CHEUNG YIU WING v. CELESTIAL ASIA SECURITIES HOLDINGS LTD

Date of Hearing: 15 June 2006

Date of Judgment: 15 June 2006

Date of Handing Down Reasons for Judgment: 22 June 2006

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1.  I agree with the judgment of Le Pichon JA.

Hon Le Pichon JA:

2.  This was an appeal from the judgment given by Barma J on 20 July 2005 dismissing the plaintiff’s claim with costs.  At the conclusion of the appeal hearing, the appeal was dismissed with costs to be paid by the plaintiff to the defendant on an indemnity basis.  Written reasons were to be handed down later which we now do.

3.  The plaintiff brought this action against the defendant, Celestial Asia Securities Holdings Ltd (“CASH”) seeking damages for breach of an alleged oral agreement.  The plaintiff claimed that he had entered into an oral agreement on the telephone with Mr Bankee Kwan Pak Hoo (“Mr Kwan”) acting on behalf of CASH to sell 50 million shares in King Pacific International Holdings Ltd (“KPI”) to CASH at $1.90 per share.  After a lengthy trial lasting some 17 days, the judge dismissed the plaintiff’s claim.

4.  At all material times, both KPI and CASH were listed companies, the plaintiff being the chairman of KPI and Mr Kwan the chairman and chief executive officer of CASH as well as the single largest shareholder in CASH.  They were the key witnesses so far as the occurrence as well as the contents of the alleged telephone conversation was concerned.  The judge remarked that even on the evidence of the plaintiff and his son, Samuel, there was some doubt as to the exact sequence of events as well as the circumstances of the telephone conversation.  The plaintiff’s own evidence was inconsistent as to whether the telephone conversation had taken place in the room where he was having a meeting with his solicitors in their offices in the presence of the party accompanying him to the meeting consisting of his son, Samuel, a Ms Billie Chan and Mr Steven Kwan an independent non-executive director of KPI, (erroneously referred to in the judgment and in the supplemental amended notice of appeal as “Ms Chen” and “Mr Stephen Kwan” respectively) and his solicitor Mr Carmelo Lee or whether that conversation had taken place outside the meeting room.

5.  After reviewing the evidence adduced by both parties, the judge expressed his reservations concerning the plaintiff’s account of events and, in particular, the assertion that after the telephone conversation he had announced to all present that he had sold 50 million shares in KPI to Mr Kwan at $1.90 per share, not least because Mr Lee was unable to recollect any such statement being made.  The judge went on to say this:

“Moreover, I note that neither Ms Chen nor Mr Stephen Kwan were called to give evidence or asked to provide statements.  They clearly could have provided relevant evidence.  Both could have confirmed or refuted the suggestion that Mr Cheung announced to the meeting that he had sold his shares to CASH or Mr Kwan.  Ms Chen could, in addition, have given evidence as to the phone calls she made or received.  It seems to me that they were witnesses which could naturally have been called by Mr Cheung, and in circumstances where it must have been obvious that there would be an acute conflict of evidence, it is unfortunate that they were not called, and that statements were not obtained from them.  The failure to call them is a further factor which I am entitled to, and do, take into account in preferring Mr Kwan’s and Ms Chow’s evidence to that of Mr Cheung and Samuel.”

6.  A notice of appeal was filed on 17 August 2005.  By this date, the plaintiff had engaged a new legal team, being Mr Melvin Wong of counsel instructed by Messrs Kong & Associates, to represent him.  The four grounds of appeal challenged the findings of fact made by the judge.  Sometime after that date, the plaintiff, whilst retaining Kong & Associates as his solicitors, engaged new counsel (Mr Allan) who settled a supplemental amended notice of appeal which was re-filed on 27 May 2006, less than three weeks before the appeal hearing.  The position adopted in the supporting affirmation and supplemental affirmation of the plaintiff was that three potential witnesses, namely Ms Billie Chan, Mr Steven Kwan and Mr Charles Lee had not been called.  Within a week, on 2 June 2006, counsel for the plaintiff filed skeleton submissions abandoning the original grounds which sought to challenge the judge’s findings and stating that the plaintiff would be seeking a retrial under Order 59 Rule 11 on the basis that there had been a “substantial miscarriage of justice” in that at least two potential witnesses (namely Ms Billie Chan, Mr Steven Kwan) who could have given material evidence for the plaintiff were not called and that this was attributable to the oversight/negligence of the plaintiff’s then solicitors and/or counsel.

7.  At the commencement of the appeal hearing, Mr Allan sought an adjournment.  The court was informed that after office hours the previous day, the plaintiff’s former solicitors, Messrs Y. S. Lau & Partners (“YSLP”) had served affirmations from Mr Y. S. Lau and Miss Ida Chan (who was the handling solicitor but who had since left YSLP) in response to the affirmations of the plaintiff, Mr Steven Kwan and Ms Billie Chan filed in support of the appeal.  Mr Allan advised the court that he had had copies made but that he had not had the opportunity of reading the affirmations.  Pausing there, it transpired that the affirmations were served at 5:30 p.m. the previous afternoon.  In those circumstances, it is astonishing that counsel for the plaintiff had no knowledge of the affirmations till shortly before the hearing when there were no less than four representatives from the firm instructing him sitting in court for the appeal hearing.  The court did not accede to the request for an adjournment.

8.  The basis upon which the appeal was sought to be argued defied belief.  It is to be observed that by the time the appeal came to be argued, inexplicably, the plaintiff appeared to have abandoned any complaint he had had against counsel who had conducted the trial.  The complaint before this court was directed solely at YSLP.  Whilst Mr Allan sought to reassure the court that he was not attacking the judge’s findings of fact, the relief sought entailed the setting aside of the judgment which was obtained after a full trial on the merits and grounded on factual findings. Mr Allan seemed quite unable to grasp the elementary principle that had there been any fault or blameworthiness on the part of YSLP in failing to call potential witnesses, his client’s remedy lay in proceedings in negligence against YSLP and not in an order for a retrial.  The court system would grind to a halt if an unsuccessful litigant could obtain an order for a retrial on the basis that relevant evidence could have been obtained with reasonable diligence but had not been adduced at the trial, not to mention the injustice of depriving the successful party of a judgment in his favour after a full trial.

9.  In my view, the appeal was little short of outrageous.  As the appeal had no legal basis, was unarguable and contrary basic legal principles, let alone common sense, a costs order marking the strongest disapproval of the court in the bringing of the appeal was warranted.  Accordingly, in dismissing the appeal, costs were awarded on an indemnity basis.

Hon Stone J:

10.  I agree with the judgment of Le Pichon JA.

Mr William Allan & Mr Kevin Hon, instructed by Messrs Kong and Associates, for the Plaintiff/Appellant

Mr John Bleach SC & Mr Paul H M Leung, instructed by Messrs A.M. Mui & Kwan, for the Defendant/Respondent