Raingate Ltd v. Bee Cheng Hiang (Hong Kong) Ltd

DCCJ 3540/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3540 OF 2015

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DECISION

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1.This is the plaintiff’s application for leave to appeal against my decision dated 1 February 2016 (the “Decision”). More particularly, it seeks leave to appeal my decision to grant the 2^nd defendant unconditional leave to defend.

The Principles

2.Section 63A (2) of the District Court Ordinance states:-

“(2) Leave to appeal shall not be granted unless the judge, the master or the Court of Appeal hearing the application for leave is satisfied that –

(a) the appeal has a reasonable prospect of success; or

(b)    there is some other reason in the interests of justice why the appeal should be heard.”

3.In Ho Yuen Ki Winnie v Ho Hung Sun Stanley, HCMP 1009/2009, unrep, Le Pichon JA stated (para 16):-

“For leave to be granted, this court must be satisfied that the appeal has ‘reasonable prospects of success’. Merely showing that the appeal is ‘arguable’ and ‘not fanciful’ would not be sufficient. In my view, ‘reasonable prospects’ requires something more and, in that regard, some assistance may be derived from the test applied when setting aside a default judgment.”

4.In KNM v HTF, HCMP 288/2011, unrep, the Court of Appeal further stated (at para 9):-

“The relevant test of whether an appeal has a reasonable prospect of success under s 63A, is whether the applicant for leave can show that he has an arguable case with reasonable chances of success on appeal. A reasonable prospect of success therefore means an appeal with prospects that are more than ‘fanciful’ but which do not need to be shown to be ‘probable”.

5.The test corresponds with the relevant leave test in section 14AA(4) of the High Court Ordinance, Cap 4 for the grant of leave from a decision of the Court of First Instance to the Court of Appeal in interlocutory matters: see SMSE v KL[2009] 4 HKLRD 125.

6.Even if the court finds there to be a reasonable prospect of success, it still retains a discretion whether to grant leave: see Hong Kong Civil Procedure 2016, Vol 1 at Note 59/2A/4.

7.There was no dispute between counsel as to the applicable principles to be applied.

The Decision

8.The application originally before me was an application by the plaintiff for summary judgment against the 1^st and 2^nd defendants.  The facts and background to that application are summarised in the Decision which I do not repeat here.

9.I decided in that application as follows:-

(1)   Interlocutory judgment, as claimed by the plaintiff, to be entered against the 1^st defendant;

(2)   Unconditional leave to defend to be granted to the 2^nd defendant;

(3)   Costs, vis a vis, the 2^nd defendant were to be costs in the cause, with certificate for counsel.

10.My reasons for granting unconditional leave to defend in favour of the 2^nd defendant are set out at paragraphs 30 to 33 of the Decision:-

“30. As stated above the plaintiff argues, on estoppel, that detrimental reliance has not been pleaded such that there is no causal link between the plaintiff’s inaction and the reliance of the 2^nd defendant.

31. Given my observations above, this argument invariably is subsumed within the estoppel/ acquiescence defence.  Whilst I do not doubt the validity of the principles set out in Sealegend, the question of the plaintiff’s knowledge is in issue such that the same has not been properly answered in the evidence which led the learned judge in Winland to conclude as he did at para 54 of the Judgment (see para 29 above).

32. Necessarily, being one ground of that defence, whether the plaintiff can succeed on the detrimental reliance depends on how the estoppel/acquiescence issue as a whole plays out.   In short, it cannot be resolved at this summary stage for the reasons I have given above.

33. As a result, I hold that the 2^nd defendant has a real or bona fide defence as to whether the plaintiff acquiesced, or is otherwise estopped, from enforcing its legal rights against the 2^nd defendant.  Leave to defend is granted on this ground.”

Leave to appeal

11.Mr Ho, counsel for the plaintiff, argues that the 2^nd defendant’s defence in relation to estoppel/acquiescence is bound to fail in that a crucial element of that defence, namely detrimental reliance, cannot succeed.

12.This is in fact the same argument that was raised by the plaintiff at the hearing of its application (the “O14 hearing”).  It was argued then that detrimental reliance has neither been raised in the 2^nd defendant’s pleadings nor in its evidence such that it has not been put in issue in these proceedings by the 2^nd defendant.  Without the necessary averrments in its pleaded case or evidence in support, detrimental reliance cannot be made out and, ultimately, estoppel and acquiescence is bound to fail as a defence.

13.In arguing that I may have erred in granting unconditional leave to defend, Mr Ho produces two new authorities at this application that were not cited before me during the O14 hearing, namely Fisher v Brooker [2009] 1 WLR 1764 (paras 62 and 63) and Jones v Stones [1999] 1 WLR 1739, 1754A-B.

14.In spite of the new authorities, Mr Ho submitted that the approach set out by Aldous J in Jones v Stones, which counsel said to be a more “principled approach” is essentially the same as that set out by Fry J in Willmott v Barber, which was adopted by Rogers JA in Tong Tim Nui v Hong Kong Housing Authority [1999] 4 HKC 466 at 495 and which was cited to me at the O14 hearing: see para 20 of the Decision.

15.Mr Ho re-emphasises that detrimental reliance is a distinct element that must be established in order to succeed on the estoppel/ acquiescence defence and has attempted to highlight this by the two new authorities.

16.Indeed, he is now prepared to accept for the purposes of this application that a triable issue arises on the question of knowledge as to whether, by its inactivity, the plaintiff made a representation to the 2^nd defendant (following Winland). He also accepts that there is a triable issue on the question of whether the plaintiff had a duty to protest (again something that may be relevant in determining estoppel/acquiescence).  In spite of this he argues that no triable issue can arise on the question of detrimental reliance given the state of the pleadings.

17.I have already dealt with this point (paragraphs 30 to 33 of the Decision, cited above).  The question is whether what the defendant has pleaded or says, on the question of detriment, is bound to fail at this stage.

18.Even after being taken back to paragraphs 14A and 14B of the 2^nd defendant’s amended defence, I remain of the same view that it is arguable, therefore triable, whether the 2^nd defendant has “done some act on the faith of his mistaken belief” (point 2 of the Tong Nim Nui reference), his mistaken belief being that he was entitled to place the air conditioning unit on the Outer Walls. It is not disputed that the 2^nd defendant’s case is thin on particulars but equally it is not disputed, as Mr Ma points out, that the amended defence can be further amended, if need be, going forward.

19.In any case, on the question of detriment being subsumed within the estoppel defence as a whole, I find support for my approach in the dicta of Robert Walker LJ in Gillett v Holt [2000] 2 All ER 289, 301:-

“…it is important to note at the outset that the doctrine of proprietary estoppel cannot be treated as subdivided into three or four watertight compartments… the quality of the relevant assurances may influence the issue of reliance, that reliance and detriment are often intertwined, and that whether there is a distinct need for a 'mutual understanding' may depend on how the other elements are formulated and understood. Moreover the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine. In the end the court must look at the matter in the round.”

20.As proposed in the above passage, the elements are connected.  Furthermore, that “equity is concerned to prevent unconscionable conduct that permeates all the elements of the doctrine” is, in my view, suggestive that determination of this issue (particularly where triable issues admittedly exist on some of the other required elements) would be premature at this stage.[1]

21.Even if I am wrong on this point and detriment needs to be considered separately, it is a question of the 2^nd defendant establishing this point at trial given the reservations I have expressed at paragraph 18 above.

22.Given the above analysis, I am not satisfied that the plaintiff’s proposed appeal, seeking judgment against the 2^nd defendant at this early stage, reaches the necessary threshold of there being reasonable prospects of success.

23.Accordingly, the application for leave to appeal is dismissed.  Costs are to be to the 2^nd defendant, with certificate for counsel, to be taxed if not agreed.

24.I thank counsel for their assistance to the court.

Mr Martin Ho, instructed by Vivien Chan & Co, for the plaintiff

Mr Billy N P Ma, instructed by William Sin & So, for the 2^nd defendant

[1] See also the passage at 308c-d.