Ip Pui Lam Arthur and Another v. Alan Chung Wah Tang and Others

HCB 3819/2011

[2019] HKCFI 2073

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 3819 OF 2011

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REASONS FOR DECISION

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1.On 31 May 2019, this Court ordered the 1^st and 2^nd respondents to comply with the order made by Au-Yeung J on 7 April 2017 (“Production Order”) within 28 days of the Order [1]. Amongst the 1^st and 2^nd respondents, Mr Tang and Ms Hou (together “Respondents”),seek to appeal against the Order by filing a Notice of Appeal dated 28 June2019 in CACV 291/2019. On the same day, they issued a summons under Order 59, rule 13 of the Rules of the High Court for a stay of the Order until determination of the appeal. Although §3 of the summons seeks an extension of time for compliance with the Order within 28 days from the date of the determination of the summons, that part of the application is not pursued by Mr Hew, counsel for the Respondents, in his written and oral submissions. At the end of the hearing, I dismissed the summons with costs to be paid by the Respondents to the Trustees with reasons to be handed down. These are the reasons for my decision.

Whether the appeal is competent

2.The Order against which the Respondents seek to appeal was made under Order 45, rule 6(1) to enforce the Production Order, specifically, to give one last chance for the Respondents to comply with it.  It seems to me that the Order is an interlocutory order, which requires leave to appeal under section 14AA(1) of the High Court Ordinance.  Prior to filing the Notice of Appeal, no application has been made by the Respondents for leave to appeal against the Order.

3.When the point is raised by this Court at the hearing, Mr Hew accepts that the Order does not fall within any of the classes of order stipulated in Order 59, rule 21(1) – (2) but contends that leave to appeal is not required as the Order is not an interlocutory order but a final order. He submits that applying the application test, the Order I made “determines the issues between the parties” raised in the Trustees’ summons for enforcement of the Production Order and, as such, is a final order.  I do not think this is right, as the Order is made to give one last opportunity for the Respondents to comply with the Production Order within the new time limit stipulated.  It did not “determine the whole action” or “a substantive part of the final trial, or ‘crucial issue’ that goes to the root of the case” or a “dominant feature of the case” in the sense discussed in Shell Hong Kong Ltd v Yeung Wai Man Kiu Yip Co Ltd (2003) 6 HKCFAR 222.

4.Mr Hew then changes his submissions and contends that the Order falls within Order 59, rule 21(1)(a), being “a judgment or order determining in a summary way the substantive rights of a party to an action”for the same reason articulated.  The submission is misconceived, given that the Order did not determine any substantive rights of the parties.   

5.Lastly, Mr Hew asks the court to adjourn the summons so that the Respondents can consider whether to make an application for leave to appeal or to allow the Respondents to make an application for leave to appeal orally.  I refuse to accede to either course suggested, in light of (a) the delay and inaction on the part of the Respondents in seeking leave, (b) the time limit for the Respondents to apply for leave to appeal has long expired, and (c) the requirements for seeking leave, as stipulated in Order 59, rule 2A(1), have not been complied with.

6.On the same day after conclusion of the hearing, Mr Chen, counsel for the Trustees, lodged a supplemental submission to draw to the Court’s attention the decision of Godfrey Lam J in Re Lee Siu Fung Siegfried (No 2) [2018] 3 HKLRD 765, where the learned Judge held that the order against which the appeal was brought was a dismissal of an application for discovery made by the Court of First Instance sitting in its bankruptcy jurisdiction and, therefore, is an order of the “court” within the meaning of section 98(2) of the Bankruptcy Ordinance (Cap 6) as well as an order “made … in the matter of any bankruptcy” within the meaning of Order 59, rule 4(1)(b) (§12).  As section 98(2) is in mandatory terms and has exclusive application to bankruptcy matters, it should be given effect over section 14AA (§14), citing Mita Kogyo Kabushiki Kaisha v Mitac Inc [1993] 2 HKLR 466; WFM Motors Pty Ltd v Malcolm Maydwell [1996] 2 HKLR 236).  Mr Chen submits that on the basis of Re Lee Siu Fung Siegfried (No 2), there is basis for saying that neither section 14(1) nor section 14AA(2) of the High Court Ordinance is intended to apply to bankruptcy appeals, the jurisdiction of which is provided by section 98(2) of the Bankruptcy Ordinance.  Mr Hew in his supplemental submissions, agrees with Mr Chen’s submissions.

7.The Court is grateful for Mr Chen’s assistance.  In Re Lee SiuFung Siegfried (No 2), the order against which the appeal was brought was a dismissal of an order for discovery made in the bankruptcy proceedings of LSF.  In the present case, the Order was made in the exercise of the power under Order 45, rule 6(1) pursuant to a summons issued by the Trustees in the bankruptcy proceedings of David Ho.  Thus, while I agree that the Production Order made under section 29 of the Bankruptcy Ordinance (Cap 6) is an order made by the court “sitting in its bankruptcy jurisdiction” and, therefore, is covered by section 98(2), the same may not be said of an order made by the Court in the exercise of its power under Order 45, rule 6(1) of the Rules of the High Court.  Nevertheless, for the purpose of considering the Respondents’ summons for stay, I am prepared to proceed on the basis that leave to appeal is not required.    

Grounds of appeal not reasonably arguable

8.I do not think that the grounds of appeal raised in the Notice of Appeal by the Respondents are reasonably arguable for the following reasons.

9.Ground 1 contains a repetition of the arguments made at the substantive hearing, which I have considered in the Decision.  In his written submissions (§§22 – 24), Mr Hew submits that the specific items identified in the Table do not show that the Respondents had failed to produce the documents covered by the Production Order.  I do not think this is a point which can be made by the Respondents in the appeal:

(1)   As noted in §18 of the Decision, at the substantive hearing, the Respondents did not dispute the accuracy of the Table.  Mr Hew confirms that this remains the position of the Respondents but goes on to say that the Respondents take issue with the descriptions in the Table insofar as they stated the Respondents had failed to produce the documents identified.

(2)   As I understand his submission, Mr Hew says that the Respondents did not fail to produce the documents identified in the Table, given that they had either been disclosed before the substantive hearing or that they were not documents within the possession, custody or control of the Respondents.  Despite this Court pointing out to Mr Hew that the latter assertion is not supported by the affirmations filed by the Respondents, Mr Hew maintains that submission, on the basis that the Court can “infer” such evidence upon reading all the affirmations filed by the Respondents as a whole.  I am unable to see why the Court should “infer” the existence of such evidence when the Respondents did not say so in their affirmations.

(3)   Mr Hew asserts that the Respondents did not confine their search for the documents covered by the Production Order to the physical case files of CWT and LSF, and they also searched the “electronic files”.  Again, when it is pointed out to Mr Hew that the Respondents did not in their affirmations say that they had for the purpose of complying with the Production Order also searched the “electronic files”, Mr Hew asks the Court to “infer” such evidence on the basis that amongst the documents produced by the Respondents, there were a few emails which, it is said, could only have been produced upon a search of the “electronic files”.  The submissions must be rejected for the same reason that it is not for the Court to infer the existence of any evidence when the Respondents did not say so in their affirmations.

(4)   This is particularly so when the Respondents were fully aware of the fact that (a) the Trustees had in the 7^th Affirmation of Ip Pui Lam Arthur dated 11 February 2019 (at §5(1)), made a specific complaint about the Respondents’ failure to produce the “email correspondence between the Respondents and David Ho”; and (b) counsel for the Trustees, in his written submissions, specifically made the point that the Respondents had confined their search on the physical files of CWT and LSF and did not search the electronic files of the CWT and LSF.

10.As for Ground 2, which concerns §2 of the Production Order,again, I do not consider the points raised are arguable.  They are repetitions of the same arguments raised at the substantive hearing, all of which have been considered at §§27 – 30 of the Decision.  The Respondents have not even articulated any basis for saying that the reasons set out in those paragraphs of the Decision are in any way incorrect.

11.Ground 3 only sets out the findings which the Respondents contend ought to have been made by this Court.  No substantive point has been raised.

Appeal would not be rendered nugatory

12.In his written submissions, Mr Hew argues that the Respondents’ appeal would be rendered nugatory if no stay is granted, on the basis that “the Respondents would have to expend considerable manpower and resources to handle the considerable logistical difficulties in complying with the Order.  They would have to locate and comb throughvoluminous documents yet again after a lengthy lapse of time and numerous office moves, and of the 10 boxes in relation to CWT.  They would not be compensated for this considerable effort if the appeal is successful.” I do not think it is open to Mr Hew to make that submission, as neither Ms Hou nor Mr Tang has in the affirmations filed in support of the summons for stay said anything to the effect submitted by Mr Hew.  As pointed out by Mr Chen, this is despite the fact that he has in his written submissions (§18) specifically made the point that there is no evidence in support of Mr Hew’s contention that the Respondents would have to expend “considerable manpower and resources to handle the considerable difficulties in complying with the Order”.  As such, it was possible for the Respondents to file a further affirmation to say so, should they truly believe that there is any factual basis in support of Mr Hew’s contention.

13.As a matter of fact, in her 5^th Affirmation, Ms Hou said (and adopted by Mr Tang) the following in support of her contention that without a stay, the appeal would be rendered nugatory:

(1)   the Respondents “would suffer loss which would not be compensated by damages” (§5).  However, what loss would be suffered by the Respondents has not been identified let alone explained;

(2)   if the Respondents succeed in the appeal, the Trustees “would already have used, read, made copies and/or distribute the documents (if any) and, as such, the appeal would be rendered nugatory (§6).  However, the Respondents never opposed production of the documents covered by the Production Order to the Trustees.  Nor has it ever been suggested that the documents covered by the Production Order should not be produced to the Trustees, whether on the ground of privilege, confidentiality or any other ground.  That being the position, it is difficult to see how the Respondents can contend that the production to, and the use of the documents by, the Trustees would render the appeal to become nugatory in the sense that information and documents, once produced, could not be reversed; and

(3)   “once the affirmation in compliance and/or documents (if any) are produced by the [Respondents], there would be prejudice caused to the [Respondents]”.  On the contrary, there would be no prejudice to the Trustees if a stay if granted (§7).  I am unable to accept the Respondents’ bare assertion as to prejudice when they have not been able to identify what prejudice they would suffer without a stay.  Nor do I accept that there would be no prejudice to the Trustees if the Order is stayed.  As the successful party, the Trustees are entitled to expect the Order to be complied with by the Respondents within the time limit stipulated.  This is particularly so when there has already been a considerable delay on the part of the Respondents in complying with the Production Order made in April 2017 which, in turn, has impeded their on-going investigations on the affairs of Mr Ho and the BVI Companies associated with him.

14.As the Respondents have not adduced any evidence to show that without a stay the appeal would be rendered nugatory, even if,contrary to my view, the three grounds identified in the Notice of Appeal are arguable or have reasonable prospects of success, I would not exercise my discretion to grant a stay of the Order.

Mr David Chen, instructed by Lee, Wong & Lam, for the applicants

Mr Yang-wahn Hew and Mr Keith Tam, instructed by ONC Lawyers, for the 2^nd respondents and Mr Alan Tang, one of the 1^st respondents