Shum Yeung v. Skynet Group Ltd

HCA 200/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 200 OF 2015

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REASONS FOR DECISION

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1.This action was commenced by the plaintiff, a PRC businessman, on the 30 March 2015. It is brought against the defendant company which I will henceforth refer to as EDS Wellness Holdings Limited. It is incorporated in the Cayman Islands and listed on the Hong Kong Stock Exchange. It has a wholly‑owned subsidiary called Blu Spa (HK) Limited which is a Hong Kong Company. Ivy Chan was a founder and director of this subsidiary at a material time as well as of EDS Wellness, but she ceased to be such in 2012.

2.The core of this action is concerned with a Sale and Purchase Agreement of 30 April 2010 with Blu Spa (HK) by which the plaintiff was to sell a number of properties on the Mainland.  A supplemental Agreement and four (4) Extension Agreements were entered into.  Blu Spa (HK) paid HK$45 million to the plaintiff.  Ivy Chan allegedly handled the matter for Blu Spa (HK).

3.In September 2012, Blu Spa (HK) commenced proceedings against the plaintiff in which it contended that the parties had, by a Deed of Termination dated 5 April 2012, agreed to cancel the Sale and Purchase Agreement, as a consequence of which the plaintiff was obliged to return the $45 million to Blu Spa (HK).

4.In July 2013 the defendant EDS Wellness (the holding company of Blu Spa (HK)) was substituted as plaintiff in the action for Blu Spa (HK) on the strength of an assignment by Blu Spa (HK) of its rights in the action.

5.It was contended on the part of EDS Wellness that there had been a series of agreements between the parties under which the plaintiff (Shum Yeung) made part payments of principal and interest (in respect of the $45 million) and extensions were granted for further payments.

6.The short averment made by Shum Yeung (as plaintiff) is that he never entered into the Deed of Termination, and never made any repayments of money to Blu Spa (HK) (or by implication to EDS Wellness).

7.By way of clarification he identifies a total of eight (8) documents which though purporting to bear his signature were he says in fact forged by Ivy Chan.  He alleges that she admitted they were forged by her.

8.The next aspect of his case concerns the actions of a firm of solicitors, ONC, who he says, purportedly acted on his behalf in the action brought against him by Blu Spa (HK) / EDS Wellness in which Ivy Chan was giving all the instructions to ONC on behalf of Shum Yeung.

9.On 6 September 2013, EDS Wellness obtained summary judgment from Deputy High Court Judge Bebe Chu (as she then was) for the balance of the monies claimed by it in that action $39,127,500 plus interest and costs.  ONC did not object to this.

10.After that judgement Shum Yeung instructed the firm Fung, Wong, Ng & Lam (on or about 24 September 2013) to act on his behalf.  Shortly thereafter the solicitors ONC supplied to the plaintiff (Shum Yeung) two documents allegedly bearing his signature.  One was an authorisation to Ivy Chan to instruct ONC on his behalf and the other was a copy of his identity card.  He in turn says neither bears his genuine signature — ie they are forgeries.

11.Finally as far as the allegations relied upon are concerned, he avers that Ivy Chan made two statements, dated 7 March 2013 and 26 April 2013, in which she admitted forging his signatures and instructing ONC without his authority.

12.On the strength of these contentions he seeks to set aside the summary judgment entered against him and claims loss and damage suffered by him which he does not particularise in any way.

13.There is however more history to the litigation involving these parties to which he has not referred.

14.On 5 March 2014 he applied through his new solicitors to set aside the summary judgment obtained in September 2013 by the defendant (Skynet / EDS Wellness).  The decision of the Deputy High Court Judge was not given until 12 January 2015.

15.That decision reviewed the whole of the background to this “saga” including the contentions which the plaintiff ventilates again in these proceedings.  It is not necessary for me to re‑iterate that content.

16.It also considered the transcript of the proceedings before Deputy High Court Judge Bebe Chu (as she then was) which confirmed that ONC, the solicitors then representing this plaintiff, explained to the court that no evidence would be filed in opposition to the application of EDS Wellness for summary judgment.

17.The decision of Deputy High Court Judge Leung went on to consider, in detail, the plaintiff’s contentions concerning ONC and Ivy Chan and her husband Alfred Law Kin Ning, and another firm of solicitors S H Chan & Co.  Interesting and curious as the interrelations between these entities are or were, and helpful as the deputy judge’s careful narrative and comments are, I do not need to consider the position anew as will become apparent from my decision which will follow.

18.The outcome of the plaintiff’s application was a finding that the judgment has been regularly entered after a hearing.  The court is functus officio and the only recourse would be by way of appeal — the Deputy Judge added “or fresh action”.  Although I am not entirely clear as to what the judge had in mind in respect of “fresh action”, the court was certainly functus officio and an appeal was the only course open.

19.The plaintiff did not appeal against this decision, or the initial decision to enter summary judgment.  He is now well out of time in any event.  All he has done is to commence fresh proceedings regurgitating the arguments presented to the court in the hearing of his application to set aside the summary judgment.

20.Miss Priscilla Wong has set out in her written submissions her arguments in support of these new proceedings, and her answer to those of Mr Victor Dawes whose written submissions support this application by the defendants to strike out these proceedings.

21.Miss Wong’s submissions, to which she has added in today’s hearing, are essentially a recapitulation of the argument before Deputy High Court Judge Leung.  In her last paragraph (28) however, emerges something which has not been considered before in express terms.  I repeat the full paragraph:

“If necessary [my underlining for a purpose which will shortly become apparent] the plaintiff is ready and able to plead that the defendant knew and/or must have known [become] aware that ONC was not acting on instructions of the plaintiff but that of Ivy Chan.”

Whether such a pleading is “necessary” is a matter for the pleader depending on how she or he wishes to put his or her case, but in its absence it is not sufficient for Miss Wong to argue, as she has done, that such an allegation is to be implied by or inferred from preceding paragraphs in the existing Statement of Claim.  The “nettle has to be grasped” if fraud or conspiracy is being alleged on the part of the defendant. There was no argument to the effect that the summary judgment had been obtained by fraud on the part of the defendant in front of Deputy High Court Judge Leung.

22.There are numerous inconsistencies and oddities in the plaintiff’s version of his relationship with Ivy Chan and ONC.  His current solicitors are in fact the ones who acted for him when he entered into the Sale and Purchase Agreement.  In March 2013 he was well aware that ONC was acting for him, on Ivy Chan’s instructions he says, but well‑knowing of her admitted (or so he alleges) forgery, and this was six months before the summary judgment obtained in September 2013.  Ivy Chan had ceased to be a director of EDS Wellness on 7 March 2012 and of Blu Spa (HK) on 7 December 2012.

23.However I am not concerned with whether the plaintiff has any sustainable recourse against either Ivy Chan or ONC but only whether this action is sustainable against the defendants.  It is important to note paragraph 16 of the Statement of Claim makes it absolutely clear that the purpose of this action is to set aside the summary judgment.  This is repeated as the prime objective under the items of the claim immediately following.

24.This court is also functus officio.  These proceedings are entirely misconceived.  They constitute an abuse of process and are vexatious.  They simply represent yet another attempt to persuade this court to set aside a judgment properly obtained and/or to circumvent a regular proper judgment.  The same accusations and arguments have been advanced and are totally flawed.

25.If this plaintiff considers that he has any reasonable cause of action, it can only be against ONC, Ivy Chan or S H Chan & Co but the difficulties in establishing the merits of such a claim have already been identified.  He has no cause of action against the defendant either as Skynet, EDS Wellness or Blu Spa (HK).

26.Accordingly I allow the defendant’s application and strike out this plaintiff’s action with an order for costs and a certificate for two counsel.

27.The other matter to be dealt with today concerns the money paid into court, pursuant to an order, which is the balance of the sum owed to the defendant under the summary judgment.  Having heard argument in relation to this — and there can be none of any substance — I order that the sum be paid out to the defendant’s solicitors without further authority.

Ms Priscilla Wong, instructed by Fung Wong Ng & Lam LLP Solicitors, for the plaintiff

Mr Victor Dawes SC & Mr Alan Kwong, instructed by Anthony Siu & Co., for the defendant