Rogers V-P:

45.I agree and have nothing to add. There will be an order as proposed.

Representation:

Mr Rimsky K K Yuen, instructed by Messrs Li & Partners for the appellants.

Mr Erik Shum, instructed by Messrs C Y Kwan & Co. for the respondents.

Application by 1st and 2nd defendants by counterclaim in HCA20335/1998 dismissed by Court of Appeal. Please refer to CACV168/2001 dated 20 September 2001