Commercial Law — Childhood and Passion Unbound: Pui Ching Litigation Saga Continued

The Romantic poet William Wordsworth attributes childhood as having “intertwine for me / the passions that build up our human Soul / Not with the mean and vulgar works of Man, / But with high objects, with enduring things”. It is childhood, writes Wordsworth, that enables us to recognise “the grandeur in the beatings of the heart”.[1]  

Yet childhood passion can, if unrestrained, distort. Such was the finding in Koo Ming Kown v The Baptist Convention of Hong Kong & Ors [2024] HKCFI 2869, where the Court dismissed the plaintiff’s claims in deceit and breach of contract with costs on an indemnity basis. The Court found that the plaintiff’s passion verges on being obsessive and that his recollection was coloured by this passion for his alma mater Pui Ching. The decision provides valuable guidance in the assessment of evidence as well as addresses a range of legal principles including on (1) when to draw adverse inferences, (2) deceit, (3) implied contract, (4) ad hoc fiduciary relations, (5) indemnity costs and (6) trial procedure. 

Abraham Chan SC, Richard Yip and Keith Cheung instructed by Messrs Or & Partners represented the successful 1st to 3rd Defendants. 

Richard Yip and Keith Cheung consider the decision below.   

Facts 

There have been long-standing disputes between the parties over the affairs of a group of schools and institutions bearing the name “Pui Ching”. In the present action the Plaintiff (“P”) says that he has been misled into making various donations principally towards causes related to the recovery and protection of the name “Pui Ching” (the “Name”) and the red and blue insignia (the “Insignia”). He seeks various injunctive relief over the use of the Name and Insignia. He also seeks damages, including exemplary and aggravated damages. 

In the 1990s, various schools bearing the Name were established in the Mainland by various people including Pui Ching alumni and those without connection to it. That posed a problem when in June 2000, the Pui Ching School in Guangzhou (the “Guangzhou School”) sought to register the Name and Insignia in the Mainland. The Guangzhou School was considered the first institute bearing the Name, having been founded in 1889. 

On 28 February 2002 a meeting was held amongst the representatives of the Pui Ching schools in Hong Kong, Macau and Guangzhou to discuss the possibility of recovery of the proprietary interest of the Guangzhou School in the Name and Insignia in the Mainland, and the necessity of considering principles for the proper use of the Name and Insignia in future (the “Campaign”). What then transpired was a decade-long endeavour to re-establish the Guangzhou School as the proprietor of the Name and Insignia.   

P now says that his involvement and donations were the result of either deceit[2] from the defendants or made pursuant to a contract between P and the Baptist Convention, the sponsoring body of the Pui Ching schools in Hong Kong.   

Approaching the Evidence  

P adduced voluminous evidence in support of his claims and gave oral evidence. The Court confirmed that it is P that must demonstrate and make good his claims pursuant to well-established principles: 

(1) The balance of probability standard means that a court is satisfied an event occurred if the court considers that, on the evidence, the occurrence of the event was more likely than not. When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability; and 

(2) an allegation of fraud or dishonesty must be sufficiently particularised, and that particulars of facts which are consistent with honesty are not sufficient.  

The Court found that P was not a credible or reliable witness [103]. P was passionate towards matters relating to Pui Ching, that passion was particularly vehement over the Campaign and that passion verges on being obsessive. It is also inherently probable that P’s recollection, perception and interpretation of events, particularly those that happened years ago, would have been coloured by his passion, subjective sense of grievance, and zealousness in the pursuit of the cause. Under cross-examination, P agreed to the suggestion put to him that his strong feelings in the matters could distort his better judgment.  

By contrast, the Defendants elected not to give oral evidence at trial. The decision, however, did not mean the Court should draw adverse inferences against the Defendants.  Importantly, the Court confirmed that: 

(1) The decision to call no witness does not effectively lower P’s burden of proof. The Court carefully examined the extensive authorities submitted and clarified their significance in their respective legal context [108]-[109].  

(2) There must be a reasonable basis for some hypothesis in the evidence or the inherent probabilities, before a court can draw useful inferences from a party’s failure to rebut it.  The mere failure of a party to call a witness does not automatically confer an evidential benefit on the opposing party [110(a)].   

(3) The drawing of adverse inference is not an automatic exercise. There is no presumption for an adverse inference to be drawn from the mere absence of a witness or documents. Whether an adverse inference should be drawn in a particular case is a matter of discretion for the trial judge based on all the relevant circumstances of the case including the quality of the other evidence [110(b)]. 

Deceit

The judgment is a useful point of reference for the principles on deceit as the Court considered jurisprudence stretching 183 years [117], from Pilmore v Hood (1838) 132 ER 1042 to Xie Li Xin v Law Ka Yan Thompson [2022] HKCFI 1591. 

In rejecting P’s claim, the Court considered upwards of 400 pages of submissions. 

There was no dispute that the elements of the tort of deceit are (1) there must be a representation of fact made by words or conduct; (2) the representation must be made with knowledge that it is or may be false. It must be wilfully false, or at least made in the absence of any genuine belief that it is true; (3) The representation must be made with the intention that it should be acted upon by the claimant, or by a class of persons which includes the claimant, in the manner which resulted in damage to him; (4) It must be proved that the claimant has acted upon the false statement; (5) It must be proved that the claimant suffered damage by so doing [116].   

A representation may be express or implied [117].   

Express representation 

The Court found that the contended Representations are composite representations and their contents are complex, embracing and incorporating various notions and concepts which are, in turn, composition in nature.   

Critically, the Court agreed that in making a finding, the width, complexity, vagueness, and the implied nature of the multi-faceted Representations are all important considerations [126]. On a review of the evidence, the Court found that these were not established. 

Implied representation: trust and confidence / joint ventures? 

As an alternative, P says that there were representations by silence. A lynchpin in this analysis is that the parties were in a relationship of trust and confidence. In advancing its case, P sought to argue that there was in fact a “joint venture”, a term which establishes an ad hoc fiduciary relationship. The Court rejected this argument because (1) “joint venture” was not pleaded and reliance to add anything to the pleaded facts is impermissible; (2) the term itself is not a magic label and it is not a principle that joint ventures belong to any legally recognised class that specific fiduciary duties flow. Equally, the term “ad hoc fiduciary relationship” is not a legal term which embraces specific fiduciary duties. It is the pleaded facts which are important.   

Applying the established principles on assumption and imposition of fiduciary duties [147], there was no fiduciary relationship between P and any of the Defendants, ad hoc or otherwise. 

Implied Contract 

A contract can be inferred from parties’ conduct though the Court will not do so lightly. The test is objective and the conduct relied upon must be unequivocally referrable to those alleged agreements [188]-[191]. There are added practical difficulties in proving an oral or inferred and assumed contracts [192]-[193].   

In reviewing the evidence, the Court agreed that P’s case was “a tangled web” [198]. P’s preparedness and commitment to pay for the relevant donations are far removed from being unequivocally referable to the alleged agreements or contracts. 

Limitation Period 

The limitation period applicable to actions founded on simple contract or tort is 6 years.  Mere absence of knowledge does not postpone accrual of time and it was incumbent on P to prove deliberate concealment.  

Applying settled principles [182], P could not extend limitation period.  

Indemnity Costs 

The Court agreed that where an action was brought in bad faith in pursuit of some personal agenda or vendetta, the Court may impose a cost order on an indemnity basis [217]-[218].   

As the Court agreed that this was such a case, the action was dismissed on an indemnity basis.  

Trial Procedure 

The default position appears from a strict reading of Order 35, rule 7(3) Rules of High Court (Cap 4A) that if a defendant who elects not to call evidence should only have one speech. That position is, however, subject to any direction to the contrary by the trial judge as provided by rule 7(1).   

Modern procedure favoured the exchange of written submissions. The Court directed that there be two rounds of simultaneous exchange of written closings and oral delivery be in the order of defendants and then P. Such direction would ensure fairness to all parties.   

Takeaway 

If P’s evidence can be described as passionate, Yeung J’s judgment epitomises calm reasoning. The judgment considers and examines the evidence methodically and in so doing illustrate a principled approach. The facts and claims are complex and at times convoluted but the judgment deserves reading and re-reading so as to understand that principled approach.   

[1] The Prelude (1805).
[2] The term is used interchangeably with fraudulent misrepresentation [94(a)].

 

Richard Yip

“One of the strongest junior barristers around, his stand-out qualities include an excellent handle on the detail, an insightful legal mind, and sound commercial sense.”
Legal 500 Asia-Pacific 2021 – 2024, Commercial Disputes — Leading Juniors, Tier 1

Richard has a broad civil practice with a focus on shareholder disputes, commercial litigation, financial regulation, competition law and personal injuries. He joined Denis Chang’s Chambers in 2011. Prior to joining the bar, Richard was a corporate finance solicitor at Herbert Smith Freehills.

He represented four respondents in the second case before the Hong Kong Competition Tribunal, where the economic efficiency defence was raised for the very first time in Hong Kong. He was also involved in a number of substantial shareholder disputes, including Acropolis Ltd v W&Q Investment Ltd, 2018 HKCA 379 (appeal against interlocutory injunction concerning the EGM voting results of a listed company) and Waddington Ltd v Chan Chun Hoo Thomas, HCA 3291/2003 (trial of a double derivative action).Richard is also actively involved in the community and academia. He is a part-time lecturer at the University of Hong Kong.

Visit Richard’s profile for more details.

Keith Cheung

Keith is developing a broad civil practice with particular experience and interest in commercial litigation, company law, insolvency, arbitration, trusts, probate and intellectual property. He has represented domestic, Mainland and overseas clients in Hong Kong and worked with legal teams in offshore litigation in the Cayman Islands and the British Virgin Islands.

Keith is a member of the Chartered Institute of Arbitrators and the Hong Kong Institute of Arbitrators.

Prior to joining the Bar, Keith qualified as a solicitor with a major international law firm. He has received awards from international and domestic mooting competitions including the Best Speaker Award from a practitioners’ moot organised by Essex Court Chambers and the Singapore Academy of Law.

Find out more from Keith’s profile.

This article was first published on 1 November 2024.

Disclaimer: This article does not constitute legal advice and seeks to set out the general principles of the law. Detailed advice should therefore be sought from a legal professional relating to the individual merits and facts of a particular case. The photographs which appear in this article are included for decorative purposes only and should not be taken as a depiction of any matter to which the case is related. The views and opinions expressed in this article/material are solely those of the members authoring it and do not necessarily reflect the official policy or position of Denis Chang’s Chambers, or of any other member or members of Denis Chang’s Chambers.