Privy Council: 'fairness' central to whether evidence must be put to party at trial

Five Supreme Court judges, sitting as the Judicial Committee of the Privy Council, overturned the decision of a British Virgin Islands (BVI) judge on the grounds that one of the parties, Mr Ng, had not had the chance to respond to two grounds on which the judge had reached his decision during cross-examination. This was unfair to Mr Ng, as the two grounds were "simple, self-contained reasons for disbelieving him" and could have been put to him very easily in the course of a 90-minute cross-examination, according to the judges.

The judges said that it was "disproportionate and unrealistic" to expect that every ground for doubting the evidence of a witness would be put to every witness in every case. Ultimately, the question was "whether the trial, viewed overall, was fair bearing in mind that the relevant issue was decided on the basis that a witness was disbelieved on grounds which were not put to him".

"In a perfect world, any ground for doubting the evidence of a witness ought to be put to him, and a judge should only rely on a ground for disbelieving a witness which that witness had had an opportunity of explaining," said Lords Neuberger and Mance, giving the judgment of the court. "However, the world is not perfect, and, while both points remain ideals which should always be in the minds of cross-examiners and trial judges, they cannot be absolute requirements in every case."

"At a relatively high level of generality ... an appellate court should have in mind two conflicting principles: the need for finality and minimising costs in litigation, on the one hand, and the even more important requirement of a fair trial, on the other," they said.

The judges then set out a number of factors that could be taken into account when deciding the point. These included the importance of the issues; how close the points were to the points that were put; what grounds there were for not having put the points; and even, in some cases, whether it was plausible to think that the witness would have had an answer anyway.

In this case, the issue concerned was central to the whole proceedings, neither ground which the judge explicitly gave for disbelieving Mr Ng on the issue was put to him or indeed referred to at the hearing at any time, save in Mr Ng's witness statement. Neither ground was obscure or difficult, and so each could reasonably be expected to have been raised in cross-examination, and it was quite possible that Mr Ng would have given believable evidence which weakened or undermined those grounds. There was also nothing in the judgment which indicated that the judge would have come to the same conclusion without those grounds, the Privy Council said.

The dispute was a complex one between a cohabiting couple, Mr Ng and Madam Chen, involving the ownership of 40,000 of the 50,000 issued shares in Peckson Ltd, the BVI-incorporated company behind the New Century Hotel in Macau. The shares, which were originally owned by Mr Ng, were transferred by him to Madam Chen in October 2011 for a "token" payment of $40,000, which was never actually paid.

Mr Ng's case was that the transfer had taken place for commercial reasons so that he could pursue a business interest in another hotel, and that there was an "express understanding" that Madam Chen would transfer the shares back to him some six months later. Madam Chen argued that she had been the beneficial owner of the shares from the outset.

Commercial litigation expert Craig Connal QC of Pinsent Masons, the law firm behind Out-Law.com, said that the issue that the judges had to wrestle with in this case was an "intensely practical" one, which arose "not infrequently" during the conduct of complex litigation.

"There are two reasons to focus on what sounds like the esoteric topic of what was or was not put to a witness in cross-examination," he said. "Firstly, such a seemingly esoteric point can turn the case - as here - entirely one way. The case turned on whether the judge's reasons for disbelieving Mr Ng could be upheld when these reasons had not been put to him."

"Secondly, and perhaps more importantly in a planning sense, it is a useful reminder to all engaged in litigation that for all the grand strategy, piles of documents, witness statements and whatever, the case may well stand or fall on very precise details of who does what in the courtroom. A useful lesson in the realities of litigation," he said.