CHEN JINHUI v. WONG KAM SAN (黃錦新), by his guardian ad litem, HUANG YUEXIA (黃月霞) AND OTHERS

CACV 178/2021, [2026] HKCA 404

On Appeal From [2021] HKCFI 710

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 178 OF 2021

(ON APPEAL FROM HCA NO 1524 OF 2012)

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J U D G M E N T

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Hon Chow JA (giving the Judgment of the Court):

INTRODUCTION

1.  This is the third application of the 4^th to 6^th Defendants (collectively “the Defendants”) by summons dated 5 September 2025 (“the Summons”) for leave to adduce new evidence in their appeal against the judgment of Deputy High Court Judge Leung (as Leung J then was, “the Judge”) dated 19 March 2021.

BRIEF BACKGROUND

2.  The basic facts of this case have been summarised in the Court’s previous judgment dated 4 November 2022 ([2022] HKCA 1522, “the 1^st New Evidence Judgment”), and will not be repeated here. Unless the context indicates otherwise, the expressions and abbreviations as defined in the 1^st New Evidence Judgment will continue to be used in this judgment.

3.  By the 1^st New Evidence Judgment, the Court granted leave to the Defendants to adduce what was referred to as “Item 23” as new evidence in the appeal. By a further judgment dated 17 July 2025 ([2025] HKCA 646, “the 2^nd New Evidence Judgment”), the Court granted leave to the Defendants to adduce what were referred to as “Item 2” and “Item 3” as new evidence in the appeal. Item 23, Item 2 and Item 3 relate to a number of purported declarations of the Plaintiff dated 3 February 2022, 25 April 2022, and 21 May 2022 respectively (“the Purported Declarations”), in which the Plaintiff admitted that he had forged various documents used at the trial of the action below (“the Trial”) and relied upon by the Judge to find in favour of the Plaintiff.

4.  By the Summons, the Defendants seek leave to adduce an additional 17 items of documents (hereinafter referred to as “Item 3-1” to “Item 3-17”, collectively “the Proposed New Evidence”) as new evidence in the appeal. According to the Defendants, those documents were derived from the underlying materials (“the Prosecution Materials”) used in the criminal proceedings against the Plaintiff in the Mainland referred to at §§13-14 of the 2^nd New Evidence Judgment (“the PRC Criminal Case”), and were obtained by the Defendants’ lawyer (Mr Wang Xuyang) in Benxi, Liaoning Province, on 10 July 2025 after the conclusion of the PRC Criminal Case against the Plaintiff:

(1)  Items 3-1 and 3-2 consist of some records of interview of the Plaintiff by the PRC Public Security/Procuratorate on various dates in January to August 2022, while Items 3-3 and 3-4 consist of four authorisation letters issued by the Plaintiff/his wife to the Plaintiff’s PRC lawyers and some records of meeting between the Plaintiff and his PRC lawyers on various dates in May to June 2022. Items 3-1 to 3-4 contain evidence of the Plaintiff’s admissions of forgery of documents and procurement of false evidence used at the Trial, and are similar in nature to the Purported Declarations.

(2)  Items 3-5 and 3-6 consist of some records of interview of Zheng Chenghui by PRC public security on various dates in January to September 2022, and a declaration made by Zheng Chenghui dated 20 September 2022. According to the Defendants, Zheng Chenghui was the former Vice  General Manager of Shunfeng, and a colleague and confidant of the Plaintiff. In Items 3-5 and 3-6, Zheng Chenghui admitted that he had participated in the Plaintiff’s fraud, including the forgery of the 6/9/2005 Letter and 8/9/2005 Letter, and he (together with the Plaintiff) procured Wu and Zheng to give false evidence at the Trial. Zheng Chenghui was not a witness at the Trial.

(3)  Items 3-7 and 3-8 consist of some records of interview of Zheng by the PRC Public Security on various dates in January to August 2022, and a declaration made by Zheng dated 21 September 2022. Zheng was the nephew of Wong and his driver/assistant, and was called by the Plaintiff as a witness to give evidence at the Trial. His evidence was accepted and relied upon by the Judge to find in favour of the Plaintiff. In Items 3-7 and 3-8, Zheng admitted that he had given false evidence for the Plaintiff at the Trial, that various documents (namely, the Debt Acknowledgement List, 6/9/2005 Letter and 8/9/2005 Letter) were forged, and that the Plaintiff had offered to reward him for giving false evidence should the Plaintiff succeed in the action.

(4)  Item 3-9 consists of some records of interview of Wu by the PRC Public Security on various dates in January to September 2022. Wu has known Wong, and has had business dealings with him, since the 1980s. Wu was called by the Plaintiff as a witness to give evidence at the Trial, and his evidence was accepted and relied upon by the Judge to find in favour of the Plaintiff. In those documents, Wu admitted that he had given false evidence for the Plaintiff at the Trial, and the Plaintiff had offered to reward him for giving false evidence should the Plaintiff succeed in the action.

(5)  Item 3-10 consists of copies of Zheng’s witness statements for the Trial containing what the Defendants say were handwritten annotations made by the Plaintiff to direct or coach Zheng to give false evidence at the Trial, and an expert report on handwriting dated 19 July 2022 which found that the annotations were written by the Plaintiff.

(6)  Item 3-11 relates to the Notebooks/Work Record of the Plaintiff which the Defendants say are the “real original version of the Work Record” of the Plaintiff and demonstrate that the version of the “Work Record” produced by the Plaintiff as evidence at the Trial in support of his account of what happened on 10 January 2003 was false.

(7)  Items 3-12 and 3-13 consist of a declaration dated 26 October 2022 by the officers of PRC Public Security (Gu Nan, Liu Sheng and Wang Yong) who took part in investigating the Plaintiff, and the transcript of examination of Liu Sheng and Wang Yong in the PRC court on 3 January 2023. In those documents, they denied having coerced or tortured the Plaintiff into confession.

(8)  Item 3-14 consists of a medical report of the Plaintiff dated 25 July 2022 which indicated that the Plaintiff was in good health and was not suffering from any particular conditions. The purpose of the medical report is to counter the Plaintiff’s allegations that he had been tortured or ill-treated while under restraint or detention.

(9)  Item 3-15 consists of an expert report on handwriting dated 11 May 2022, which opined that the handwriting on an envelope was that of Tian. The relevance of the identity of the person whose handwriting appeared on the envelope lies in the fact that at the Trial, the Plaintiff gave evidence that on 18 July 2011, he unexpectedly received a mail containing the 6/9/2005 Letter and 8/9/2005 Letter[1]. However, in the records of interview of the Plaintiff (see Item 3-1 above), he admitted that the 6/9/2005 Letter and 8/9/2005 Letter were forged, and the envelope (which allegedly contained the forged letters received by the Plaintiff on 18 July 2011) was in fact sent by Tian from Beijing to the Plaintiff’s home upon his direction. The fact that the handwriting on the envelope was that of Tian would tend to support the veracity of the admission made by the Plaintiff in the record of interview.

(10)  Item 3-16 consists of “reconstructions” carried out by the Plaintiff in April 2022 at the request of the PRC Public Security of how he fabricated the 1995 Letter, the 10/1/2003 Confirmation, the 8/9/2005 Letter, and other documents which he adduced as evidence at the Trial in support of his case.

(11)  Item 3-17 consists of an expert report on handwriting dated 1 July 2022 on the signatures attributed to a person called Lan Xiulin on an agreement dated 1 April 2000 and a letter dated 2 April 2000 in respect of an alleged debt of US$2 million owed by Wong appearing on the Debt Acknowledgement List. The expert evidence suggests that the signatures were actually the Plaintiff’s handwriting, and supports the veracity of the Plaintiff’s admission in his record of interview dated 31 March 2022 (see Item 3-1 above) that the said debt and the person “Lan Xiulin” were fabricated by him.

5.  The Defendants seek leave to adduce Items 3-1 to 3-17 on 3 alternative bases: (i) the principle in Noble v Owens [2010] 1 WLR 2491, (ii) Ladd v Marshall, and (iii) as evidence of matters which have occurred after the Trial.

6.  The Plaintiff opposes the admission of the Proposed New Evidence on the following principal grounds: (i) the Defendants’ conduct of producing highly selective materials from the PRC Criminal Case against the Plaintiff instead of producing all relevant evidence, including evidence and materials relevant to the question of the voluntariness of the Plaintiff’s alleged confessions, (ii) the incredibility or unreliability of the alleged confessions or admissions by the Plaintiff and various individuals, (iii) lack of relevance or cogency of the proposed evidence, (iv) non-satisfaction of the Ladd v Marshall conditions, and (v) the Defendants’ delay and unreasonable conduct.

7.  Having considered the documents and submissions before us, we are of the view that it is appropriate to determine the Summons on paper pursuant to Order 59, rule 14A(1) of the Rules of the High Court, Cap 4A.

DISCUSSION

8.  In the 1^st New Evidence Judgment, the Court discussed the applicable principles for the admission of what may, for want of better expressions, be referred to as “pre-trial new evidence” (in respect of matters which occurred prior to the trial) and “post-trial new evidence” (in respect of matters which have occurred after the trial) as new evidence on appeal. As mentioned at §16(3) of the 2^nd New Evidence Judgment, different principles apply for the admission of pre-trial new evidence and post-trial new evidence. The admission of pre-trial new evidence is generally governed by the Ladd v Marshall conditions (subject to the Court’s residual discretion to admit the evidence in exceptional circumstances notwithstanding the non-satisfaction of the Ladd v Marshall conditions), while the admission of post-trial new evidence is subject to the Court’s discretion under Order 59, rule 10(2) of the Rules of the High Court. We refer to the discussion at §34 and §§48-49 of the 1^st New Evidence Judgment in respect of the relevant principles for the exercise of the Court’s discretion in relation to these 2 categories of new evidence in “fraud” cases, and do not propose to repeat the same here, save to emphasise that the distinction between them lies in whether the “matters” sought to be proved by the proposed new evidence occurred before or after the date of the trial or hearing, not whether the “evidence” sought to be adduced was produced or obtained before or after the date of the trial or hearing.

(i)  Post-trial new evidence

9.  Items 3-1 to 3-4 and 3-16 are similar in nature to the Purported Declarations. We see no reason why they should be treated differently from the Purported Declarations insofar as the question of whether leave should be given for their admission as new evidence in the appeal is concerned.

10.  Items 3-5 to 3-9 relate to various alleged admissions by the participants of the Plaintiff’s fraud (“the Fraud Participants”), some of whom gave evidence as the Plaintiff’s witnesses at the Trial. The admissions were made after the Trial, and the proposed new evidence should be regarded as post-trial new evidence. The Court’s reasons for granting leave to the Defendants to adduce the Purported Declarations apply equally to Items 3-5 to 3-9.

11.  Items 3-12 to 3-14 relate to the circumstances in which the Plaintiff made the alleged confessions, and concern matters occurring after the Trial. They are relevant to the issue of the voluntariness of the Plaintiff’s confessions, and thus the veracity of those confessions. In our view, leave ought to be granted for them to be adduced as evidence in the appeal in order for the Court to properly assess the admissibility of, and/or the weight that should be given to, the Plaintiff’s confessions.

(ii)  Pre-trial new evidence

12.  Items 3-10, 3-11, 3-15 and 3-17 concern matters occurring before the Trial, although the relevant evidence was produced or obtained after the Trial. We have no difficulty in coming to the conclusion that the Ladd v Marshall conditions are satisfied:

(1)  The Defendants had no access to Items 3-10 and 3-11 prior to the Trial. Also, it seems fairly clear that the forensic examination of the annotations on Zheng’s witness statements (Item 3-10), the envelope (Item 3-15), and the agreement dated 1 April 2000 and letter dated 2 April 2000 (Item 3-17) were prompted by the admissions made by the Plaintiff and/or the Fraud Participants. The relevant evidence, ie Items 3-10, 3-11, 3-15 and 3-17, could not, in our view, have been obtained at the Trial by the Defendants with reasonable diligence.

(2)  The potential impact of Items 3-10, 3-11, 3-15 and 3-17 should not be looked at in isolation, but should be assessed in conjunction with other items of which leave has been or is granted for their admission as new evidence in the appeal. Viewed holistically, these items of new evidence reinforce each other and, if they are ultimately accepted by the Court as admissible and reliable, provide a strong case that the Plaintiff obtained the Judgment by fraud. We are satisfied that Items 3-10, 3-11, 3-15 and 3-17, if admitted and accepted, would probably have an important influence on the result of the case.

(3)  Lastly, the various items of proposed new evidence are apparently credible.

13.  We next consider the principal objections raised by Mr Wong, SC on behalf of the Plaintiff to the admission of the Proposed New Evidence.

14.  First, Mr Wong points out that the 8^th Affirmation of Zhang filed by the Defendants on 23 October 2025 (“Zhang 8”) in reply to the evidence filed by the Plaintiff on 3 September 2025 in relation to Item 23, Item 2 and Item 3 (“the Plaintiff’s Evidence”), has inappropriately and without the Court’s leave referred to, adopted and/or cited the contents of the 7^th Affirmation of Zhang filed on 11 September 2025 and the Proposed New Evidence as sought, but not yet allowed, to be adduced under the Summons. Mr Wong argues that if the Defendants consider that they are entitled to file the entirety of Zhang 8 as reply evidence to the Plaintiff’s Evidence (which the Plaintiff does not accept), the taking out of the Summons for leave to adduce the Proposed New Evidence would have been wholly unnecessary and a waste of the Court and the parties’ time, to which the Plaintiff should be fully compensated by costs. On the other hand, if the Defendants take the view that they are not entitled to file the Proposed New Evidence without the Court’s leave, substantial parts of Zhang 8 would need to be struck out, necessitating further rounds of interlocutory application(s), thereby wasting substantial time and costs[2]. It seems to us that, leaving aside the issue of costs which we shall deal with at the end of this judgment, the questions of (i) whether the Defendants are entitled to rely on the Proposed New Evidence as evidence in reply to the Plaintiff’s Evidence, and (ii) whether the Defendants ought to be granted leave to adduce the Proposed New Evidence under the Summons, are two separate matters. If the Plaintiff considers that the whole or any parts of Zhang 8 are objectionable, the Plaintiff may, if so advised, make such application in relation to Zhang 8 as he wishes. The fact that the Defendants’ reply evidence in Zhang 8 refers to, adopts or cites various parts of the Proposed New Evidence is not itself a ground for refusing to admit the Proposed New Evidence under the Summons.

15.  Second, Mr Wong complains that while the Defendants have sought to adduce evidence relating to the admissions made by the Plaintiff and other individuals in the PRC Criminal Case, they somehow selectively chose not to adduce (or disclose) the Plaintiff’s evidence in the witness box in open court that he had been tortured by the authorities and forced to make various confessions, or the records of interview of the Plaintiff and other individuals who, prior to being held under restraint or supervision in Liaoning Province, did not confess to their alleged “crimes” and confirmed the evidence given at the Trial to be true. Mr Wong says that the Defendants have not been forthcoming in producing to the Court all relevant evidence on inter alia the question of the voluntariness of the alleged confessions, and the Court should be extra-cautious in entertaining yet another application by the Defendants for leave to adduce new evidence. Mr Wong also says that the conduct of the parties is a relevant consideration in the exercise of the discretion to admit (or refuse) new evidence, and on this ground alone, the present application ought to be refused[3]. Whatever view one may take of the Defendants’ litigation conduct or strategy in relation to the present application, it has not been suggested by Mr Wong there is any duty of full and frank disclosure on the part of the Defendants. We do not consider that the Defendants’ failure to adduce or disclose evidence in the Plaintiff’s favour is a sufficient ground by itself to reject the Defendants’ application herein.

16.  Third, Mr Wong says that the purpose of the Proposed New Evidence is to show that the Plaintiff and his witnesses have voluntarily confessed to fraud at various times. However, such evidence is already before the Court by way of the Purported Declarations. It is difficult to see what the Proposed New Evidence adds to the Purported Declarations. The burden is on the Defendants to show that the Proposed New Evidence, on top of the Purported Declarations (whether by themselves or read together therewith), probably has an important influence on the result of the appeal. Mr Wong submits that this ground of objection is relevant to the question of discretion (and also costs)[4]. Mr Shieh, SC (on behalf of the Defendants) argues, however, that the Proposed New Evidence contains the Plaintiff’s detailed account of how the fraud was carried out, evidence from other individuals who corroborate the Plaintiff’s confession, and contemporaneous documents which support the Plaintiff’s account of fraud and undermine the allegation that his confession was obtained by torture. The Proposed New Evidence is not the same as the Purported Declarations. Further, the introduction of further and more elaborate materials on the Plaintiff’s fraud from the same and other sources can reinforce the strength of the existing materials. We accept Mr Shieh’s submission. The mere fact that evidence of the Plaintiff’s confession of his fraud can already be found in the Purported Declarations is not a sufficient reason to rule out the Proposed New Evidence, even though it is to the same or similar effect, at this stage.

17.  Fourth, Mr Wong argues that for those witnesses who testified at the Trial (namely, the Plaintiff, Zheng and Wu) and who now (rather suddenly, inexplicably but voluntarily) say they previously told a lie and wish to tell the truth (as evidenced by their confessions found in Items 3-1, 3-2, 3-3, 3-4, 3-7, 3-8 and 3-9), their evidence would not, as a rule, satisfy the third condition in Ladd v Marshall, which is still a condition that needs to be satisfied for fraud cases. Even if it is suggested that Ladd v Marshall does not apply to the “confessions” as they came into existence after the Trial, the rationale as to the credibility of such evidence still applies, and there is no reason why the Court should exercise its discretion to admit evidence which is clearly not credible or reliable[5]. In our view, the relevant “matters” sought to be proved by the proposed evidence are the confessions of the Plaintiff, Zheng and Wu. Those confessions are relevant to the question of whether the Plaintiff obtained the Judgment by fraud. Since the confessions were made after the Trial, relevant evidence of the confessions should be regarded as post-trial new evidence. Ladd v Marshall does not apply to the admission of such evidence. Instead, the matter is governed by the court’s discretion under Order 59, rule 10(2) of the Rules of the High Court. It cannot be said that an admission of having given false evidence contrary to one’s previous sworn testimony is generally to be regarded as incredible or unreliable. On the contrary, an admission against interest may, depending on the circumstances, be strong evidence of the truth of the admission. The weight that should be given to the confessions made by the Plaintiff, Zheng and/or Wu is a matter to be considered at the hearing of the appeal. We do not consider that Items 3-1, 3-2, 3-3, 3-4, 3-7, 3-8 and 3-9 should be ruled out at this stage on the simple ground that the evidence contained therein is incredible or unreliable. In passing, we should mention that the position is different from “Exhibit ‘ZRW-32’”, which related to the confession by Tian that he took part in the Plaintiff’s fraud. In the 1^st New Evidence Judgment, this Court refused to exercise its discretion to admit “Exhibit ‘ZRW-32’” as new evidence in the appeal of the 1^st to 3^rd Defendants[6] for the specific reasons mentioned at §61 of the 1^st New Evidence Judgment. In particular, Tian was not a witness at the trial and his evidence formed no part of the reasoning by the Judge in the Judgment. Moreover, Tian made it clear that he was not prepared to give evidence to support what he said in the interview, and thus his credibility could not be tested by the Plaintiff’s lawyers in the Hong Kong proceedings.

18.  Fifth, Mr Wong submits that Items 3-5 and 3-6 (relating to the records of interview and a declaration of Zheng Chenghui) should not be admitted because he was not a witness at the Trial and his evidence did not form part of the evidence considered by the Judge and formed no part of the Judge’s reasoning in the Judgment, and thus those items cannot be relevant to the fraud issue[7]. We do not accept this submission. What Zheng Chenghui said in the records of interview and declaration supports the Defendants’ case that the Plaintiff obtained the Judgment by fraud. Mr Wong has not pointed to any evidence which indicates that Zheng Chenghui is not prepared to give evidence in the Hong Kong proceedings (whether in the appeal or in any re-trial which may be ordered in the event that the appeal should be successful) such that his evidence cannot be tested by the Plaintiff’s lawyers. Further, the position now is different from the situation prevailing at the time when the Court considered Tian’s evidence in the 1^st New Evidence Judgment. There is now a much more substantial body of evidence, other than the Plaintiff’s own confessions, of the Plaintiff’s fraud, and the evidence of Zheng Chenghui contained in Items 3-5 and 3-6 should be viewed in the light of the totality of the evidence currently before the Court. We consider that leave should be given for Items 3-5 and 3-6 to be adduced as new evidence in the appeal, leaving the question of the weight of Zheng Chenghui’s evidence to be considered at the hearing of the appeal.

19.  Sixth, Mr Wong submits that the expert’s conclusion in Item 3-15 that Tian wrote the “impressions” on the 8/9/2005 Letter[8] is directly contradictory to the alleged confession by the Plaintiff that he himself had written those impressions in his record of interview dated 26  March 2022 at 13:00, and in his case re-enactment (Item 3-16)[9]. However, as correctly pointed out by Mr Shieh, Item 3-15 is about the handwriting on the envelope that Tian sent to the Plaintiff in July 2011, not the impressions on the 8/9/2005 Letter. Mr Wong’s submission is based on a misunderstanding of the expert evidence in Item 3-15.

20.  Seventh, Mr Wong complains about the Defendants’ delay and unreasonable conduct. In addition to the points already dealt with above, Mr Wong argues that the Defendants have not been forthcoming as to the time when they first knew about or gained possession of the Prosecution Materials or any part thereof, that the 6^th Defendant’s agents, who had participated in the trial of the PRC Criminal Case, must have been fully aware of the contents of the Prosecution Materials, including the existence of the Proposed New Evidence, by 4 January 2023 at the very latest, and that the Defendants had further delayed by about two months before taking out the Summons after they had obtained the Prosecution Materials on 10 July 2025. In reply, Mr Shieh submits that the Plaintiff is merely nitpicking about mere differences of expression in the supporting and reply affirmations of Zhang, and the Plaintiff simply has no good answer at all to the Defendants’ evidence and submissions that the application to adduce the Proposed New Evidence was taken out without delay and with reasonable diligence. There is, in our view, some validity in Mr Shieh’s criticism that the Plaintiff’s allegation that the Defendants have not been forthcoming about the time when they first knew about or gained possession of the Prosecution Materials or any part thereof is nitpicking of the differences in the language and/or expressions used in Defendants’ evidence. In any event, we have considered the evidence filed by the parties, and accept Mr Shieh’s submission that under the relevant laws and regulations in the Mainland, including Article 55 of the Interpretation by the Supreme People’s Court on the Application of PRC Criminal Procedure Law, and Regulations 32, 33 and 37 of the Regulations on Lawyers Handling Criminal Cases of the All China Lawyers Associations, the Prosecution Materials could not be disclosed by the Defendants’ PRC lawyers or provided to the Defendants for any purpose other than in relation to the PRC Criminal Case while the criminal proceedings and the appeal were still ongoing in the Mainland. We also accept the Defendants’ evidence that the Prosecution Materials were not available or retrievable for use other than in relation to the PRC Criminal Case until June 2025, and their PRC lawyer (Mr Wong Xuyang) did not receive a full set of the Prosecution Materials until 10 July 2025. We are not satisfied on the evidence before us that the Defendants were guilty of unjustified delay in taking steps to obtain the Prosecution Materials. As for the 2 months’ delay in taking out the Summons after the Defendants obtained the Prosecution Materials, we take into account the substantial volume of the evidence contained in the Prosecution Materials and the consequent time required by the Defendants to study the materials and formulate and prepare the application. We consider that the Defendants could have made the application sooner, but the delay is not so substantial or unreasonable that we would feel compelled to dismiss the Summons on the ground of delay alone.

21.  Lastly, Mr Wong has made various points which essentially go to the issue of the weight of the evidence sought to be adduced, eg the annotations on copies of Zheng’s witness statements together with the expert opinion on handwriting that the annotations were made by the Plaintiff (Item 3-10)[10], the reliability of the expert report concerning the signatures attributed to “Lan Xiulin” (Item 3-17)[11], the similarities (or dissimilarities) between the signatures on the “forged” documents produced at the trial and those on the re-enactment documents, as well as some inconsistencies in the evidence (Item 3-16)[12], and the relevance of the Notebooks/Work Record (Item 3-11)[13]. We do not see that the points made by Mr Wong are sufficient to cause us to refuse to exercise our discretion to grant leave for the above items to be adduced as new evidence in the appeal. They should, instead, be considered as matters relevant to the weight of those items to be dealt with at the hearing of the appeal.

22.  In all, we are satisfied that leave should be granted to the Defendants to adduce Items 3-1 to 3-17 as new evidence in the appeal. Having reached the above conclusions, it is not necessary for us to consider whether Noble v Owens provides the Defendants with a possible alternative basis for their admission as new evidence in the appeal.

DISPOSITION

23.  The following orders are made:

(1)  leave be granted to the 4^th to 6^th Defendants to adduce Items 3-1 to 3-17 as new evidence at the hearing of the appeal;

(2)  the order made in paragraph (1) above shall not prejudice the right of the Plaintiff to make submissions on the admissibility, weight and/or truthfulness of the evidence contained in Items 3-1 to 3-17 or any part thereof at the hearing of the appeal;

(3)  the Plaintiff shall have leave to file and serve evidence (if so advised) to deal with the issues in paragraph (2) above within 49 days from the date of the order herein;

(4)  the 4^th to 6^th Defendants shall have leave to file and serve evidence in reply (if so advised) within 35 days thereafter;

(5)  no further evidence may be filed without leave of the court; and

(6)  liberty to apply.

24.  On the issue of the costs of the Summons, notwithstanding the matters urged upon us by Mr Wong, including the allegation of delay and unreasonable conduct on the part of the Defendants, which we have dealt with above, we consider that the fair order to make would be costs in the cause of the 4^th to 6^th Defendants’ appeal. We so order.

25.  In relation to the costs thrown away by the adjournment of the hearing of the appeal originally scheduled on 25 and 26 November 2025, the Plaintiff has confirmed that he has not incurred any costs in relation to the adjournment[14], while the Defendants have not indicated what, if any costs, have been wasted by the adjournment. We do not consider that the Plaintiff should bear the Defendants’ costs of the adjournment occasioned by the latter’s repeated applications for leave to adduce new evidence. We make no order as to the costs of the adjournment.

26.  Lastly, there has already been very substantial delay to the progress of the Defendants’ appeal as a result of the repeated applications by the Defendants for leave to adduce new evidence. We make an order that no further application for leave to adduce new evidence may be made without leave of the Court.

Mr Stewart Wong, SC and Ms Jennifer Fan, instructed by Adrian Yeung & Cheng, for the Plaintiff

Mr Paul Shieh, SC, Mr Danny Tang and Mr Keith Chan, instructed by Baker & McKenzie, for the 4^th, 5^th and 6^th Defendants

CACV 178/2021, [2025] HKCA 646

On Appeal from [2021] HKCFI 710

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 178 OF 2021

(ON APPEAL FROM HCA NO 1524 OF 2012)

________________________

____________

_______________

J U D G M E N T

_______________

Hon Chow JA (giving the Judgment of the Court):

INTRODUCTION

1.  There are before the Court two summonses taken out by 4^th to 6^th Defendants for leave to adduce new evidence in support of their appeal against the judgment of Deputy High Court Judge Leung (as he then was) dated 19 March 2021:

(1)  By a summons dated 23 January 2025 (“the First Summons”), the 4^th to 6^th Defendants apply for leave to adduce the following 3 items of proposed new evidence –

(a)  Item 1 - a criminal judgment of the Liaoning Benxi Intermediate People’s Court dated 19 September 2024 (“the Intermediate People’s Court Judgment”);

(b)  Item 2 - an email from Cheng Rui (“Cheng”) to Zhang Rongwen (“Zhang”) dated 29 April 2022 and the attachments thereto, including a purported declaration made by the Plaintiff dated 25 April 2022; and

(c)  Item 3 - an email from Cheng to Zhang dated 23 May 2022 and the attachments thereto, including a purported declaration made by the Plaintiff dated 21 May 2022.

(2)  By a further summons dated 24 April 2025 (“the Second Summons”), the 4^th to 6^th Defendants apply for leave to amend the First Summons for the purpose of seeking leave to adduce an additional item of proposed new evidence, namely –

Item 1A - a criminal judgment of the Liaoning Higher People’s Court dated 17 March 2025 (“the Higher People’s Court Judgment”) upholding the Intermediate People’s Court Judgment.

We consider it appropriate to determine these two summonses on paper pursuant to Order 59 rule 14A of the Rules of the High Court, Cap 4A.

ITEMS 2 AND 3

2.  The present applications of the 4^th to 6^th Defendants follow on from their previous applications for leave to adduce new evidence, which this Court dealt with in a judgment dated 4 November 2022 (“the CA Judgment”).

3.  The basic facts of this case, the 4^th to 6^th Defendants’ grounds of appeal, and the applicable principles for admission of new evidence in the Court of Appeal, were set out in the CA Judgment, and will not be repeated here. Unless the context indicates otherwise, the expressions and abbreviations as defined in the CA Judgment will continue to be used in this judgment.

4.  In the CA Judgment, this Court granted leave to the 4^th to 6^th Defendants to adduce “Item 23” as new evidence at the hearing of their appeal. Item 23 consists of:

(1)  a purported declaration made by the Plaintiff dated 3 February 2022 (“the Feb 2022 Declaration”), in which the Plaintiff stated that:

(a)  he was currently under restraint at home (監視居住) because he was suspected of having committed offence(s) of fraud;

(b)  he had forged various documents which were used in legal proceedings in Hong Kong, including the 10/1/2003 Confirmation, the Debt Acknowledgement List, the Letter of Undertaking, the 6/9/2005 Letter and the 8/9/2005 Letter;

(c)  he wished to withdraw the proceedings in Hong Kong; and

(d)  he had asked his appointed lawyer (Cheng) in the PRC to send his declaration to the victims’ lawyers and his own lawyers in Hong Kong (namely, Mak Ka Ping of Adrian Yeung & Cheng); and

(2)  an appointment letter signed by the Plaintiff dated 4 February 2022, whereby the Plaintiff appointed Cheng as his lawyer in relation to his fraud case.

5.  The Court granted leave to the 4^th to 6^th Defendants to adduce Item 23 as new evidence notwithstanding the suspicious circumstances concerning the purported appointment of Cheng as the Plaintiff’s lawyer in the PRC essentially because of the potential significance of the proposed new evidence. Nevertheless, the Court made it clear that there were obvious questions to be asked as to whether the Plaintiff in fact made the alleged admission contained in the Feb 2022 Declaration, and whether such admission (if made) was voluntary, and reserved the question of what weight (if any) ought to be accorded to Item 23 for consideration at the substantive hearing of the appeal (see §52 of the CA Judgment).

6.  Items 2 and 3 are similar in nature to Item 23. The declarations allegedly made by the Plaintiff dated 25 April and 21 May 2022 respectively were made shortly after the Feb 2022 Declaration, and apparently when he was still under restraint at home. The 4^th to 6^th Defendants have had Items 2 and 3 in their possession for more than 3 years. They were produced as exhibits “ZRW-34” and “ZRW-35” to Zhang’s 4^th Affirmation, which was filed by the 4^th to 6^th Defendants on 27 June 2022 in relation to their previous applications for leave to adduce new evidence. As a matter of fact, the 4^th to 6^th Defendants’ previous applications had undergone a few rounds of amendments. The 4^th to 6^th Defendants could have included Items 2 and 3 in their previous applications (by further necessary amendments) so that they could be dealt with by the Court in one go. Instead, the 4^th to 6^th Defendants have delayed for over two and a half years before issuing the First Summons on 23 January 2025. Nevertheless, the Plaintiff has not objected to the 4^th to 6^th Defendants’ application in respect of Items 2 and 3 on the ground of delay. Thus, we shall focus on the merits of the application.

7.  Our reasons for granting leave to the 4^th to 6^th Defendants to adduce Item 23 as new evidence apply equally to Items 2 and 3. As can be seen from the correspondence between the parties’ solicitors, the Plaintiff does not object to the 4^th to 6^th Defendants being granted leave to adduce Items 2 and 3 at the hearing of the appeal, provided that:

(1)  it is without prejudice to “any submissions that the Plaintiff may make as to the admissibility, weight and/or truthfulness of the New Evidence or any parts thereof …”[1]; and

(2)  leave is granted to the Plaintiff to “file and serve affirmation(s) to deal with the admissibility, weight and/or truthfulness of the New Evidence or any part thereof … within 49 days from the date of the Order being made herein”[2].

8.  The 4^th to 6^th Defendants did not agree with the Plaintiff’s proposals, contending in their solicitors’ letter of 26 February 2025, amongst other things, that:

(1)  the “admissibility” of the proposed new evidence should not be in dispute and the Plaintiff should only be permitted to argue the weight to be given to the new evidence; and

(2)  the Plaintiff should be required to file and serve evidence to deal with the weight of the proposed new evidence by 13 March 2025 (in other words, within 14 days), while the 4^th to 6^th Defendants should have leave to file and serve reply evidence within 28 days thereafter[3].

9.  The 4^th to 6^th Defendants argued that the Plaintiff should not be permitted to challenge the admissibility of Item 23 because, it was said, the issue of admissibility had already been dealt with by the Court of Appeal in the CA Judgment[4]. Apparently, the 4^th to 6^th Defendants took the position that the same consideration should apply to Items 2 and 3 as well. This position of the 4^th to 6^th Defendants is not justifiable. Although the Court granted leave to the 4^th to 6^th Defendants to adduce Item 23 as new evidence, the issue of “admissibility” of the new evidence was not raised by either party in the previous applications, and the Court did not make any ruling on whether Item 23 was legally “admissible” as evidence. At §52 of the CA Judgment, the Court expressly left open, inter alia, the question of whether the Plaintiff’s alleged admission was voluntary. As submitted by Mr Stewart Wong, SC (for the Plaintiff), an admission (or confession) extracted from a party by torture is not “admissible” as evidence at common law and must be excluded from consideration altogether when deciding the facts in issue (see Shagang Shipping Co Ltd (in liquidation) v HNA Group Co Ltd (Liberty intervening) [2020] 1 WLR 3549, §§105-107). As recorded in the Intermediate People’s Court Judgment, the Plaintiff did complain that he was coerced into making a confession and his confession was obtained by illegal means[5], although that complaint was not accepted by the Liaoning Benxi Intermediate People’s Court. In our view, nothing in the CA Judgment precludes the Plaintiff from contending at the hearing of the appeal that Item 23 is strictly not admissible as evidence. The same consideration applies to the alleged declarations made by the Plaintiff dated 25 April and 21 May 2022.

10.  In his written submissions for the 4^th to 6^th Defendants, Mr Paul Shieh, SC argues that “‘[a]dmitted’ in the present context (and correspondingly ‘admissibility’) only narrowly means being able to be placed before the Court for consideration”[6]. This submission sparks off an arid debate on the distinction between the “legal admissibility” of a piece of evidence and “adducing the evidence procedurally for the CA to look at it”[7]. While we consider that the 4^th to 6^th Defendants ought to be granted leave to adduce Items 2 and 3 as new evidence (in the sense that they may be placed before the Court for consideration), we accept the Plaintiff’s submission that such leave should be without prejudice to any submissions that he may wish to make as to the admissibility, weight and/or truthfulness of the evidence contained in Items 2 and 3 or any parts thereof.

11.  As for the time that the Plaintiff should have to file and serve evidence in response to the proposed new evidence contained in Items 2 and 3, the 4^th to 6^th Defendants’ justification, contained in Baker & McKenzie’s letter of 26 February 2025, for limiting the Plaintiff to just 14 days (ie on or before 13 March 2025) was that the First Summons was filed and served on 23 January 2025 and the Plaintiff would, by 13 March 2025, already have had 49 days to deal with the matter. The position taken by 4^th to 6^th Defendants conflated the time for the Plaintiff to file and serve evidence in response to (i) the First Summons, and (ii) the proposed new evidence. Logically, the question of whether the 4^th to 6^th Defendants may be permitted to adduce the proposed new evidence is an anterior question which ought to be disposed of first, before consideration is given to the question of the time that the Plaintiff should be given to adduce evidence in response to the new evidence. As it is, the parties have not been able to agree on the terms of the leave to be granted by the Court for the 4^th to 6^th Defendants to adduce Items 2 and 3 as new evidence, and thus this matter has to be resolved by the Court. In his written submissions, Mr Shieh maintains that the Plaintiff should have 14 days from the date of the order herein to file and serve evidence. Taking into account the fact that the Plaintiff is, it appears, currently under incarceration in Mainland China, we consider that the Plaintiff ought to be given a period of 49 days from the date of the order herein to file and serve evidence (if so advised) to deal with the admissibility, weight and/or truthfulness of the evidence contained in Items 2 and 3 or any parts thereof.

12.  As for evidence which the Plaintiff may wish to file in response to Item 23, this falls outside the scope of the First Summons. The Court would leave it to the parties to come to a sensible agreement on this matter. In the event that the parties are unable to reach agreement within 14 days from the date of this judgment, the Plaintiff shall have leave to take out a summons for necessary directions within a further period of 14 days, and the summons will be dealt with on paper.

ITEMS 1 AND 1A

13.  The Intermediate People’s Court Judgment is a first instance criminal judgment of the Liaoning Benxi Intermediate People’s Court, by which the Plaintiff was convicted of an offence of fraud under Articles 23, 266 and 307(1) of the PRC Criminal Law, and sentenced to 10 years imprisonment and fined RMB 20 million allegedly for fabricating his case and forging various documents in the Hong Kong proceedings which led to the Judgment.

14.  The Higher People’s Court Judgment is an appeal judgment of the Liaoning Higher People’s Court upholding the Intermediate People’s Court Judgment.

15.  Under the Hollington principle, a judgment and factual finding of another court or tribunal in earlier proceedings, whether civil or criminal, is inadmissible in subsequent proceeding, unless the party against whom the finding sought to be deployed is bound by it by reason of an estoppel per rem judicatum (Capital Century Textile Company Limited v Li Dianxiao[2018] HKCFI 729, at §23). Prima facie, neither the Intermediate People’s Court Judgment nor the Higher People’s Court Judgment is admissible as evidence in the current appeal.

16.  Mr Shieh, SC argues, however, that insofar as the Intermediate People’s Court Judgment/the Higher People’s Court Judgment contain a summary of the factual evidence presented to the PRC courts (eg the testimony of prosecution witnesses) and such evidence relates to the issues in the Hong Kong proceedings, the contents of those judgments are not excluded under the Hollington principle, nor can they be excluded as hearsay evidence given that such exclusionary rule has been abolished in civil proceedings (see Capital Century, at §§29-34 and 62(1), and Zillion Global Ltd v UBS AG[2020] HKCFI 953, at §15). He accepts, nevertheless, that “a finding of a foreign judge that ‘I find the fact to be A’ is inadmissible to prove A in Hong Kong Proceeding. But if the judge said ‘Before me, witness X said A happened and I believe X that A happened’, the first part can be admitted by way of a hearsay statement made by the judge to prove that witness X had said that A happened.”[8] We accept, as a matter of principle, that the factual evidence set out, or summarised, in the said judgments of the PRC courts can constitute admissible hearsay evidence for the purpose of legal proceedings in Hong Kong. We do not, however, consider that leave should be granted to the 4^th to 6^th Defendants to adduce Items 1 and 1A as new evidence under the First and Second Summonses, for the following reasons:

(1)  Under both the First Summons and the draft Amended Summons annexed to the Second Summons, the 4^th to 6^th Defendants’ application is for leave to adduce the whole Intermediate People’s Court Judgment/Higher People’s Court Judgment as new evidence. If the 4^th to 6^th Defendants wish to adduce only parts of those judgments which set out or summarise the evidence adduced in the PRC proceedings, the 4^th to 6^th Defendants ought to have identified the relevant passages in those judgments in the summonses. Since the 4^th to 6^th Defendants are seeking the Court’s leave to adduce new evidence in their appeal, it is incumbent on them to clearly identify the proposed new evidence which they seek to place before the Court for its consideration. It is not for the Court to identify for the 4^th to 6^th Defendants the relevant passages in the said judgments which may constitute admissible evidence for the purpose of their appeal.

(2)  In Zhang’s 5^th and 6^th Affirmations filed on 23 January 2025 and 24 April 2025 respectively, he identifies various passages in the Intermediate People’s Court Judgment/Higher People’s Court Judgment which the 4^th to 6^th Defendants intend to rely upon at the hearing of the appeal[9]. However, he also makes it clear that the parts of the two judgments of the PRC courts that the 4^th to 6^th Defendants intend to rely upon include, but are not limited to, the specific passages that he has identified in his affirmations[10]. This approach adopted by 4^th to 6^th Defendants is wholly unsatisfactory. As earlier mentioned, it is incumbent on the 4^th to 6^th Defendants to clearly identify the proposed new evidence which they seek to place before the Court for its consideration. Such identification is essential for the Court’s exercise of discretion whether to grant leave to the 4^th to 6^th Defendants to adduce the relevant part(s) of the two judgments of the PRC courts as new evidence in the appeal.

(3)  While hearsay evidence contained in a foreign judgment is not legally inadmissible in civil proceedings in Hong Kong, the 4^th to 6^th Defendants’ applications here concern the admission of proposed new evidence in an appeal. To justify the applications, the 4^th to 6^th Defendants have to show not only that the proposed evidence is legally admissible as evidence, but also that the conditions for admission of new evidence in support of their appeal are satisfied. Different principles apply for the admission of new evidence as to matters which occurred prior to trial (“pre-trial new evidence”) and those which have occurred after the trial (“post-trial new evidence”). The admission of pre-trial new evidence is generally governed by the Ladd v Marshall conditions (subject to the Court’s residual discretion to admit the evidence in exceptional circumstances notwithstanding the non-satisfaction of the Ladd v Marshall conditions), while the admission of post-trial new evidence is subject to the Court’s discretion under Order 59, rule 10(2) of the Rules of the High Court, Cap 4A (see §48 of the CA Judgment). A brief examination of the Annex to Zhang’s 5^th Affirmation, which sets out the particular passages in the Intermediate People’s Court Judgment which the 4^th to 6^th Defendants wish to rely upon in their appeal, show that they include the statements or evidence of numerous persons (including witnesses who gave evidence on behalf of the 4^th to 6^th Defendants before the Judge at the trial, namely, Yu and Zhang), as well as other pre-trial and post-trial documentary evidence. The Intermediate People’s Court Judgment also refers to the statement or evidence of Liu (who gave evidence on behalf of the 1^st to 3^rd Defendants before the Judge), and Bao (who apparently is the prime-mover behind the 4^th to 6^th Defendants). In view of the approach adopted by the 4^th to 6^th Defendants, the possibility that they may also seek to rely on Liu and/or Bao’s evidence as set out in the Intermediate People’s Court Judgment at the hearing of the appeal cannot be excluded. The evidence of Liu, Yu, Zhang and/or Bao would appear to be available to the 4^th to 6^th Defendants to them at the time of the trial. In short, the materials contained in the Intermediate People’s Court Judgment cover both pre-trial and post-trial new evidence (including apparently some accountancy and handwriting expert evidence). The 4^th to 6^th Defendants have not, however, attempted to justify the admission of the proposed new evidence, whether by reference to the Ladd v Marshall conditions or the court’s residual discretion in the case of pre-trial new evidence, or the court’s discretion under Order 59, rule 10(2) in the case of post-trial new evidence.

(4)  At the hearing of the appeal, the parties and Court ought to be focusing on the substantive merits of the appeal, instead of being drawn into arguments on collateral issues such as (i) which particular passages in the two judgments of the PRC courts are not excluded by the Hollington principle and are intended to be relied upon by the 4^th to 6^th Defendants as new evidence, (ii) whether the relevant passages in the two judgments of the PRC courts should be regarded as pre-trial new evidence or post-trial new evidence, (iii) whether, in the case of the pre-trial new evidence, the Ladd v Marshall conditions are satisfied, or whether the Court should exercise its residual discretion to admit the proposed evidence notwithstanding the non-satisfaction of the Ladd v Marshall conditions, and/or (iv) whether, in the case of post-trial new evidence, the Court ought to exercise its discretion under Order 59, rule 10(2) to admit the same.

17.  In all the circumstances, we are not prepared to grant leave to the 4^th to 6^th Defendants to adduce Items 1 and 1A as new evidence at the hearing of their appeal under the First and Second Summonses.

DISPOSITION

18.  In respect of the First Summons, the following orders are made:

(1)  leave be granted to the 4^th to 6^th Defendants to adduce Items 2 and 3 as set out in the Schedule annexed to the First Summons as new evidence at the hearing of their appeal (with the clarification that Item 3.2 refers to page 3 of exhibit “ZRW-35”);

(2)  the order made in paragraph (1) above shall not prejudice the right of the Plaintiff to make submissions in the appeal in respect of the admissibility, weight and/or truthfulness of the evidence contained in Items 2 and 3 or any part thereof;

(3)  the Plaintiff shall have leave to file and serve evidence (if so advised) to deal with the issues in paragraph (2) above within 49 days from the date of the order herein;

(4)  the 4^th to 6^th Defendants shall have leave to file and serve evidence in reply (if so advised) within 28 days thereafter;

(5)  no further evidence may be filed without leave of the court; and

(6)  liberty to apply.

Save as aforesaid, the First Summons is dismissed.

19.  The Second Summons is dismissed.

20.  On the issue of costs, although the 4^th to 6^th Defendants have succeeded in their application in respect of Items 2 and 3, the reason why the matter could not be resolved by consent was because of the position taken by the 4^th to 6^th Defendants on (i) whether the Plaintiff should be permitted to object to the “admissibility” of the proposed new evidence, and (ii) the time that the Plaintiff should be given to file and serve evidence in response to the proposed new evidence. On both issues, we rule in favour of the Plaintiff. Furthermore, the 4^th to 6^th Defendants ought reasonably to have included Items 2 and 3 in their previous applications for admission of new evidence.

21.  In all the circumstances, we make an order that the Plaintiff shall have the costs of the First Summons as from 27 February 2025 (this being the order sought by the Plaintiff), and the costs of Second Summons, to be summarily assessed, with certificate for two counsel. The 4^th to 6^th Defendants shall have leave to file a statement of objections (limited to 3 pages) to the Plaintiff’s costs statement dated 20 May 2025 within 14 days from the date of this judgment. The rest of the costs of the First Summons shall be in the cause of the appeal.

22.  The above costs order is an order nisi, which shall become absolute unless an application is made to vary the same within 14 days from the date of this judgment.

Mr Stewart Wong, SC and Ms Jennifer Fan, instructed by Adrian Yeung & Cheng, for the Plaintiff

Mr Paul Shieh, SC, Mr Danny Tang and Mr Keith Chan, instructed by Baker & McKenzie, for the 4^th, 5^th and 6^th Defendants

CACV 173/2021 &

CACV 178/2021

[2023] HKCA 513

On Appeal From [2022] HKCFI 1829

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS 173 & 178 OF 2021

(ON APPEAL FROM HCA NO 1524 OF 2012)

________________________

____________

(Heard together)

________________

J U D G M E N T

________________

Hon Chow JA (giving the Judgment of the Court):

INTRODUCTION

1.  There are before the Court 2 applications for leave to appeal against the Court’s earlier judgment refusing to grant leave to the 1^st to 3^rd Defendants and the 4^th to 6^th Defendants to adduce various items of proposed new evidence in their respective appeals.

THE APPLICATIONS

2.  On 4 November 2022, this Court gave its judgment (“the CA Judgment”) granting leave to the 1^st to 3^rd Defendants and the 4^th to 6^th Defendants to adduce one item of proposed new evidence (referred to as Item 23) for the purpose of their respective appeals against the judgment of Deputy High Court Judge Leung dated 19 March 2021 (“the CFI Judgment”), but not the remaining items of proposed new evidence (referred to as Items 1 to 22 and Exhibit “ZRW-32”[1]) (“the Excluded New Evidence”).

3.  The basic facts of the case and the issues in the appeals have been set out in the CA Judgment and will not be repeated here. The abbreviations used in the CA Judgment will be adopted in the present judgment.

4.  The Excluded New Evidence consists of 3 categories:

(1)  Category 1 (the Receipt in Item 10 and Items 16-22) concerns the authenticity of the 8/9/2005 Letter on which was appended what the Defendants allege to be the old company chop of Shunfeng which ought to be have destroyed in or about July 2004.

(2)  Category 2 (Items 1-15, save for the Receipt in Item 10) -

(a)  Items 1 to 14 concern the underlying debts owed by Wong to Chen as particularised in the Debt Acknowledgement List; and

(b)  Item 15 is said to be relevant to the evidence contained in the Receipt that Chen received 5 pieces of blank letterheads signed by Wong.

(3)  Category 3 (Exhibit “ZRW-32”) concerns an interview of Tian, recorded in a DVD-Rom, by the 4^th to 6^th Defendants’ lawyers in an office of the Beijing Public Security Bureau (北京市公安局東城分局東花市派出所) on 26 January 2022. Tian made a witness statement in 2014 and was named as a witness for Chen, but did not attend court to give evidence at the trial.

5.  The Court refused to grant leave to the Defendants to adduce the materials in Category 1 as new evidence on the grounds that:

(1)  The 1^stLadd v Marshall Condition (“Condition 1”) was not satisfied, in that the Defendants had failed to discharge the burden of showing that the proposed new evidence could not have been obtained for use at the trial with reasonable diligence (§§41 and 42 of the CA Judgment).

(2)  The 2^ndLadd v Marshall Condition (“Condition 2”) was not satisfied in so far as the Receipt in Item 10 was concerned, because the relevance of the Receipt to the authenticity of the disputed documents was at best tangential (§43 of the CA Judgment).

6.  The Court also held that the possible relaxation of the reasonable diligence requirement in fraud cases should not be applied in relation to Category 1, because the new documents, taken at their highest, did not show any dishonest conduct in the trial on the part of Chen, and were not sufficient to show a “reasonable prospect of success” that the CFI Judgment was obtained by fraud for which Chen should be held responsible (§44 of the CA Judgment).

7.  The Court refused to grant leave to the Defendants to adduce the materials in Category 2 as new evidence on the grounds that:

(1)  Condition 1 was not satisfied, for the same reasons as in relation to Category 1 (§55 of the CA Judgment).

(2)  Condition 2 was not satisfied (§56 of the CA Judgment).

Pausing here, it may be noted that, as mentioned at §53 of the CA Judgment, the 4^th to 6^th Defendants did not in fact advance any submissions in support of the application for admission of the materials in Category 2.

8.  In respect of Category 3 (Exhibit “ZRW-32”), in view of the fact that the proposed new evidence came into existence after the trial, the Ladd v Marshall Conditions have no application. As earlier mentioned, Exhibit “ZRW-32” concerns an interview of Tian which took place in Beijing after the trial. In the interview, Tian made clear it that he was not prepared to give evidence in court to support what he had said orally, and thus he would not be available for cross examination by Chen’s lawyers in Hong Kong proceedings. The Court considered that Tian’s credibility would obviously be in issue, and no weight could be given to his out-of-court interview, the veracity of which could not be tested by cross examination. Accordingly, the Court declined to exercise its discretion to admit Exhibit “ZRW-32” as new evidence (§§61-62 of the CA Judgment).

9.  On 2 December 2022, the 1^st to 3^rd Defendants issued a Notice of Motion seeking leave to appeal the CA Judgment to the Court of Final Appeal. In the Notice of Motion, the 1^st to 3^rd Defendants identified the following questions (“Question 1”, “Question 2” and “Question 3” respectively) as being questions of great general or public importance which ought to be submitted to the Court of Final Appeal for determination:

“(1) In seeking a relaxation of the reasonable diligence requirement for the admission of new evidence on appeal (‘Condition 1’ in Ladd v Marshall), whether the appellant is required to show a ‘reasonable prospect of success’ that (a) the judgment was procured by fraud; and (b) that the respondent was complicit or responsible for, or knowingly relied upon, the fraud; or, rather, it is sufficient that the judgment was procured by fraud, even if the respondent was not himself responsible for, or aware of, the fraud.

(2) In showing whether there is a ‘reasonable prospect of success’ that the respondent has obtained the judgment by fraud or that he knowingly relied upon the fraud for the purpose of seeking a relaxation of the reasonable diligence requirement for the admission of new evidence on appeal (without prejudice to Question (1) above), whether the appellant is confined to the evidence sought to be admitted, or whether he is entitled to rely on the totality of the evidence before the Court, including evidence that came into existence after the judgment.

In particular, in considering the admission of the Receipt and Items 16-20 in the appeal (§44 of the CA Judgment), whether the Court should also have taken into consideration Item 23, given its potential importance in the appeal in showing the respondent’s dishonest conduct and/or responsibility for the fraud, as the basis for relaxing the reasonable diligence requirement.

(3) Conversely, in considering what weight is to be accorded to an alleged admission of fraud by the respondent (i.e., Item 23) at the substantive hearing of the appeals, whether the Court is entitled to and should also consider evidence in support of the existence of the fraud (i.e., the Receipt and Items 16-20), which would be relevant to the authenticity and reliability of the alleged admission.”

10.  On the same date, the 4^th to 6^th Defendants also issued a Notice of Motion seeking leave to appeal the CA Judgment to the Court of Final Appeal. In the Notice of Motion, the 4^th to 6^th Defendants identified the following question (“Question 4”) as being a question of great general or public importance which ought to be submitted to the Court of Final Appeal for determination:

“In a Ladd v Marshall application, in order for the ‘reasonable diligence’ requirement to be relaxed on the basis of a reasonable prospect of success that the judgment below was obtained by fraud, (i) does the fraud have to be that of the respondent or at least suborned by or knowingly relied upon by the respondent, or (ii) is it sufficient that the judgment was procured by fraud, without the additional requirement that the fraud should be that of, or known by, the respondent?”

DISCUSSION

11.  Under s 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, Cap 484, an appeal shall lie to the Court of Final Appeal at the discretion of the Court of Appeal or the Court of Final Appeal in any civil cause or matter if, in the opinion of the Court of Appeal or the Court of Final Appeal (as the case may be), the question involved in the appeal is one which, by reason of its great general or public importance, or otherwise, ought to be submitted to the Court of Final Appeal for decision.

12.  As stated by Kwan VP in Leung Ping Chiu Roy v Wai Chen[2022] HKCA 1730, at §63, appeals to the Court of Final Appeal against interlocutory orders of the Court of Appeal are rare and exceptional. Leave will generally be refused unless it can be clearly seen that: (1) the proposed appeal genuinely raises a question of law of great general or public importance; (2) the result of the appeal would indeed turn on how that question is answered; and (3) such result is likely to make a significant contribution to the just disposal of the litigation in this court.

Question 1 and Question 4

13.  Question 1 and Question 4 raise the same point, namely, whether, in order for the “reasonable diligence” requirement under Condition 1 to be relaxed in an application for admission of new evidence where the judgment below is alleged to have been obtained by fraud, it is necessary to show that the respondent was complicit in or responsible for, or knowingly relied upon, the fraud (as put in Question 1), or the fraud was that of the respondent or at least suborned by or knowingly relied upon by the respondent (as put in Question 4).

14.  We have summarised what we consider to be the relevant principles for the admission of new evidence in appeal in fraud cases in §34 of the CA Judgment. Importantly for the present purpose is the distinction between (i) an action brought to set aside a judgment obtained by fraud, and (ii) an application for admission of new evidence in a fraud case. In the former situation, the Ladd v Marshall Conditions are not relevant or applicable. In the latter situation, the general rule is that the Ladd v Marshall Conditions should be applied in their full vigour for the admission of fresh evidence, subject to a possible relaxation of the reasonable diligence requirement under Condition 1 where an applicant can demonstrate a reasonable prospect of success that the judgment below was obtained by fraud (as opposed to fraud in relation to the general underlying merits of the case) in accordance with the principles summarized by Aikens LJ in Royal Bank of Scotland plc v Highland Financial Partners [2013] 1 CLC 596 (at §106) and reiterated by Kwan VP in Mayer Corporation Development International Ltd v Alliance Financial Intelligence Ltd[2019] HKCA 777 (at §72):

(1)  there must be “conscious and deliberate dishonesty” in relation to the relevant evidence given;

(2)  the fresh evidence must be “material”, in that it demonstrates that the previous relevant evidence, action, statement or concealment was an operative cause of the court’s decision to give judgment in the way it did, or that it would have entirely changed the way in which the first court approached and came to its decision; and thus the conscious and deliberate dishonesty must be causative of the impugned judgment being obtained in the terms it was; and

(3)  the question of “materiality” of the fresh evidence is to be assessed by reference to its impact on the evidence supporting the original decision, not by reference to its impact on what decision might be made if the claim were to be retried on honest evidence.

15.  In the present case, the thrust of the Defendants’ complaint is that the documents relied upon by the Plaintiff, including in particular the 10/1/2003 Confirmation, the 6/9/2005 Letter and the 8/9/2005 Letter, in support of his claim were not authentic, or were forgeries. In other words, their complaint is about fraud in relation to the underlying merits of the case. On this footing, the question of relaxation of the reasonable diligence requirement does not arise. However, to the extent that the Defendants’ case is that the CFI Judgment was obtained by fraud, the Court considered that the new documents were not sufficient to show a reasonable prospect of success that the CFI Judgment was obtained by fraud for which Chen should be held responsible, and thus the reasonable diligence requirement should not be relaxed (§44 of the CA Judgment). It is at this point that the Defendants propose to argue, under Questions 1 and 4, that the reasonable diligence requirement may be relaxed so long as it is shown that a judgment was obtained by fraud, and it is not necessary to show that the respondent was himself responsible for, or aware of, the fraud (as put in Question 1), or the fraud was that of, or known by, the respondent (as put in Question 4).

16.  To make good the argument that the CFI Judgment was obtained by fraud, Mr Paul Shieh, SC, on behalf of the 4^th to 6^th Defendants, now argues that the forgery in relation to the 8/9/2005 Letter was at least known to Zheng who committed perjury and as Zheng was a witness for Chen and had a financial interest in the outcome of these proceedings (as he would stand to receive RMB 2 million if Chen’s claim is successful and the Letter of Undertaking is enforced), the two of them had a “common foe” and Zheng was a “comrade in arms” of Chen who adopted his perjury[2].

17.  On behalf of the 1^st to 3^rd Defendants, Mr Douglas Lam, SC likewise argues that Chen can be implicated in one of 2 ways without showing his knowledge of Zheng’s fraud:

(1)  Chen produced and positively adopted the contents of the 8/9/2005 Letter, which he relied upon to show the existence of the 10/1/2003 Confirmation.

(2)  Zheng has a financial interest in the outcome of the trial as he was one of the designated persons to be paid pursuant to the Letter of Undertaking, the success of which depended on Chen’s claim[3].

18.  As correctly pointed out by Mr Eugene Fung, SC for the Plaintiff, this factual case that the relevant fraud was perpetuated by Zheng (by giving false evidence) and the same was adopted by Chen has never been put forward hitherto. In the application for admission of new evidence before the Court, the 4^th to 6^th Defendants’ argument (adopted by the 1^st to 3^rd Defendants[4]) was that “Chen had forged the 8/9/2005 Letter using blank papers pre-signed and pre-stamped by Wong”[5]. Further, the allegation that Zheng was guilty of fraud in relation to the 8/9/2005 Letter lacked evidential foundation. Whilst he did give evidence concerning the sending out of that letter[6], none of the Defendants pleaded or argued that Shunfeng’s chop on the 8/9/2005 Letter was forged, or adduced any evidence as to the authenticity of Shunfeng’s chop on that letter, at the trial[7]. The authenticity of the signature of Wong on the 8/9/2005 Letter was strongly supported by the evidence of Mr Radley (the handwriting expert called by Wong, Line Power and Trengei, ie the 1^st to 3^rd Defendants) and Ms Yang (the handwriting expert called by Chen)[8]. That it was upon the instruction of Wong that the 8/9/2005 Letter was sent to Chen was also supported by the evidence of Mr Radley[9]. We do not consider that it is open to the Defendants to run a new factual case in their intended appeals in the Court of Final Appeal which was not pursued before the Court of Appeal (see Leung Ping Chiu Roy, ante, at §§64-67, per Kwan VP).

19.  The 4^th to 6^th Defendants also argue that the “Fraud of a Party Requirement” is unsound in principle, and there should be a relaxation of the reasonable diligence requirement whenever a judgment is obtained by fraud for reasons of public policy[10]. In view of the discussion in §§15-18 above, this argument does not arise for consideration. In any event, it overlooks the fact where a judgment is obtained by fraud, an action may be brought to set aside the judgment, and the Ladd v Marshall Conditions are not applicable in such an action. It is only where a party applies to adduce new evidence in an appeal that the Ladd v Marshall Conditions are relevant in the exercise of the Court’s discretion whether to admit the new evidence. We do not see that there is any compelling public policy reason to extend the fraud exception in the way suggested by the 4^th to 6^th Defendants.

Questions 2 and 3

20.  They are not questions of great general or public importance, but are specific to the facts and circumstances of the present case. We would add that:

(1)  In respect of Question 2, as submitted by Mr Fung, the Court admitted Item 23 on the basis of its “potential significance” to the appeal and expressly reserved the question of what weight (if any) ought to be accorded to the documents comprised in Item 23[11]. In the CA Judgment, the Court pointed out that there were obvious questions to be asked as to whether Chen in fact made the alleged admission, and whether such admission (if made) was voluntary[12]. It should also be noted that the documents in Item 23 came into existence after the CFI Judgment, and the Ladd v Marshall Conditions do not apply to the Defendants’ applications for their admission as new evidence. There is no finding by the Court in the CA Judgment that the evidence comprised in Item 23 is apparently credible under the 3^rdLadd v Marshall Condition. We do not consider the materials in Item 23 to constitute sufficient evidence to demonstrate that “fraud to the requisite standard” has been demonstrated such that the reasonable diligence requirement should be relaxed.

(2)  In respect of Question 3, if the materials in Category 1 could not properly be admitted as new evidence, we do not consider they should become admissible for the purpose of supporting the authenticity or reliability of the alleged admission or confession made by Chen in Item 23.

“Or otherwise”

21.  Insofar as the 1^st to 3^rd Defendants and 4^th to 6^th Defendants are seeking leave to appeal under the “or otherwise” limb in s 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, it is the well-settled practice of the Court of Appeal to defer consideration of such matter to the Appeal Committee of the Court of Final Appeal.

22.  Mr Shieh argues that: (i) the Court’s finding that there is no reasonable prospect of success that Chen should be held responsible for the forgery of the 8/9/2005 Letter is fundamentally inconsistent with the Court’s admission of Item 23, by which the Court must have accepted that it raises a reasonable possibility of forgery of documents (including, inter alia, the 8/9/2005 Letter) by Chen, (ii) the failure of the Court to consider Item 23 is a manifest error, and (iii) this makes the present case a truly exceptional one such that the Court of Appeal should grant leave to appeal on the “or otherwise” limb[13]. Mr Lam likewise argues that the Court was manifestly wrong to hold that there is no reasonable prospect of success that Chen should be held responsible for the forgery of the 8/9/2005 Letter as he did not have the requisite knowledge[14].

23.  Whether the Court has made a manifest error as contended by the Defendants is a matter for consideration by the Appeal Committee in the 1^st to 3^rd Defendants/4^th to 6^th Defendants’ applications to the Court of Final Appeal for leave to appeal (if any). We see no reason to depart from the well settled practice of the Court of Appeal to defer consideration of the “or otherwise” limb to the Appeal Committee of the Court of Final Appeal in the present case.

24.  Lastly, it is clear that Questions 1, 2 and 4 only concern the reasonable diligence requirement under Condition 1, while Question 3 concerns the question of whether the Category 1 materials should be admitted to support the authenticity and reliability of Chen’s alleged admission or confession in Item 23. They do not have any impact on the Court’s finding that Condition 2 is not satisfied in respect of Category 2, or the Court’s decision to refuse to exercise its discretion to admit Category 3 as new evidence (in respect of which the Ladd v Marshall Conditions have no application). Hence, there would, in any event, be no basis to grant leave to appeal in so far as Category 2 and Category 3 are concerned.

25.  The 2 Notices of Motion are dismissed with costs to the Plaintiff, with certificate for 2 counsel. We summarily assess the Plaintiff’s costs in the amounts of (i) HK$130,000 in relation to the 1^st to 3^rd Defendants’ Notice of Motion, and (ii) HK$150,000 in relation to the 4^th to 6^th Defendants’ Notice of Motion. These orders as to costs are orders nisi, which will become absolute unless an application is made to vary the same within 14 days from the date of this judgment.

Mr Eugene Fung, SC, Ms Andrea Yu and Ms Jennifer Fan, instructed by Adrian Yeung & Cheng, for the Plaintiff

Mr Douglas Lam, SC and Mr Chow Ho Kiu, instructed by C L Chow & Macksion Chan, for the 1^st, 2^nd and 3^rd Defendants

Mr Paul Shieh, SC, Ms Eva Sit, SC and Mr James Man, instructed by Baker & McKenzie, for the 4^th, 5^th and 6^th Defendants

CACV 178/2021

[2023] HKCA 146

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 178 OF 2021

(ON APPEAL FROM HCA NO 1524 OF 2012)

________________________

________________________

____________________

JUDGMENT

____________________

Hon Chow JA (giving the Judgment of the Court):

1.  On 4 November 2022, this Court gave its judgment (“the Judgment”) granting leave to the 4^th to 6^th Defendants to adduce one item of proposed new evidence (referred to as Item 23) for the purpose of their appeal against the judgment of Deputy High Court Judge Leung dated 19 March 2021, but not the remaining items of proposed new evidence (referred to as Items 1 to 22) (“the Excluded New Evidence”) ([2022] HKCA 1522).

2.  On 2 December 2022, the 4^th to 6^th Defendants issued a Notice of Motion seeking leave to appeal against the Judgment.  In the Notice of Motion, the 4^th to 6^th Defendants identified the following question as being a question of great general or public importance which ought to be submitted to the Court of Final Appeal for determination:

“In a Ladd v Marshall application, in order for the ‘reasonable diligence’ requirement to be relaxed on the basis of a reasonable prospect of success that the judgment below was obtained by fraud, (i) does the fraud have to be that of the respondent or at least suborned by or knowingly relied upon by the respondent, or (ii) is it sufficient that the judgment was procured by fraud, without the additional requirement that the fraud should be that of, or known by, the respondent?”

3.  On 16 December 2022, the 4^th to 6^th Defendants issued a summons (“the Summons”) seeking a stay of the leave application until the determination of their Notice of Appeal filed on 19 April 2021 (ie the substantive appeal of the 4^th to 6^th Defendants).

4.  On 20 December 2022, the Court gave directions for the filing of written submissions in support of/opposition to the Summons, and for the Summons to be determined on paper.  The Court has since received and considered the respective written submissions of the 4^th to 6^th Defendants and of the Plaintiff.  This is the Court’s decision on the Summons.

5.  The rationale of the 4^th to 6^th Defendants’ stay application has succinctly been summarised in §7 of their written submissions dated 3 January 2023, as follows:

“(1)  If D4-6 succeed in the substantive appeal, the leave application will be rendered purely academic (because, at risk of repetition, D4-6 were able to succeed without reliance on or reference to the items of evidence that had been excluded by the [Judgment]). It will not be necessary for D4-6 to proceed with the leave application, and considerable time and costs will be saved (including P’s, given P’s position and the Court’s direction that he need not file any responsive skeleton for the leave application yet).

(2)  Conversely, if D4-6 fail in the substantive appeal, it would be expedient to deal with the leave application together with any application for leave to appeal against the judgment dismissing the substantive appeal by D4-6.  There would be savings in the court’s (both this Court and the Appeal Committee) time and resources since both courts would only have to read into the papers once; as well as savings in costs for all parties concerned.”

6.  The Plaintiff opposes the 4^th to 6^th Defendants’ stay application as being unprincipled, illogical, unfair and not cost-efficient.  Amongst other things, the Plaintiff submits that:

(1)  The 4^th to 6^th Defendants’ position must be examined from their own perspective: they say that new evidence should be considered by this Court in their substantive appeal but they want to wait and see what happens in the substantive appeal, and will only proceed to obtain leave to appeal to the CFA should they lose in the appeal. It is well established that a litigant should ensure that all relevant matters are placed before the court for it to finally determine the disputes between the parties.  No court should determine the disputes on the basis of what one party claims to be incomplete materials.  Their argument can potentially be run by all losing litigants whenever their attempt to introduce new evidence fails.

(2)  If D4-6 have the conviction that the excluded new evidence is relevant and believe that their application for leave to appeal to the CFA has merits, principles and logic would dictate that they must now proceed on that basis.  This is entirely consistent with the recent directions given by the Registrar of Civil Appeals that the substantive appeal will not be dealt with until the determination of the respective leave to appeal application.

(3)  Obvious unfairness will result if the stay is granted.  The effect of a stay is to enable the 4^th to 6^th Defendants to contend in their substantive appeal before the Court of Appeal that the CFI judgment is wrong on the basis of what they claim to be incomplete materials, and (should they lose the appeal) have a second chance to argue again that the CFI judgment is wrong on the basis of the excluded new evidence.  In addition to being unprincipled and illogical, the stay sought will cause obvious unfairness to the Plaintiff.

See §§3 and 5(1) of the Plaintiff’s Skeleton Submissions dated 17 January 2023.

7.  It is common ground that it is a matter of case management for the Court to decide whether to grant the stay sought by the 4^th to 6^th Defendants.  The Court has to consider the balance of convenience and fairness as between the parties, as well as issues of costs and overall administration of justice.

8.  As a general rule, all interlocutory applications concerning admission of evidence pending before the relevant court ought to be disposed of prior to the substantive trial or appeal (as the case may be), although exceptionally it may be just and convenient on the particular facts or circumstances of a case to depart from this general rule.

9.  In the present case, the 4^th to 6^th Defendants’ substantive appeal raises both issues of fact and of law (see §27 of the Judgment).  According to the 4^th to 6^th Defendants, the Excluded New Evidence is relevant to their appeal against the Judge’s findings of fact, including those referred to in §§1-3 of the 4^th to 6^th Defendants’ Notice of Appeal dated 16 April 2021 (see §27(1) and (2) of the Judgment).  The question of whether the Excluded New Evidence should form part of the Court’s consideration when examining the Judge’s findings of fact ought, in our view, to be determined prior to the actual examination of the Judge’s findings.  We can see no sufficient reason or justification on the facts of the present case why the 4^th to 6^th Defendants’ appeal against the Judge’s findings of facts should be determined on the basis of what may turn out to be only part of the relevant and properly admissible evidence (should the 4^th to 6^th Defendants ultimately succeed in their intended appeal against the Judgment).

10.  We have no difficulty with the 4^th to 6^th Defendants’ first proposition mentioned in §5(1) above, ie if the 4^th to 6^th Defendants should succeed in the substantive appeal without the need to rely on the proposed new evidence, the time and costs which will have to be incurred in relation to the intended appeal will be saved (provided that if the Plaintiff should seek to appeal against the Court of Appeal’s judgment allowing the 4^th to 6^th Defendants’ substantive appeal, the 4^th to 6^th Defendants would not then seek to proceed with the leave application in order to rely on the Excluded New Evidence to resist the Plaintiff’s appeal in the Court of Final Appeal).  We do not, however, accept the second proposition mentioned in §5(2) above, ie if the 4^th to 6^th Defendants should fail in the substantive appeal, it would be expedient to deal with the leave application together with any application for leave to appeal against the judgment dismissing the substantive appeal.  There are a number of different possible scenarios depending on the outcomes of (i) the substantive appeal and (ii) the application(s) for leave to appeal against the Judgment (and any further appeal therefrom should leave be granted).  For example, should the 4^th to 6^th Defendants lose the substantive appeal and any further appeal against the Court of Appeal’s judgment dismissing the substantive appeal but ultimately succeed in the appeal against the Judgment, it is not entirely certain whether the Court of Final Appeal will then proceed to examine the impact of the Excluded New Evidence on the Judge’s findings of fact and come to a final determination (in the absence of any relevant decision by the Court of Appeal), or remit the matter to the Court of Appeal for fresh consideration taking into account the Excluded New Evidence.  In the latter scenario, the Court of Appeal’s further judgment could potentially generate another round of application(s) for leave to appeal and further appeal to the Court of Final Appeal.  Thus, the 4^th to 6^th Defendants’ proposed course of action could potentially lead to multiple further hearings and additional costs being incurred. 

11.  In our view, it is also relevant that there has already been very substantial delay in the resolution of the Plaintiff’s claim against the Defendants.  The relevant agreement between the 1^st Defendant and the Plaintiff for the transfer of 80% of the shares in Hawkins was (according to the Plaintiff) entered into in January 2003, and the present action was brought in 2012.  It is unnecessary to consider which part(ies) was/were responsible for the delay.  It is clear that there ought to be a final resolution of the claim as early as possible.

12.  Overall, we are of the view that the 4^th to 6^th Defendants’ Notice of Motion should first be disposed of before consideration of their substantive appeal. 

13.  The Summons is accordingly dismissed with costs to the Plaintiff, with certificate for 2 counsel.  We summarily assess the Plaintiff’s costs in the amount of HK$150,000.  This order as to costs is an order nisi, which will become absolute unless an application is made to vary the same within 14 days from the date of this judgment.

14.  Lastly, we give the following further directions to the parties regarding the 4^th to 6^th Defendants’ Notice of Motion dated 2 December 2022:

(1)  The 4^th to 6^th Defendants shall have leave to file and serve 2 sets of written submissions in support of the Notice of Motion (limited to 5 pages) within 14 days from the date of this order.

(2)  The Plaintiff shall have leave to file and serve 2 sets of written submissions in opposition to the Notice of Motion (limited to 5 pages) within 14 days thereafter.

(3)  The 4^th to 6^th Defendants shall have leave to file and serve 2 sets of written submissions in reply (limited to 3 pages) within 14 days thereafter.

(4)  No further document may be filed without leave of the court.

(5)  The Notice of Motion shall be determined on paper without an oral hearing.

CACV 173/2021 &

CACV 178/2021

(On appeal from HCA 1524/2012)

[2022] HKCA 1522

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 173 & 178 OF 2021

(ON APPEAL FROM HCA 1524/2012)

________________________

____________

________________

J U D G M E N T

________________

Hon Chow JA (giving the Judgment of the Court):

INTRODUCTION

1.  There are before the Court a number of applications by the 1^st to 3^rd Defendants and 4^th to 6^th Defendants for leave to adduce fresh evidence in support of their respective appeals (CACV 173/2021 and CACV 178/2021) against the judgment of Deputy High Court Judge Leung dated 19 March 2021.

2.  Having considered the papers including the submissions of Mr Eugene Fung, SC (together with him, Ms Andrea Yu and Ms Jennifer Fan) for the Plaintiff, Mr Douglas Lam, SC (together with him, Mr Chow Ho Ku) for the 1^st to 3^rd Defendants, and Mr Paul Shieh, SC (together with him, Ms Eva Sit, SC and Mr James Man) for the 4^th to 6^th Defendants, we consider it appropriate to determine the applications without a hearing on the basis of written submissions only pursuant to Order 59, rule 14A(1) of the Rules of the High Court, Cap 4A.

BASIC FACTS

3.  The Plaintiff (“Chen”)’s claim in this action is for the recovery of 80% of the shares (“the Shares”) in the 5^th Defendant (“Hawkins”), which Chen alleges the 1^st Defendant (“Wong”) agreed, subject to certain undertaking given by him, to sell and transfer to him in satisfaction of debts of more than RMB 21 million due from Wong and/or his companies to him.

4.  The transactions giving rise to the disputes between the parties are of some considerable complexity. For the purpose of disposing of the present applications, the following brief summary, taken largely from the written judgment of Deputy High Court Judge Leung dated 19 March 2021 (“the Judgment”), should suffice.

(i)  The parties

5.  Chen, a Mainland resident, was formerly a branch manager of Bank of China in Shunde province. Chen came to know Wong in about 1990 and had business dealings with him in that capacity.

6.  Wong was the beneficial owner of various companies including順德全順實業發展有限公司 (“Shunde Quanshun”) and Hawkins, a company incorporated in Hong Kong. His interest in Hawkins was held through 2 corporate vehicles, namely, (i) the 2^nd Defendant (“Line Power”), a Hong Kong company, and (ii) the 3^rd Defendant (“Trengei”), a BVI company, the shares of which were held by him and his personal assistant, Liu Yong (“Liu”).

7.  In early 1996, Wong embarked on a Sino-foreign joint venture business in the Mainland known as 遼陽順鋒鋼鐵有限公司(“Shunfeng”), which held iron ore mining rights in Liaoning. Wong’s 80% interest in Shunfeng was held through Hawkins. The remaining 20% interest in Shunfeng was held by the Mainland counter-parties to the joint venture.

8.  The 4^th Defendant (“Lead Success”), a Hong Kong company, and the 6^th Defendant (“Superfine”), a BVI company, are beneficially owned by Bao Zichen (“Bao”). Bao is also the ultimate beneficial owner of two other companies known as 本溪火連寨鐵礦選礦廠(“Huolianzhai”) and Everest Development Group LLC (“Everest”), with Yu Hai Yang (“Yu”) acting as his representative in relation to those companies. As at 12 September 2008, Yu also held 99% of the shares in Lead Success on behalf of Bao.

9.  Since 2004, Wong had been involved in a series of litigations[1] with Yeung Wing Keung (“Yeung”) and his associates (“Yeung’s camp”) over the control of Hawkins/Shunfeng, the details of which it is not necessary to recite in this judgment.

(ii)  The 2003 Agreement

10.  In late 1995, Chen resigned from Bank of China and joined Wong’s group as deputy general manager and deputy director.

11.  Since 1996, Chen had been assisting Wong to obtain financing from third parties for Wong’s businesses. Chen also personally lent money to Wong. According to Chen, all those loans were treated as due and owing by Wong to him personally, even though some of the loans were sourced from third parties and some of them were used for the purposes of Wong’s companies.

12.  According to Chen, at a meeting on 10 January 2003, he and Wong reached an agreement (“the 2003 Agreement”), whereby Wong agreed to settle indebtedness of over RMB 21 million (including a loan of RMB 700,000 advanced at that meeting) by transferring (inter alia) the Shares to him. The 2003 Agreement was evidenced by 3 key documents:

(1)  借欠款清單 (“the Debt Acknowledgement List”) - a typewritten document (or more accurately a document generated from a printer) which appeared to have been signed by Wong and bore the company chop of Shunfeng;

(2)  確認書 (“the 10/1/2003 Confirmation”) dated 10 January 2003 - a Chinese document written on the letterhead of Shunfeng which appeared to have been signed by Wong and bore the company chop of Shunfeng; and

(3)  承諾書 (“the Letter of Undertaking”) dated 10 January 2003 - a Chinese document written on the letterhead of 順德華群纤維絲束有限公司 (Shunde Vastqueen Fiber Tow Co Ltd) and signed by Chen.

(iii)  The transfer of Hawkins to Lead Success/Superfine

13.  Subsequent to the making of the 2003 Agreement, Wong entered into two further financing arrangements with other third parties, namely:

(1)  a quadri-partite agreement dated 14 September 2003, under which Huolianzhai agreed to lend RMB 20 million to Shunfeng - it was agreed that, in default of repayment, the debt would be satisfied by 50% of the shares in Hawkins; and

(2)  an agreement dated 20 April 2006 (“the April 2006 Agreement”), under which Everest agreed to provide a loan of HK$20 million to Wong to fund the legal costs of Wong’s ongoing litigations with Yeung and a further loan of HK$350 million to fund the operations of Shunfeng after control of Hawkins/Shunfeng had been restored to Wong - the agreement provided that Wong had the option of issuing a specified number of new shares in Hawkins (at the price of HK$1 per share) calculated by an agreed formula to Everest in repayment of the loans.

14.  Pursuant to the April 2006 Agreement, Yu was appointed as general manager, director and legal representative of Shunfeng, and his appointment was approved by the Liaoyang Administrative Bureau for Industry and Commerce (遼陽市工商行政管理局) (“Liaoyang ABIC”) in March 2007.

15.  By an agreement dated 29 August 2008 (“the August 2008 Agreement”) entered into between Wong, Liu, Line Power and Trengei (as transferor) and Lead Success (as transferee), the former agreed to transfer 100% of the shares in Hawkins to Lead Success for the consideration of RMB 130 million, part of which was to be settled by the outstanding indebtedness of RMB 10.2 million owed by Wong to Everest under the April 2006 Agreement.

16.  Pursuant to the August 2008 Agreement, the Hawkins shares were transferred to Lead Success on 12 September 2008. Some further representatives/nominees of Bao were appointed as directors of Shunfeng on 19 December 2008.

17.  The August 2008 Agreement was subsequently superseded and replaced by a further agreement dated 2 April 2011 (“the April 2011 Agreement”) entered into between Wong, Liu, Line Power and Trengei (as transferors) and Superfine (as transferee), under which the former agreed to transfer 100% of the shares in Hawkins to Superfine for the reduced consideration of RMB 115 million. For the purpose of this judgment, it is not necessary to set out the reasons which led to the making of the April 2011 Agreement or details of its subsequent performance. It suffices for us to mention out that the consideration payable by Superfine under the April 2011 Agreement was agreed by the parties thereto as having been fully paid by 27 October 2014.

(iv)  The Judgment

18.  On 23 August 2012, Chen commenced the present action in the High Court to enforce the 2003 Agreement and recover the Shares from the Defendants. The trial of the action took place in January and May 2019, and judgment was given on 19 March 2021.

19.  At the trial, Wong denied making the 2003 Agreement. He put forward a positive case of forgery in 2 senses: the signature was not his; but if it was, it was there already on a blank document pre-signed by him and the contents were added afterwards at a time unknown to him[2].

(1)  In respect of the Debt Acknowledgement List - Wong made no admission about the document. His alternative position was that even if he had signed the document, he did so without knowledge or consent. There was no allegation of forgery by Wong in respect of that document[3].

(2)  In respect of the 10/1/2003 Confirmation, Wong did not admit the signature on the document to be his signature. He also said that he had in the course of business pre-signed papers or letterheads of Shunfeng in blank for administrative convenience, and was not sure whether the signature on that document was a forgery or whether the 10/1/2003 Confirmation was written on one of those pre-signed blank papers[4]. In view of the fact that the two handwriting experts, Mr Radley and Ms Yang engaged by Wong and Chen respectively, both opined that the signature on the document was written by Wong and it was highly unlikely to be simulation, the substantial issue before the Judge was whether the 10/1/2003 Confirmation was written on a pre-signed letterhead of Shunfeng as alleged by Wong[5].

(3)  In respect of the Letter of Undertaking, as it was written and signed by Chen only, there was no question of forgery in either of the 2 senses alleged by Wong. The dispute was whether it came about together with the Debt Acknowledgement List and the 10/1/2003 Confirmation on 10 January 2003[6].

20.  After considering the oral testimony of the witnesses, including Chen but not Wong (who had become mentally incapacitated by the time of the trial[7]), expert evidence on handwriting and paper/ink dating, other contemporaneous and documentary evidence, including in particular two letters dated 6 September 2005 (“the 6/9/2005 Letter”) and 8 September 2005 (“the 8/9/2005 Letter”), as well as the inherent probabilities of the conflicting versions put forward by the parties, the Judge found the 2003 Agreement proved. For the present purpose, it is not necessary to set out the detailed analysis of the evidence by the Judge. At §135 of the Judgment, the Judge stated his conclusion as follows:

“I am satisfied that the background of indebtedness of Wong owed to Chen which gave rise to the Debt Acknowledgement List was factually true. Not only has Chen managed to establish on a balance of probabilities the indebtedness as a matter of fact, but he has also established that Wong did sign the Debt Acknowledgement List to admit the indebtedness on 10 January 2003. I am also satisfied that Wong did sign the 10/1/2003 Confirmation on that day, and I reject the contention that it came about by way of addition of the text to what Wong has pre-signed (or pre-chopped with the company stamp) in blank as alleged. As the Letter of Undertaking came about as part of the package on the same occasion, I too find that this document came to be signed together with the other two documents on 10 January 2003. It follows that the 2003 Agreement is proved.”

21.  The Judge next considered and rejected a number of specific defences raised by the 1^st to 3^rd Defendants, namely: (i) past consideration[8], (ii) incomplete agreement[9], (iii) uncertainty[10], (iv) limitation[11], and (v) laches[12].

22.  The Judge found that Lead Success and Superfine could not take the Shares free of Chen’s interest in them by reason of their notice of Chen’s interest by late 2005[13], or late 2009[14], or March 2011[15], and in any event prior to the full payment of the agreed consideration for the Shares in October 2014[16], and also because they did not act in good faith[17]. The Judge further found that Lead Success and Superfine were liable to Chen as constructive trustees on the basis of “knowing receipt” of the Shares[18].

23.  In the result, the Judge granted declaratory relief in respect of the Shares in favour of Chen, and made an order that, in default of the transfer back to Chen of the Shares, Wong, Lead Success and Superfine shall jointly and severally be liable to pay to Chen the following amount: RMB 92 million (being the value of 80% of the shares in Hawkins as assessed by the Judge - RMB 115 million x 80%) less the amount of RMB 60 million pursuant to the Letter of Undertaking given by Chen plus interest on RMB 21,925,140 calculated at the prevailing official interest rates in the PRC from 11 January 2003 until full payment.

THE NOTICES OF APPEAL

24.  Both the 1^st to 3^rd Defendants and 4^th to 5^th Defendants have lodged appeals against the Judgment.

25.  In the notice of appeal of the 1^st to 3^rd Defendants dated 16 April 2021, 2 grounds of appeal are raised:

(1)  The Judge erred in holding that the 2003 Agreement did not fail for lack of valid consideration from Chen.

(2)  There was no or insufficient evidence upon which the Judge could find that the market value of the Hawkins shares was RMB 115 million for the purpose of assessment of damages.

26.  Attached to the Reply Skeleton Argument of the 1^st to 3^rd Defendants dated 16 August 2022 is a draft Supplementary Notice of Appeal (“D1-D3’ draft Supplementary Notice of Appeal”). It contains 9 paragraphs, and raises various grounds of appeal against findings of fact made by the Judge which 1^st to 3^rd Defendants intend to pursue based on new evidence to be admitted (see §30 below).

27.  In the notice of appeal of the 4^th to 6^th Defendants dated 16 April 2021, the following grounds of appeal are raised:

Appeal on fact

(1)  The Judge erred in finding that the 6/9/2005 Letter was authentic, and in treating it as proof, or giving weight to it as evidence, of its contents (§§1 and 2).

(2)  The Judge erred in relying on the 6/9/92005 Letter to make further adverse findings against the 4^th and 6^th Defendants (§3).

(3)  The Judge erred in failing to find that the transfers of the Shares to Lead Success and Superfine were unrelated to and without knowledge of Chen’s interest in the Shares (§4).

Appeal on law

(4)  The Judge erred in holding that the relevant time for considering the issues of (i) bona fides and (ii) absence of notice was when full payment was made and not when legal estate was acquired (§5).

Remedies

(5)  The Judge erred in failing to have regard or sufficient regard to the investment and improvement in Shunfeng since about 2007 by Bao/Yu’s camp, and it was inequitable to require the 4^th to 6^th Defendants to make restitution by transferring the Shares to Chen (§6).

(6)  The Judge ought to have afforded the 4^th to 6^th Defendants the right to elect to “pay off Chen’s interest subject to any set-off” (§7).

THE PRESENT APPLICATIONS

(i)  The 4^th to 6^th Defendants’ applications

28.  By a summons dated 7 December 2021 (“the December 2021 Summons”), the 4^th to 6^th Defendant applied for leave to adduce 15 items of new evidence for the purpose of their appeal in CACV 178/2021. The 4^th to 6^th Defendants subsequently issued three further summonses dated 21 January 2022, 31 January 2022 and 23 February 2022 (“the February 2022 Summons”) respectively seeking leave to amend the December 2021 Summons. The amendments sought by the summonses of 21 and 31 January 2022 are effectively superseded by the amendments sought by the February 2022 Summons. The parties agree that no order is required to be made in respect of the summonses of 21 and 31 January 2022.

29.  The December 2021 Summons as proposed to be amended by the February 2022 Summons now relates to 23 items of proposed new evidence (“Item 1” to “Item 23” respectively) as set out in an Amended Schedule.

(ii)  The 1^st to 3^rd Defendants’ application

30.  By a summons dated 15 July 2022, the 1^st to 3^rd Defendants applied for leave to adduce (i) the same Items 1 to 23 (referred to as Items 2(1) to (23) in the Schedule to that summons), and (ii) Exhibit “ZRW-32” to the 4^th Affirmation of Zhang Rongwen (“Zhang”)[19] filed on 27 June 2022, as fresh evidence for the purpose of their appeal in CACV 173/2021.

APPLICABLE PRINCIPLES

31.  It is not in dispute that the three conditions in Ladd v Marshall, namely, that the proposed new evidence:

(1)  could not have been obtained at the trial with reasonable diligence (“Condition 1”);

(2)  must be such that, if given, would probably have an important influence on the result of the case, though it need not be decisive (“Condition 2”); and

(3)  is apparently credible though it need not be incontrovertible (“Condition 3”),

are, in principle, applicable to the current applications for admission of new evidence (save in respect of Item 23 and Exhibit “ZRW-32”).

32.  Nevertheless, Mr Shieh argues that where it can be shown that there is a reasonable prospect of success that fraud was practised in the proceedings below, the application of the 3 conditions would be modified. According to Mr Shieh:

(1)  “Fraud” in this context means “conscious and deliberate dishonesty in relation to the relevant evidence given”, including where the judgment is obtained by perjured evidence, not fraud in the underlying dispute.

(2)  For Condition 1, the criterion of reasonable diligence can be relaxed.

(3)  For Condition 2, the fresh evidence must be material in that it has to show that the previous relevant evidence, action, statement or concealment was an operative cause of the court’s decision to give judgment in the way it did, or that it would have entirely changed the way in which the court approached and came to its decision; and thus the conscious and deliberate dishonesty must be causative of the impugned judgment being obtained in the terms it was. “Materiality” of the fresh evidence is to be assessed by reference to its impact on the evidence supporting the original decision, not by reference to its impact on what decision might be made if the claim were to be retried on honest evidence. That said, that fresh evidence does not have to be of decisive influence or of such character that it would have formed a determining factor in the result.

In support of these submissions, Mr Shieh relies on the judgment of the Court of Appeal in Lu Yongliang v Bank of China Ltd, Dongguan Branch[2020] HKCA 1089, at §§21-25, and the judgment of the UK Supreme Court in Takhar v Gracefield Dev Ltd [2020] AC 450.

33.  On the other hand, Mr Fung submits that before the court would consider relaxing the reasonable diligence criterion for the purpose of Condition 1, “clear evidence of a judgment being obtained by fraud” must be shown (Lu Yongliang, at §§12-14), and “where fresh evidence is adduced in the Court of Appeal tending to show that the judge at first instance was deliberately misled, the court will only allow the appeal and order a retrial where the fraud is either admitted or the evidence of it is incontrovertible” and “[i]n any other case, the issue of fraud must be determined before the judgment of the court below can be set aside” (Noble v Owens [2010] 1 WLR 2491, at §27).

34.  We consider the relevant principles for the admission of fresh evidence in appeal in fraud cases to be as follows:

(1)  As held by Lam VP (as he then was) in Lu Yongliang, a distinction should be drawn between (i) a case of judgment obtained by fraud, and (ii) a case where an allegation of fraud was relied upon in the substantive underlying merits of the dispute (§12).

(2)  In the former situation, ie where a judgment was obtained by fraud, the party seeking to impeach the judgment obtained may commence a fresh action to set it aside. “An action to set aside an earlier judgment for fraud is not a procedural application but a cause of action … an original bill differed from a bill of review on the basis of further evidence, which was essentially procedural and did require leave” (Takhar v Gracefield Developments Ltd [2020] AC 450, at §60 per Lord Sumption). In an action to set aside a judgment on the ground that the judgment was obtained by fraud, the court is not concerned with the exercise of the power of appeal or review in the same action. It is not a precondition that the unsuccessful party has exercised reasonable diligence to discover the fraud in the earlier proceedings. The reasonable diligence requirement is a condition to be satisfied only where leave to adduce new evidence on appeal is sought (Lu Yongliang, at §§15-19; Clone Pty Ltd v Players Pty Ltd (2018) 353 ALR 24, at §64).

(3)  In the latter situation, ie where fraud in the substantive underlying merits of the dispute or in the course of the events leading up to the dispute is relied upon, the three Ladd v Marshall Conditions should be applied in its full vigour for the admission of fresh evidence (Lu Yongliang, at §§13-14).

(4)  The possible relaxation of the reasonable diligence requirement under Condition 1 for the admission of fresh evidence in fraud cases is confined to the situation where an applicant can demonstrate a “reasonable prospect of success” that the judgment below was obtained by fraud in accordance with the principles summarized by Aikens LJ in Royal Bank of Scotland plc v Highland Financial Partners [2013] 1 CLC 596 (at §106), as opposed to fraud in relation to the general underlying merits of the case (Lu Yongliang, at §§14, 23 & 25).

(5)  The principles summarized by Aikens LJ in Royal Bank of Scotland were reiterated by Kwan VP in Mayer Corporation Development International Ltd v Alliance Financial Intelligence Ltd[2019] HKCA 777, at §72 -

(a)  there must be “conscious and deliberate dishonesty” in relation to the relevant evidence given;

(b)  the fresh evidence must be “material”, in that it demonstrates that the previous relevant evidence, action, statement or concealment was an operative cause of the court’s decision to give judgment in the way it did, or that it would have entirely changed the way in which the first court approached and came to its decision; and thus the conscious and deliberate dishonesty must be causative of the impugned judgment being obtained in the terms it was; and

(c)  the question of “materiality” of the fresh evidence is to be assessed by reference to its impact on the evidence supporting the original decision, not by reference to its impact on what decision might be made if the claim were to be retried on honest evidence.

(6)  Even in such a situation, Conditions 2 and 3 must still be satisfied for the admission of the proposed new evidence (Lu Yongliang, at §§71-72 & 79). That this is so was made plain by the Court of Appeal refusing to grant leave to appeal in Lu Yongliang[2021] HKCA 1047, at §10.

DISCUSSION

(i)  The Receipt in Item 10 and Items 16-22

35.  As earlier mentioned, in finding the 2003 Agreement proved, the Judge relied on, inter alia, the 6/9/2005 Letter and 8/9/2005 Letter:

(1)  The 6/9/2005 Letter was apparently sent from Yu to Wong, in which Yu referred to the 10/1/2003 Confirmation and the Letter of Undertaking. Yu said in the letter that the two documents showed that Wong had agreed on 10 January 2003 to transfer, inter alia, 80% of the shares in Hawkins to Chen, and asked Wong to explain how, in those circumstances, Huolianzhai could recover the outstanding debt or use shares in Hawkins in satisfaction of the outstanding debt.

(2)  The 8/9/2005 Letter was apparently Wong’s reply to Yu, in which Wong “expressed his confidence that Chen would not seek to enforce the 10/1/2003 Confirmation without his prior notice”, referred to “the legal advice of [Messrs C L Chow & Macksion Chan] that Huolianzhai’s interest would be secure so long as it was a bona fide purchaser of Hawkins’ shares for value without notice”, and stated that “[e]ven assuming Chen would take legal action, the Hawkins’ shares could be transferred to another third party company before transferring to Huolianzhai”[20].

(3)  The Judge considered that the 8/9/2005 Letter amounted to an “admission” by Wong that he had signed the 10/1/2003 Confirmation[21], and was also evidence that Lead Success and Superfine had notice of Chen’s interests in the Shares in September 2005[22].

36.  As for the provenance of those letters, according to Chen, he unexpectedly received them by mail to his home address on 18 July 2011. The evidence before the Judge suggested that they were sent by Wong to Chen[23]. It was not, however, clear why Wong would send the letters to Chen in 2011, and the Judge did not make any definitive finding on that issue[24]. On the other hand, Yu denied having written the 6/9/2005 Letter or seen it until it was revealed by Chen for the purpose of the litigation, and Wong also denied having prepared and sent out the 8/9/2005 Letter.

37.  The 4^th to 6^th Defendants now seek to adduce a receipt in Item 10 (“the Receipt”) and Items 16-22 as fresh evidence to show that the 6/9/2005 Letter and the 8/9/2005 Letter were not authentic, and thus when Lead Success acquired the Shares from Wong in 2008, it did so in good faith without notice of Chen’s prior equity:

(1)  The Receipt is dated 15 June 2001, and purports to be a receipt by Chen from Kang Zhuang (“Kang”)[25] of, inter alia, 5 blank pieces of paper with letterhead, pre-signed and pre-stamped by Wong.

(2)  Item 16 is an invoice issued by a chop-maker called 維盾 to Shunfeng dated 15 July 2004 (“the July 2004 Invoice”) for the sum of RMB 135 for 4 company chops.

(3)  Item 17 are documents retrieved from a file kept by 維盾 upon inquiries made by Zhang with the current management of 維盾showing that Shunfeng applied for 4 new company chops to be made on 29 June 2004 and its old company chops were destroyed on 15 July 2004.

(4)  Item 18 is a legal opinion from Weng Di of Hong Li Law Office of Liaoning dated 21 January 2022 on the applicable PRC laws/regulations requiring a company which has changed its chop to return the old chop to the chop-maker for destruction.

(5)  Item 19 is a record of interview dated 23 December 2021 with a person called Yang Zhu (楊竹), who was the accountant of Shunfeng during the period from 1996 to 2005 and handled the change of Shunfeng’s company chops in 2004.

(6)  Item 20 and Item 22 (financial statements) purport to be some Shunfeng documents showing the use of the old and new company chops before and after July 2004.

(7)  Item 21 consists of documents obtained from Agricultural Bank of China showing that Shunfeng applied for change of company chops on 15 July 2004.

(8)  Item 22 (letters dated 7 and 8 September 2005) are letters exchanged between Shunfeng and Liaoyang ABIC retrieved from Shunfeng’s file.

38.  Mr Shieh argues that Items 16-22 show that on 29 June 2004, Shunfeng applied to have 4 new chops made, and on 15 July 2004, the new chops were collected and the old chops were destroyed, and argues the fact that Shunfeng’s old (destroyed) chop was still appended to the 8/9/2005 Letter strongly suggests that it was a forgery. In support of this argument, Mr Shieh refers to the fact that after July 2004, the new chop of Shunfeng was consistently applied in various documents of Shunfeng, and that another letter of Shunfeng also dated 8 September 2005 (“the 2^nd 8/9/2005 Letter”) in Item 22 bore the company’s new chop. Mr Shieh further argues that the Receipt supports the Defendants’ case that Wong had the practice of pre-signing and pre-stamping blank letter papers, and directly contradicts Chen’s evidence at the trial that it was not possible for Wong to pre-sign and pre-stamp blank papers with letterhead of his companies, and that he never received such papers from Wong.

39.  The 4^th to 6^th Defendants say the documents could not have been obtained for use at the trial with reasonable diligence because:

(1)  Yeung’s camp previously took away Shunfeng’s documents (up to 2005) in December 2006 when Yeung was still in control of Hawkins/Shunfeng;

(2)  the Shunfeng documents were later seized by the Public Security Bureau of Dengta City (“the Dengta City PSB”) when investigating Wong’s potential criminal conduct upon the complaint of Yeung’s camp;

(3)  the seized documents could not be returned to Shunfeng until the completion of the investigation against Wong;

(4)  it was only after Wong’s death on 29 November 2019 (after the conclusion of the trial on 28 May 2019) and after the Judgment was handed down on 19 March 2021 that the 4^th to 6^th Defendants requested the Dengta City PSB to return the Shunfeng documents;

(5)  the Shunfeng documents were eventually returned in 7 boxes on 13 April 2021, including Items 1-16 and 20, and the financial statements of Shunfeng in Item 22;

(6)  it was from those 7 boxes of documents that the 4^th to 6^th Defendants found the evidence concerning the destruction of the old chops of Shunfeng in 2004, which “led to further inquiry and discovery or obtaining of further evidence relating to the change of the chop (including #17-19, 21 and [the 2^nd 8/9/2005 Letter] under #22)”[26].

40.  Mr Lam’s submissions on behalf of the 1^st to 3^rd Defendants in respect of the Receipt and Items 16-20 are to the same effect.

Condition 1

41.  We are not satisfied that the Defendants have discharged the burden of showing that the proposed new evidence could not have been obtained for use at the trial with reasonable diligence.

(1)  The Defendants have failed to produce credible or satisfactory evidence to show what documents were actually seized/detained by the PSB, or returned to Shunfeng, or the dates on which the documents were seized/detained or returned. Significantly, there is no evidence emanating from the Dengta City PSB, or independent evidence, identifying the documents actually seized/detained or returned, or the dates of the alleged seizure/detention or return of the documents (save that in a handwritten note apparently made by 燈塔市公安局經偵大隊 dated 11 May 2011[27], it was mentioned that the Dengta City PSB had detained some (unparticularised) pre-2005 accounting records of Shunfeng in connection with the investigation of suspected criminal conduct on the part of Wong). In the 1^st Affirmation of Zhang dated 25 November 2021, he states that the Dengta City PSB failed to provide any appropriate or formal records of the documents returned by the Dengta City PSB, or the process concerning the return of documents despite request, contrary to applicable regulations (上述的當局歸還文件及資料的過程竟然令人沮喪地沒有記錄。儘管我方提出過要求，國內當局仍然沒有為此類活動提供合適及正式記錄，這是不符合常規的). Even if the Dengta City PSB failed or refused to provide documentary proof of the documents which were actually seized/detained, or returned to Shunfeng, or the dates on which the documents were seized/detained or returned, the relevant correspondence with the Dengta City PSB (including the request made to the Dengta City PSB for the release of Shunfeng’s documents and for relevant records concerning the documents returned in April 2021, and the Dengta City PSB’s replies) could have been produced, unless the whole process relating to the request for supporting documentary evidence was conducted by way of oral communications only. Zhang has not suggested that this was the situation, which we consider to be an unlikely scenario in itself.

(2)  Wong died on 29 November 2019. Zhang said he learnt about Wong’s death from a letter sent by the 1^st to 3^rd Defendants’ solicitors (C L Chow & Macksion Chan) to the Court and copied to the 4^th to 6^th Defendants’ former solicitors dated 30 December 2019. He did not however take any steps to retrieve any documents seized by the Dengta PSB until after judgment was handed down on 19 March 2021 and the Defendants had lost the case. On his evidence, the Dengta PSB very swiftly (on 13 April 2021) released the documents after being informed of Wong’s death. The Defendants could reasonably have asked the Dengta PSB for the release of the documents soon after the passing away of Wong. If the Defendants had taken steps earlier, they would presumably have got the documents earlier, and could have asked the Judge to reopen the hearing based on the documents obtained.

42.  There is an additional reason why we do not consider that the Defendants have satisfied the reasonable diligence requirement in relation to the proposed evidence that Shunfeng changed its company chops in July 2004:

(1)  According to the 2^nd affirmation of Zhang filed on 17 January 2022, what sparked off the inquiry and led to the discovery of the proposed new evidence concerning the change and use of the 4 new company chops of Shunfeng was the July 2004 Invoice (Item 16).

(2)  Assuming for the sake of argument that the July 2004 Invoice was indeed not in Shunfeng’s possession between December 2006 and April 2021 and was only returned to Shunfeng in April 2021 as alleged, we consider that the critical information that the 1^st to 3^rd Defendants required which would likely have led to the discovery of the proposed new evidence regarding the change of Shunfeng’s company chops in July 2004 was not the July 2004 Invoice, but the fact that Shunfeng applied to change its company’s chops in June 2004 and received the new chops in July 2004. At that time, Wong was still the Legal Representative, and in control, of Shunfeng[28]. Bearing in mind the importance of the company chops in the context of a PRC company[29], it can reasonably be assumed that Shunfeng’s application for the new company chops was made with the knowledge and consent of Wong (and there is no evidence which suggests the contrary). There was a clear visual difference between the old and new company chops of Shunfeng (as can be seen from the pictures at §9(3) of Mr Shieh’s Skeleton Argument dated 29 June 2022). It would have been obvious to Wong that the old company chop of Shunfeng was still appended to the 8/9/2005 Letter notwithstanding the fact that Shunfeng had, allegedly, changed its chops in July 2004.

(3)  Even without the July 2004 Invoice, the 1^st to 3^rd Defendants could have made appropriate inquires with 維盾 concerning the change of Shunfeng’s company chops in July 2004 which would have led them to the other documents not under detention by the Dengta City PSB mentioned above, ie Items 17, 18, 19 and 21 and the letters in Item 22 (including the 2^nd 8/9/2005 Letter). While it is appreciated that Wong had become mentally incapacitated in about 2013[30], there is no suggestion that there was no one else in Wong’s camp, including Liu (his personal assistant who gave evidence for the 1^st to 3^rd Defendants at the trial), who had knowledge about the change of Shunfeng’s company chops in 2004, or the visual differences between the old and new chops.

(4)  In so far as the 4^th to 6^th Defendants are concerned, Bao’s nominees (including Yu) have been acting as Legal Representative, general manager and directors of Shunfeng since no later than March 2007. They would have possession and control of Shunfeng’s current company chops and documents bearing Shunfeng’s company chops dated both before and after July 2004 (including the 2^nd 8/9/2005 Letter in Item 22). In view of the fact that it had all along been the 4^th to 6^th Defendants’ contention that the 8/9/2005 Letter was a forgery[31], it can reasonably be assumed that they would have carefully examined the 8/9/2005 Letter and noticed, or ought to have noticed, the obvious difference between (i) the company chop appearing on that document, and (ii) the company chops currently in use by Shunfeng and those appearing in other contemporaneous documents of Shunfeng (including the 2^nd 8/9/2005 Letter which was in Shunfeng’s possession all along and not seized or detained by the Dengta City PSB). Reasonable inquiries, including inquiries with Yeung’s camp, would, or would likely, have revealed the fact that Shunfeng changed its company chops in July 2004 and sparked off the same inquiry leading to the discovery of Items 17, 18, 19 and 21 and the financial statements in Item 22 now proposed to be adduced as new evidence.

Condition 2

43.  We are also not satisfied that Condition 2 is satisfied in so far as the Receipt is concerned. The relevance of the Receipt to the authenticity of the disputed documents, in particular the 10/1/2003 Confirmation and the 8/9/2005 Letter, is at best tangential. It is not mentioned in the Receipt which company’s letterhead the 5 blank pieces of paper related to. The Receipt plainly cannot constitute direct evidence that the aforesaid disputed documents were forgeries as alleged by the Defendants. As pointed out by the Judge at §71 of the Judgment, even assuming that Wong had the habit of pre-signing letterheads in blank, that of itself would not prove that the 10/1/2003 Confirmation was compiled from such pre-signed letterhead. While the Receipt could be used to challenge the credibility of Chen, there was other evidence accepted by the Judge which supported his conclusion that the disputed documents were authentic:

(1)  In respect of the 10/1/2003 Confirmation - (i) the direct evidence of Zheng Zhiguang (“Zheng”, the nephew of Wong who worked as his driver and assistant in the Mainland during the period between 1996 and 2008), who saw the signing of the document by Wong at the meeting on 10 January 2003[32], and (ii) the Work Record of Chen[33].

(2)  In respect of the 8/9/2005 Letter - (i) the direct evidence of Zheng, who said that he handled the sending out of the 8/9/2005 Letter[34], and (ii) the discovery by Wong’s own handwriting expert (Mr Radley) of the handwriting impression on the 8/9/2005 Letter left by the handwritten instruction of Wong for documents to be mailed to Chen at his home address together with Wong’s signature and the date of 30 June 2011[35]. Pausing here, it may also be noted that it was Mr Radley’s evidence, with whom Chen’s handwriting expert (Ms Yang) agreed, that there was strong evidence to support that the signature on the 8/9/2005 Letter was appended by Wong[36].

(3)  We do not consider that the Receipt, if admitted, would probably have an important influence on the result of the case.

44.  Finally, we do not consider that the possible relaxation of the reasonable diligence requirement should be applied when considering whether the Receipt and Items 16-22 should be admitted as new evidence. The new documents, taken at their highest, do not show any dishonest conduct in the trial on the part of Chen. He received the documents from an anonymous mail, as supported by the hidden impression discovered by Mr Radley. Even if the 8/9/2005 Letter was a forgery, there does not seem to be anything to show that Chen should know it was a forgery. Zheng was a mere witness, not a party. To set aside a judgment for fraud it is not enough to show that a witness committed perjury. It is necessary to show that the judgment was obtained by fraud and that the fraud was that of a party to the action or was at least suborned by or knowingly relied upon by that party: Dale v Banga [2021] EWCA Civ 240, at §27. We are not satisfied that the proposed new evidence is sufficient to show a “reasonable prospect of success” that the Judgment was obtained by fraud for which Chen should be held responsible as required for the possible relaxation of the reasonable diligence requirement.

45.  In all, we refuse to exercise our discretion to admit the Receipt and Items 16-22 as new evidence in the present appeals.

(ii)  Item 23

46.  Item 23 consists of, inter alia:

(1)  a purported聲明書dated 3 February 2022 (“the 2022 Chen Declaration”), in which Chen stated that:

(a)  he was currently under restraint at home (監視居住) because he was suspected of having committed offence(s) of fraud;

(b)  he had forged various documents used in legal proceedings in Hong Kong, including the 10/1/2003 Confirmation, the Debt Acknowledgement List, the Letter of Undertaking, the 6/9/2005 Letter and the 8/9/2005 Letter;

(c)  he wished to withdraw the proceedings in Hong Kong; and

(d)  he had asked his appointed lawyer in the PRC, Cheng Rui (“Cheng”), to send his declaration to the victims’ lawyers and his own lawyers in Hong Kong (Mak Ka Ping of Adrian Yeung & Cheng); and

(2)  an appointment letter signed by Chen dated 4 February 2022, whereby Chen appointed Cheng as his lawyer in relation to his fraud case (“the Letter of Appointment”).

47.  According to Zhang, he received copies of the 2022 Chen Declaration and the Letter of Appointment from Cheng on 4 February 2022. Mr Yeung Wing On and Ms Mak Ka Ping Judy have also confirmed that they received copies of those documents from Cheng on 4 February 2002.

48.  As the matters evidenced by the documents in Item 23 came into existence after the trial, the Ladd v Marshall conditions do not apply. The application is governed by the words in parenthesis in Order 59, rule 10(2) of the Rules of the High Court:

“The Court of Appeal shall have power to receive further evidence on questions of fact, either by oral examination in court, by affidavit, or by deposition taken before an examiner, but no such further evidence (other than evidence as to matters which have occurred after the date of the trial or hearing) shall be admitted except on special grounds.”

49.  The applicable principles for the admission of evidence of matters arising after the trial are well settled. The Court of Appeal has a wide discretion to admit new evidence with regard to matters which have occurred after the hearing. However, this discretion is to be exercised sparingly with due regard to the need for finality in litigation. Whilst it is not possible to produce an exhaustive list of relevant considerations, among them are the extent to which the fresh evidence may affect the outcome, the time element and the conduct of the parties. The evidence should be admitted where it would be an affront to one’s sense of fairness not to admit it. And the new evidence must substantially affect a basic assumption made at the trial: the matter is one of degree. See Re China Fishery Group Ltd[2020] HKCA 169 at §26; China Medical Technologies Inc v Bi Xiao Qiong[2020] HKCA 541 at §22; Hong Kong Civil Procedure 2002, Vol 1, §59/10/13.

50.  Mr Shieh submits that the admission by Chen of his forgeries is clear and unambiguous, and the 2022 Chen Declaration should plainly be admitted for the purpose of the 4^th to 6^th Defendants’ appeal. Mr Lam submits that Chen’s admission is obviously hugely important and changes the entire complexion of the case, and everything in his clients’ appeal must now be viewed through the prism of this admission of fraud by Chen.

51.  On the other hand, Mr Fung has argued with considerable force that the provenance of the 2022 Chen Declaration is highly questionable, and it would be unsafe for the Court to treat Chen as having admitted to forging evidence used at the trial. In particular, Mr Fung points out that right up to the date before he was detained in the Mainland (22 January 2022), Chen had been instructing his lawyers in Hong Kong to fully enforce the Judgment and oppose the 4^th to 6^th Defendants’ applications for stay of execution and admission of new evidence, as well as the substantive appeal. However, on 23 January 2022, Chen was apparently taken away in Shunde and brought to Liaoning by the Public Security Bureau of Benxi City, Liaoning, upon a complaint of fraud laid by Bao (who, on his own account, has strong business and political influence in Liaoning[37]). Shortly afterwards, Chen made the alleged admission of forgeries.

52.  There are obvious questions to be asked as to whether Chen in fact made the alleged admission, and whether such admission (if made) was voluntary. There are also suspicious circumstances concerning the purported appointment of Cheng as Chen’s lawyer in the PRC. These matters are fully set out in the affirmations of Yeung Wing On and Mak Ka Ping Judy filed on 26 April 2022, and §§25-32 of the Plaintiff’s Skeleton Submissions dated 2 August 2022. On the other hand, it is submitted on behalf of the 1^st to 3^rd Defendants that Chen’s change of position is not incredible because he had an incentive to mitigate his potential criminal liability. In our view, these matters cannot be resolved in the present applications for admission of new evidence, and require further consideration with the assistance of full arguments by the parties. In view of the potential significance of the proposed new evidence, we consider that leave should be granted to the Defendants to rely on the documents in Item 23 for the purpose of their appeals, reserving the question of what weight (if any) ought to be accorded to them for consideration at the substantive hearing of the appeals.

(iii)  Items 1-15 (save for the Receipt in Item 10)

53.  In the Skeleton Argument of the 4^th to 6^th Defendants dated 29 June 2022, Mr Shieh makes submissions in respect of (i) the Receipt in Item 10, (ii) Items 16-22 and (iii) Item 23 only, and invited the Court to grant leave to the 4^th to 6^th Defendants to adduce those items of new evidence. Mr Fung submits that the 4^th to 6^th Defendants should be taken to have abandoned reliance on the remaining items of proposed new evidence, ie Items 1-15 (save for the Receipt in Item 10). Mr Shieh has not responded to this submission in the Reply Submissions of the 4^th to 6^th Defendants dated 16 August 2022.

54.  Items 1-15 (save for the Receipt in Item 10) consist of various payment records alleged to have been returned by the Dengta City PSB on 13 April 2021. The 1^st to 3^rd Defendants propose to rely on:

(1)  Items 1 to 12 to challenge the Judge’s findings regarding the underlying debts owed by Wong to Chen as particularised in the Debt Acknowledgement List[38];

(2)  Items 13 to 14 to show that Wong and Zheng went to Guangzhou, instead of Heilongjiong, on 11 January 2003, with a view to challenging Chen’s evidence that Wong “requested a further loan of RMB 700,000 from [Chen] to enable [Wong] to attend a meeting with his lenders to be held in Heilongjiang, Harbin on 11 January 2003” to enable the unfreezing a loan of US$300 million[39]; and

(3)  Item 15 to show that Kang went on a trip to Beijing on 14 June 2001. This item is relevant to the issue concerning the receipt by Chen of 5 pieces of blank letterheads signed by Wong, which we have already dealt with above in our discussion relating to the Receipt.

55.  For the reasons mentioned in §41 above, we are not satisfied that the 1^st to 3^rd Defendants have discharged the burden of showing that Items 1-15 could not have been obtained for use at the trial with reasonable diligence under Condition 1.

56.  In any event, we do not consider that Condition 2 is satisfied in respect of the evidence contained in those items.

(1)  In so far as Items 1 to 12 (said to be relevant to the underlying debts owed by Wong to Chen) are concerned, the critical consideration, in our view, is the authenticity of the Debt Acknowledgement List and 10/1/2003 Confirmation. If those documents were authentic, they constituted a clear and unequivocal acknowledgement of the debts owed by Wong to Chen. Further, the Judge did not merely rely on the Debt Acknowledgement List and the 10/1/2003 Confirmation to find the existence of the underlying debts. His finding was also based on other contemporaneous documents evidencing the debts[40]. We do not see that the evidence contained in the payment records, which relate to only a few (5 out of 18) and relatively small items of travelling expenses/salaries in the Debt Acknowledgement List, if admitted, would probably have an important influence on the Judge’s finding as regards the underlying debts owed by Wong to Chen.

(2)  In so far as Items 13-14 (said to be relevant to Wong and Zheng’s trip to Guangzhou on 11 January 2003) are concerned, it is clear from Chen’s witness statement that his understanding of Wong’s intended trip to Heilongjiang was based on what Wong had told him. Wong’s precise itinerary was not something that Chen was privy to. Whether Wong actually went to Heilongjiang on 11 January 2003, or on some other day, was a matter beyond Chen’s knowledge. Even if it can be proved as a fact that Wong and Zheng went to Guangzhou instead of Heilongjiang on 11 January 2003, we do not consider that this fact would probably have an important influence on the Judge’s findings regarding the meeting between Wong and Chen on 10 January 2003.

57.  In all, we are not prepared to to exercise our discretion to admit Items 1 to 15 as new evidence in the present appeals.

(iv)  Exhibit “ZRW-32”

58.  Tian Junzhe (“Tian”) was the person from whom Chen allegedly borrowed RMB 700,000 for the purpose of lending the same to Wong at the meeting on 10 January 2003 (see §12 above). Tian made a witness statement in 2014 and was named as a witness for Chen at the trial, but did not attend court to give evidence. Accordingly, his witness statement was expunged and did not form part of the evidence considered by the Judge[41].

59.  According to Zhang, the 4^th to 6^th Defendants’ lawyers in the PRC made contact with Tian on 26 January 2022 and managed to interview him in an office of the Beijing Public Security Bureau (北京市公安局東城分局東花市派出所) on the same day. During the interview, Tian apparently told the 4^th to 6^th Defendants’ lawyers that: (i) the contents of his witness statement made in 2014 were false and were manufactured by Chen, (ii) he never lent RMB 700,000 to Chen and in fact did not have RMB 700,000 to lend to him at that time, (iii) he signed the witness statement upon the request of his friend (Chen), (iv) the witness statement that he signed consisted of only 2-3 pages but the one submitted by Chen to the Hong Kong court was 6 pages long, and (v) he very much regretted having made the witness statement for Chen.

60.  The interview with Tian was recorded in a DVD-Rom which, together with (inter alia) a transcript of the interview (“the Tian Transcript”) and copies of some mobile messages exchanged between the 4^th to 6^th Defendants’ lawyer and Tian, form part of Exhibit “ZRW-32” now proposed to be adduced as new evidence by the 1^st to 3^rd Defendants in support of their appeal.

61.  Like Item 23, the proposed new evidence in Exhibit “ZRW-32” came into existence after the trial. Thus, the Ladd v Marshall conditions do not apply to the admission of Item 23 as new evidence. However, different considerations apply to the admission of Item 23 and Exhibit “ZRW-32”:

(1)  Chen was a key witness at the trial. His evidence was crucial to the conclusions reached by the Judge in the Judgment. On the other hand, Tian did not give evidence, and his witness statement was expunged by the Judge. Tian’s evidence was not relied upon by the Judge and formed no part of the Judge’s reasoning in the Judgment.

(2)  According to the Tian Transcript, he signed a witness statement for use in legal proceedings in Hong Kong merely upon the request of a friend. If, as claimed by Tian, he signed the witness statement without reading it, it would mean that he was prepared to sign a legal document without ascertaining its contents and thus without any positive belief as to the truth of the contents.

(3)  Further, Tian stated (at p14 of the Tian Transcript) that he was not prepared to give evidence in court to support what he had said orally. He will thus not be available for cross examination by Chen’s lawyers in Hong Kong proceedings.

62.  In our view, Tian’s credibility would obviously be in issue, and no weight could be given to his out-of-court interview, the veracity of which cannot be tested by cross examination. Accordingly, we decline to exercise our discretion to admit Exhibit “ZRW-32” as new evidence in the 1^st to 3^rd Defendants’ appeal.

63.  In passing, we note that the 4^th to 6^th Defendants have not applied for the admission of Exhibit “ZRW-32” as new evidence in support of their appeal. Even if they had made such an application, we would have rejected it for the same reasons.

DISPOSITION

64.  The following orders are made in respect of the 4^th to 6^th Defendants’ summonses:

(1)  no order be made in respect of the summonses dated 21 January 2022 and 31 January 2022;

(2)  leave be granted to the 4^th to 6^th Defendants to amend the December 2021 Summons as per the draft attached to the February 2022 Summons;

(3)  leave be granted to the 4^th to 6^th Defendants to adduce Item 23 as set out in the Amended Schedule annexed to the December 2021 Summons as amended as new evidence at the hearing of their appeal;

(4)  save as aforesaid, the December 2021 Summons (as amended) be dismissed.

65.  The following orders are made in respect of the 1^st to 3^rd Defendants’ summons dated 15 July 2022:

(1)  leave be granted to the 1^st to 3^rd Defendants to adduce Item 2(23) as set out in the Schedule annexed to that summons as new evidence at the hearing of their appeal;

(2)  save as aforesaid, the 1^st to 3^rd Defendants’ summons be dismissed.

66.  On the issue of costs, the Plaintiff has been largely successful in resisting the applications of the 1^st to 3^rd Defendants and the 4^th to 6^th Defendants. We order the 1^st to 3^rd Defendants and the 4^th to 6^th Defendants to pay 50% the Plaintiff’s costs incurred in relation to their applications for the admission of new evidence, with certificate for 2 counsel, to be assessed summarily. It appears from the Plaintiff’s costs statements that the bulk of his costs was incurred in relation to the 4^th to 6^th Defendants’ applications and prior to the 1^st to 3^rd Defendants’ taking out of their application on 15 July 2022. The 1^st to 3^rd Defendants and the 4^th to 6^th Defendants shall have leave to file their respective statements of objection (limited to 2 pages) to the Plaintiff’s costs statements within 14 days from the date of this judgment. Subject to any further directions as may be given, the Court shall thereafter assess the Plaintiff’s costs summarily.

Mr Eugene Fung, SC, Ms Andrea Yu and Ms Jennifer Fan, instructed by Adrian Yeung & Cheng, for the Plaintiff

Mr Douglas Lam, SC and Mr Chow Ho Ku, instructed by C L Chow & Macksion Chan, for the 1^st, 2^nd and 3^rd Defendants

Mr Paul Shieh, SC, Ms Eva Sit, SC and Mr James Man, instructed by Baker & McKenzie, for the 4^th, 5^th and 6^th Defendants