K & L Gates v. Navin Kumar Aggarwal and Others

HCA 1061/2011 &
HCA 349/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1061 OF 2011

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AND

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 349 OF 2012

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(Consolidated by the Order of Deputy High Court
Judge B Chu dated the 10^th day of July 2013)

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D E C I S I O N

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1.By a decision handed down on 20 May 2016 (“the Decision”), this court (i) dismissed D2’s application to strike out KLG’s claim; and (ii) ordered D2 to make specific discovery of one class of documents. This is an application by D2 for leave to appeal against both orders.

2.The legal principles for seeking leave to appeal are not in dispute. They have been recently set out in another judgment of mine in Hengshi International Investments Ltd v Bayspring International Ltd & anor, HCMP 1916/2015, 11 May 2016, §2. 

3.Basically, D2 has to satisfy the court either (1) that the proposed appeal has a reasonable prospect of success, or (2) that there is some other reason in the interest of justice why the appeal should be heard. Reasonable prospect of success involves the notion that the prospect of succeeding must be more than fanciful, without having to be probable.

4.For an appellate court to interfere with the judge’s exercise of discretion, it must be established that the judge has misunderstood the law or the evidence or that the exercise of his discretion was plainly wrong such that it was “outside the generous ambit within which reasonable disagreement is possible”.

Leave to appeal against the order refusing to strike out the claim

5.The statement of claim did not provide particulars of conferment of actual or apparent authority by D2 to SIC to receive any of the 28 payments. Aggarwal had admitted paying $128m to SIC to settle his gambling debt. KLG may rely on the 2^nd to 5^th Matters, which were primary facts, to invite the court to draw inferences of agency. It was impossible to say now that the trial judge will definitely reject KLG’s case.  These formed the sum total of the Decision.

6.It has to be remembered that the basis of the striking out was not grounded on the first limb of Order 18, rule 19, ie not the lack of reasonable cause of action limb.  The core issue was whether if all the facts were taken in favour of KLG, they would support an inference of agency.

7.The present application for leave was premised on this court’s alleged wrong interpretation of Simply Power Ltd v Billy Chua & ors, HCA 2452/2013, 22 January 2015, Mr Recorder Pow SC, §§29-33.  Mr Lam SC submits that Simply Power was concerned with the approach that the court should adopt in either a summary judgment/striking out application, ie when the credibility and probability of the claim are called into question. In considering whether the factual assertion was believable, the court should consider all relevant matters as a whole rather than in isolation as a matter of common sense. 

8.Mr Lam SC pointed out, however, that the present case had no issue of credibility.  This court had been invited to ignore D2’s evidence and consider all primary facts and evidence relied on by KLG as true.  He submits that no authority has been cited by KLG to support the proposition that the approach in Simply Power may be used to justify drawing an inference of agency by considering matters together when those matters individually were incapable of supporting such an inference.  This misapplication of Simply Power legitimized an inference of agency by piling suspicion upon suspicion.

9.I am unable to agree.  In all cases of striking out, the party whose pleading is sought to be strike out will have it assumed in his favour that all facts are true.  The purpose of the court considering all relevant matters as a whole is with a view to deciding whether the matter should be allowed to go forth for trial instead of being struck out, which was what the Decision has done.

10.The refusal to strike out was an exercise of discretion after considering the authorities and facts.  It has not been shown that the decision was outside the generous ambit within which reasonable disagreement is possible. 

11.I do not find reasonable prospect of success and I dismiss the application for leave to appeal.

The order for specific discovery

12.This part of the leave to appeal is a “tag” on.  No error of law has been shown in respect of this order, which only stands and falls with the leave application in respect of the striking out.

Conclusion

13.In summary, I am not satisfied that there are reasonable prospect of success in the intended appeal.  I therefore dismiss the application.

14.On a nisi basis, I order D2 to bear the costs of the plaintiff. Costs for preparing a statement of costs are not recoverable in a summary assessment.  Subject to this, I summarily assess D2’s costs at HK$32,160.

15.I thank counsel for their assistance.

Ms Frances Lok, instructed by Robertsons, for the plaintiff

Mr Paul Lam, SC, instructed by Michael Li & Co, for the 2^nd defendant