Xu Lian Guo and Another v. Kwok Ming Fai and Others

HCA 1710/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1710 OF 2011

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D E C I S I O N

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1.The summary judgment in this case was given against the P1 on 24 December 2014 and, although P1 did have legal representation at one stage until around April 2013, at the hearing in October 2014 he was not represented and he was absent. There had been no challenge in relation to service.

2.However, the present setting aside application was not taken out by the P1 until September 2016.

3.There had been a long delay and it appeared that the P1 did not take action until the enforcement proceedings were taken by D4, and up to now, even up to now, even with the new solicitors on record, there has been no application by P1 to set aside order of 2 May 2013 of Poon J (as he then was) (“Poon’s Order”) and, so far, almost three or four years, coming up to four years in May 2017, there has been no compliance with that order.

4.P1 has effectively been in contempt of Poon’s Order.

5.Anyway, P1’s main reason for setting aside the summary judgment were, first of all, his ill health.  He was in hospital on two occasions.  The first time from March to September 2014, although it was not quite clear as to what exactly the treatment was, because a lot of the documents produced were in relation to tests and examinations.  The second period was less than a month, about three weeks, from May 2016 to 7 June 2016.

6.These were all hospital records.  There was actually no actual medical certificate as to his condition.  From the records, he appeared to be suffering from some chronic disease, including kidney diseases, but there was no medical certificate to show why he was not able to deal with the matter or give instructions to lawyers even during the time when he was in hospital.

7.And, further, more importantly, there was no explanation what he had been doing when he was not in hospital, namely what steps he had been taking.

8.His other reasons for this application appeared to be there was a misunderstanding between him and his brother, P2, and he thought P2 was taking care of the matter for him.  He had also said there was some misapprehension about procedures.

9.As pointed out by Mr Lo, the evidence showed that P1 was clearly ignoring the Hong Kong proceedings and, as I have said, there was no attempt by him or on his behalf to even comply with Poon’s Order.

10.Having considered all the reasons given by P1, I am of the view that he has not been able to demonstrate good reasons for his long and undue delay.

11.I will come to the merits now.

12.It appeared from what P1 was trying to say that his merits were in relation to the existence and identification of the Fund and also the Fund did not belong to D4 or its subsidiaries.

13.As pointed out by Mr Lo, even on the P1’s own statement of claim, the existence and the identification of the Fund was quite clear, and also I will not go through again, but in my previous judgment I had also set out matters relating to the existence and identification of the Fund, and it was clear to this court from all the evidence what the Fund was and that the Fund belonged to D4 and/or its subsidiary.

14.P1’s case appeared to be that the Fund referred to in the Fund Resolution was an anticipatory loan.  There was no independent evidence provided by him to support what he said or what was allegedly said by Cheung Yuk-ching, and I have pointed out during the hearing that there was no evidence as to why the company would need a loan of RMB150 million or for what purpose the loan was for, when less than a month or even, according to the auditors’ report, as at the end of June 2011, there was this sum of money sitting in the First Sino Bank account. 

15.At the time P1 himself was the chairman of the board and there was no explanation why the Fund Resolution had to be prepared in haste, as he seemed to claim.

16.Having considered his evidence, I really do not find what P1 said about this anticipatory loan credible.  The burden is on the P1 to show that he has a real prospect of success on the merits on the relevant part of D4’s counterclaim.  He has not satisfied this court that he has discharged the burden or that he has shown any real prospect of success on merits.

17.I will also deal with the prejudice point.

18.RMB150 million is a substantial sum, but, as I have said, the P1 has not even complied with Poon’s Order to explain what happened to the Fund and to all the other matters, the accounts, all set out in detail in Poon’s Order, and I have considered what Mr Lo submitted and I am satisfied that D4 will suffer prejudice, and grave prejudice, if this application is allowed.

19.Having considered all the circumstances, I am going to dismiss the P1’s summons issued on 21 September 2016.

20.As I have dismissed the application, I do not see any grounds to support any stay of execution and the application for stay of execution is also dismissed.

(Discussion re costs)

21.Costs will be to the D4, in any event, and to be taxed if not agreed.

Mr Austin Yiu, instructed by Patrick Mak & Tse, for the 1^st plaintiff

Mr Henry H Y Lo, instructed by Michael Li & Co, for the 4^th defendant