Su Su v. Li Wing Chiu

HCA 2225/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2225 OF 2013

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DECISION
(Leave to Appeal)
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Introduction

1.P applies for leave to appeal against the judgment of this court on 30 January 2015 in declining to grant summary judgment to P (“O14 Judgment”), and also this court’s subsequent corrigendum dated 3 August 2015 (“Corrigendum”), with reasons of the same date (“Reasons”) .

2.In this decision, I will adopt the same abbreviations in the O14 Judgment.

3.By way of background, prior to the O14 Judgment, I had handed down two earlier judgments, the 1^st Judgment refusing D’s application to set aside the Mareva Order, and the 2^nd Judgment refusing D’s application for leave to appeal against the 1^st Judgment, and allowing P’s application to vary the Mareva Order to raise the ceiling therein to HK$21.08m, to take into account contractual interest for 12 months.

Grounds of Appeal

4.P had annexed a copy of the draft Notice of Appeal (“Draft Notice”) to her summons for leave to appeal, setting out the grounds of appeal.

Refusal to grant summary judgment

5.On the court’s refusal to grant summary judgment, P’s Counsel Mr Liang submitted that this court was plainly wrong in concluding that there were bona fide triable issues as to the existence of the Entire Contract, in particular the alleged oral guarantees and undertakings therein (“Oral Terms”) which were raised for the first time only in D’s 5^th affirmation.

6.That D had changed his stance several times was clearly noted in the O14 Judgment[1], namely in his 1^st affirmation of November 2013, his 2^nd affirmation of January 2014 and then finally in his 5^th affirmation of June 2014.  His latest/new defence was also not pleaded in his D&C filed on 20 February 2014.

7.Mr Liang had referred to D’s new defence to be a “pure recent concoction”. Further, Mr Liang relied on what was said by DHCJ Marlene Ng in AVC Property Development Co Ltd v Joyful Grace Trading Ltd HCA 529/2013 (21.02.14)[2] and submitted that this court should have looked at D’s new defence with a “jaundiced eye”, in particular when D did not even provide any explanation as to why his new defence and/or facts underlying it had not be set out in his previous affirmations or in his D&C.

8.At the time of the O14 Hearing, D had argued that what he was putting forward in his 5^th affirmation was not a different version of his case but only an elaboration of his previous case.

9.In any event, this court had accepted in the O14 Judgment that D’s case had mutated, and that the new defence was not pleaded in the D&C[3].

10.However, this court had considered contemporaneous documents, such as the Draft Agreement and other drafts, before coming to the view that what D had put forward, namely the 3 Relevant Agreements, ie the Transfer Agreement and Consultancy Agreements could all be part of the Entire Contract, or an entire or overall agreement for the Buying Out Transaction, was not a fanciful idea[4].

11.This court had also considered available evidence before the court of the Relevant Negotiations and also the affirmation from a witness Zhang XB filed on behalf of D[5].

12.It was under the above circumstances that this court was not able to say that D’s allegations were fanciful, and the court came to the conclusion that D had raised triable issues on whether there had been an Entire Contract and whether there could have been guarantees/implied terms in the Entire Contract and that leave to defend should be given to D subject to condition.

13.Mr Liang had submitted that even if the facts giving rise to the new defence could be established, D would still be under an independent liability to pay the sum of HK17m to P under the Transfer Agreement.

14.However, as pointed out by Mr Chan, if D eventually were to be able to establish the Entire Contract and its implied terms, then the parties’ rights and liabilities in the Transfer Agreement could be affected.

New Evidence on the sum of HK$17m in court

15.After the handing down of the O14 Judgment, the order was not sealed or perfected for some time, and during that period of time, the parties’ respective solicitors had sent various correspondences to the court in relation to the clarification of the condition.  Eventually, this court directed that a hearing be fixed in relation to the matters raised in correspondence.

16.It was at this hearing that Mr Liang then raised the new evidence.  The position of the court at the hearing was simply that what P was seeking was a modification or variation of the O14 Judgment in light of the new evidence, and this court was of the view that P should take out a proper summons to deal with their application. This was set out in paragraph 33 of the Reasons.  There was eventually no summons taken out by P.  Thus, the court simply had not considered, nor determined, the issue as to whether the condition should be varied by any further payment in light of the new evidence.

Full amount of claim as condition

17.Although this court gave leave to D to defend, this court had imposed condition, as this court had said that D’s new defence was more than shadowy, and his mode of presenting his case was suspicious[6].

18.The condition this court imposed was, as clarified in the Corrigendum and the Reasons, the amount of HK$17.68m, being the amount already paid into court, ie the FULL amount of HK$17m claimed by P plus two months of contractual interest, to remain in court as D’s payment to meet the condition.

19.P’s position at the O14 Hearing in relation to any condition, if imposed, was that D should pay an additional sum of HK$17m plus interest into the court, as the then evidence before the court was that the liquidators of Thousand Jade were claiming that the sum of HK$17m paid into court by D did not belong to D, but belonged to Thousand Jade instead.

20.The above was the main reason as to why P was seeking an additional amount of HK$17m plus interest to be paid, and Mr Liang had himself admitted that there was “very meagre treatment” in the O14 Hearing on the issue of the condition or the amount. 

21.Mr Liang complained that this court did not give any reason as to why the amount should be confined to the amount already paid into court, and that D did not advance any argument whatsoever at the O14 Hearing as to the issue of his impecuniosity or make any proper attempt at all to satisfy the burden of proof that it was impossible for him to fulfil the condition of payment into court of the full amount. 

22.Although there were no submissions at the O14 Hearing on D’s impecuniosity, D had filed his 4^th and 6^th affirmations to explain that due to his impecuniosity, he was not able to meet the increased ceiling of the Mareva Order[7].

23.Mr Liang had referred to Bass &Alloy Pressings (Deritend) Limited v DA Allen t/a Royce Racing, Court of Appeal, 8 December 1986 where the Court of Appeal decided to give leave to the defendant to defend on condition upon paying the face value of the cheques in question plus the interest as originally ordered by the Deputy District Registrar.

24.The defendant in the above case had argued on interest, in that it was submitted that having regard to the lack of any original claim for interest, to the late reliance on the cheques and to the imminence of the trial, the court should not order interest at all.  Lord Justice Bingham had said the District Registrar had in no way wrongly exercised his discretion in making an award of interest, and that to deprive the plaintiff of interest would seem to be no more than to penalize him for a forensic failure and that was not usually the correct approach to a purely commercial dispute.

25.The facts of the above case were quite different, and I am of the view that the case would not assist D.

26.Mr Liang had also referred to Maracomp Limited Proprietors of North West Automart v Roger Stuart Fairbrother (Court of Appeal, 26 November 1986), and Bank of China (Hong Kong) Ltd v Charter Point Enterprises Ltd HCA 401/2011 (3 January 2013) to support his submission that “full amount as a condition for leave to defend would clearly include interest on the amount claimed”.  In those two cases, the issue was, however, whether there should be unconditional leave to defend as opposed to conditional leave, and there was no issue on the amount of interest ordered.

27.In the present case, there were simply no submissions made at the O14 Hearing on the amount of interest, or the period over which such interest should be calculated, in the event of the court imposing a condition for leave to defend for the full amount of claim.  The only submission was whether an additional amount to the sum already paid into court should be paid, and I gave brief reasons for declining to order an additional amount to be paid[8].

Condition

28.Having considered the above, I am not satisfied that P’s intended appeal has a reasonable prospect of success, or that there is some other reason in the interests of justice why the appeal should be heard.  I therefore dismiss P’s summons issued on 28 July 2015 for leave to appeal with costs to D.  This is an order nisi which shall be final after 21 days.

Mr Alfred Liang, instructed by W K To & Co, for the plaintiff

Mr Kenneth C L Chan and Ms Margaret K M Chan, instructed by WT Law Office, for the defendant