劉互慈 v. 張永輝(張偉賢之遺產執行人)

CAMP 463/2022

[2023] HKCA 311

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 463 OF 2022

(ON AN INTENDED APPEAL FROM DCCJ NO. 2990 OF 2020)

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D E C I S I O N

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Hon Cheung JA (giving the Decision of the Court) :

I.  Introduction

1.This is the defendant’s renewed application by way of summons dated 7 November 2022 (‘Summons) for leave to appeal out of time to the Court of Appeal against the decision of HH Judge KC Chan dated 26 July 2022 (‘Decision’), whereby the Judge dismissed the defendant’s application to set aside the default judgment entered against him on 22 April 2021 (‘Default Judgment’). The Judge had refused to grant leave to appeal to the defendant.

2.Having considered the documents filed and lodged by the parties, we are of the view that it is appropriate to determine the present application on paper without an oral hearing. We now give our decision.

II.  Procedural background

3.The relevant background is summarised in [5] to [22] of the Decision. In a nutshell, on 18 June 2020, the plaintiff commenced the proceedings below against her ex - boyfriend, Mr. Cheung Wai Yin (‘Deceased’) for repayment of loans totalling HK$1,005,300 advanced to him between 2013 and 2015 on 15 occasions, when they were still in a romantic relationship. The plaintiff pleaded that the Deceased had promised her in 2013 that he would pay back the money within a year and thereafter, he repeatedly promised her that he would pay her back year after year. Contrary to his promises, he has failed to repay the loans.

4.The plaintiff subsequently discovered that the Deceased had passed away in February 2020. The plaintiff then applied by summons to amend the writ to replace the Deceased with the defendant, who is the personal representative of the Deceased’s estate. The amendment application was eventually allowed on 5 February 2021.

5.On 18 February 2021, the plaintiff served the amended writ on the defendant by registered post. The defendant did not dispute service of the amended writ in the Court below. He did not file an acknowledgment of service. Upon the defendant’s default, the plaintiff applied for default judgment which, as mentioned, was entered on 22 April 2021.

6.The default judgment was served on the defendant by registered post on 27 April 2021.

7.It was only after the plaintiff obtained a charging order nisi against the Deceased’s property that the defendant first took out a summons on 22 July 2021 to set aside the default judgment. The application was heard and dismissed by Master Jocelyn Leung on 19 October 2021.

8.On 1 November 2021, the defendant appealed the Master’s decision to the Judge. Meanwhile, on 9 November 2021, the charging order nisi was made absolute (‘Charging Order’). The Judge ordered an interim stay of the charging order pending the outcome of the appeal below.

III.  The Judge’s Decision

9.The Judge dismissed the appeal, lifted the interim stay of the charging order and ordered costs against the defendant.

10.To begin with, the Judge held that the default judgment was regularly entered. Following the well - established legal principles governing the setting aside of regularly entered default judgment, the Judge went on to consider the parties’ respective cases at [24] to [63] of the Judgment. He concluded that the defendant had failed to show any defence with a real prospect of success or any other reason for the Judge to exercise his discretion to set aside the Default Judgment.

11.The Judge first held that the plaintiff’s claim of the 15 loans was supported by evidence. He then considered the various defences raised by the defendant.

1)  Limitation Defence

(1)  The defendant contended that the claim in respect of ten payments advanced to the Deceased in 2013 (‘2013 Payments’) were time-barred because those payments were due and payable on 31 December 2013.

(2)  The Judge held that the defendant’s case is based on one sentence in the plaintiff’s affirmation filed on 3 May 2021, when she was acting in person, to apply for the charging order nisi, where she said that the Deceased promised to pay back the money to the plaintiff in the year 2013 (他當時承諾會在2013年償還錢給本人). The defendant therefore contended that the due date for the loans was 31 December 2013 from which the limitation period should start to run.

(3)  The Judge dealt with this in [40] of the Decision. He held that the defendant had taken the statement out of context. What the plaintiff said was that after the defendant’s initial promise to repay, the plaintiff had requested repayments from the Deceased on various occasions. The Deceased each time promised her that he would try to come up with the money to repay her and based on such promise she waited year after year. Accordingly, her claim was not time‑barred.

(4)  Alternatively, the Judge held that in July 2013 when the plaintiff was facing mounting financial pressure, she asked the Deceased to commit to a fixed repayment date. It was at that point that the Deceased said he would repay the plaintiff within a year. The Judge found that there is a very real prospect at trial that the Court would find the plaintiff and the Deceased had agreed that the due date should be July 2014 for the repayment of the first ten loans.

2)  The need for scrutiny

(1)  The defendant argued that the Court should exercise caution when a claim is made against a deceased person who cannot now give evidence against the claim.

(2)  The Judge accepted that the Court should approach the plaintiff’s claim with caution and care, given the Deceased was unable to give his version of events against the claim. The Judge then consider this argument in [49] - [58] of his Decision. He found that there is documentary evidence to support the plaintiff’s claims that i) she advanced ten sums to the defendant in 2013; ii) a large part of such funds was borrowed by the plaintiff from various sources; and iii) since August 2014, the plaintiff further advanced five sums to the Deceased. The Judge further considered the evidence produced by the defendant and found that the monthly statements of the Deceased’s bank account showed that the loan amounts pleaded in the plaintiff’s claim had indeed been transferred or deposited into the Deceased’s account. There is no evidence to support the defendant’s query whether the payments might have been for other purposes such as sale and purchase or investment. The Judge held that the totality of the evidence pointed to the inference that the Deceased had been living on the amounts provided by the plaintiff.

3)  Other miscellaneous defences

(1)  The defendant has raised a number of points such as questioning whether the payments made to the Deceased were in the nature of gifts, whether there was consideration, whether there was intention to create legal relationship, and whether the proceedings against the Deceased was a nullity.

(2)  The Judge discussed these in [59 – 63] of the Decision and did not consider these miscellaneous defences to be meritorious.

IV.  The present application

1)  Applicable principles

12.The relevant approach to determine an application for extension of time to appeal is well established, namely, the Court will take into account the length of the delay, the reasons for the delay, the chances of the appeal succeeding if an extension of time is granted, and the degree of prejudice to the other party if the application is granted.

2)  Grounds of appeal

13.The defendant has set out five grounds of appeal in the draft notice of appeal as follows :

(1)  Ground 1: ‘The learned judge is plainly wrong in ordering a liquidated sum of HK$1,005,300 as debts for all 15 alleged loans made between 2013 and 2015 by the Plaintiff to the Deceased under a 2013 promise to repay in 1 year…’

(2)  Ground 2: ‘In admitting the unchallenged evidence of Madam Ng (吳少芳女士) by affirmation that she solely paid for the charged property in the Estate, the learned judge erred in principle in lifting the interim stay on the Charging Order Absolute without inquiring into whether or not the property is part of the Estate. The injustice is aggravated by the lack of service of the Draft Amended Writ which named her as D2 and the Amended Writ which removed her as D2. There are 7 other prejudicial acts (PA1-PA7) and other matters which the learned judge ought not to reject as irrelevant as these are matters or irregularities which in the interest of justice the Court should intervene.’

(3)  Ground 3: ‘On Plaintiff’s evidence that no payment dates for the first 10 alleged loans in 2013 were agreed upon when they were made and the finding that there was no evidence that the 2013 promise was accepted to form a contract, the learned judge ought to find that the 10 individual alleged loans were due immediately and the causes of action accrued at those times when the alleged loans were respectively made and hence were time-barred when the action was commenced by writ on 18/6/2020 (new view). Further, the learned judge ought to find that without fresh consideration or accord and satisfaction, nothing in the alleged promise in 2013 that the loans be repaid in 1 year could have subsequently changed the position on the individual accrual dates (old view). The decision that the limitation defence has no real or reasonable prospect of success is erred in law.’

(4)  Ground 4: ‘On the alleged relationship of the Plaintiff and the Deceased at the material times as boyfriend and girlfriend, there is an unopposed presumption that no legal intention exists in the alleged agreement(s). With no evidence from the Plaintiff to rebut this presumption, the decision that the legal intention defence has no real or reasonable prospect of success is erred in law.’

(5)  Ground 5: ‘With no evidence from the Plaintiff as to why she could not have mitigated her alleged loss by not allegedly lending more to the Deceased in 2014 and 2015 after the newly created promise to repay in 1 year from July 2013 had defaulted, the learned judge ought to find that the Plaintiff failed to discharge her duty to mitigation [sic]. The decision that the mitigation defence has no real or reasonable prospect of success and/or not considered at all is erred in law.’

3)  Our view

14.The delay in this case is seven days. This is not a substantial delay. We will focus on the merits of the intended appeal. Leave to appeal will only be granted if the grounds are reasonably arguable.

(1)  Ground 1

15.This is in essence a repetition of the limitation defence which had been rejected by the Judge. We agree with the Judge’s view. The defendant relied on the state of pleadings and evidence of the plaintiff. He argued that each payment was due immediately, and that there was a lack of fresh consideration, accord and satisfaction or acceptance to support an agreement to repay by July 2014. He complained that the plaintiff had failed to mitigate in that she should decline to grant further loans to the deceased after the default in July 2014. He complained about the Judge’s assessment of the evidence on the actual money lent. He argued that the plaintiff had adduced new evidence without leave. In our view none of these provide a reasonably arguable point that the Judge is wrong on his view on the date of repayment and his alternative view that the date of repayment had been varied. An action in debt is not subject to the duty of mitigation: Strong Offer Investment Ltd v Nyeu Ting Chuang (2007) 10 HKCFAR 529 [46 - 47]. The Judge had already rejected the defendant’s argument that the plaintiff was relying on new evidence in [48] of his Decision.

(2)  Ground 2

16.The Judge had in [9] of his Decision on leave to appeal addressed the arguments on Ground 3 :

「9. 擬上訴理由三投訴本席沒有考慮吳女士聲稱在死者的物業中的權益。如果吳女士聲稱她才是該物業的實質業權人，她應該採取合適的法律程序去處理原告人就該物業獲得的押記令。這事宜與被告人就原告人的申索有沒有成功機會的抗辯理由是兩回事，不應混淆而談，亦不是應否擱置該最終判決的考慮。故此，該上訴理由亦沒有合理的成功機會。」

17.We agree with the Judge.

(3)  Ground 3

18.This is again a repetition of the limitation defence which we have held is not reasonably arguable.

(4)  Ground 4

19.The Judge had addressed this ground in [59] of his Decision that the fact that two parties were in an intimate relationship would not prevent them from entering into legally binding arrangements. We agree.

(5)  Ground 5

20.We had already dealt with this point earlier.

V.  Conclusion

21.For the reasons set out above, we refuse to grant leave to the defendant to appeal the Judge’s decision. The summons is accordingly dismissed. We order the defendant to pay the plaintiff’s costs of this application to be assessed summarily at $50,000 which includes counsel fee of $25,000.

22.As this application is entirely without merit, pursuant to Order 59, rule 2A(8), we further order that no party may under rule 2A(7) request the determination to be reconsidered at an oral hearing inter partes.

Mr. Andrew H. P. Lau, instructed by Chan & Associates, for the Defendant

Mr. Eugene Kwan, instructed by CY Tsang & Co, for the Plaintiff