Credit One Finance Ltd v. Cheung Yiu Cho

HCA 2564/2018

[2020] HKCFI 3170

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2564 OF 2018

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BETWEEN

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Before:  Deputy High Court Judge Paul Lam SC in Chambers

Date of Hearing:  28 December 2020

Date of Decision:  28 December 2020

Date of Reasons for Decision:  7 January 2021

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REASONS FOR DECISION

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A.  INTRODUCTION

1.This is the Defendant’s appeal against the summary judgment granted by Master Lai on 7 August 2020. The hearing of this appeal proceeded in the absence of the Defendant. At the end of the hearing, I indicated that I would dismiss the Defendant’s appeal.

B.  PROCEDURAL HISTORY

2.In this action commenced on 1 November 2018, the Plaintiff, a licensed moneylender, sued the Defendant for outstanding loan and interests. The Plaintiff claimed that, on 28 May 2018, it lent to the Defendant $2,800,000 to be repaid on or before 28 May 2019; interests shall be paid in 12 monthly instalments; the interest rates were 30% per annum from the date of the loan to the date of the 1^st instalment and 18% per annum thereafter until payment; the 1^st instalment interest of $70,000 shall be paid on 28 June 2018 whereas interests for the remaining instalments of $42,000 each shall be paid on the 28^th day of each month. The Defendant had only repaid $112,000 in total. Hence, by letter dated 18 October 2018, the Plaintiff terminated the loan agreement and demanded the Defendant to repay the outstanding principal and interests.

3.The Defendant has been acting in person. In his handwritten Defence, he did not deny that he had borrowed $2,800,000 from the Plaintiff. He claimed that, in respect of the 1^st instalment interest, he was told by a Mr. Wong that he only needed to pay $42,000 (rather than $70,000) because $28,000 would be rebated upon full repayment after 12 months. Hence, he paid $42,000 each in June and July 2018 totaling $84,000. However, in late July or August 2018, Mr Wong asked him to pay $28,000 which was in fact Mr Wong’s commissions but Mr Wong promised again that this sum would be rebated at the end of the day. Accordingly, he paid $28,000 on 21 August 2018. Hence, the total sum that he had repaid was $112,000 (as claimed by the Plaintiff).

4.By summons dated 10 January 2019, the Plaintiff applied for summary judgment. In the supporting affirmation, the Plaintiff exhibited the written loan agreement, the repayment schedule and related documents signed by the Defendant. The Plaintiff denied that it had ever made any representation about the $28,000 as alleged by the Defendant, which was contradictory to the express term of the loan agreement. In his affirmation in opposition, the Defendant repeated his allegations in his Defence and produced some WhatsApp messages between him and one Mr Wong Chi Kin of the Plaintiff. In those messages, Mr Wong said that 1% of the principal sum i.e. $28,000 was his “wage”. The Defendant claimed that Mr Wong stated initially that it was his “commission” but he deleted and replaced it by “wage” subsequently. He said that he was not refusing to repay, and was merely asking the Plaintiff to state clearly the outstanding sums. He also claimed that he owned a property the market value of which was about $5,600,000; and hence, he had the ability to repay.

5.The hearing of the Plaintiff’s application was adjourned a number of times on 11 September 2019, 11 November 2019 and 21 November 2019 at which the Defendant was present. On 11 September 2019, he said he was unwell when the hearing began and he was sent to hospital by ambulance. On 11 November 2019, he sought an adjournment on the ground that he needed to consult a doctor and look for a lawyer. On 21 November 2019, after the Plaintiff had finished submissions, the Defendant said he was unwell and was sent to hospital by ambulance. The matter was initially further adjourned to 12 February 2020, which was subsequently postponed to 6 July 2020 due to Covid-19.  On 6 July 2020, the Defendant informed the court that he was in hospital. The matter was then further adjourned to 7 August 2020. By letter dated 6 July 2020, the Registrar informed the Defendant that he had applied to adjourn the hearing on health reasons on many occasions previously, to ensure that court proceedings would not be delayed unnecessarily, if the Defendant intended to be absent from the hearing on 7 August 2020, he shall submit detailed medical proof explaining why he would be unable to attend the hearing, otherwise the hearing would proceed in his absence. He was also reminded that consultation certificates or sick leave certificates issued by treating doctors would not be adequate. The Defendant then applied again to adjourn the hearing several times from 4 August 2020 to 7 August 2020 on medical grounds with the support of some medical documents. His applications were rejected by Master Lai.

6.On 7 August 2020, Master Lai granted summary judgment. The Defendant was absent. The Master noted that the Defendant applied to adjourn the hearing many times. He had made it clear that the hearing would not be adjourned unless the Defendant could produce medical evidence supporting that he could not attend the court hearing. As the Defendant had failed to do so, he decided to proceed with the hearing. In any event, Master Lai had considered the Defendant’s defence before he granted summary judgment.

7.By summons dated 20 August 2020, pursuant to Order 35, rule 2, Rules of the High Court (“RHC”), the Defendant applied to set aside Master Lai’s judgment on the ground that he was absent at the hearing on 7 August 2020 due to illness. He submitted voluminous medical documents to support his application.

8.On 12 October 2020, Master Chow dismissed his application. Upon considering further medical evidence produced by the Defendant, Master Chow took the view that Mater Lai would not have adjourned the hearing on 7 August 2020 even if such additional evidence was before him.

9.By a notice of appeal dated 21 October 2020, the Defendant appealed against the judgment of Master Lai dated 7 August 2020. This is the matter before me.

10.On 30 October 2020, the Defendant applied for a stay of execution of the judgment on the ground that he had lodged an appeal.  On 12 November 2020, Master Lai dismissed his application.

11.In the meantime, on 11 September 2020, Master Tse made a charging order nisi to show case in relation to a property owned by the Defendant. A hearing was fixed on 16 December 2020 for the Defendant to show cause. However, the hearing was adjourned to 11 January 2021 due to his alleged medical condition.

C.  THE DEFENDANT’S ABSENCE AT THIS HEARING

12.Shortly before this hearing, the Defendant asked a female friend to produce a letter written by him dated 27 December 2020 (“the Letter”) to the court. He said he had been sick since 25 December 2020, and was suspected to have contracted Covid-19. He produced, firstly, a medical certificate, which merely stated that he attended the Lek Yuen GOPC on 26 December 2020; he was suffering from cough; and he was given sick leave from 26 to 28 December 2020. He also produced an investigation reminder form that he was required to undergo a compulsory Covid-19 test before 28 December 2020. It is unclear whether he had undergone the test, and if so, the result thereof. While he claimed that he was advised by the doctor to stay at home, his female friend informed the court’s clerk at the time she produced the Letter that he was nearby.

13.In principle, when a party applies for an adjournment on the ground of illness, the court is entitled to be satisfied that the inability of the litigant to be present is genuine and the onus is on the applicant to prove the need for such an adjournment (Lam Yin Pok Bosco, a minor by Lam Po Yee, his mother and next friend v Dr Chan Yee Shing also known as Dr Chan Yee Shing Alvin, HCMP2256/2012 (2 November 2012, unreported), §§9-11).  Having regard to the procedural history of this case, the Letter and documents in support of the adjournment application, I was not convinced that the Defendant had discharged the burden of proving a genuine need for an adjournment on medical grounds. Accordingly, I decided to proceed with the hearing in his absence.

D.   THE DEFENDANT’S LEGAL AID APPICATION

14.On 21 December 2020, the Director of Legal Aid filed a memorandum that the Defendant had applied for legal aid.

15.Section 15(4) of the Legal Aid Ordinance (Cap. 91) provides that:

“Where any memorandum is so filed, then, unless otherwise ordered by the court in which the memorandum is filed, all proceedings in the action or in the appeal or in both the action and the appeal shall, by virtue of this section, be stayed for such period, being not less than 14 days, as may be prescribed, and during such period (unless otherwise ordered by any such court) time fixed by or under any law or otherwise for the doing of any act or the taking of any step in the proceedings shall not run.”

16.Regulation 7A of the Legal Aid Regulations provides that:

“The period during which any proceedings are stayed by section 15 of the Ordinance shall be 42 days.”

17.On 23 December 2020, I directed that the hearing should proceed, and I shall invite submissions on s.15(4) of the Legal Aid Ordinance. By summons taken out on 24 December 2020, the Plaintiff applied to lift the stay.

18.The Defendant was aware of this application as he had made submissions in the Letter as to why the stay should not be lifted. He said that he made some enquires with the High Court on 21 December 2020, and the staff member there advised him to seek help from the Legal Aid Department. Hence, he attended the office of the Legal Aid Department that afternoon, and made an application for legal aid on 22 December 2020.

19.The court has the discretion to lift the stay imposed by s.15(4) of the Legal Aid Ordinance. As Recorder Kwok SC held in Bank of China (Hong Kong) Limited v Fu Ming Kong Michael, HCA7769/2000 (24 June 2005, unreported), §§26-27, the purpose of the stay is to allow sufficient time for the Director to process an application for legal aid, and in the event that legal aid is granted, for the assigned lawyers to effectively represent the assigned client and where appropriate to apply for more time; however, the statutory stay is an aid in, not an obstacle to, the administration of justice.  In Choi Tak Man v Chan Yuk Lan Didi and another, HCA600/2015 (20 January 2017, unreported), DHCJ Anson Wong SC reviewed the relevant authorities extensively in §§30-37 of his judgment. In deciding whether to lift the stay, the primary function of the court is to do justice between the parties. On the one hand, the court should take into account any prejudice that a party may suffer if the hearing proceeds without any legal representation for that party (which will invariably be the case if the stay is lifted). The right to legal representation is a fundamental right. However, such right, like most other fundamental human rights, is not absolute. The court expects that litigants will take litigations seriously, and will seek legal representation or apply for legal aid without unreasonable delay. Further, any stay will inevitably lead to wastage of time and costs, which may constitute material prejudice to the other party. It must also be borne in mind that, to ensure that legal proceedings will be conducted expeditiously, hearing dates (in particular, “milestone dates”) should not be changed unless there are exceptional circumstances. In reality, it is not uncommon to see legal aid applications made very close to hearing dates. The court must not allow the statutory stay to be misused as a means to delay court proceedings.

20.This action was commenced more than 2 years ago. The Defendant has appeared in court and prepared legal documents many times. Back in November 2019, he already told the court that he was looking for a lawyer. Moreover, in the notice of appeal filed on 21 October 2020 (which was more than 2 months ago), he stated specifically that he intended to instruct counsel to attend the hearing. He has not provided any reasonable explanation in the Letter as to why he only applied for legal aid on 22 December 2020. Having regard to the procedural history of the matter, I took the view that his legal aid application was merely another attempt to delay this hearing. Therefore, I decided to exercise my discretion to lift the stay.

21.As the Defendant did not appear at the hearing, the appeal should simply be dismissed for want of prosecution. However, as he had made submissions in the Letter as to why his appeal should be allowed, I decided to consider his appeal on its merits.

E.  MERITS OF THE DEFENDANT’S APPEAL

22.As mentioned, the Defendant had applied to set aside the summary judgment by invoking Order 35, rule 2(1), RHC, which provides that “Any judgment, order or verdict obtained where one party does not appear at the trial may be set aside by the Court, on the application of that party, on such terms as it thinks just.” In my view, what was engaged should be Order 14, rule 11, which provides that “Any judgment given against a party who does not appear at the hearing of an application under rule 1 or rule 5 may be set aside or varied by the Court on such terms as it thinks just” (Hong Kong Civil Procedure 2021, vol. 1, §14/11/1 at pp. 356-357). Nevertheless, the Defendant’s application to set aside the summary judgment on the ground that he was absent at the hearing before Master Lai had been heard, and dismissed, by Master Chow on 12 October 2020.

23.If he was dissatisfied with Master Chow’s order, he could and should have appealed against her order. However, he did not do so. Instead, he chose to appeal against Master Lai’s judgment. The relationship between an absent defendant’s right to apply to set aside a master’s order or judgment and his right to appeal against that order or judgment raises difficult and complicated procedural issues, which I do not intend to consider in detail. In Bank of Scotland plc v Pereira [2011] 1 WLR 2391 at 2400, [36], Lord Neuberger observed that “Experience and common sense suggest that it may well be impossible to lay down rules in that connection which would cover every case”. Nevertheless, he and Lloyd LJ gave some guidelines which would apply in the greater majority of cases. In Fok Hing (HK) Trading Ltd and another v Gunawan-indra t/a Bumipala Dhanadwipa, CACV74/2014 (4 July 2014, unreported), §§29-30, the Court of Appeal did not find it necessary to consider whether the Hong Kong court should follow the same guidelines. Suffice for me to say that, in this particular case, it is open to the Defendant to appeal against Master Lai’s judgment subject to one qualification. As he had failed in his application to set aside Master Lai’s judgment and elected not to appealed against Master Chow’s order in this respect, it should not be open to him to contend, in his appeal against Master Lai’s judgment, that the judgment should not stand because it was wrong for Master Lai to proceed with the hearing in his absence. The Defendant in fact complained in the Letter that Master Lai was wrong to grant summary judgment in his absence. For reasons just mentioned, it was not open to him to raise this as a ground of appeal at this hearing. Nevertheless, even if he was entitled to do so, I would have concluded that the Master’s decision to proceed with the hearing in the Defendant’s absence could not be faulted having regard to the insufficiency of the medical evidence produced by the Defendant and the procedural history. The Defendant may, of course, raise any other ground to support his appeal as an appeal against a master’s order or judgment is, by nature, a hearing de novo.

24.The real problem is that the Defendant’s present appeal is out of time. Order 58, rule 1(3), RHC, provides that an appeal against a master’s judgment must be lodged within 14 days.  The summary judgment was granted on 7 August 2020. The 14-day period expired on 21 August 2020. However, the present notice of appeal was only filed on 21 October 2020. The Defendant must, therefore, seek leave to extend the time for appeal first. In considering whether to extend the time to appeal, the court has to consider all relevant factors including the length of the delay, the reasons for the delay, the merits of the proposed appeal and the degree of prejudice to the other party (Hong Kong Civil Procedure 2021, vol. 1, §58/1/9 at p. 1183).

25.In this case, the length of the delay was about 2 months, which was substantial.

26.Although the Defendant had not provided any reason for the delay, the only plausible reason must be that the Defendant, having applied to set aside the judgment, would naturally wish to wait for the outcome of that application first. If his application succeeded and the judgment was set aside as a result, there would be no need to appeal against the judgment. He applied to set aside the judgment on 20 August 2020, which was 13 days after Master Lai granted the judgment and was within the time permitted by the rules. Master Chow dismissed his application to set aside the judgment on 12 October 2020. He then filed the present notice of appeal on 20 October 2020, which was only 8 days later. In these circumstances, I am prepared to accept that the delay was understandable.

27.What is most critical is the merits of the Defendant’s appeal. As mentioned, although the Defendant was absent, Master Lai had considered the merits of his defence as set out in his Defence and affirmation. In the Letter, the only point he made on the merits is about the $28,000. In my view, the Defendant’s assertion concerning the sum of $28,000 is unbelievable in that it was not supported by any credible evidence and was contradicted by the contemporaneous documents. In the Loan Agreement, the Memorandum of Loan Agreement, the Agreements & Acknowledgements Statements and the Repay Schedule all signed by the Defendant, it was stated clearly that the first interest installment was in the amount of $70,000 payable on 28 June 2018. The WhatsApp messages that the Defendant produced merely suggest that Mr Wong said that $28,000 was indeed his wage, and do not support the Defendant’s allegations. Moreover, as between the Plaintiff and Mr Wong, whether Mr Wong was going to receive the sum of $28,000 out of any amount repayable or repaid by the Defendant, or how such payment should be classified (whether as commission or wage), is irrelevant to the Defendant’s liability to repay the outstanding principal and interests. He is clearly bound by the loan agreement and other related documents that he had signed. He admitted that he had only repaid $112,000. In fact, he never denied that he was liable; he only said that he had sufficient assets to discharge his liability. He has not shown any arguable defence or triable issue at all. As his appeal has no merits, no extension of time to appeal should be granted as it would be pointless to do so.

28.While the Plaintiff may not suffer any material prejudice, in particular when the court had already rejected the Defendant’s application to stay execution of the judgment, if time to appeal is extended, the absence of prejudice is not a reason supporting extension of time.

29.All in all, this is a clear case where the time for appeal should not be extended. It follows that the appeal, being lodged out of time, is incompetent and must be dismissed. For the sake of completeness, I should add that, even if the appeal was not out of time, or the time to appeal were to be extended, for reasons just mentioned, the Defendant’s appeal will nevertheless fail.

F.  CONCLUSION

30.For the above reasons, as I indicated at the end of the hearing, the Defendant’s appeal is dismissed with costs summarily assessed at $75,000.

Mr Lau Kin instructed by Au Yeung, Lo & Chung, for the Plaintiff

Defendant acting in person, absent