Cheung Hing v. Wong Chor Cheung and Others

HCA 925/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 925 OF 2010

________________________

Before: Hon Anthony Chan J in Chambers

Date of Hearing: 2 September 2014

Date of Decision: 19 September 2014

________________

D E C I S I O N

________________

1.There are 5 Summonses before the court, all taken out by the defendants. However, according to the submissions advanced by the defendants, only the last 2 Summonses dated 10^th and 12^th June 2014 (“Summonses”) issued respectively by the 2^nd defendant (“D2”) and the 1^st and 3^rd defendants (“D1&3”) are being pursued.

2.The Summonses are in identical terms.  They seek an order that s 14AA(1) of the High Court Ordinance, Cap 4 (“Section”), which governs the requirement for leave to appeal against an interlocutory judgment or order, does not apply to the Order of Deputy High Court Judge Burrell made herein on 13 March 2014 (“Order”). 

3.The relevant background may be stated briefly as follows.  This is basically an action between, sadly, 2 childhood friends – the plaintiff (“Cheung”) and D1.  They have a joint investment in a landed property (“Property”) held via D3.  Dispute has broken out between the 2 friends over the Property.  In March 2010, by way of a Consent Order made in another action, HCA 336/2008, Cheung and D1 agreed to the sale of the Property and the distribution of the proceeds. 

4.However, D1, who was in control of D3 (see the Judgment referred to below), purported to sell the Property to D2 at a gross undervalue.  That purported sale led to this action.

5.The trial of this action was scheduled to commence on 12 March 2014.  On the day before the trial began, D1&3 took out 2 Summonses (“11 March Summonses”) to (a) amend their Defence to challenge the locus of Cheung to bring common law derivative action on behalf of D3 and (b) seek to have the locus challenge (“Challenge”) dealt with by way of preliminary issue. 

6.The 11 March Summonses were dismissed on 13 March 2014 both on the ground of lateness and lack of merit.  Hence the Order.

7.After disposing of the 11 March Summonses, the learned Deputy Judge proceeded to try the action.  On 7 April 2014, a Judgment was handed down by the court in this action (“Judgment”).  In short, Cheung’s case was upheld; the sale of the Property to D2 was declared void; and the costs of the action were awarded against D1 and D2 on indemnity basis.  It is right to point out that the sale to D2 was found by the court to be a sham and that D2 was merely the alter ego of D1. 

8.The Judgment is being appealed by all 3 defendants by Notices of Appeal dated 5 May 2014 (“Appeals”).  The Appeals are scheduled to be heard on 14 April 2015.

9.With respect, I believe that these applications are misconceived. 

10.Despite the dismissal of the 11 March Summonses, the court proceeded to deal with the Challenge because it was the primary argument of the defence (see para 52 of the Judgment).  It was rejected by the court and is one of the subject matters of the Appeals. 

11.It is the primary position of both Ms Ho and Mr Tang, who appeared respectively for D1&3 and D2, that (a) the defendants are entitled as of right to appeal the Judgment and (b) the Order will not inhibit the defendants from advancing their arguments in respect of the Challenge in the Appeals.  I agree.

12.In the premises, I am unable to see why the Section is engaged at all. 

13.Insofar as there is any doubt as to whether the Defence of D1&3 should be amended to plead the Challenge (see para 5 above), O 59, r 21(2)(i) (read with O 59, r 21(1)(a)) provides that leave of the court is unnecessary in respect of an appeal against the refusal of an amendment of a pleading to introduce a new defence. 

14.Finally, I am unable to see any entitlement on the part of D2 to appeal against the Order.  The 11 March Summonses were issued by D1&3.  Further, contrary to Mr Tang’s contention that D2 “supported” the 11 March Summonses, the Order reflects that D2 was absent during the hearing of those Summonses and that its former solicitors were present “for observation”.

15.For these reasons, the Summonses are dismissed with costs to Cheung.  I further order that the costs of and occasioned by the other 3 Summonses dated respectively 17 March 2014, 26 March 2014 and 17 April 2014 be paid by the parties on whose behalf they were issued.  

The plaintiff appeared in person

Ms Sabrina Ho, instructed by W K To & Co, for the 1^st and 3^rd defendants

Mr Alexander Tang, instructed by Raymond Cheung & Chan, for the 2^nd defendant