Ageas Insurance Co (Asia) Ltd v. Lam Hau Wah Inneo

CACV 65/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 65 OF 2014

(ON APPEAL FROM HCA NO. 1840 OF 2009)

________________________

________________________

________________

JUDGMENT
________________

Hon Kwan JA (giving the judgment of the court):

1.On 9 January 2015, this court handed down judgment dismissing the defendant’s appeal against the judgment of Deputy High Court Judge Chu (as she then was) given after a ten-day trial. We rejected all the challenges to the findings of fact of the judge. The defendant issued a notice of motion on 6 February 2015 seeking leave to appeal to the Court of Final Appeal on the ground that the question involved in the intended appeal is of great general or public importance. He also asked the court to grant leave to appeal on the “or otherwise” limb.

Question of great general or public importance

2.The single question formulated by the defendant as being of great general or public importance is as follows:

“What circumstances constitute a credible explanation given by a party for a failure to call or subpoena a material witness to give evidence on his behalf at trial for the purposes of the court deciding whether to draw an adverse inference against that party, and in particular, whether the perceived unwillingness (as opposed to inability) of the material witness to give evidence favourable to that party is a sufficient explanation.”

3.At the trial, it was submitted by the defendant that the court should draw an adverse inference against the plaintiff for not calling its former CEO Andrew Yang to give evidence in relation to the 1994 Agreement alleged by the defendant to have been made orally between him and Yang.  The plaintiff explained that Yang did not leave his employment on amicable terms and was sued by the plaintiff for a multitude of breaches of fiduciary duty.  The judge accepted the plaintiff’s explanation and found it understandable under those circumstances that the plaintiff did not wish to call or subpoena Yang as a witness.  She declined to draw any adverse inference against the plaintiff for not calling Yang[1].

4.The judge’s refusal to draw an adverse inference against the plaintiff for not calling Yang to testify was not raised in the amended notice of appeal or addressed in the written or oral submissions of the defendant in the Court of Appeal.  The defendant took a number of points in relation to the trial judge’s refusal to draw various inferences against the plaintiff, but this point now raised as the single issue of general importance justifying leave to appeal was not among them.

5.Mr Paul Shieh, SC and Mr Jin Pao (who did not appear for the defendant below or on appeal) now sought to contend that the mere fact that a party considers a witness is not on amicable terms or otherwise not prepared to volunteer his evidence should not – as a matter of principle – be considered as a good reason against drawing an adverse inference against the party who had failed to call him.  In the present context, there is an essential distinction to be drawn between the situation where a witness is unable to give evidence (such as due to poor health, mental incapacity, lack of recollection of the events, or inability to be located) and where there is a perceived unwillingness on his part to give evidence favourable to the party calling him.

6.They submitted that the relevant case law does not examine what circumstances would, as a matter of principle, constitute a “credible explanation” for failing to call or subpoena a material witness[2].  And although they accepted that often the answer to what constitutes a credible explanation would depend on the precise facts of a case, they contended that certain particular factual configurations are often encountered in practice.  The question they framed would have an impact on questions of evidence and fact-finding at courts of all levels on a regular basis, so it would be appropriate and of immense importance for authoritative guidance to be provided by the Court of Final Appeal.

7.They further submitted although this point was not argued in the Court of Appeal, it was argued below and so is not a completely new point, unlike Hotung Investment (China) Ltd v Ernst v Young (a firm) & Ors, CACV 271/2011, 28 May 2013, at §§4 and 5 and To Pui Kui v Ng Kwok Piu, CACV 281/2012, 29 January 2015, at §29, where the Court of Appeal decided to follow the practice of not granting leave with respect to completely new points but leaving it to the Appeal Committee of the Court of Final Appeal to grant leave if appropriate.

8.The practice of not granting leave to appeal applies not just to completely new points not argued on appeal and below but applies equally to new points not pursued in the Court of Appeal.  Bokhary PJ said this in Flywin Co Ltd v Strong & Associates Ltd (2002) 5 HKCFAR 356 at §39:

“Clearly the foundational imperative of the “state of the evidence” bar, as I propose to call it, is fairness. Even where a new point is not barred on that basis, there is still a hurdle facing a party who seeks to raise in the final appellate court a point which was not pursued in the intermediate appellate court. As Chief Justice Li said in Wong Tak Yue v Kung Kwok Wai & Another (No 2) (1997–98) 1 HKCFAR 55 at p.66E–G:

“The Court of Final Appeal as a court of final appeal should be very reluctant to consider an issue which was not duly raised and considered in the Court of Appeal. The circumstances must be very exceptional. The statement made by the Privy Council in Ahamath v Sariffa Umma [1931] AC 799, p.803 which it applied in A-G vCheng Yick Chi [1983] 1 HKC 14 on an appeal from Hong Kong, is apposite:

‘It must only be under very exceptional circumstances that an issue dropped in the intermediate Court of Appeal and for that reason not dealt with or referred to by that Court can be revived before this Board.’ ”

This is especially so when entertaining the new point and accepting it would constitute a major development of the law. In such an exercise, it is to be expected that having the intermediate appellate court’s view on the point of law involved would be of assistance to the final appellate court. Therefore where the question of a major development of the law is involved, the foundational consideration underlying the “not considered on intermediate appeal” hurdle, as I propose to call it, is that when the courts develop the law, it is best that they do so with all their intellectual resources fully deployed.”

9.As in the situation where the Court of Appeal would decline to grant leave on the “or otherwise” limb but leave it to the Appeal Committee to decide if exceptional circumstances are made out for leave to be granted under this limb, we would leave it to the Appeal Committee to consider if there are very exceptional circumstances here to warrant the granting of leave despite the hurdle of “not considered on intermediate appeal”.

10.In any event, we are not persuaded it is appropriate to grant leave on this question, which is necessarily fact sensitive and is a question of fact for the trial judge.  The judge’s conclusion raises no question of law.  We are also inclined to agree with Mr John Bleach, SC in light of the fact that the defendant advanced no explanation why he did not call or subpoena Yang, it would be difficult to impugn the judge’s decision that no adverse inference should be drawn against the plaintiff in the circumstances.

“Or otherwise” limb

11.On behalf of the defendant, it was submitted that the dispute had serious effects on his finances, livelihood and professional reputation and involved the following “peculiar circumstances” which merit consideration by the Court of Final Appeal:

(1) where the defendant was recruited in 1994 with the plaintiff as a senior agency leader from AXA Life Insurance Hong Kong Limited overseeing about 300 agents on the basis of verbal promises made by Yang that he would not be financially worse off for joining the plaintiff;

(2) where the defendant had served as a regional director and agency manager with the plaintiff for 15 years and had a network of 998 agents under his supervision when his appointment was terminated in 2009, which was an extremely valuable corporate asset of the plaintiff;

(3) where the defendant was terminated by the plaintiff in 2009 as a result of an investigation in relation to voting in PCCW which did not eventuate in any criminal charge or conviction and which caused the defendant to effectively lose his network of agents built up over his years of valuable service with the plaintiff;

(4) where the effect of the judgment appealed from is that in consequence of such termination, the defendant was not only deprived of his proper buy-out entitlement but also had to repay purported advances made to him over the years upon his termination.

12.As mentioned earlier, the usual practice for the Court of Appeal is to leave it to the Appeal Committee to decide whether exceptional circumstances are made out for leave to be granted on the “or otherwise” limb (Richly Bright International Ltd v De Monsa Investments Ltd, CACV 247/2012, 9 May 2014, §21).  We would decline to grant leave on this limb.

13.For the above reasons, we dismiss the defendant’s application for leave to appeal with costs to the plaintiff.

Written submissions by Mr John Bleach SC, instructed by Freshfields Bruckhaus Deringer, for the Plaintiff (Respondent)

Written submissions by Mr Paul Shieh SC and Mr Jin Pao, instructed by Robertsons, for the Defendant (Appellant)