Dah Sing Bank Ltd v. Dynasty Management Ltd and Others

HCA 2554/2018

[2021] HKCFI 563

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2554 OF 2018

________________________

________________________

Before:  Deputy High Court Judge MK Liu (Paper Disposal)

Date of the Plaintiff’s Written Submissions:  26 February 2021

Date of the 2^nd and 3^rd Defendants’ Written Submissions: 8 March 2021

Date of Decision:  10 March 2021

____________________

DECISION

____________________

1.By a summons dated 14 January 2021 (“the Summons”), the 2^nd defendant (“D2”) applies for an order to stay the execution (“the Stay Application”) of the order of DHCJ Raymond Leung SC dated 4 August 2020 (“the Order”). The Order was made in a written decision handed down by the learned judge on the same date (“the 2020 Decision”). By the Order, the learned judge dismissed the appeal lodged by D2 and the 3^rd defendant (“D3”) against the summary judgment granted to the plaintiff (“P”) by Master Dick Ho on 12 August 2019. The Order was sealed on 28 August 2020.

2.The Summons is supported by the affirmations made by D2 and D3 on 14 August 2020 (“the Supporting Affirmations”). Accordingly, I proceed on the basis that the Stay Application is made by D2 and D3.  The 1^st defendant (“D1”) was wound up on 16 December 2020 and provisional liquidators have been appointed.  There is no one representing D1 in the Stay Application.  The Stay Application is not made by, and does not concern D1.

3.At the time of issuing the Summons, D2 stated on the Summons that the estimated length of the hearing of the summons was 5 hours.  The summons was originally fixed to be heard on 12 April 2021.

4.After receiving the papers, on 27 January 2021, I directed the parties to provide written submissions to this court.  I informed the parties that after considering those written submissions, I might determine the Summons on paper without an oral hearing, or I might conduct an oral hearing on 12 April 2021, with 2 hours reserved.

5.Having considered the papers and the submissions provided by the parties, I am of the view that the Summons can be determined on paper without an oral hearing.  This is my decision on the Summons.  The hearing fixed on 12 April 2021 is vacated. 

6.The background facts have been clearly set out in the 2020 Decision and I shall not repeat the same herein.  This decision should be read together with the 2020 Decision.  For ease of reference, unless otherwise indicated, the abbreviations used in the 2020 Decision are adopted herein.

Discussion

7.As per the Summons, the grounds of the Stay Application are as follows:

(1)  since the date of the judgment, there are special circumstances which render the enforcement of the judgment inappropriate; and

(2)  there are special circumstances that the judgment should not be enforced.

8.As set out in the Supporting Affirmations, the special circumstances relied upon by D2 and D3 are the valuation of the Property set out in a valuation report dated 29 July 2020 signed by a Mr Francis KS Shum of Rofta Consulting Limited (“the Rofta Report”).  As per the Rofta Report, the market value of the Property as at 27 April 2018 was in the region of HK$60,000,000.  The Rofta Report was not evidence before the learned judge in the hearing on 15 July 2020.  Although the report was dated 29 July 2020, the report was only received by the court on 6 August 2020, ie 2 days after the handing down of the 2020 Decision.

9.D2 and D3 are trying to re-argue the undervalue point made by them before the learned judge.  The learned judge has ruled against D2 and D3 on that point.  In the 2020 Decision, the learned judge said:

“54. As to the 3^rd ground of appeal relating to the alleged sale of the Property at undervalue, the 2^nd Defendant asserted that there had been sales of similar shop premises in the vicinity of the Property at the relevant times and it would demonstrate that the Property was sold at grossly undervalue to Sky Rainbow.

55. In addition, the 2^nd Defendant boldly asserted that the purchaser was a connected party of the Plaintiff. However, there is not a shred of evidence of that (see Paragraph 6 of the 1st Affirmation of the 2^nd Defendant).

56. In this connection, the 2^nd Defendant argued that the Valuation Report of Prudential Surveyor dated 13 June 2018 (Exhibit LS-6) produced by the Plaintiff was a sham to justify the sale below market value in favour of Sky Rainbow.

57. In the 4^th Affirmation of Shum Chi Kwan Lydia (dated 29 July 2019), it was explained that an oral valuation was first obtained from Prudential Surveyor on 16 April 2018 giving a Current Market Value of HK$40,000,000 and a Value for Sale under Repossession at HK$34,000,000. This is evidenced in the series of contemporaneous emails at Exhibit LS-14. The date of the valuation was also 16 April 2018 as stated Valuation Report (Exhibit LS-6, at p.6).

58. It is instructive to note that the 2^nd Defendant admittedly attended all 3 public auctions, the last being held on 13 March 2018. On that occasion, the Open Bid was reduced from HK$35,000,000 (from the two previous auctions) to HK$32,000,000 but still no bid was received. There was no suggestion of any complaint made by the Defendants at the material times that the auctions were not properly conducted. On the evidence before the Court, the sales price of HK$33,800,000 was within reasonable range.

59. Apart from the bare assertion made in Paragraph 8 of the 2^nd Affirmation of the 2^nd Defendant, there is not a scintilla of evidence to show that the Defendants were in a position to nominate an alternative purchaser making an offer matching that of Sky Rainbow, let alone procuring a sales of the Property at a price which would have totally extinguished the indebtedness of the 1^st Defendant in a sum close to HK$60 m (ie total indebtedness before setting off against the proceeds of sales of the Property, see Statement of Balance dated 20 July 2018 at Exhibit LS-5).”

10.The undervalue point has been decided against D2 and D3 and the Order has been sealed.  By reason of issue estoppel, D2 and D3 cannot re-argue the point before this court by the Summons.

11.D2 and D3 may only challenge the 2020 Decision by an appeal.  In the Supporting Affirmations, D2 and D3 said that an appeal was being contemplated by them.  However, the fact is no appeal against the 2020 Decision has ever been lodged.

12.By reason of issue estoppel and in the absence of any appeal against the 2020 Decision, there is simply no reason to stay the execution of the Order.

13.For the sake of discussion, even if an appeal against the 2020 Decision has been lodged, I would still exercise my discretion refusing the stay sought by D2 and D3.

(1)  The Rofta Report can only be admitted as evidence in the appeal if the conditions in Ladd v Marshall [1954] 1 WLR 1489 can be met.  Under the Ladd v Marshall requirement, further evidence is admissible on an appeal only where such evidence:

(a)  could not have been obtained at the trial or at the hearing with reasonable diligence;

(b)  would or might, if believed, have a very important effect on the mind of the court; and

(c)  is of a sort which inherently is not improbable.

(2)  There is no evidence showing a satisfactory explanation concerning the 1^st condition.

(3)  In any event, for the reasons set out by the learned judge in [58] and [59] of the 2020 Decision, I am of the view that the 2^nd and the 3^rd conditions are not fulfilled.

(4)  For the reasons above, it is highly unlikely that the Rofta Report can be admitted as evidence in the appeal.

(5)  I am of the view that D2 and D3 cannot have an arguable appeal against the 2020 Decision.  Accordingly, even if an appeal has been lodged, I would refuse to grant a stay pending appeal.

Disposition

14.I dismiss the Summons.

15.Costs should follow the event.  There be a costs order nisi that costs of the Summons be paid by D2 and D3 to P forthwith and be summarily assessed on paper.  There be leave to P to file and serve a bill of costs for summary assessment within 7 days after the costs order nisi becoming absolute, and leave to D2 and D3 to file and serve a written reply to the said bill within 7 days thereafter.

16.I thank counsel for the assistance rendered to the court.

Written submissions by K. B. Chau & Co, for the plaintiff

Written submissions of the 2^nd and 3^rd defendants, acting in person