Cheer Signal Development Ltd v. Wong Siu Fan and Others

HCA 780/2015

ACTION NO 780 OF 2015

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D E C I S I O N
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1.By my decision dated 26 October 2015 (“the Decision”), I dismissed the Mareva injunction against, amongst others, D1, D2, D4 and D5 (collectively “the defendants”). This is the application of the plaintiff (“Cheer Signal”) for (a) leave to appeal to the Court of Appeal; and (b) stay of execution pending appeal or pending application to the Court of Appeal for leave to appeal. I shall adopt the abbreviations used in the Decision.

Legal principles for grant of leave to appeal

2.Leave for an interlocutory appeal will only be granted if the court is satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard. “Reasonable prospects of success” requires something more than an appeal which is “arguable”, ie more than fanciful without having to be probable; and is akin to the test for setting aside a default judgment.  SMSE v KL [2009] 4 HKLRD 125, at §17; Ho Yuen Ki Winnie & anor v Ho Hung Sun Stanley & anor [2009] HKCU 1252, at §16.

3.Mr Chain, counsel for Cheer Signal, accepts that the Decision involves an exercise of discretion.  The Court of Appeal will intervene only in limited circumstances, where the judge has misdirected himself in the relevant law or evidence, took into account irrelevant matters or failed to take into account relevant matters, or that his exercise of discretion was so plainly wrong that it was outside the generous ambit within which there can be a reasonable disagreement: Cheung Kam Wah v Cheung Hon Wah & ors [2005] 1 HKC 136, at 142F-G, §17, Woo VP;Hong Kong Civil Procedure 2016, Vol 1, §59/0/54.

4.Appeals in Mareva injunction cases should be rare and confined to matters of principle: Commercial Injunctions, 5^th ed, §23.041.

5.Four intended grounds of appeal have been put forth.

Ground 1: that this court erred in applying 2 legal principles

6.It is alleged that this court erred in applying the principle that:

(a) In assessing factual evidence where there are 2 conflicting versions of events, if one can be rejected it is logical to accept the other: Alan Peter Ide v ATB Sales Ltd, [2008] EWCA 424, 28 April 2008, §6, per Thomas LJ.

(b) That this court failed to apply to the defendants’ case the principle in Re H that the more serious the allegation the more cogent the evidence is required to establish it on balance of probabilities.

7.It is also said that this court erroneously concentrated on detail but failed to properly consider the inherent probabilities and documentary evidence amidst the big picture of the parties’ respective cases.

8.In Ide, Thomas LJ stated as follows:

“6. As a matter of common sense, it will usually be safe for a judge to conclude, where there are two competing theories before him neither of which is improbable, that having rejected one it is logical to accept the other as being the cause on the balance of probabilities. It was accepted in the course of argument on behalf of the appellant that, as a matter of principle, if there were only three possible causes of an event, then it was permissible for a judge to approach the matter by analyzing each of those causes. If he ranked those causes in terms of probability and concluded that one was more probable than the others, then, provided those were the only three possible causes, he was entitled to conclude that the one he considered most probable, was the probable cause of the event provided it was not improbable.”

9.The reliance on Ide is, without disrespect, misconceived.  It was an appeal against a trial on the facts.  That authority is therefore not applicable to the present situation involving an interlocutory application where the evidence was far from complete.

10.Further, one must not overlook the finding in the Decision that both sides had presented half truths and that there were inherent doubts in Cheer Signal’ case.  These findings clearly meant that there were more possible causes not presented to the court, and Cheer Signal as applicant had failed to discharge its burden of proof.

11.Regarding the Re H principle, although itwas not expressly cited in the Decision, the principle was no different to those in Nina Kung v Wang Din Shin (2005) 8 HKCFAR 387, §§181-184 cited in §91 of the Decision.

12.This court has examined, not only the inherent improbabilities of the plaintiff’s case, but also the defendants’. 

13.Items (b) and (c) under Ground 1 are bare assertions not made good even in the submission of counsel for Cheer Signal.  It has not been demonstrated that this court has erred in the manner described in paragraph 3 above.

14.Ground 1 has no prospect of success.

Ground 2 – failure to take into account matters relating to the defendants’ case on the Ying Fai Mechanism

15.It is asserted under Ground 2 that this court failed to take into account the motive, purpose and effect of setting up the Ying Fai Mechanism. Quite apart from the fact that this was not the case, it was cherry picking from a whole host of other factors that this court had taken into account. Again, it has not been demonstrated that this court has erred in the manner described in paragraph 3 above.

Ground 3 – failure to take into account matters regarding explanation for whereabouts of Cheer Signal’ s funds

16.The 4 factors in items (i) to (iv) in Ground 3 have in fact been considered by this court.  What weight this court accorded to those matters could hardly be a ground of appeal.  Ground 3 has no merits.  In any case, this ground does not concern D1, D2 and D5.

Ground 4 – that the court ought to have found, for reasons set out in the other 3 Grounds, a good arguable case and consequentially a risk of dissipation of assets against the defendants

17.This court found an arguable case only.  The finding on lack of risk of dissipation of assets was not a consequential holding.  There was separate analysis on whether there had been risk of dissipation.  Again this Ground is a criticism on how the court weighed the evidence and has no merits.

Stay of execution pending appeal or application for leave to appeal to the Court of Appeal

18.No prospect of success of appeal having been shown, there is no basis to grant a stay of execution.

Conclusion

19.I dismiss both applications of Cheer Signal.  I make an order nisi that costs of this application should be to the defendants, D3 and the 3^rd Third Party (who were originally served with the summons for appeal).  I summarily assess the costs of D1, D2 and D5 at $90,000; those of D4 and the 3^rd Third Party at $40,000; and those of D3 at $35,000.

20.I thank counsel for their assistance.

Mr Christopher Chain, instructed by Li & Partners, for the plaintiff

Mr Laurence Li, instructed by Samuel L.C. Yang & Co, for the 1^st, 2^nd and 5^th defendants

The 3^rd Defendant, represented by Lawrence Chan & Co

Mr Tony Chow, instructed by C.L. Chow & Macksion Chan, for the  4^th defendant and the 3^rd Third Party