CACV109/2012 TAN KAH ENG v. TAN SECK YEOW AND ANOTHER - LawHero
CACV109/2012
上訴法庭（民事）Lunn VP, Kwan and Barma JJA18/12/2013
CACV109/2012
A A
CACV 109/2012
B B
IN THE HIGH COURT OF THE
C C
HONG KONG SPECIAL ADMINISTRATIVE REGION
D COURT OF APPEAL D
CIVIL APPEAL NO. 109 OF 2012
E E
(ON APPEAL FROM HCA NO. 9640 OF 1999)
F F
G BETWEEN G
TAN KAH ENG Plaintiff
H H
(Appellant)
I And I
TAN SECK YEOW AND TAN SECK CHUN, Defendant
J J
Executors or intended Executors of (Respondent)
Tan Eng Khiam deceased
K K
L Before: Hon Lunn VP, Kwan and Barma JJA in Court L
Date of Hearing: 19 December 2013
M M
Date of Judgment: 19 December 2013
N Date of Handing down Reasons for Judgment and Decision on Costs: N
12 September 2014
O O
P P
REASONS FOR JUDGMENT
Q Q
AND DECISION ON COSTS
R R
S Hon Barma JA (giving the Reasons for Judgment and Decision on Costs of the S
Court):
T T
U U
V V
A
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1. This was an appeal against the judgment of Recorder Shieh SC
B B
dated 26 April 2012 by which he dismissed, after trial, the plaintiff’s claim for
C the repayment of sums totalling S$3,120,190 and HK$3,000,000 allegedly lent C
by him to his uncle, the late Tan Eng Khiam, during 1997 and 1998. The
D D
action was commenced by the plaintiff against his uncle on 11 June 1999, but
E for various reasons did not reach trial until late November 2011. By that time, E
Tan Eng Khiam had passed away, having died in 2009, and the defendants had
F F
been appointed to carry on the defence of the proceedings on behalf of his estate.
G For convenience, we shall, in these Reasons for Judgment, refer (as did the G
H
Recorder in his judgment) to the late Tan Eng Kheam as “the defendant”. H
I 2. At the conclusion of the hearing, we dismissed the appeal and I
indicated that we would hand down our reasons for doing so at a later date.
J J
This we now do. So far as costs were concerned, Mr Bruce SC (who appeared
K for the plaintiff) accepted that the plaintiff should bear the defendant’s estate’s K
costs of the appeal with a certificate for two counsel, although he resisted the
L L
application of Mr Leo Remedios (appearing for the defendant’s estate) for such
M costs to be taxed on the indemnity basis. We indicated that we would make an M
order nisi dealing with the basis of taxation when handing down our reasons for
N N
judgment, and this is done at the end of these reasons.
O O
3. On the face of it, these proceedings were a straightforward claim
P P
for the repayment of loans made by the plaintiff to the defendant. According
Q to the statement of claim, the loans were made to the defendant on six occasions, Q
as follows:
R R
2 October 1997 S$1,732,330
S S
13 November 1997 S$420,000
T T
20 December 1997 S$100,000
U 30 December 1997 S$567,000 U
V V
A
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17 January 1998 S$300,000
B B
21 February 1998 HK$3,000,000
C C
These amounts totalled the S$3,120,190 and HK$3,000,000 claimed.
D D
E 4. In the statement of claim, these dates and amounts were set out in a E
table, with the dates appearing under the heading “Date of loan”. However,
F F
the plaintiff’s evidence was that the sums indicated against each date were not
G in fact advanced on the date stated. Instead, the plaintiff said, various amounts G
of money were advanced by him to the defendant (sometimes by cash payments
H H
to the defendant in various different currencies, and sometimes by Hong Kong
I dollar cheques) on numerous occasions between August 1997 and February I
1998, with acknowledgments being signed by either the defendant, or his
J J
girlfriend, on each occasion that money was provided. The dates and amounts
K pleaded in the table summarised above were not the dates and amounts of these K
loans as and when they were actually made, but the dates and amounts recorded
L L
on six vouchers signed by the defendant which were (according to the plaintiff)
M signed as a record of the receipt by the defendant of loans or advances from the M
plaintiff. The plaintiff said that, from time to time, he and the defendant would
N N
total up the amounts lent since the last time a receipt was signed, convert the
O total into Singapore or Hong Kong dollars, and create a voucher to record the O
(further) amount lent up to then. The vouchers were signed by the defendant
P P
as an acknowledgment of his indebtedness to the plaintiff. The plaintiff said
Q that on each occasion when a voucher was generated, he handed over to the Q
defendant the earlier acknowledgments signed by the defendant or his girlfriend
R R
when the loans were actually made, so that the contemporaneous
S S
acknowledgments were no longer held by him.
T T
5. The plaintiff also relied on three other documents as evidence of
U the loans. These were: U
V V
A
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(1) A letter dated 3 May 1998, headed “Acknowledgement of Friendly
B B
Loans” addressed to the plaintiff and bearing the defendant’s
C signature, which acknowledged receipt of loans made by the C
plaintiff to the defendant on the dates and in the amounts set out in
D D
paragraph 3 above, undertaking to repay them on demand;
E E
(2) An undated letter, also addressed to the plaintiff and bearing the
F F
defendant’s signature, which stated that it had been signed at the
G Park Hotel in Hong Kong, in which the defendant acknowledged G
having borrowed substantial amounts from the plaintiff (without
H H
specifying the details of such borrowings), and asked for time to
I repay what was owed to the plaintiff; and I
J J
(3) A letter dated 12 February 1999, also addressed to the plaintiff and
K
bearing the defendant’s signature, in which the defendant again K
acknowledged an indebtedness to the plaintiff (also without
L L
specifying its details) and asked to be allowed to repay the plaintiff
M by instalments. M
N 6. The defendant denied that any of the alleged loans were made to N
him by the plaintiff. He also denied having signed the three letters referred to
O O
in the previous paragraph, and alleged that the signatures on the letters were
P forgeries. So far as the vouchers were concerned, he agreed that he had signed P
vouchers that were of the same pre-printed type, bearing dates and amounts in
Q Q
figures that corresponded with those on the vouchers relied upon by the plaintiff
R R
in the statement of claim. However, he said that the vouchers he had signed
S
were different from those relied on by the plaintiff, in that those relied upon by S
the plaintiff had additional writing on them, which was not there when he
T T
signed them. He also said that the reason why he signed the vouchers that he
U U
V V
A
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did was not to acknowledge any indebtedness to the plaintiff, but for a quite
B B
different purpose.
C C
7. According to the defendant, when he signed the vouchers, the only
D D
markings on them, apart from the pre-printed parts, were the dates, the figures
E indicating the amounts, and a circle around the printed word “cash”. Unlike E
the vouchers relied upon by the plaintiff, there was no indication as to the
F F
currency (whether Hong Kong or Singapore dollars) and there was no Chinese
G handwriting acknowledging the amounts to be loans from the plaintiff to the G
defendant.
H H
I
8. So far as the reason for signing the vouchers was concerned, the I
defendant alleged that he and the plaintiff had (sometime in 1997) invested in a
J J
company called Wai Wai Private Limited (“WWPL”) with a view to doing
K
business on the Mainland. He said that he had given a total of about K
HK$2,700,000 to the plaintiff as his contribution in respect of WWPL, but that
L L
in 1998 it was agreed that WWPL should be wound up and his contribution
M refunded to him. He alleged that the plaintiff had said that the vouchers had to M
be signed to facilitate the repatriation of his funds – calling the first five
N N
vouchers “receipts in advance” and the sixth (the one for HK$3,000,000) a
O “cash declaration form”. He also said that the voucher for S$1,732,330 was in O
respect of monies taken into China for the purchase of a property through
P P
WWPL.
Q Q
9. His case was therefore that the vouchers were not intended as
R R
acknowledgments of loans to him, and that the additional writing by which the
S
amounts were denominated in a particular currency, and by which the sums S
were purportedly described as loans, was added to the vouchers after he had
T T
signed them. In support of this, he produced copies of the vouchers which
U
matched his description of them, which appeared (apart from their lack of U
V V
A
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reference to a currency and to their being loans to the defendant) to be identical
B B
to those relied upon by the plaintiff.
C C
10. The difference between the parties’ respective cases was therefore
D D
stark, and, as the Recorder rightly observed, there was only one issue of fact
E that called for determination – whether the alleged loans had in fact been made E
by the plaintiff to the defendant as the plaintiff claimed.
F F
11. At the trial, a number of factual witnesses were called for each
G G
party. The plaintiff himself gave evidence, and was cross-examined at some
H H
length. He also called as witnesses his brother, Mr Tan Kah Hock, and a
I
friend, Mr Tan Kim Lock. On the defendant’s side, the defendant had, as we I
have noted, passed away before the trial. However, two other witnesses, a Ms
J J
Olivia Woo and a Mr Tan Eng Yam (one of his elder brothers) gave evidence.
K
In addition, each side called one handwriting expert to give evidence in relation K
to the three letters the authenticity of which was in dispute.
L L
12. The Recorder correctly noted that notwithstanding the absence of
M M
the defendant as a witness, it would not be appropriate simply to accept the
N plaintiff’s evidence at face value. Rather, given the dispute between the N
parties, the plaintiff’s evidence should be tested by reference to its inherent
O O
credibility (or lack of it), and its consistency (or otherwise) with
P contemporaneous documentation and undisputed (or undisputable) facts. The P
Recorder also noted, again correctly, that while the demeanour of a witness
Q Q
would also have some role to play in assessing a witness’ credibility, it should
R R
not be given too much weight, the factors previously mentioned being better
S
guides. S
T 13. The Recorder concluded that the plaintiff had failed to prove that T
the loans were actually made. He also found that the three documents relied
U U
V V
A
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upon by the plaintiff were forgeries, in that the defendant’s signature on them
B B
was more likely than not placed on the documents by a process of copying
C genuine signatures of the defendant and pasting (by computerised means or C
otherwise) the copy signatures onto the documents.
D D
E 14. In coming to his conclusion that the plaintiff had not advanced the E
loans which formed the subject matter of the proceedings, the Recorder took
F F
into account a number of factors, apart from the allegation that the vouchers
G were not signed as acknowledgments of loans, and that the three other letters G
relied upon were forgeries. These matters (discussed between paragraphs 32
H H
to 80 of the judgment below) included:
I I
(1) His assessment of the plaintiff as a wholly unconvincing and
J J
incredible witness, whose evidence he was not prepared to accept
K
unless it was supported by contemporaneous documents or K
incontrovertible background facts. This assessment was reached
L L
for a number of reasons, including:
M M
(a) the plaintiff’s evasiveness and frequent failure to answer
N questions in a straightforward or relevant manner; N
O O
(b) the plaintiff’s frequent attempts to avoid having to answer
P difficult questions by purporting not to read or understand P
English, whereas it was evident that he did in fact have at
Q Q
least a working knowledge of English; and
R R
(c) the plaintiff’s recourse to assertions that he had forgotten
S S
things in answer to many questions in order to avoid
T
answering them, when the matters on which he was being T
questioned were inherently matters which he would have
U U
been expected to recollect, in contrast to the detail with
V V
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which he was able to recollect other matters of less relevance
B B
or significance.
C C
(2) The inherent improbability of the loans having been recorded in the
D D
manner alleged by the plaintiff, since:
E E
(a) no reason was given as to why it should have been necessary
F to have the “stocktaking” of such loans from time to time; F
G G
(b) the plaintiff’s suggestion that it was necessary to convert the
H loans (which were mostly extended in Hong Kong dollars or H
Renminbi) to Singapore dollars because both parties were
I I
Singaporean made little sense, as the plaintiff was not living
J in Singapore at the time; and J
K K
(c) this suggestion also did not sit well with the fact that one of
L the vouchers was denominated in Hong Kong dollars. L
M (3) The fact that the plaintiff’s evidence in relation to two alleged M
advances which he said had been advanced by cheques was
N N
inconsistent, as he had said in his witness statement that he had
O accompanied the plaintiff to the bank to encash the cheques, O
whereas he said in his oral evidence that he did not go to the bank
P P
with the plaintiff.
Q Q
(4) Further, in relation to these two advances, his explanation for not
R R
being able to produce bank statements or records to make good his
S allegations was unacceptable. The plaintiff had said that he had S
sought such records from the bank, but was told that the records
T T
were no longer available since the bank did not keep records after
U seven years. However, as the dispute between the parties had U
V V
A
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arisen within seven years of the alleged transactions, with the
B B
defendant having set out his case in pre-action correspondence,
C there was no good reason why the plaintiff could not have sought C
such records at a much earlier stage when they would presumably
D D
still have been available. The fact that the plaintiff had been
E imprisoned in the Mainland from 2001 to 2006 did not excuse this E
failure, since the dispute between the parties had become apparent
F F
well before 2001.
G G
(5) The plaintiff’s financial position at the time that the loans were
H H
allegedly advanced was that he was an undischarged bankrupt in
I Singapore, who had disclosed no significant assets in the course of I
his bankruptcy. This suggested that he was not in a position to
J J
make the loans to the defendant. The plaintiff, however, claimed
K to have had substantial amounts of cash on the Mainland, and that K
he was owed money by others, but none of these matters were
L L
disclosed in his statement of affairs. The plaintiff claimed that the
M non-disclosure was on the advice of the Official Assignee in M
Singapore. The Recorder did not accept this evidence and
N N
accordingly did not accept that the plaintiff was in fact in a
O financial position to make the loans. In coming to this conclusion, O
the Recorder considered various items of evidence that might
P P
suggest that the plaintiff in fact had some means from which to
Q make the loans, but explained why he did not consider such Q
evidence to be persuasive in the plaintiff’s favour.
R R
S (6) Moreover, the plaintiff’s evidence as to how he came to have S
substantial amounts of cash in China was also unsatisfactory,
T T
involving as it did an assertion that such funds derived from the
U sale by the plaintiff’s father of two properties in Singapore for U
V V
A
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some S$4,000,000. However, as the Recorder noted, the
B B
documentary evidence showed that the properties had in fact been
C sold for a total of less than S$2,000,000. The plaintiff claimed, in C
the face of the records, that the properties had been sold for over
D D
S$4,000,000 and were in fact worth some S$8,000,000, but that his
E father had understated the amount involved in order to reduce the E
amount of stamp duty payable on the sale. The Recorder was
F F
sceptical about this explanation, involving as it did a fraud on the
G Singapore tax authorities. G
H H
(7) Further, the plaintiff’s evidence as to how much money he had in
I cash on the Mainland varied substantially on different occasions, I
leaving the true position in considerable doubt.
J J
K
15. Having dealt with these matters, the Recorder went on to consider K
the genuineness of the three letters relied upon by the plaintiff (paragraphs 81 to
L L
112 of his judgment), and concluded that they were in fact forgeries. In
M coming to this conclusion, the Recorder made the following observations: M
N (1) The letters were typed in English, which was inherently N
improbable since the plaintiff claimed not to understand English,
O O
making it unlikely that the defendant would write to him in that
P language. By contrast, another loan acknowledgment (involving P
a loan from the defendant to the plaintiff) was in Chinese.
Q Q
R (2) So far as the handwriting expert evidence was concerned, the R
experts were hampered by having to examine copies of the
S S
disputed letters rather than the originals. It was not possible to
T determine from the copies examined whether or not the signature T
of the defendant on the letters had been actually placed there by the
U U
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defendant signing the documents himself. Neither expert could
B B
state definitively whether the documents represented a “cut and
C paste” operation whereby a genuine signature of the defendant was C
copied and inserted into the documents, so that the documents did
D D
not bear an original signature of the defendant placed on it by the
E defendant himself. The plaintiff’s expert had not been asked to E
consider this possibility, but accepted in cross-examination that it
F F
could not be excluded. The defendant’s expert expressed the
G view that the copies could have been the result of a “cut and paste” G
H
operation, a view which she considered was reinforced by the H
location of the signatures in relation to lines indicating where the
I I
document should be signed (on the first two of the disputed
J
documents which had such lines), the tendency of the defendant J
(shown by the control copies) to sign in the place indicated for his
K K
signature (whereas, by contrast, in the first two documents
L examined, the signature was not in that location) and the quality of L
the copies (in relation to the third document, where the quality of
M M
the copy of the signature appeared to be noticeably poorer than that
N of the document generally). The Recorder took the view that N
there was force in the defendant’s expert’s observations, as in all
O O
but three of the control documents, the defendant’s signature
P appeared on the line provided to indicate where it should be placed, P
and in the other three it appeared against the word “signed”, which
Q Q
served the same purpose. By contrast, the signature on the first
R two documents was some distance above the line indicating where R
the signature should be placed. He also relied on the quality of
S S
the copy of the signature (which was poorer than the rest of the
T copy document) in the third document, which the defendant’s T
expert had pointed out. The plaintiff’s expert had in fact accepted
U U
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that this difference in quality indicated that the signature may have
B B
been copied more times than the rest of the document, a fact which
C would point to its being a copy which was placed on the document. C
D D
(3) The Recorder also considered the plaintiff’s contentions as to the
E unavailability of the original documents for examination. The E
plaintiff claimed to have handed over the originals of all three
F F
documents to his former solicitors, Livasiri & Co, and alleged that
G they had since been lost by that firm. However, there was no G
contemporaneous record of his having done so, and nor was there
H H
any clear acknowledgment by Livasiri & Co that they had had
I possession of the originals but had lost them. Nor was there any I
evidence to confirm that the originals had been inspected by the
J J
defendant’s former solicitors (Baker & McKenzie) as the plaintiff
K asserted The Recorder also noted that although the plaintiff K
claimed to have given the originals of all three documents to
L L
Livasiri & Co, only the first two documents were listed in his List
M of Documents as originals, and that when the plaintiff’s new M
solicitors sought original documents from Livasiri & Co in 2006,
N N
they seemed only to have asked for the first, but not the second or
O third, of these documents. Even as to the first document, the O
plaintiff’s evidence as to why he had not obtained it from the
P P
former solicitors was regarded with considerable scepticism by the
Q Recorder. As to the third document, the plaintiff (somewhat Q
inconsistently) claimed in his witness statement to have lost it at an
R R
early stage, suggesting that he had never in fact given the original
S S
to Livasiri & Co. However, despite having misgivings about the
T
plaintiff’s story about having had the originals of all three T
documents, which were lost by his former solicitors, the Recorder
U U
did not ultimately make any findings as to this, on the basis that
V V
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even if this were true, it would not take matters further on the issue
B B
of whether or not the defendant’s signatures were a “cut and paste”
C job, and in particular would not have assisted the plaintiff on this C
point.
D D
E (4) However, the Recorder considered that the first document (the E
letter of 3 May 1998) and the third document (the 12 February
F F
1999 letter) contained oddities which told against their
G genuineness: G
H H
(a) The letter of 3 May 1998 purported to be an
I
acknowledgment of loans by the plaintiff to the defendant on I
six occasions, in the amounts and on the dates of the
J J
vouchers relied upon by the plaintiff in his Statement of
K
Claim. However, as the Recorder noted, the plaintiff’s K
evidence was that the voucher dates were not in fact the
L L
dates of the actual advances, and the actual advances
M covered by each voucher were made on a number of M
different occasions in different amounts, prior to the date of
N N
the voucher. The letter thus acknowledged loans which
O were in line with what was pleaded in the Statement of O
Claim, but not in accordance with the actual case being
P P
advanced by the plaintiff. The Recorder regarded this as
Q suspicious, and as providing reason to think that this letter Q
was manufactured by the plaintiff in order to support the
R R
case he was to plead, prior to his realisation that such a case
S was unlikely to withstand scrutiny in the light of evidence S
(in the form of a copy of the defendant’s passport) to show
T T
that the defendant was not in Hong Kong on the dates of
U U
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some of the supposed advances, had they been made on the
B B
dates of the vouchers.
C C
(b) The letter of 12 February 1999 purported to admit (in
D D
general terms) that the defendant was indebted to the
E plaintiff. But as the Recorder pointed out, the defendant E
was by this time already engaged in correspondence with the
F F
plaintiff through lawyers over their disputed financial
G dealings. Shortly after this letter, the defendant’s legal G
advisers wrote to the plaintiff to deny his indebtedness to the
H H
plaintiff, challenging the authenticity of the 3 May 1998
I letter, and setting out the defendant’s case as to the six I
vouchers. The plaintiff, however, did not refer to this 12
J J
February 1999 letter at the time to rebut the defendant’s case.
K The Recorder considered that these matters suggested that K
the 12 February 1999 letter, too, was not a genuine
L L
document, since it was wholly inconsistent with the
M defendant’s position and it was inexplicable for the plaintiff M
not to have relied on it in response had it been a genuine
N N
document in existence at the time.
O O
(5) The Recorder also had regard to two previous convictions of the
P P
plaintiff as providing evidence of a propensity on the plaintiff’s
Q part for dishonesty. These were a conviction in Singapore in Q
1992 on charges of corruption, to which the plaintiff pleaded guilty,
R R
and for which he was fined S$30,000 (the charges having been
S amended from an earlier charge of blackmail), and a conviction in S
the Mainland in 2001, for which after a successful appeal, the
T T
plaintiff was retried and sentenced to five years’ imprisonment for
U “contractual fraud”. U
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16. Finally, the Recorder considered the six vouchers relied upon by
B B
the plaintiff, and rejected the plaintiff’s case as to the circumstances in which,
C and the purpose for which, they were signed. He also concluded that the C
Chinese words purporting to confirm that the amounts mentioned in them were
D D
loans from the plaintiff to the defendant were not there when the documents
E were signed, and that at least the voucher for S$1,732,330 did not have the “S$” E
written on it when it was signed. He did so for three main reasons:
F F
G (1) It seemed to him to be inherently improbable that the parties would G
have used documents in the format of payment vouchers for the
H H
purpose of acknowledging debts;
I I
(2) There was a previous IOU between the parties (although in relation
J J
to a loan from the defendant to the plaintiff) which was simply
K
written out in Chinese, and not in the format of a payment voucher; K
L (3) The fact that the voucher for $1,732,330 was for an amount which L
was exactly the same as the total Hong Kong dollar cost of a
M M
Mainland property purchased by the defendant supported the
N defendant’s case, as it would be straining credulity to accept that, N
purely by coincidence, the plaintiff had made a loan to the
O O
defendant in the exact same amount, but in a different currency.
P P
17. Additionally, the Recorder had regard to all the other evidence in
Q Q
the case (which would include the other matters canvassed by him that led him
R to the conclusion that no loans had in fact been made, mentioned in paragraph R
14 above, and the matters leading him to the conclusion that the three
S S
documents relied upon by the plaintiff were forgeries, set out in paragraphs
T 15(1), (2) and (5) above). However, he expressly ruled out reliance on the T
U U
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versions of the vouchers put forward by the defendant (which have been
B B
described in paragraph 7 above).
C C
18. For all of these reasons, the Recorder did not accept that the
D D
plaintiff had extended to the defendant the loans upon which he relied in these
E proceedings. E
F 19. Before us, Mr Bruce SC contended that the Recorder’s rejection of F
the plaintiff’s case as to the alleged loans was wrong. The grounds for this
G G
criticism were as follows:
H H
(1) The Recorder was wrong to find that the three documents relied
I I
upon by the plaintiff were forgeries as:
J J
(a) neither expert witness was able to say that they were the
K K
product of a “cut and paste” exercise – the best that either
L could say was that this was possible, or that it could not be L
ruled out; and
M M
(b) the Recorder’s points about the first and third documents
N N
(summarised in paragraph 15(4) above) were not sufficient
O grounds for finding that the documents were forged. O
P P
(2) Also in relation to the finding of forgery, the Recorder was wrong
Q to conclude that there was evidence of propensity to engage in Q
forgery or fraudulent conduct on the plaintiff’s part, since:
R R
S
(a) the Singapore conviction was stale (being over 20 years ago) S
and did not involve forgery or fraud;
T T
U U
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(b) the Recorder’s views in relation to the sale of the two
B B
properties in Singapore (which the plaintiff had relied on to
C show that he was in a position to make the loans) could not C
amount to evidence of such propensity; and
D D
E (c) The Mainland proceedings could not amount to evidence of E
propensity, as the defendant’s conviction had been
F F
successfully appealed and a retrial had been ordered. The
G Recorder had been wrong to speculate as to the nature of the G
charges and to base his conclusions on the fact that the
H H
plaintiff had spent some time in custody.
I I
(3) The Recorder was wrong in harbouring misgivings about the
J J
plaintiff’s evidence concerning the existence of original versions of
K
the three documents and their having been lost by his former K
solicitors, especially when the first two of the documents had been
L L
described in the plaintiff’s list of documents as originals which
M were available for inspection. M
N (4) The Recorder should not have regarded the plaintiff’s credibility as N
damaged by the undervaluation of the sale of his father’s properties
O O
in Singapore as there was no cogent evidence as to how the sale
P had been carried out, or as to any fraud on the Singapore tax P
authorities.
Q Q
R (5) The Recorder erred in concluding that the voucher for S$1,732,330 R
was not for the purpose of acknowledging the loans by reference to
S S
the documentation concerning the Mainland property transaction,
T as the plaintiff had been unable to cross-examine the defendant as T
to that documentation.
U U
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20. In our view, none of these contentions have merit. We deal with
B B
each of them below.
C C
21. The first three complaints relate to the finding of forgery. So far
D D
as that is concerned, it is clear from the judgment that the Recorder was well
E aware of the correct approach to take to the question of the standard of proof E
required, referring to the well known passage from Lord Nicholls’ judgment in
F F
Re H & others (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563 at
G 586, which he set out in paragraph 111 of the judgment below. As appears G
from paragraph 112, he also had in mind the views expressed by Lord Scott in
H H
Nina Wang v Wang Din Shin [2005] 8 HKCFAR 387 at paragraph 626, where
I Lord Scott pointed out that apart from taking account of the inherent probability I
or otherwise of serious allegations of fraud or misconduct being true when
J J
considering whether or not the evidence was sufficiently cogent to establish
K such allegations to the necessary standard of proof, it was necessary to take K
account of propensity – so that what might seem inherently improbable would
L L
be less so where the person against whom the accusation was levelled had a
M record of involvement in the conduct alleged. In the case of allegations of M
forgery, previous involvement in forgery or fraud would go into the balance,
N N
meaning that the strength of the other evidence required to make out the
O allegation would be less than that needed in respect of someone with no O
previous involvement in such conduct. Mr Bruce did not dispute that the
P P
Recorder was right to follow the approach called for by these principles.
Q Q
22. As for the criticism that it was inappropriate for the Recorder to
R R
have concluded on the basis of the expert evidence that the documents were
S forgeries as neither expert could say that they clearly were, this is true so far as S
it goes. It was indeed the case that neither expert was able to express a
T T
categorical or firm view one way or another (although the defendant’s expert’s
U views appeared to show a distinct inclination towards the view that the U
V V
A
- 19 - A
documents were forgeries). However, while expert evidence as to handwriting
B B
may often be of considerable assistance to a court in attempting to come to a
C conclusion as to whether or not a document is genuine or a forgery, it is C
necessary to bear in mind the limitations of such evidence, particularly where,
D D
as here, the expert witnesses were hampered by the unavailability of the original
E documents for examination. The conclusion whether or not a document is E
forged is one that must be reached on a consideration of the totality of the
F F
evidence, both expert evidence and other evidence. This is what the Recorder
G did. He clearly recognised that neither expert could say categorically whether G
H
or not the signatures were forgeries, but had regard (as he was entitled to) to the H
questions raised by the placement of the signature on the first two documents,
I I
and the poor quality of the signature on the third, and also took into account the
J
other factors mentioned by him – the inherent improbability of documents J
between the parties being prepared in English, the particular reasons for
K K
thinking that the first and third documents were questionable, and the evidence
L of propensity – in coming to his conclusion. In our view, he was entirely L
justified in doing so.
M M
23. In the same way, it seems to us that the criticism in relation to the
N N
Recorder’s reliance on the odd features of the first and third documents is also
O misplaced. To our mind, they were certainly matters that called for O
explanation. We were told that there was quite extensive cross-examination of
P P
the plaintiff on these points, but for reasons of which we are unaware, the
Q transcript of such cross-examination was not obtained and put before us. In Q
these circumstances, it does not seem to us to be right to criticise the Recorder
R R
for forming the views that he did as to the documents without seeking to
S S
demonstrate that the evidence before him could not have supported those views.
T
It is clear from the Recorder’s assessment of the plaintiff as a witness that he T
found him to be unimpressive and unreliable. Without the transcripts of his
U U
evidence, there is no proper basis for attacking that assessment, which clearly
V V
A
- 20 - A
would have been an important factor in the Recorder’s thinking on this, and
B B
other, points. For our part, we consider that the points made by the Recorder
C in paragraphs 108 and 109 of the judgment have real force, and do cast doubt on C
the genuineness of the documents concerned. Without being shown the
D D
plaintiff’s evidence on these points, it is quite impossible for us say that the
E Recorder was not justified in concluding that these points, in conjunction with E
the other matters he referred to, indicated that the documents were, on the
F F
balance of probabilities, forged.
G G
24. As for the question of propensity, Mr Bruce accepted that it was a
H H
material factor, and would operate (as indicated by Lord Scott) so as to render it
I possible for the court to come to a finding of forgery on the basis of evidence I
that might be less strong than that required where a party had no previous
J J
history of conduct of the sort alleged. As we understood it, Mr Bruce’s
K complaint here was that the matters relied upon as evidence of propensity on the K
plaintiff’s part were not such as demonstrated a past record of involvement in
L L
dishonest or fraudulent conduct. With respect, we disagree. The Recorder
M relied on two matters in this respect – the prior convictions of the plaintiff in M
Singapore and on the Mainland. He did not, so far as we can see, rely on the
N N
circumstances of the sale of the plaintiff’s father’s properties in Singapore as
O being evidence of propensity. O
P P
25. In our view, each of the Singaporean and Mainland convictions is
Q evidence of dishonest or fraudulent conduct on the part of the plaintiff, and as Q
such is evidence of propensity which should go into the balance in determining
R R
the question of forgery. The Singapore conviction involved charges of
S corruption – an offence which would ordinarily be regarded as involving S
dishonest conduct. As for the Mainland conviction, although Mr Bruce
T T
appeared to suggest that the retrial had not taken place (in the court below it was
U suggested that the retrial was “not fully conducted”), it seems clear from a U
V V
A
- 21 - A
Certificate of Release issued by the Mainland authorities in respect of the
B B
plaintiff that he had been convicted after retrial of contractual fraud, for which
C he received a sentence of 5 years’ imprisonment. That is clearly, on the face C
of it, an offence involving fraud and dishonesty. Again, we were informed that
D D
these were matters on which the plaintiff had been cross-examined at trial, but
E in relation to which we were not provided with the transcript of the evidence. E
In those circumstances, we do not see any basis for disagreeing with the
F F
Recorder that there was in this case evidence of propensity to engage in
G fraudulent conduct, which should be taken into account when weighing up the G
H
evidence for and against a finding of forgery. H
I 26. Turning to the complaint that the Recorder should not have had I
misgivings about the plaintiff’s evidence as to his having previously had the
J J
originals of the three documents, but that they were lost by his former solicitors,
K it is again the case that this was a matter that was the subject of extensive K
cross-examination, a record of which has not been made available to us. But
L L
more fundamentally, it seems to us that this point does not take the plaintiff
M anywhere because the Recorder did not in fact take it into account, as is clear M
from paragraph 107 of his judgment.
N N
O 27. In addition, as Mr Remedios pointed out, the many other factors O
identified by the Recorder as suggesting that the loans had never been made
P P
were also matters which cast doubt on the genuineness of the documents.
Q Q
28. For all of these reasons, we do not think that it can be said that the
R R
Recorder was wrong to reach the conclusions that he did on the forgery issue.
S S
29. Mr Bruce’s next complaint related to the Recorder’s assessment of
T the plaintiff’s credibility. It focussed on the Recorder’s consideration of the T
circumstances of the sale of two properties in Singapore by the plaintiff’s father.
U U
V V
A
- 22 - A
This was a matter that had a bearing on the plaintiff’s financial capacity to make
B B
the alleged loans to the defendant. As we have noted, the Recorder observed
C that the plaintiff was an undischarged bankrupt in Singapore at the time the C
loans were allegedly made, and had failed to disclose any significant assets in
D D
the course of his bankruptcy. Among various explanations given by the
E plaintiff to suggest that he in fact had substantial funds available to him was a E
suggestion that he had obtained funds from the sale of these properties, and that
F F
the amount realised from the sale was substantially higher than the sale price
G recorded in public documents in Singapore. The Recorder took the view that G
H
plaintiff’s evidence in relation to this matter cast further doubt on his credibility, H
because it was either untrue (and the amount realised was the amount publicly
I I
recorded), or it showed that the plaintiff was privy to conduct which amounted
J
to a fraud on the Singapore tax authorities. J
K 30. Mr Bruce contended that this was unjustified, since there was no K
cogent evidence of how the sales were carried out, or of the nature of any fraud
L L
on the Singapore tax authorities. But it was the plaintiff’s own evidence that
M the sales were carried out at a true price that was significantly (some two to four M
times, depending on which version of his evidence one has regard to) higher
N N
than the recorded price. If this was untrue, it clearly had implications for the
O plaintiff’s credibility and the reliability of his evidence. On the other hand, if O
it were true, it would seem self-evident that the plaintiff was aware of a scheme
P P
on his father’s part to defraud the Singapore tax authorities. While he may or
Q may not himself have been a party to this, the fact that on his own case he was Q
aware of it, and received a substantial share of the sale proceeds, does raise
R R
questions about the extent of his involvement. We therefore think that the
S S
Recorder was justified in regarding the plaintiff’s evidence on this matter as
T
something which impacted adversely on his credibility. T
U U
V V
A
- 23 - A
B B
31. Moreover, even if (contrary to the view we have just expressed)
C this was not a matter that should have been held against the plaintiff, there was C
ample reason for the Recorder to have had serious reservations about the
D D
plaintiff as a witness, having regard to the many other unsatisfactory aspects of
E his evidence which were identified by the Recorder. E
F 32. Mr Bruce’s final point relates to the Recorder’s conclusion that the F
voucher for S$1,732,330 was not for the purpose of acknowledging the loans.
G G
He contended that in the absence of cross-examination of the defendant about
H H
the supposed Chinese property transaction, the Recorder should not have relied
I
on this material. However, the Recorder was well aware of the fact that the I
defendant was not available to be cross-examined, but considered that having
J J
regard to the matters canvassed by him in paragraph 121 of the judgment, it was
K
open to him to conclude that the vouchers were not created for the purpose K
alleged by the plaintiff. The coincidence in numbers was but one of these
L L
matters. We are therefore not persuaded that there is any substance to this
M point either. M
N 33. Further, we think that Mr Remedios was right to point out that N
there were many other matters on which the Recorder formed views adverse to
O O
the plaintiff, to which no challenge had been made. The complaints raised in
P this appeal have focussed on specific aspects of the Recorder’s reasoning, and P
have not had sufficient regard to the totality of the many reasons which the
Q Q
Recorder took into account in coming to the conclusion that the plaintiff had
R R
failed to satisfy him that loans had in fact been made to the defendant as
S
claimed. S
T T
U U
V V
A
- 24 - A
B B
34. For all of the foregoing reasons, we considered that the appeal was
C without merit, and accordingly dismissed it. C
D 35. So far as costs are concerned, it will be clear from the reasons D
which we have given that the appeal was entirely unmeritorious. In these
E E
circumstances, we think that it would be right to make an order nisi that the
F costs of the appeal, which we ordered should be paid by the plaintiff to the F
defendant, with certificate for two counsel, should be taxed on the indemnity
G G
basis.
H H
I I
J J
K K
(Michael Lunn) (Susan Kwan) (Aarif Barma)
Vice President Justice of Appeal Justice of Appeal
L L
M Mr Andrew Bruce SC and Mr. James Sherry instructed by Raymond Chan, M
Kenneth Yuen & Co. for the Appellant/Plaintiff
N N
Mr Leo Remedios and Mr. Jose Remedios instructed by John Ip & Co. for the
Respondent/Defendant
O O
P P
Q Q
R R
S S
T T
U U
V V
A A
CACV 109/2012
B B
IN THE HIGH COURT OF THE
C C
HONG KONG SPECIAL ADMINISTRATIVE REGION
D COURT OF APPEAL D
CIVIL APPEAL NO. 109 OF 2012
E E
(ON APPEAL FROM HCA NO. 9640 OF 1999)
F F
G BETWEEN G
TAN KAH ENG Plaintiff
H H
(Appellant)
I And I
TAN SECK YEOW AND TAN SECK CHUN, Defendant
J J
Executors or intended Executors of (Respondent)
Tan Eng Khiam deceased
K K
L Before: Hon Lunn VP, Kwan and Barma JJA in Court L
Date of Hearing: 19 December 2013
M M
Date of Judgment: 19 December 2013
N Date of Handing down Reasons for Judgment and Decision on Costs: N
12 September 2014
O O
P P
REASONS FOR JUDGMENT
Q Q
AND DECISION ON COSTS
R R
S Hon Barma JA (giving the Reasons for Judgment and Decision on Costs of the S
Court):
T T
U U
V V
A
- 2 - A
1. This was an appeal against the judgment of Recorder Shieh SC
B B
dated 26 April 2012 by which he dismissed, after trial, the plaintiff’s claim for
C the repayment of sums totalling S$3,120,190 and HK$3,000,000 allegedly lent C
by him to his uncle, the late Tan Eng Khiam, during 1997 and 1998. The
D D
action was commenced by the plaintiff against his uncle on 11 June 1999, but
E for various reasons did not reach trial until late November 2011. By that time, E
Tan Eng Khiam had passed away, having died in 2009, and the defendants had
F F
been appointed to carry on the defence of the proceedings on behalf of his estate.
G For convenience, we shall, in these Reasons for Judgment, refer (as did the G
H
Recorder in his judgment) to the late Tan Eng Kheam as “the defendant”. H
I 2. At the conclusion of the hearing, we dismissed the appeal and I
indicated that we would hand down our reasons for doing so at a later date.
J J
This we now do. So far as costs were concerned, Mr Bruce SC (who appeared
K for the plaintiff) accepted that the plaintiff should bear the defendant’s estate’s K
costs of the appeal with a certificate for two counsel, although he resisted the
L L
application of Mr Leo Remedios (appearing for the defendant’s estate) for such
M costs to be taxed on the indemnity basis. We indicated that we would make an M
order nisi dealing with the basis of taxation when handing down our reasons for
N N
judgment, and this is done at the end of these reasons.
O O
3. On the face of it, these proceedings were a straightforward claim
P P
for the repayment of loans made by the plaintiff to the defendant. According
Q to the statement of claim, the loans were made to the defendant on six occasions, Q
as follows:
R R
2 October 1997 S$1,732,330
S S
13 November 1997 S$420,000
T T
20 December 1997 S$100,000
U 30 December 1997 S$567,000 U
V V
A
- 3 - A
17 January 1998 S$300,000
B B
21 February 1998 HK$3,000,000
C C
These amounts totalled the S$3,120,190 and HK$3,000,000 claimed.
D D
E 4. In the statement of claim, these dates and amounts were set out in a E
table, with the dates appearing under the heading “Date of loan”. However,
F F
the plaintiff’s evidence was that the sums indicated against each date were not
G in fact advanced on the date stated. Instead, the plaintiff said, various amounts G
of money were advanced by him to the defendant (sometimes by cash payments
H H
to the defendant in various different currencies, and sometimes by Hong Kong
I dollar cheques) on numerous occasions between August 1997 and February I
1998, with acknowledgments being signed by either the defendant, or his
J J
girlfriend, on each occasion that money was provided. The dates and amounts
K pleaded in the table summarised above were not the dates and amounts of these K
loans as and when they were actually made, but the dates and amounts recorded
L L
on six vouchers signed by the defendant which were (according to the plaintiff)
M signed as a record of the receipt by the defendant of loans or advances from the M
plaintiff. The plaintiff said that, from time to time, he and the defendant would
N N
total up the amounts lent since the last time a receipt was signed, convert the
O total into Singapore or Hong Kong dollars, and create a voucher to record the O
(further) amount lent up to then. The vouchers were signed by the defendant
P P
as an acknowledgment of his indebtedness to the plaintiff. The plaintiff said
Q that on each occasion when a voucher was generated, he handed over to the Q
defendant the earlier acknowledgments signed by the defendant or his girlfriend
R R
when the loans were actually made, so that the contemporaneous
S S
acknowledgments were no longer held by him.
T T
5. The plaintiff also relied on three other documents as evidence of
U the loans. These were: U
V V
A
- 4 - A
(1) A letter dated 3 May 1998, headed “Acknowledgement of Friendly
B B
Loans” addressed to the plaintiff and bearing the defendant’s
C signature, which acknowledged receipt of loans made by the C
plaintiff to the defendant on the dates and in the amounts set out in
D D
paragraph 3 above, undertaking to repay them on demand;
E E
(2) An undated letter, also addressed to the plaintiff and bearing the
F F
defendant’s signature, which stated that it had been signed at the
G Park Hotel in Hong Kong, in which the defendant acknowledged G
having borrowed substantial amounts from the plaintiff (without
H H
specifying the details of such borrowings), and asked for time to
I repay what was owed to the plaintiff; and I
J J
(3) A letter dated 12 February 1999, also addressed to the plaintiff and
K
bearing the defendant’s signature, in which the defendant again K
acknowledged an indebtedness to the plaintiff (also without
L L
specifying its details) and asked to be allowed to repay the plaintiff
M by instalments. M
N 6. The defendant denied that any of the alleged loans were made to N
him by the plaintiff. He also denied having signed the three letters referred to
O O
in the previous paragraph, and alleged that the signatures on the letters were
P forgeries. So far as the vouchers were concerned, he agreed that he had signed P
vouchers that were of the same pre-printed type, bearing dates and amounts in
Q Q
figures that corresponded with those on the vouchers relied upon by the plaintiff
R R
in the statement of claim. However, he said that the vouchers he had signed
S
were different from those relied on by the plaintiff, in that those relied upon by S
the plaintiff had additional writing on them, which was not there when he
T T
signed them. He also said that the reason why he signed the vouchers that he
U U
V V
A
- 5 - A
did was not to acknowledge any indebtedness to the plaintiff, but for a quite
B B
different purpose.
C C
7. According to the defendant, when he signed the vouchers, the only
D D
markings on them, apart from the pre-printed parts, were the dates, the figures
E indicating the amounts, and a circle around the printed word “cash”. Unlike E
the vouchers relied upon by the plaintiff, there was no indication as to the
F F
currency (whether Hong Kong or Singapore dollars) and there was no Chinese
G handwriting acknowledging the amounts to be loans from the plaintiff to the G
defendant.
H H
I
8. So far as the reason for signing the vouchers was concerned, the I
defendant alleged that he and the plaintiff had (sometime in 1997) invested in a
J J
company called Wai Wai Private Limited (“WWPL”) with a view to doing
K
business on the Mainland. He said that he had given a total of about K
HK$2,700,000 to the plaintiff as his contribution in respect of WWPL, but that
L L
in 1998 it was agreed that WWPL should be wound up and his contribution
M refunded to him. He alleged that the plaintiff had said that the vouchers had to M
be signed to facilitate the repatriation of his funds – calling the first five
N N
vouchers “receipts in advance” and the sixth (the one for HK$3,000,000) a
O “cash declaration form”. He also said that the voucher for S$1,732,330 was in O
respect of monies taken into China for the purchase of a property through
P P
WWPL.
Q Q
9. His case was therefore that the vouchers were not intended as
R R
acknowledgments of loans to him, and that the additional writing by which the
S
amounts were denominated in a particular currency, and by which the sums S
were purportedly described as loans, was added to the vouchers after he had
T T
signed them. In support of this, he produced copies of the vouchers which
U
matched his description of them, which appeared (apart from their lack of U
V V
A
- 6 - A
reference to a currency and to their being loans to the defendant) to be identical
B B
to those relied upon by the plaintiff.
C C
10. The difference between the parties’ respective cases was therefore
D D
stark, and, as the Recorder rightly observed, there was only one issue of fact
E that called for determination – whether the alleged loans had in fact been made E
by the plaintiff to the defendant as the plaintiff claimed.
F F
11. At the trial, a number of factual witnesses were called for each
G G
party. The plaintiff himself gave evidence, and was cross-examined at some
H H
length. He also called as witnesses his brother, Mr Tan Kah Hock, and a
I
friend, Mr Tan Kim Lock. On the defendant’s side, the defendant had, as we I
have noted, passed away before the trial. However, two other witnesses, a Ms
J J
Olivia Woo and a Mr Tan Eng Yam (one of his elder brothers) gave evidence.
K
In addition, each side called one handwriting expert to give evidence in relation K
to the three letters the authenticity of which was in dispute.
L L
12. The Recorder correctly noted that notwithstanding the absence of
M M
the defendant as a witness, it would not be appropriate simply to accept the
N plaintiff’s evidence at face value. Rather, given the dispute between the N
parties, the plaintiff’s evidence should be tested by reference to its inherent
O O
credibility (or lack of it), and its consistency (or otherwise) with
P contemporaneous documentation and undisputed (or undisputable) facts. The P
Recorder also noted, again correctly, that while the demeanour of a witness
Q Q
would also have some role to play in assessing a witness’ credibility, it should
R R
not be given too much weight, the factors previously mentioned being better
S
guides. S
T 13. The Recorder concluded that the plaintiff had failed to prove that T
the loans were actually made. He also found that the three documents relied
U U
V V
A
- 7 - A
upon by the plaintiff were forgeries, in that the defendant’s signature on them
B B
was more likely than not placed on the documents by a process of copying
C genuine signatures of the defendant and pasting (by computerised means or C
otherwise) the copy signatures onto the documents.
D D
E 14. In coming to his conclusion that the plaintiff had not advanced the E
loans which formed the subject matter of the proceedings, the Recorder took
F F
into account a number of factors, apart from the allegation that the vouchers
G were not signed as acknowledgments of loans, and that the three other letters G
relied upon were forgeries. These matters (discussed between paragraphs 32
H H
to 80 of the judgment below) included:
I I
(1) His assessment of the plaintiff as a wholly unconvincing and
J J
incredible witness, whose evidence he was not prepared to accept
K
unless it was supported by contemporaneous documents or K
incontrovertible background facts. This assessment was reached
L L
for a number of reasons, including:
M M
(a) the plaintiff’s evasiveness and frequent failure to answer
N questions in a straightforward or relevant manner; N
O O
(b) the plaintiff’s frequent attempts to avoid having to answer
P difficult questions by purporting not to read or understand P
English, whereas it was evident that he did in fact have at
Q Q
least a working knowledge of English; and
R R
(c) the plaintiff’s recourse to assertions that he had forgotten
S S
things in answer to many questions in order to avoid
T
answering them, when the matters on which he was being T
questioned were inherently matters which he would have
U U
been expected to recollect, in contrast to the detail with
V V
A
- 8 - A
which he was able to recollect other matters of less relevance
B B
or significance.
C C
(2) The inherent improbability of the loans having been recorded in the
D D
manner alleged by the plaintiff, since:
E E
(a) no reason was given as to why it should have been necessary
F to have the “stocktaking” of such loans from time to time; F
G G
(b) the plaintiff’s suggestion that it was necessary to convert the
H loans (which were mostly extended in Hong Kong dollars or H
Renminbi) to Singapore dollars because both parties were
I I
Singaporean made little sense, as the plaintiff was not living
J in Singapore at the time; and J
K K
(c) this suggestion also did not sit well with the fact that one of
L the vouchers was denominated in Hong Kong dollars. L
M (3) The fact that the plaintiff’s evidence in relation to two alleged M
advances which he said had been advanced by cheques was
N N
inconsistent, as he had said in his witness statement that he had
O accompanied the plaintiff to the bank to encash the cheques, O
whereas he said in his oral evidence that he did not go to the bank
P P
with the plaintiff.
Q Q
(4) Further, in relation to these two advances, his explanation for not
R R
being able to produce bank statements or records to make good his
S allegations was unacceptable. The plaintiff had said that he had S
sought such records from the bank, but was told that the records
T T
were no longer available since the bank did not keep records after
U seven years. However, as the dispute between the parties had U
V V
A
- 9 - A
arisen within seven years of the alleged transactions, with the
B B
defendant having set out his case in pre-action correspondence,
C there was no good reason why the plaintiff could not have sought C
such records at a much earlier stage when they would presumably
D D
still have been available. The fact that the plaintiff had been
E imprisoned in the Mainland from 2001 to 2006 did not excuse this E
failure, since the dispute between the parties had become apparent
F F
well before 2001.
G G
(5) The plaintiff’s financial position at the time that the loans were
H H
allegedly advanced was that he was an undischarged bankrupt in
I Singapore, who had disclosed no significant assets in the course of I
his bankruptcy. This suggested that he was not in a position to
J J
make the loans to the defendant. The plaintiff, however, claimed
K to have had substantial amounts of cash on the Mainland, and that K
he was owed money by others, but none of these matters were
L L
disclosed in his statement of affairs. The plaintiff claimed that the
M non-disclosure was on the advice of the Official Assignee in M
Singapore. The Recorder did not accept this evidence and
N N
accordingly did not accept that the plaintiff was in fact in a
O financial position to make the loans. In coming to this conclusion, O
the Recorder considered various items of evidence that might
P P
suggest that the plaintiff in fact had some means from which to
Q make the loans, but explained why he did not consider such Q
evidence to be persuasive in the plaintiff’s favour.
R R
S (6) Moreover, the plaintiff’s evidence as to how he came to have S
substantial amounts of cash in China was also unsatisfactory,
T T
involving as it did an assertion that such funds derived from the
U sale by the plaintiff’s father of two properties in Singapore for U
V V
A
- 10 - A
some S$4,000,000. However, as the Recorder noted, the
B B
documentary evidence showed that the properties had in fact been
C sold for a total of less than S$2,000,000. The plaintiff claimed, in C
the face of the records, that the properties had been sold for over
D D
S$4,000,000 and were in fact worth some S$8,000,000, but that his
E father had understated the amount involved in order to reduce the E
amount of stamp duty payable on the sale. The Recorder was
F F
sceptical about this explanation, involving as it did a fraud on the
G Singapore tax authorities. G
H H
(7) Further, the plaintiff’s evidence as to how much money he had in
I cash on the Mainland varied substantially on different occasions, I
leaving the true position in considerable doubt.
J J
K
15. Having dealt with these matters, the Recorder went on to consider K
the genuineness of the three letters relied upon by the plaintiff (paragraphs 81 to
L L
112 of his judgment), and concluded that they were in fact forgeries. In
M coming to this conclusion, the Recorder made the following observations: M
N (1) The letters were typed in English, which was inherently N
improbable since the plaintiff claimed not to understand English,
O O
making it unlikely that the defendant would write to him in that
P language. By contrast, another loan acknowledgment (involving P
a loan from the defendant to the plaintiff) was in Chinese.
Q Q
R (2) So far as the handwriting expert evidence was concerned, the R
experts were hampered by having to examine copies of the
S S
disputed letters rather than the originals. It was not possible to
T determine from the copies examined whether or not the signature T
of the defendant on the letters had been actually placed there by the
U U
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defendant signing the documents himself. Neither expert could
B B
state definitively whether the documents represented a “cut and
C paste” operation whereby a genuine signature of the defendant was C
copied and inserted into the documents, so that the documents did
D D
not bear an original signature of the defendant placed on it by the
E defendant himself. The plaintiff’s expert had not been asked to E
consider this possibility, but accepted in cross-examination that it
F F
could not be excluded. The defendant’s expert expressed the
G view that the copies could have been the result of a “cut and paste” G
H
operation, a view which she considered was reinforced by the H
location of the signatures in relation to lines indicating where the
I I
document should be signed (on the first two of the disputed
J
documents which had such lines), the tendency of the defendant J
(shown by the control copies) to sign in the place indicated for his
K K
signature (whereas, by contrast, in the first two documents
L examined, the signature was not in that location) and the quality of L
the copies (in relation to the third document, where the quality of
M M
the copy of the signature appeared to be noticeably poorer than that
N of the document generally). The Recorder took the view that N
there was force in the defendant’s expert’s observations, as in all
O O
but three of the control documents, the defendant’s signature
P appeared on the line provided to indicate where it should be placed, P
and in the other three it appeared against the word “signed”, which
Q Q
served the same purpose. By contrast, the signature on the first
R two documents was some distance above the line indicating where R
the signature should be placed. He also relied on the quality of
S S
the copy of the signature (which was poorer than the rest of the
T copy document) in the third document, which the defendant’s T
expert had pointed out. The plaintiff’s expert had in fact accepted
U U
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that this difference in quality indicated that the signature may have
B B
been copied more times than the rest of the document, a fact which
C would point to its being a copy which was placed on the document. C
D D
(3) The Recorder also considered the plaintiff’s contentions as to the
E unavailability of the original documents for examination. The E
plaintiff claimed to have handed over the originals of all three
F F
documents to his former solicitors, Livasiri & Co, and alleged that
G they had since been lost by that firm. However, there was no G
contemporaneous record of his having done so, and nor was there
H H
any clear acknowledgment by Livasiri & Co that they had had
I possession of the originals but had lost them. Nor was there any I
evidence to confirm that the originals had been inspected by the
J J
defendant’s former solicitors (Baker & McKenzie) as the plaintiff
K asserted The Recorder also noted that although the plaintiff K
claimed to have given the originals of all three documents to
L L
Livasiri & Co, only the first two documents were listed in his List
M of Documents as originals, and that when the plaintiff’s new M
solicitors sought original documents from Livasiri & Co in 2006,
N N
they seemed only to have asked for the first, but not the second or
O third, of these documents. Even as to the first document, the O
plaintiff’s evidence as to why he had not obtained it from the
P P
former solicitors was regarded with considerable scepticism by the
Q Recorder. As to the third document, the plaintiff (somewhat Q
inconsistently) claimed in his witness statement to have lost it at an
R R
early stage, suggesting that he had never in fact given the original
S S
to Livasiri & Co. However, despite having misgivings about the
T
plaintiff’s story about having had the originals of all three T
documents, which were lost by his former solicitors, the Recorder
U U
did not ultimately make any findings as to this, on the basis that
V V
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even if this were true, it would not take matters further on the issue
B B
of whether or not the defendant’s signatures were a “cut and paste”
C job, and in particular would not have assisted the plaintiff on this C
point.
D D
E (4) However, the Recorder considered that the first document (the E
letter of 3 May 1998) and the third document (the 12 February
F F
1999 letter) contained oddities which told against their
G genuineness: G
H H
(a) The letter of 3 May 1998 purported to be an
I
acknowledgment of loans by the plaintiff to the defendant on I
six occasions, in the amounts and on the dates of the
J J
vouchers relied upon by the plaintiff in his Statement of
K
Claim. However, as the Recorder noted, the plaintiff’s K
evidence was that the voucher dates were not in fact the
L L
dates of the actual advances, and the actual advances
M covered by each voucher were made on a number of M
different occasions in different amounts, prior to the date of
N N
the voucher. The letter thus acknowledged loans which
O were in line with what was pleaded in the Statement of O
Claim, but not in accordance with the actual case being
P P
advanced by the plaintiff. The Recorder regarded this as
Q suspicious, and as providing reason to think that this letter Q
was manufactured by the plaintiff in order to support the
R R
case he was to plead, prior to his realisation that such a case
S was unlikely to withstand scrutiny in the light of evidence S
(in the form of a copy of the defendant’s passport) to show
T T
that the defendant was not in Hong Kong on the dates of
U U
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some of the supposed advances, had they been made on the
B B
dates of the vouchers.
C C
(b) The letter of 12 February 1999 purported to admit (in
D D
general terms) that the defendant was indebted to the
E plaintiff. But as the Recorder pointed out, the defendant E
was by this time already engaged in correspondence with the
F F
plaintiff through lawyers over their disputed financial
G dealings. Shortly after this letter, the defendant’s legal G
advisers wrote to the plaintiff to deny his indebtedness to the
H H
plaintiff, challenging the authenticity of the 3 May 1998
I letter, and setting out the defendant’s case as to the six I
vouchers. The plaintiff, however, did not refer to this 12
J J
February 1999 letter at the time to rebut the defendant’s case.
K The Recorder considered that these matters suggested that K
the 12 February 1999 letter, too, was not a genuine
L L
document, since it was wholly inconsistent with the
M defendant’s position and it was inexplicable for the plaintiff M
not to have relied on it in response had it been a genuine
N N
document in existence at the time.
O O
(5) The Recorder also had regard to two previous convictions of the
P P
plaintiff as providing evidence of a propensity on the plaintiff’s
Q part for dishonesty. These were a conviction in Singapore in Q
1992 on charges of corruption, to which the plaintiff pleaded guilty,
R R
and for which he was fined S$30,000 (the charges having been
S amended from an earlier charge of blackmail), and a conviction in S
the Mainland in 2001, for which after a successful appeal, the
T T
plaintiff was retried and sentenced to five years’ imprisonment for
U “contractual fraud”. U
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16. Finally, the Recorder considered the six vouchers relied upon by
B B
the plaintiff, and rejected the plaintiff’s case as to the circumstances in which,
C and the purpose for which, they were signed. He also concluded that the C
Chinese words purporting to confirm that the amounts mentioned in them were
D D
loans from the plaintiff to the defendant were not there when the documents
E were signed, and that at least the voucher for S$1,732,330 did not have the “S$” E
written on it when it was signed. He did so for three main reasons:
F F
G (1) It seemed to him to be inherently improbable that the parties would G
have used documents in the format of payment vouchers for the
H H
purpose of acknowledging debts;
I I
(2) There was a previous IOU between the parties (although in relation
J J
to a loan from the defendant to the plaintiff) which was simply
K
written out in Chinese, and not in the format of a payment voucher; K
L (3) The fact that the voucher for $1,732,330 was for an amount which L
was exactly the same as the total Hong Kong dollar cost of a
M M
Mainland property purchased by the defendant supported the
N defendant’s case, as it would be straining credulity to accept that, N
purely by coincidence, the plaintiff had made a loan to the
O O
defendant in the exact same amount, but in a different currency.
P P
17. Additionally, the Recorder had regard to all the other evidence in
Q Q
the case (which would include the other matters canvassed by him that led him
R to the conclusion that no loans had in fact been made, mentioned in paragraph R
14 above, and the matters leading him to the conclusion that the three
S S
documents relied upon by the plaintiff were forgeries, set out in paragraphs
T 15(1), (2) and (5) above). However, he expressly ruled out reliance on the T
U U
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versions of the vouchers put forward by the defendant (which have been
B B
described in paragraph 7 above).
C C
18. For all of these reasons, the Recorder did not accept that the
D D
plaintiff had extended to the defendant the loans upon which he relied in these
E proceedings. E
F 19. Before us, Mr Bruce SC contended that the Recorder’s rejection of F
the plaintiff’s case as to the alleged loans was wrong. The grounds for this
G G
criticism were as follows:
H H
(1) The Recorder was wrong to find that the three documents relied
I I
upon by the plaintiff were forgeries as:
J J
(a) neither expert witness was able to say that they were the
K K
product of a “cut and paste” exercise – the best that either
L could say was that this was possible, or that it could not be L
ruled out; and
M M
(b) the Recorder’s points about the first and third documents
N N
(summarised in paragraph 15(4) above) were not sufficient
O grounds for finding that the documents were forged. O
P P
(2) Also in relation to the finding of forgery, the Recorder was wrong
Q to conclude that there was evidence of propensity to engage in Q
forgery or fraudulent conduct on the plaintiff’s part, since:
R R
S
(a) the Singapore conviction was stale (being over 20 years ago) S
and did not involve forgery or fraud;
T T
U U
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(b) the Recorder’s views in relation to the sale of the two
B B
properties in Singapore (which the plaintiff had relied on to
C show that he was in a position to make the loans) could not C
amount to evidence of such propensity; and
D D
E (c) The Mainland proceedings could not amount to evidence of E
propensity, as the defendant’s conviction had been
F F
successfully appealed and a retrial had been ordered. The
G Recorder had been wrong to speculate as to the nature of the G
charges and to base his conclusions on the fact that the
H H
plaintiff had spent some time in custody.
I I
(3) The Recorder was wrong in harbouring misgivings about the
J J
plaintiff’s evidence concerning the existence of original versions of
K
the three documents and their having been lost by his former K
solicitors, especially when the first two of the documents had been
L L
described in the plaintiff’s list of documents as originals which
M were available for inspection. M
N (4) The Recorder should not have regarded the plaintiff’s credibility as N
damaged by the undervaluation of the sale of his father’s properties
O O
in Singapore as there was no cogent evidence as to how the sale
P had been carried out, or as to any fraud on the Singapore tax P
authorities.
Q Q
R (5) The Recorder erred in concluding that the voucher for S$1,732,330 R
was not for the purpose of acknowledging the loans by reference to
S S
the documentation concerning the Mainland property transaction,
T as the plaintiff had been unable to cross-examine the defendant as T
to that documentation.
U U
V V
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20. In our view, none of these contentions have merit. We deal with
B B
each of them below.
C C
21. The first three complaints relate to the finding of forgery. So far
D D
as that is concerned, it is clear from the judgment that the Recorder was well
E aware of the correct approach to take to the question of the standard of proof E
required, referring to the well known passage from Lord Nicholls’ judgment in
F F
Re H & others (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563 at
G 586, which he set out in paragraph 111 of the judgment below. As appears G
from paragraph 112, he also had in mind the views expressed by Lord Scott in
H H
Nina Wang v Wang Din Shin [2005] 8 HKCFAR 387 at paragraph 626, where
I Lord Scott pointed out that apart from taking account of the inherent probability I
or otherwise of serious allegations of fraud or misconduct being true when
J J
considering whether or not the evidence was sufficiently cogent to establish
K such allegations to the necessary standard of proof, it was necessary to take K
account of propensity – so that what might seem inherently improbable would
L L
be less so where the person against whom the accusation was levelled had a
M record of involvement in the conduct alleged. In the case of allegations of M
forgery, previous involvement in forgery or fraud would go into the balance,
N N
meaning that the strength of the other evidence required to make out the
O allegation would be less than that needed in respect of someone with no O
previous involvement in such conduct. Mr Bruce did not dispute that the
P P
Recorder was right to follow the approach called for by these principles.
Q Q
22. As for the criticism that it was inappropriate for the Recorder to
R R
have concluded on the basis of the expert evidence that the documents were
S forgeries as neither expert could say that they clearly were, this is true so far as S
it goes. It was indeed the case that neither expert was able to express a
T T
categorical or firm view one way or another (although the defendant’s expert’s
U views appeared to show a distinct inclination towards the view that the U
V V
A
- 19 - A
documents were forgeries). However, while expert evidence as to handwriting
B B
may often be of considerable assistance to a court in attempting to come to a
C conclusion as to whether or not a document is genuine or a forgery, it is C
necessary to bear in mind the limitations of such evidence, particularly where,
D D
as here, the expert witnesses were hampered by the unavailability of the original
E documents for examination. The conclusion whether or not a document is E
forged is one that must be reached on a consideration of the totality of the
F F
evidence, both expert evidence and other evidence. This is what the Recorder
G did. He clearly recognised that neither expert could say categorically whether G
H
or not the signatures were forgeries, but had regard (as he was entitled to) to the H
questions raised by the placement of the signature on the first two documents,
I I
and the poor quality of the signature on the third, and also took into account the
J
other factors mentioned by him – the inherent improbability of documents J
between the parties being prepared in English, the particular reasons for
K K
thinking that the first and third documents were questionable, and the evidence
L of propensity – in coming to his conclusion. In our view, he was entirely L
justified in doing so.
M M
23. In the same way, it seems to us that the criticism in relation to the
N N
Recorder’s reliance on the odd features of the first and third documents is also
O misplaced. To our mind, they were certainly matters that called for O
explanation. We were told that there was quite extensive cross-examination of
P P
the plaintiff on these points, but for reasons of which we are unaware, the
Q transcript of such cross-examination was not obtained and put before us. In Q
these circumstances, it does not seem to us to be right to criticise the Recorder
R R
for forming the views that he did as to the documents without seeking to
S S
demonstrate that the evidence before him could not have supported those views.
T
It is clear from the Recorder’s assessment of the plaintiff as a witness that he T
found him to be unimpressive and unreliable. Without the transcripts of his
U U
evidence, there is no proper basis for attacking that assessment, which clearly
V V
A
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would have been an important factor in the Recorder’s thinking on this, and
B B
other, points. For our part, we consider that the points made by the Recorder
C in paragraphs 108 and 109 of the judgment have real force, and do cast doubt on C
the genuineness of the documents concerned. Without being shown the
D D
plaintiff’s evidence on these points, it is quite impossible for us say that the
E Recorder was not justified in concluding that these points, in conjunction with E
the other matters he referred to, indicated that the documents were, on the
F F
balance of probabilities, forged.
G G
24. As for the question of propensity, Mr Bruce accepted that it was a
H H
material factor, and would operate (as indicated by Lord Scott) so as to render it
I possible for the court to come to a finding of forgery on the basis of evidence I
that might be less strong than that required where a party had no previous
J J
history of conduct of the sort alleged. As we understood it, Mr Bruce’s
K complaint here was that the matters relied upon as evidence of propensity on the K
plaintiff’s part were not such as demonstrated a past record of involvement in
L L
dishonest or fraudulent conduct. With respect, we disagree. The Recorder
M relied on two matters in this respect – the prior convictions of the plaintiff in M
Singapore and on the Mainland. He did not, so far as we can see, rely on the
N N
circumstances of the sale of the plaintiff’s father’s properties in Singapore as
O being evidence of propensity. O
P P
25. In our view, each of the Singaporean and Mainland convictions is
Q evidence of dishonest or fraudulent conduct on the part of the plaintiff, and as Q
such is evidence of propensity which should go into the balance in determining
R R
the question of forgery. The Singapore conviction involved charges of
S corruption – an offence which would ordinarily be regarded as involving S
dishonest conduct. As for the Mainland conviction, although Mr Bruce
T T
appeared to suggest that the retrial had not taken place (in the court below it was
U suggested that the retrial was “not fully conducted”), it seems clear from a U
V V
A
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Certificate of Release issued by the Mainland authorities in respect of the
B B
plaintiff that he had been convicted after retrial of contractual fraud, for which
C he received a sentence of 5 years’ imprisonment. That is clearly, on the face C
of it, an offence involving fraud and dishonesty. Again, we were informed that
D D
these were matters on which the plaintiff had been cross-examined at trial, but
E in relation to which we were not provided with the transcript of the evidence. E
In those circumstances, we do not see any basis for disagreeing with the
F F
Recorder that there was in this case evidence of propensity to engage in
G fraudulent conduct, which should be taken into account when weighing up the G
H
evidence for and against a finding of forgery. H
I 26. Turning to the complaint that the Recorder should not have had I
misgivings about the plaintiff’s evidence as to his having previously had the
J J
originals of the three documents, but that they were lost by his former solicitors,
K it is again the case that this was a matter that was the subject of extensive K
cross-examination, a record of which has not been made available to us. But
L L
more fundamentally, it seems to us that this point does not take the plaintiff
M anywhere because the Recorder did not in fact take it into account, as is clear M
from paragraph 107 of his judgment.
N N
O 27. In addition, as Mr Remedios pointed out, the many other factors O
identified by the Recorder as suggesting that the loans had never been made
P P
were also matters which cast doubt on the genuineness of the documents.
Q Q
28. For all of these reasons, we do not think that it can be said that the
R R
Recorder was wrong to reach the conclusions that he did on the forgery issue.
S S
29. Mr Bruce’s next complaint related to the Recorder’s assessment of
T the plaintiff’s credibility. It focussed on the Recorder’s consideration of the T
circumstances of the sale of two properties in Singapore by the plaintiff’s father.
U U
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This was a matter that had a bearing on the plaintiff’s financial capacity to make
B B
the alleged loans to the defendant. As we have noted, the Recorder observed
C that the plaintiff was an undischarged bankrupt in Singapore at the time the C
loans were allegedly made, and had failed to disclose any significant assets in
D D
the course of his bankruptcy. Among various explanations given by the
E plaintiff to suggest that he in fact had substantial funds available to him was a E
suggestion that he had obtained funds from the sale of these properties, and that
F F
the amount realised from the sale was substantially higher than the sale price
G recorded in public documents in Singapore. The Recorder took the view that G
H
plaintiff’s evidence in relation to this matter cast further doubt on his credibility, H
because it was either untrue (and the amount realised was the amount publicly
I I
recorded), or it showed that the plaintiff was privy to conduct which amounted
J
to a fraud on the Singapore tax authorities. J
K 30. Mr Bruce contended that this was unjustified, since there was no K
cogent evidence of how the sales were carried out, or of the nature of any fraud
L L
on the Singapore tax authorities. But it was the plaintiff’s own evidence that
M the sales were carried out at a true price that was significantly (some two to four M
times, depending on which version of his evidence one has regard to) higher
N N
than the recorded price. If this was untrue, it clearly had implications for the
O plaintiff’s credibility and the reliability of his evidence. On the other hand, if O
it were true, it would seem self-evident that the plaintiff was aware of a scheme
P P
on his father’s part to defraud the Singapore tax authorities. While he may or
Q may not himself have been a party to this, the fact that on his own case he was Q
aware of it, and received a substantial share of the sale proceeds, does raise
R R
questions about the extent of his involvement. We therefore think that the
S S
Recorder was justified in regarding the plaintiff’s evidence on this matter as
T
something which impacted adversely on his credibility. T
U U
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A
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B B
31. Moreover, even if (contrary to the view we have just expressed)
C this was not a matter that should have been held against the plaintiff, there was C
ample reason for the Recorder to have had serious reservations about the
D D
plaintiff as a witness, having regard to the many other unsatisfactory aspects of
E his evidence which were identified by the Recorder. E
F 32. Mr Bruce’s final point relates to the Recorder’s conclusion that the F
voucher for S$1,732,330 was not for the purpose of acknowledging the loans.
G G
He contended that in the absence of cross-examination of the defendant about
H H
the supposed Chinese property transaction, the Recorder should not have relied
I
on this material. However, the Recorder was well aware of the fact that the I
defendant was not available to be cross-examined, but considered that having
J J
regard to the matters canvassed by him in paragraph 121 of the judgment, it was
K
open to him to conclude that the vouchers were not created for the purpose K
alleged by the plaintiff. The coincidence in numbers was but one of these
L L
matters. We are therefore not persuaded that there is any substance to this
M point either. M
N 33. Further, we think that Mr Remedios was right to point out that N
there were many other matters on which the Recorder formed views adverse to
O O
the plaintiff, to which no challenge had been made. The complaints raised in
P this appeal have focussed on specific aspects of the Recorder’s reasoning, and P
have not had sufficient regard to the totality of the many reasons which the
Q Q
Recorder took into account in coming to the conclusion that the plaintiff had
R R
failed to satisfy him that loans had in fact been made to the defendant as
S
claimed. S
T T
U U
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A
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B B
34. For all of the foregoing reasons, we considered that the appeal was
C without merit, and accordingly dismissed it. C
D 35. So far as costs are concerned, it will be clear from the reasons D
which we have given that the appeal was entirely unmeritorious. In these
E E
circumstances, we think that it would be right to make an order nisi that the
F costs of the appeal, which we ordered should be paid by the plaintiff to the F
defendant, with certificate for two counsel, should be taxed on the indemnity
G G
basis.
H H
I I
J J
K K
(Michael Lunn) (Susan Kwan) (Aarif Barma)
Vice President Justice of Appeal Justice of Appeal
L L
M Mr Andrew Bruce SC and Mr. James Sherry instructed by Raymond Chan, M
Kenneth Yuen & Co. for the Appellant/Plaintiff
N N
Mr Leo Remedios and Mr. Jose Remedios instructed by John Ip & Co. for the
Respondent/Defendant
O O
P P
Q Q
R R
S S
T T
U U
V V