Miss Leung So Hung Siem v. Mr. Carson Wen

CACV 580/2018

[2019] HKCA 1428

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 580OF 2018

(ON APPEAL FROM HCSD 16/2018)

________________________

________________________

_____________________

JUDGMENT

_____________________

Hon Lam VP (giving the Judgment of the Court):

1.On 26 April 2018, Master Lui struck out the claim of the Applicant (as plaintiff) in HCA 121/2017 and awarded costs in favour the Respondent (as defendant in that action). He also summarily assessed the costs at $88,250.

2.The Applicant’s application for extension of time to appeal against the decision of Master Lui was dismissed by Recorder Houghton SC on 16 July 2018.  Her further attempt to appeal against the decision of Recorder Houghton SC was dismissed by the Court of Appeal in CACV 514/2018 on 8 January 2019 on the ground of that no leave was granted under Section 14AA of the High Court Ordinance: see [2019] HKCA 94; [2019] 1 HKLRD 1123.  The Applicant said she had since made an application for leave under Section 14AA in CAMP 242/2019 which is still pending.

3.In the meantime, the Respondent served a statutory demand on the Applicant on 11 May 2018 based on the order for costs. The Applicant applied to set aside the statutory demand in HCSD 16/2018.  The application was heard by Anthony Chan J (“the Judge”) on 20 November 2018.  The Judge dismissed the application on 20 November 2018.

4.This is the appeal by the Applicant against the refusal to set aside the statutory demand.

5.The law on setting aside a statutory demand should be familiar to the parties.  Apart from the judgment of the Judge, the parties also litigated on a statutory demand based on an earlier order of another master against the Applicant in HCSD 15/2018.  The Applicant failed before DHCJ Simon Leung on 29 June 2018.  She further appealed to this Court in CACV 357/2018.  That appeal was heard on 11 June 2019 and by a judgment of 21 June 2019 [2019] HKCA 678 the appeal was dismissed.  Chu JA set out the law clearly in that judgment at [16] to [18].

6.There was another instance of a similar application by the Applicant in HCSD 40/2018 based on the costs order made by Recorder Houghton SC in favour of another defendant in HCA 121/2017.  That application by the Applicant was dismissed by Ng J on 21 June 2019.  The judgment of Ng J also set out the law on setting aside a statutory demand at [7] and [8].  Ng J also rejected the Applicant’s counterclaims (including the one on legal costs, similar to the one advanced by the Applicant before us) at [13].  The Applicant said she is appealing against Ng J’s judgment in CACV 331/2019.

7.An application for setting aside a statutory demand is meant to be a summary process.  A statutory demand is a preliminary step to a petition for bankruptcy.  It would defeat the purpose of a statutory regime if an application for setting aside statutory demand can be a long-drawn out battle delaying the process of bankruptcy for a substantial period of time.  The experience in the present appeal illustrates how such process could be delayed simply because an applicant chose to repeatedly challenge statutory demands and appeals against decisions rejecting such challenges.  Despite the issue of the petition by the Respondent against the Applicant on 16 July 2018 in HCB 4036/2018, it has yet to be heard.

8.The courts have firmly and repeatedly reiterated that we would not go behind a judgment or an order in the context of an application to set aside a statutory demand.  This is particularly so when that judgment or order has subsequently been affirmed on appeal or when the appeal has subsequently been dismissed.  

9.Since the filing of the notice of appeal on 14 November 2018, the appeal against the striking out of HCA 121/2017 in CACV 514/2018 has been dismissed: see [2] above.  Further, the appeal in CACV 357/2018 against the decision of DHCJ Simon Leung was also dismissed. 

10.As explained by Chu JA in the earlier judgment of this Court in CACV 357/2018 [2019] HKCA 678, the perceived merit of the Applicant as to her claim in HCA 121/2017 cannot be a ground for setting aside the statutory demand.

11.Insofar as the Applicant attempted to re-introduce such claim by way of an Order 14 application in the present proceedings, we agree with the Judge that it is misconceived.  There cannot be any Order 14 application in the context of a HCSD.  It is an abuse of process.

12.Likewise, the attempt by the Applicant to introduce or re-open matters litigated in HCA 121/2017 by way of a summons to file additional evidence for this appeal (as per her summons of 3 October 2019) is also an abuse of process.  Once it is appreciated that the Applicant is not permitted to go behind the costs order and the matters raised in HCA 121/2017 cannot be re-opened (at least until leave to appeal has been obtained), the so called new evidence cannot assist the Applicant in this appeal.

13.As submitted by counsel for the Respondent in his skeleton submissions, it is bizarre that the Applicant advanced a counterclaim based on the costs incurred in the application for discovery and further and better particulars when DHCJ Yeung (as he then was) in the judgment of 29 March 2018, [2018] HKCFI 685 on such application actually ordered costs against her.

14.We do not see how the reference to the definition of confidential information in Clause 3(1) in her contract with the Respondent could take the matter further.  The relevant part of that provision which the Applicant relied upon referred to the costs in respect of protecting information of a disclosing party from public disclosure at his own expenses if a receiving party uses reasonable best efforts to do so.  There is no basis for the application of this provision to the costs of the discovery application coming before DHCJ Yeung.    

15.Equally bizarre is the submission of the Applicant that the issue of the statutory demand constituted an act of defamation against her.

16.Also, we agree with counsel that the Applicant liberally raised allegations of fraud and dishonesty and perjury without any proper basis for doing so.  The court does not accept such allegations.  It is not practice of the court to entertain serious allegations without proper foundation, see Choy Bing Wing v Chief Executive of HKSAR [2006] 1 HKLRD 666 at [9].  Even though she acts in person, the court should not apply a looser standard when dealing with such serious allegations as it would occasion unfairness to other parties.  All the more so when the Applicant advanced serious allegations of “suppression of evidence” and “perverting the course of justice” against several judicial officers. 

17.For these reasons, we have no hesitation in dismissing the appeal.

18.In our judgment, particularly in light of the two earlier decisions of this court in [2019] HKCA 94 and [2019] HKCA 678 the appeal is plainly vexatious and an abuse of process.  The Applicant must pay the costs of the Respondent on indemnity basis.  We so order.  Based on the statement of costs of the Respondent, we summarily assess the costs of the Respondent in this appeal at $83,161.

19.Finally, we are of the view that the bankruptcy petition should be heard as soon as practicable.  It is not in public interest to allow the process of bankruptcy to be delayed by interlocutory applications or repeated applications to set aside statutory demands.

20.This is not the only case where we have seen obviously unmeritorious appeals against refusals to set aside statutory demand being deployed to delay the process of bankruptcy.  We take this opportunity to urge the Rules Committee and the Official Receiver to consider if there should be a requirement for leave to appeal in an appeal of this nature.

The applicant appearing in person

Mr Vincent Chiu, instructed by Siao, Wen and Leung, for the respondent