Ho Miu Ha Formerly t/a Great Enterprise International Co v. Li Yee Hung

DCCJ4193/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4193 OF 2012

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DECISION

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1.This is an application of the defendant for leave to appeal against the decision handed down on 16 October 2014 (“the Decision’) whereby this court dismissed her application to stay the present proceedings on the ground of lis abili pendens pursuant to Order 12 rule 8 of the Rules of the District Court, Cap 336H.

2.The principles and my considerations in the application were stated in the Decision.  The background of the case was set out at paragraphs 2 to 18 and the reasons to exercise the discretion against the application have been stated therein.  I do not repeat them here. 

3.In this decision, I shall adopt the abbreviations in the Decision.

Principles for leave to appeal

4.It is clear that leave should be granted only if the court is satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard: see section 63A(2) of the District Court Ordinance.

5.Where an intended appeal against the exercise of a discretion, the applicant has to show that the judge exercised his discretion under a mistake of law, or that he took into account irrelevant matters or his conclusion was outside the generous ambit within which reasonable disagreement is possible: see Ho Siu Pui & ors v Yue Sheng Finance Ltd & ors, CACV 361/2002(30.1.2003) at §14.

Grounds of appeal

6.The proposed grounds of appeal suggested errors in the court’s finding:-

(1)  that the defendant failed to discharge the burden for a grant of a stay;

(2)  in taking into account facts or allegations which have not been pleaded in the Amended Statement of Claim;

(3)  in taking into account the plaintiff’s intent of amendment to the Amended Statement of Claim;

(4)  that both the proceedings are distinct claims instead of distinct subject matters;

(5)  that the defendant did not establish that continuing the present proceedings would cause an injustice to her;

(6)  that the substantial part of the proceedings which affect parties’ rights was premised on the Agreement;

(7)  that the plaintiff has juridical advantage to obtain Hong Kong judgment for execution and may encounter difficulty in enforcing the PRC judgment in Hong Kong;

(8)   that the plaintiff is required to bring fresh proceedings in the PRC; and

(9)  by awarding costs to the plaintiff.

Ground 1

7.In reaching my Decision, I have relied on the legal principles enunciated in Hyundai Engineering & Construction Co Ltd v UBAF (Hong Kong) Ltd, [2012] 5 HKLRD 620 at §37 in the application for stay on the ground of lis alibi pendens. The defendant accepts these principles to be suitable in this present case.

8.I dismissed the defendant’s application to stay.  Ihave given reasons in supportin the Decision at §§38 to 48. I do not repeat here.

Grounds 2 and 3

9.In gist, under grounds 2 and 3, the defendant complains that the court had erred in taking into account wrongdoings happened before 2005, which have not been pleaded in the Amended Statement of Claim.  It is both unfair and against the law and procedure of the court to allow the plaintiff suddenly enlarging her case to include the unpleaded materials in order to prove the non-identity of subject matters between the two proceedings. 

10.Mr Lam for the defendant refers to the Hong Kong Civil Procedure 2015 at §18/7/7.  It reads that “each party must plead all the material facts on which he means to rely at the trial; otherwise he is not entitled to give any evidence of them at the trial.”

11.With respect, the above principles relate to what evidence may be given at trial.  For the present purpose, the court is clearly concerned with affidavit evidence.  It provides under Order 12 r.8 (4) that an application under paragraph (1) or (2) must be supported by an affidavit verifying the facts on which the application is based.

12.The court normally disposes of the application on the basis of the materials which contained in the affidavits of the parties and the exhibits thereto: Hong Kong Civil Procedure 2015 at §12/8/2. 

13.In my view, the scope of the plaintiff’s pleaded case and the reasons for objection to a stay application would not be all the same. To limit only the pleaded case, it would be unfair to the plaintiff in the stay application.  In this respect, Mr Lam frankly admits that there is no legal authority to support his proposition that only the pleaded materials can be relied upon in a stay application.

14.In the Decision, I have found that both the present and the PRC proceedings involved different subject matters. The PRC proceedings were premised on the breach of the Agreement whereas the present proceedings were primarily concerned with the defendant’s breach of the employee’s duty.  The mere fact that there were similar allegations, namely that the defendant diverted business from the plaintiff’s companies in both proceedings does not make the subject matter of the two proceedings the same (§43 of the Decision).

15.Furthermore, the plaintiff has referred to a number of the defendant’s acts of wrongdoings happened before the signing of the Agreement in 2005.  Some of them have never been raised in the PRC proceedings.  They are supported by documentary evidence and responded to by the defendant.  Thus the allegations are not spurious and made up just to oppose the stay application (§44 of the Decision).

16.After all, this is one of my six reasons that I refused the stay application.  Even if I were wrong on the aforesaid analysis, most importantly, I had held that a stay is not automatically ordered if it can be shown that there is a legitimate purpose with two sets of proceedings(§45 of the Decision).

Ground 4

17.It is obvious from the Decision that I had considered the question of whether the two sets of proceedings concerned distinct subject matters (§§44 and 45 of the Decision). There is no merit in this ground.

Ground 5

18.Mr Lam submits that the plaintiff tailored her allegation in the present proceedings in light of the evidence and argument which the defendant has put forth in the PRC proceedings has caused her injustice.

19.This allegation is unfounded. The defendant herself would also have the benefit of the plaintiff’s evidence having been given in the PRC proceedings.  Besides, discovery has to be made by both parties in respect of the present proceedings. The defendant would have to produce all relevant documents in her possession for inspection anyway.  Therefore the defendant fails to convince me the Decision in this respect (at §46 of the Decision) would reasonably be overturned. 

Ground 6

20.It could be seen that the defendant is only repeating her submissions made in the application for stay.

21.The plaintiff commences the present proceedings as of right and the defendant has no right to deprive the plaintiff from the court which she has chosen in the absence if good reason. Furthermore, the plaintiff did not counterclaim against the defendant in the PRC proceedings. The pursuance of the claim in the present proceedings is obviously a legitimate purpose of the plaintiff.  I find that the defendant advanced no argument that causes me to doubt the Decision in this respect (at §§39 to 41 of the Decision).

Ground 7

22.Both the plaintiff and the defendant are Hong Kong residents. Great Enterprise was incorporated in Hong Kong. FC and the D’s GE are Hong Kong companies (at §§42 & 47 of the Decision).  It goes without saying that the plaintiff has juridical advantage which derives from suing in Hong Kong.  She can effect execution on the defendant’s assets (if any) in Hong Kong.  The absence of a direct enforcement mechanism would mean that the plaintiff may encounter difficulty in the enforcement. This ground fails.

Ground 8

23.I relied on the affirmation from the defendant’s PRC lawyer in arriving at the conclusion that the plaintiff is required to bring fresh proceedings in the PRC on the issue of the defendant’s breach of employee’s duty (at §41 of the Decision). This ground has no merit.

Ground 9

24.The defendant alleged that the plaintiff has not signaled until the substantive hearing her intent to include allegations of wrongdoings prior to 2005 in her affirmation. The court erred in awarding costs to the plaintiff. 

25.I have dealt with similar argument in my previous paragraphs under Grounds 2 and 3 above.  I do not repeat here. 

26.In any event, the stay application is bound to fail on all other reasons that I have given. It is natural cause that costs would be awarded to the plaintiff.

Conclusion

27.I am not satisfied that the intended appeal by the defendant has a reasonable prospect of success.  This is the court’s discretion under O.12, r.8.  I am not convinced that the appellate court would lightly interfere with the exercise of the discretion in the circumstances of this case.  I therefore refuse the application for leave to appeal. 

28.I make an order nisi that the defendant shall pay the plaintiff’s costs of this application, to be taxed if not agreed, with certificate for counsel.  The order will be made absolute 14 days from the day of this decision.

Miss Anny Chak, instructed by Lui & Law, for the plaintiff

Mr Mark Lam, instructed by Chui & Lau, for the defendant