BRUCE HUTCHISON v. HO PUI TSUN PETER

HCA 749/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 749 OF 2002

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(by Original Writ and Order of Master Lung of 3 March 2006 to carry on)

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J U D G M E N T

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1.  This is the trial of a counterclaim.  The plaintiff has already secured judgment on the claim for $1,910,000 of which $1,410,000 remains outstanding.  The execution of that sum has been stayed pending the outcome of this counterclaim. 

2.  The claim originated in a loan from the plaintiff to the defendant for HK$2 million, made in or about 1998.  The loan remained unpaid until in May 2001 when the defendant agreed to enter into a Deed of Undertaking in which he acknowledged his indebtedness to the plaintiff and agreed to repay the sums due in four installments.  He wrote four cheques to the plaintiff in purported compliance with the Deed of Undertaking.  All four were dishonoured. 

3.  The plaintiff therefore commenced proceedings.  The proceedings were defended, albeit unsuccessfully.  The defence, dated October 2002, pleaded a counterclaim and set-off as follows :

“6.  During the period between the middle of 1997 and the beginning of 1998, the Plaintiff requested the Defendant to contribute and the Defendant did pay a series of monies to the Plaintiff for the total sum of HK$2,000,000.00 to enable the Plaintiff to acquire horses in Australia and New Zealand in auction for subsequent selling in Hong Kong or elsewhere for profits. 

7.  It was agreed that the monies paid or contributed by the Defendant to the Plaintiff were for the purpose of acquiring a total of eight horses for trading or use. 

8.  In breach of the agreement and/or in breach of trust, the Plaintiff so far only arranged two horses to be shipped to Hong Kong for use, but without accounting to the Defendant whether or not the Plaintiff had acquired the remaining 6 horses and whether or not the horses have been sold for profits.”

4.  The defendant admits that the reference to “eight” horses in paragraph 7 and “two” horses in paragraph 8 are mistaken.  The evidence has only referred to “six” and “one” horses respectively. 

5.  Sadly, the plaintiff, Mr Bruce Hutchison, died of a heart attack in 2005.  The only witness giving evidence at trial was the defendant, Mr Peter Ho.  In the late 1990s they were friends at the Hong Kong Jockey Club.  Mr Hutchison was a horse trainer, Mr Ho was a businessman who enjoyed gambling in high stakes at Happy Valley and Shatin.  Unfortunately, money issues soured their friendship from about 2000 onwards.  

6.  Mr Ho’s claim is that in late 1997 and early 1998 he paid $2 million, in cash, to Mr Hutchison as his half of a joint venture to buy racehorses in Australia and bring them to Hong Kong to race.  In support of his case that there was an oral agreement to this effect, he relies on (a) his own testimony and (b) four documents.  The four documents are very poor photocopies.  It is only possible to decipher parts of them.  Three purport to be invoices for the purchase of six horses and the forth is a fax dated February 1998 from a bloodstock agency in Australia addressed to “Dear Bruce”.  The legible parts of the fax appear to say that AUD610,280 is due on “your account”.  It is chopped “PAID 26-2-1998”.  Two of the invoices (for a total of five horses) have the names “B. Hutchison and Peter Ho” next to the words “OWNED BY”.  The figures are very indistinct.  The third invoice is addressed to Mr Bruce Hutchison and is dated 23 January 1998 and is for HK$1,200,000.  All three invoices are chopped “PAID”. 

7.  Mr Ho’s counterclaim is for “a proper account arising from the joint venture in horse trading”.  He must establish on a balance of probabilities that such a joint venture was entered into.  In my judgment he has failed to discharge that burden by a considerable margin.  I found both his oral testimony and the documentary evidence to be very unsatisfactory.  I shall now refer to each of those briefly. 

(1)  The oral and written testimonies

8.  There is no doubt that Mr Ho and Mr Hutchison were good friends and enjoyed good times at the racetrack in the late 1990s.  However, as a trainer, Mr Hutchison was never permitted to own a racehorse and I accept from his 2^nd affidavit and his witness statement, the admissibility of which were not challenged, that he never did.  

9.  For the reasons which follow, I regarded Mr Ho’s evidence as unsatisfactory and unreliable.  He was an unimpressive witness whose evidence was often prolix and evasive.  Of course, the court has not had the opportunity of evaluating Mr Hutchison as a witness and no doubt, had he given evidence, parts of his witness statement would have been challenged.  However, given my assessment of Mr Ho’s evidence and bearing in mind the burden on him, I consider it safe to place weight on the material parts of Mr Hutchison’s statement.  In particular, in the overall context of this litigation, I find the following passage from his statement dated 7 October 2004 to paint an accurate and reliable picture :

“As indicated above, I had no direct or indirect interest in the horse trading business of the Defendant.  I must stress that he consulted me purely because I was his friend.  There was no written or verbal consultancy agreement whatsoever reached between us.  It was never discussed about any consultancy fees or any share of profit.  I advised him simply out of courtesy and our friendship, and a general interest in horses.  

In fact, the Defendant has failed to disclose any documents to support his allegation that there was an agreement between us.  The only documents produced by the Defendant in relation to the horse trading business are some very unclear copies of invoices which I cannot even read properly.  The reason why my name appears on the ‘owned by’ section on these invoices was simply because the Defendant and I negotiated the prices and selected the horses.  I did not own the horses, they solely belonged to the Defendant.  I did not/do not have a permit to own a horse in Hong Kong anyway. 

As mentioned above, I verily believe that this so called horse trading business raised in the Defendant’s counterclaim is a delaying tactic attempting to prevent me from enforcing the balance judgment sum of HK$1.41 million.” 

10.  On the other hand, with regard to Mr Ho’s evidence the following criticisms can be properly made. 

(a)  The so-called joint venture in horse trading dates back to January and February 1998.  The first time it is mentioned in writing is when the Defence and Counterclaim was filed in October 2002, nearly five years later.  It had not been mentioned at the time of Mr Hutchison’s first writ, in which he sued on the oral loan agreement, nor when the Deed of Undertaking was signed nor when the cheques were dishonoured. 

(b)  No evidence was adduced in support of any cash transactions in support of the joint venture.  The high water mark of the counterclaim was that money changed hands confidentially, in cash, with no documents in support.  No bank statements were identified which might corroborate such cash payments.  I accept that, at the time, Mr Ho, with the help of advice from Mr Hutchison, was placing large bets on horse races and that large amounts of cash were involved.  However, Mr Ho was unable to identify any sum attributable to a joint venture rather than to gambling.  Even though, according to his testimony, the joint venture money was paid, although not all in one payment, over a short period of time in February 1998.  

(c)  The counterclaim has come to trial over six years after it was filed.  Mr Ho’s primary explanation for the slow progress of his claim was that the parties were trying to negotiate.  This explanation does not bear scrutiny.  No one would deny a litigant’s right of appeal but looked at as a whole the only common sense assessment of this litigation is that the defendant has taken every delaying step available to him.  He appealed the Order 14 judgment on the dishonoured cheques, he appealed an order for payment into court of money in the Bankruptcy proceedings brought against him, he made two applications for stays of execution (one of which was partially successful), he appealed against a discovery order and on seven consecutive checklist hearings he opposed the plaintiff’s application to have the matter set down for trial.  When leave was eventually granted to set the matter down (i.e. his claim) in June 2005, he appealed against it.  Mr Ho and his then solicitors parted company in 2006.  He failed to attend two Pre-Trial Reviews.  For about a year the defendant could not be contacted.  In February 2007 a statutory demand was eventually (after some unsuccessful attempts) served.  His present solicitors then came on the record.  They were immediately instructed to apply again for a stay of execution.  Finally, shortly before this trial his solicitors applied to cease acting for him.  Happily, that application was withdrawn and he was ably represented at trial by Mr Jason Wong.  

(d)  Certain aspects of his evidence, on peripheral matters, highlighted his overall unreliability.  The following are examples. 

He consistently referred to the Deed of Undertaking in which he acknowledged his indebtedness to Mr Hutchison as a “Deed of Compensation”.  Thus, he persisted in his unsuccessful defence (which he had lost six years earlier) that the HK$2 million was to compensate the plaintiff for losses made when investing in shares in the defendant’s company.  

He was also reluctant to admit that he and Mr Hutchison had fallen out as friends.  This was in support of his claim that the delay in bringing the matter to court was because there were attempts at an amicable settlement. 

He said that his income from his company in 2001 was $2.5 million.  He agreed that it was because of such an income that he could place large cash bets on horses at that time.  He was nonetheless reluctant to resile from this even when he was reminded that at an earlier hearing in which he had applied to set aside an order for payment of money into court on the grounds of impecuniosity, that he had affirmed that since 2000 his remuneration from his company had been nil.  

Lines of cross-examination often ended with the answer “can’t recall”. 

(2)  The documentary evidence

11.  Not surprisingly, Mr Wong placed great emphasis on the invoices in support of the alleged oral agreement.  In my judgment they fall well short of providing adequate proof of the oral agreement which the defendant claims. 

12.  The defendant himself has produced no documents at all.  According to the defendant the source of the invoices in evidence was the plaintiff.  I have already noted that they are very poor quality photocopies.  To elevate them into evidence of a probable contract of a joint venture is a forlorn task.  It is simply not safe to do so.  The more plausible evidence comes from Mr Hutchison’s witness statement.  He had no reason and no permit to own horses for racing in Hong Kong.  He was however able to offer his expertise and friendship in selecting horses for Mr Ho when in Australia.  Given that the plaintiff was the negotiator in Australia and the person to whom the invoices were, presumably, originally sent it is not particularly surprising that the author of the invoices, an unknown person, included the plaintiff’s name against the printed words “OWNED BY”. 

13.  In short, I find Mr Ho’s counterclaim to be as unclear as the invoices he has produced in support.  But even those parts of the invoices which are legible do not, in the context of the whole case, begin to establish the truth of the alleged joint venture. 

14.  The counterclaim is dismissed with costs, to be taxed if not agreed. 

HCA749/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CIVIL ACTION NO. HCA 749 OF 2002

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R U L IN G

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1. This is an application for a stay of execution pending an appeal against my judgment in this matter dated 25 April this year. Leave to appeal had become necessary because the defendant had been out of time in bringing his appeal, which of course would have been an appeal as of right. Nevertheless, the parties agreed that he should have leave, which was subsequently endorsed by the single Justice of Appeal.

2. There are three elements to the judgment: firstly, an outright judgment for $500,000 on a dishonoured cheque; secondly, an order giving the defendant conditional leave to defend the balance of the claim in the amount of $1.41 million on terms that he bring that amount into court within 56 days or else the plaintiff would be at liberty to enter judgment - that condition not having been satisfied, judgment was subsequently entered by the court in favour of the plaintiff.

3. The defendant now applies for a stay on all three elements of the judgment. The argument has been very well put on both sides by Mr Lam who applies for the stay and by Mr Fung who has resisted the application.

4. The law on applications of this sort have been relatively recently restated by Ma J (as he then was) in Wendon Engineering Service Company Limited v Lee Shing Yiu Construction Company Limited, HCCT 90/1999. Firstly, the defendant will need to justify a stay. There are two basic ingredients for a successful application: the first being that there is merit in the appeal; and secondly, that if a stay is not granted, that the appeal would be rendered nugatory.

5. In the circumstances of this case, the defendant says that he is impecunious. There is a bankruptcy petition against him taken out by the plaintiff which is extant and which stands adjourned to await the outcome of this application.

6. Related to this there is also an issue as to whether the successful plaintiff is now resident in Hong Kong. It is suggested that he has now relocated himself to his native Australia following his retirement as a racehorse trainer.

7. As to the merits, these divide themselves between the outright judgment on the cheque for $500,000 and the balance of the judgment. Whilst one must remain as objective as possible in the face of an appeal against one's own judgment, the range of manoeuvre in an action on a cheque is limited. I am of the view that the defendant has not been able to show that there are reasonable prospects of success on an appeal from this part of the judgment.

8. As to the question of whether the appeal would be rendered nugatory because it might cause the defendant to go bankrupt, I have been shown correspondence by Mr Fung which indicates that the defendant would, with assistance from his family who would appear to be well established and well to do, be able to pay this amount.

9. This leaves over the question of whether the balance would tip the other way by virtue of the fact that the appeal might be rendered nugatory because the defendant may not be able to recover this amount from the plaintiff if he were to succeed because the plaintiff could make himself judgment-proof, as it were, by virtue of his absence from Hong Kong.

10. As to the plaintiff's absence from Hong Kong, whilst the evidence is not complete, there is a good prima facie case to be made that the plaintiff is really now living in Australia and only comes to Hong Kong for visits. Nevertheless, that is not enough in all the circumstances of this case to persuade me to grant a stay on this amount. I say that because in my judgment the prospects of success on the appeal as to this element of the judgment are far too illusory to justify a stay. I have considered whether I should merely order payment into court of this amount, but in all the circumstances I do not think it would be right to deprive the plaintiff, who in my view has a strong case, of his judgment and to force him to wait.

11. As to the major part of the judgment, $1.41 million, I am going to grant a stay. The matter is arguable. I have given leave to defend, albeit conditionally. The evidence does show that a refusal of a stay would cause the defendant substantial, if not catastrophic, financial consequences.

12. I will grant a stay on the remaining parts of the order. I appreciate that the condition, 56 to days to pay in, has passed and so the stay may be said to be academic in respect of that part of the order. Nevertheless, the whole of the position should be held pending the appeal.

Representation:

Mr Eugene Fung, instructed by Messrs Haldanes, for the Plaintiff

Mr Douglas Lam, instructed by Charles Wong & Co., for the Defendant