XIAO LONG v. GREAT WALL SECURITIES LTD (formerly known as COLORS SECURITIES LTD)

HCA 369/2018

[2020] HKCFI 1616

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 369 OF 2018

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DECISION

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I.  INTRODUCTION

1.  On 28 November 2018, pursuant to a summons for summary judgment filed on 20 April 2018 (“O14 Summons”) by the plaintiff (“P”), Master Kot granted summary judgment in favour of P and ordered the defendant (“D”) to pay P HK$17,533,600 (“Judgment Sum”) with interest thereon at judgment rate from the date of the Writ of Summons until payment with costs of the action including costs of the summons for summary judgment with certificate for counsel to be taxed if not agreed (“Master Order”). I pause to note the Master Order was a final judgment and not interlocutory judgment for damages to be assessed.

2.  By a Notice of Appeal filed on 3 December 2018, D appealed against the Master Order to dismiss the O14 Summons or to seek unconditional leave to defend (“Appeal”).

3.  On 28 December 2018, D paid the sum of HK$17,533,600 into court (“Payment Into Court”) pursuant to the order dated 21 December 2018 by DHCJ William Wong SC (“Wong Order”) which granted inter alia stay of execution of the Master Order pending the outcome of the Appeal (“Wong Order”).

4.  On 22 January 2019, D filed inter alia a summons for leave to adduce the affirmation of Zhang Chengzhou (“Zhang”) as per the draft annexed to such summons (“Draft Zhang Aff” or “New Evidence”) for the purpose of the Appeal (“Leave Summons”). By the time of the Appeal Hearing, Zhang had affirmed the Draft Zhang Aff before a solicitor in Hong Kong.

5.  On 29 January 2019, the Appeal and Leave Summons came before me for substantive hearing (“Appeal Hearing”). On 15 November 2019, I handed down my reasoned judgment in respect of such summonses (“Reasoned Judgment”) as follows:

(a)	the Appeal be allowed and the Master Order be set aside;
(b)	D be granted unconditional leave to defend P’s claim;
(c)	the parties were directed to respectively serve List of Documents within 21 days from the date of the Reasoned Judgment, and there be inspection of documents within 7 days thereafter;
(d)	the Payment Into Court and interest accrued thereon be paid out of court to D’s solicitors on behalf of D;
(e)	paragraphs 4 and 7 of the Wong Order be discharged;
(f)	there be a costs order nisi that (i) save for the costs provision in (ii) below, D shall pay P costs of and occasioned by the Leave Summons, and (ii) P shall pay D costs of and occasioned by the opposition of the Leave Summons at the Appeal Hearing to be taxed if not agreed with certificate for two counsel;
(g)	there be a costs order nisi that (i) costs of and occasioned by the O14 Summons (including all costs reserved if any) be costs in the cause, and (ii) costs of and occasioned by the Appeal (including all costs reserved if any) be paid by P to D to be taxed if not agreed with certificate for two counsel.

6.  The costs orders nisi in paragraph 5(f)-(g) above had since become absolute. For convenience, in this Decision I shall adopt the abbreviations in the Reasoned Judgment.

7.  On 29 November 2019, P filed a summons for the following reliefs (“Appeal Summons”):

(a)	leave be granted for P to appeal against the Reasoned Judgment as per the draft Notice of Appeal attached thereto (“Draft Notice”);
(b)	an order that execution of the order made on 15 November 2019 by this court (in terms as set out in paragraph 5(a)-(g) above, “Judge Order”) be stayed pending the intended appeal;
(c)	costs of the application be “in the appeal”.

8.  By the Draft Notice, P sought to appeal against the Reasoned Judgment on the matters in paragraph 5(a), (b), (d) and (g) above, to set aside the Reasoned Judgment and to seek the following reliefs (“Appeal Reliefs”):

(a)	interlocutory judgment on liability be entered against D for damages to be assessed;
(b)	alternatively, (i) D be granted conditional leave to defend upon the Payment Into Court remaining in court, but (ii) should leave be granted for D to withdraw the Payment Into Court, interlocutory judgment on liability be entered against D for damages to be assessed;
(c)	costs be to P.

9.  By the Draft Notice, P intended to rely on the following 2 grounds of appeal (“Intended Grounds”) which Ms So, counsel for P (and Mr Hui, solicitor advocate for P, with her) succinctly summarised as follows:

(a)	this court erred in failing to conclude P was the legal and beneficial owner of the Shares/Certs (“Intended Ground 1”);
(b)	this court erred in concluding the ImmD Record was not conclusive evidence of P’s absence from Hong Kong from 14 July to 15 September 2015 (“Intended Ground 2”).

10.  Ms So’s written submissions claimed P also sought leave to file Hui’s 2^nd affidavit and to rely on such affidavit for the purpose of the Appeal Summons, but no summons was filed for such purpose prior to the hearing of the Appeal Summons on 14 January 2020 (“Appeal Summons Hearing”).

11.  But in the hearing bundle for the Appeal Summons Hearing, there was a draft summons by P (unsigned and not filed) for the following reliefs (“Draft New Evidence Summons”):

(a)	leave be granted for P to file Hui’s 2nd affidavit as per the draft attached thereto (which draft was unsigned and not affirmed) and to rely on the same at the Appeal Summons Hearing;
(b)	service of Hui’s 2nd affidavit on D be dispensed with;
(c)	costs of the application be in the cause of Appeal Summons.

12.  At the Appeal Summons Hearing, Ms So informed this court the Draft New Evidence Summons was being filed whilst the Appeal Summons was being heard. But even so, P had not filed any sworn affidavit evidence to be used at the Appeal Summons Hearing for the purpose of explaining and justifying the need to adduce new evidence for the Appeal Summons. The draft Hui’s 2^nd affidavit annexed to the Draft New Evidence Summons was unsigned and unsworn, so in short there was no sworn affidavit evidence to support such summons.

13.  But despite the procedural defects referred to in paragraphs 10-12 above, both Ms So and Mr Yung, counsel for D, canvassed the proposed new evidence (ie the draft Hui’s 2^nd affidavit) in their written submissions, and it did not appear D would be unduly prejudiced in its intended objection to such new evidence save for costs in respect of such application to adduce new evidence, which Ms So readily conceded P would have to bear.

14.  So at the Appeal Summons Hearing, I granted the following orders:

(a)	without prejudice to D’s opposition to the new evidence intended to be adduced by P, leave be granted for P to file for the purpose of the Appeal Summons Hearing (i) P’s summons (a draft of which was the Draft New Evidence Summons) and (ii) Hui’s 2nd affidavit in support of such summons (a draft of which was annexed to such summons) on or before 4pm on 14 January 2020;
(b)	service of such summons and Hui’s 2nd affidavit be dispensed with;
(c)	costs of and occasioned by P’s application to adduce new evidence be to D to be taxed if not agreed.

15.  It was well understood and accepted by Ms So that the order in paragraph 14 above was an indulgence for P to overcome the evidential lacuna referred to in paragraph 12 above, but such order would not preclude D from objecting to P’s reliance on Hui’s 2^nd affidavit as new evidence for the purpose of the Appeal Summons Hearing or for the purpose of P’s intended appeal to the Court of Appeal on Ladd v Marshall and/or other grounds.

16.  On 14 January 2020, P filed his summons the draft of which was the Draft New Evidence Summons (“New Evidence Summons”), and further filed Hui’s 2^nd affidavit (“Hui 2^nd Aff” or “Further New Evidence”).

II.  INTENDED GROUNDS

17.  I do not propose to reiterate what I have said in the Reasoned Judgment, which is there for all to see. I state below the Intended Grounds as set out in the Draft Notice.

18.  Intended Ground 1 P contended this court erred in failing to conclude on both P’s pleaded case and D’s pleaded case that at the material times P was the legal and beneficial owner of 17,360,000 ordinary ListCo shares (ie the Shares) with corresponding share certificates nos 1565-1572, 1973 and 2144-2160 issued on 30 April 2015 (ie the Share Certificates):

(a)	although P pleaded he did not give instructions for withdrawal of the “Shares”, CCASS (upon instructions input by D on 24 August 2015 based on the mistake that P made such request) did intend to issue and convey the Shares to P, so at that point of time, the Shares were crystallised as being legally and/or at least beneficially owned by P;
(b)	D admitted in paragraph 3(b) of the Amended Defence that P was the beneficial owner of the Shares.

19.  Intended Ground 2 P contended this court erred in failing to give P opportunity to be heard and to reply before concluding erroneously that the ImmD Record relied on by P to prove conclusively his absence from Hong Kong from 14 July to 15 September 2015 (ie including 25 August 2015) was not conclusive on the basis that the ImmD Record was issued only in respect of P’s Passport but not his Permit for travelling to and from Hong Kong:

(a)	at the Master/Appeal Hearings, D on whom the burden lied to produce evidence with precision/particulars (which contention D accepted) merely argued that P might have entered Hong Kong illegally or have some other identities;
(b)	the point this court relied, ie the ImmD Record only showed or might have only showed the travel records of P using the Passport but not the Permit,[1] was never raised at the hearings, and P was never afforded opportunity to address this point by way of submission or evidence, even though D carried the burden to produce evidence (see (a) above);
(c)	this court erred in law in concluding the Miles v Bull ground applied in the present case[2] absent any special circumstances identified properly or at all, and the matters considered by this court[3] at most would lead to the conclusion that the defence raised by D was shadowy for which conditional leave should have been granted.

III.  HUI 2^ND AFF

20.  P intended to adduce the contents of the Hui 2^nd Aff as Further New Evidence in support of the Intended Ground 2. In the Hui 2^nd Aff, Hui pointed out that a main point in dispute in the present action was whether P was in Hong Kong on 25 August 2015 such that (as D alleged on evidence) P personally collected the Shares/Certs from Lui (who verified P’s identity) that day at the Handover Site.

21.  Hui noted this court was not persuaded the ImmD Record was so obviously unequivocal as P / P’s counsel would have this court accept[4] as this court accepted D’s submissions that the ImmD Record only showed someone with P’s name and date of birth entering Hong Kong via immigration checkpoints, and went on to say the ImmD Record when read together with the ImmD Application appeared to have been generated with reference to P’s Passport but not with reference to P’s other Travel Documents such as the Permit. Hui further noted this court (a) held that the logical inference must have been (or at least there was strongly arguable basis to suggest such logical inference) that the ImmD Record provided pursuant to the ImmD Application was in relation to P’s legal entries/exits into and from Hong Kong using his Passport,[5] and (b) commented[6] about the non-equivocal nature of the ImmD Record when P himself admitted having entered Hong Kong in April 2015 using his Permit,[7] thus characterising the situation as a “lacuna in the evidence” as to whether P ever made application to the ImmD for his statement of travel records in relation to use of the Permit as his travel document, and whether the data in the ImmD Record included P’s entry(ies)/exit(s) into and from Hong Kong using the Permit.[8]

22.  Hui said P had not specifically researched into and/or addressed the scope of the ImmD Record at the Master/Appeal Hearings because:

(a)	P did not know the ImmD Record would be considered equivocal evidence as to his legal entries/exits into and out of Hong Kong. Written submissions by D at the Appeal Hearing referred to P possibly entering Hong Kong with another set of travel documents that bore a different name or different date of birth without suggesting the ImmD Record was non-exhaustive or did not cover entries with the Permit;
(b)	it was assumed the ImmD Record (which on its face made reference to P’s arrival/departure entries without mention of being limited to only entries by the Passport or the Permit) exhaustively showed all P’s travel records;
(c)	P’s entry into Hong Kong in April 2015 (which all parties accepted was under his Permit) was clearly reflected in the ImmD Record, so it was assumed the ImmD Record of itself and showed it was an exhaustive statement of P’s travel records.

23.  In light of the matters in paragraph 21 above, PSols wrote to the ImmD on 28 November 2019 (by letter and email) to seek clarification about the nature of the contents of a statement of travel records (such as the ImmD Record). On 2 December 2019, the ImmD replied by email explaining that such statement would contain a data subject’s English name, date of birth, arrival/departure dates (with time) during the requested period, and the names of the control points through which the data subject completed immigration clearance as a passenger.

24.  Hui noted such answer did not fully clarify the position, so PSols again wrote to the ImmD on 12 December 2019 attaching the Reasoned Judgment and requesting a definitive answer on (a) whether the ImmD Record was conclusive evidence that P had not entered into Hong Kong on 25 August 2015 even though the ImmD Application only made reference to the Passport, and (b) whether it was necessary to apply for another statement of travel records with specific reference to the Permit. On 24 December 2019, PSols had a telephone conversation with a representative of the ImmD who confirmed inter alia that to search for a person’s immigration records the ImmD would use such person’s name, sex and date of birth rather than a specific travel document, and this court was incorrect in terms of the ImmD’s procedures for searching a person’s immigration records. By an email dated 27 December 2019, the ImmD confirmed the above explanation, and noted a statement of travel records contained all movements of the subject individual travelling via any immigration control points, and such individual’s travel records “are not made only based on the applicant’s provided travel documents”.

25.  On the basis of the ImmD’s replies, Hui believed the Reasoned Judgment contained a misunderstanding about the ImmD Record, and the aforesaid new evidence (which could not be said to be improbable as it was provided by a government department) would have a important effect on the mind of this court, especially on the critical point of whether P was in Hong Kong on 25 August 2015. It was said that as P and his legal team were unaware of the significance of the new evidence (which only clarified the nature/scope of the ImmD Record and was not new information as such), it could not have been obtained at the time of the Appeal Hearing with reasonable diligence.

26.  Thus, if P were granted leave to appeal, Hui said P would seek leave from the Court of Appeal to adduce the Further New Evidence (including the aforesaid correspondence between the ImmD and PSols) and an affidavit repeating in substance the contents of the Hui 2^nd Aff. Hui exhibited a draft summons for leave from the Court of Appeal to adduce the Further New Evidence to be filed in the event leave to appeal were granted. Hui claimed the Further New Evidence would significantly bolster the chances of success of P’s intended appeal (by demonstrating unequivocally that P was not in Hong Kong on 25 August 2015 to personally receive the Shares/Certs from Lui), so P’s intended appeal would have more than reasonable prospects of success. So Hui urged this court to grant leave to appeal, and (in light of the strong Intended Ground 2) to grant stay of execution of the Reasoned Judgment pending appeal and to ensure the Payment Into Court remained in court.

IV.  LEGAL PRINCIPLES ON LEAVE TO APPEAL

27.  Under section 14AA(4) of the High Court Ordinance Cap 4, leave to appeal shall not be granted unless the court is satisfied 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. In SMSE v KL,[9] Le Pichon JA pointed out such leave to appeal is not lightly granted. Reasonable prospect of success involves the notion that the prospect of succeeding must be “reasonable” and therefore more than “fanciful”, without having to be “probable”. Chu J (as she then was) explained in Wynn Resorts (Macau) SA v Mong Henry[10] that to meet the “reasonable prospect of success” test, an applicant is required to show more than an arguable case, ie an appeal that has merits and ought to be heard although he does not have to demonstrate that the appeal will probably succeed.

28.  Further, it is pertinent to bear in mind that even if there is a reasonable prospect of success on appeal, the court still retains a discretion whether to grant leave to appeal, and the court may refuse leave to appeal in the interests of procedural economy and proportionality even though the fact that there is, ex hypothesi, a reasonable prospect of success will heavily influence the court’s exercise of discretion.[11]

29.  It is trite that the Court of Appeal will only in very special circumstances interfere with a judge’s grant of unconditional leave to defend on points of evidence and fact.[12]

V.  PRELIMINARY MATTERS

30.  But before I turn to the Intended Grounds, I need to deal with a few preliminary matters, some of which would be determinative.

(a)  Appeal against order not reasons

31.  The Appeal Summons and the Draft Grounds sought leave to appeal against the Reasoned Judgment. But any appeal or intended appeal should be made against the Judge Order (or parts of the Judge Order) and not against the reasons in the Reasoned Judgment.[13] So for the purpose of the Appeal Summons, I shall assume P sought leave to appeal against parts of the Judge Order in terms as in paragraph 5(a), (b), (d) and (g) above.

(b) Reliefs sought on intended appeal different from Master Order

32.  In the Draft Notice, P claimed that (a) should leave to appeal to the Court of Appeal be granted and (b) if P were to succeed on the intended appeal to the Court of Appeal, he would ask the Court of Appeal to grant the Appeal Reliefs which were quite different from the Master Order. At the Appeal Summons Hearing, Ms So confirmed P wished to seek the Appeal Reliefs, and assured this court P would not seek to uphold the Master Order.

33.  As explained in paragraph 1 above, the Master Order against D was a final monetary judgment with order for payment of the Judgment Sum to P with costs. But the Appeal Reliefs merely contemplated interlocutory judgment against D for damages to be assessed (with no direct/immediate monetary payment to P), or alternatively conditional leave to defend with the Payment Into Court to remain in court (see paragraph 8 above).

34.  At the Appeal Hearing, D was critical of the Master Order that was in the nature of a final judgment, which contention this court accepted despite resistance by P who sought to uphold the Master Order in its entirety.[14] But from paragraphs 32-33 above it was obvious that by now P conceded he was entitled (if at all) to interlocutory and not final summary judgment for damages to be assessed. Nonetheless, given P’s insistence on upholding the Master Order in its entirety (without any concession as in paragraph 32 above) even up to and including the Appeal Hearing, D plainly had to appeal against the Master Order in order to overturn the final judgment granted thereunder otherwise it would not have been able to secure this court’s decision to set aside the Master Order on such ground[15] and to enjoy P’s concession in the Draft Notice of not insisting on any final judgment. That being the case, I am unable to see reasonable prospects of success in respect of the Appeal Relief on costs in paragraph 8(c) above.

(c)  Approach to Appeal/Leave Summonses as agreed by P and D

35.  When the Appeal/Leave Summonses came before this court at the Appeal Hearing, both Mr Chan SC and Mr Yung (then counsel for D) and Mr Lam and Mr Hui (then counsel and solicitor advocate for P) agreed to adopt the following procedural approach for dealing with such summonses as set out in the Reasoned Judgment:

“51. The Appeal and Leave Summonses came before this court at the Appeal Hearing. Since (a) the Leave Summons hijacked hearing time at the Appeal Hearing originally intended for the Appeal, and (b) submissions to support/oppose the Leave Summons necessarily had to canvass the subject matters of P’s claim, D’s defence and the O14 Summons in order to assess the impact of the New Evidence, Mr Chan SC and Mr Lam agreed that to avoid further delay both the Appeal and Leave Summonses should be heard together on the following basis:

(a)	if this court were to determine the Appeal in D’s favour (ie allow the Appeal and grant unconditional/conditional leave to defend or dismiss the O14 Summons) upon the existing evidence and without reference to any New Evidence, this court would not have to deal with the Leave Summons except for the issue of costs;
(b)	if this court would have dismissed the Appeal (ie not determine the Appeal in D’s favour as explained in (a) above) upon the existing evidence, this court would have to go on to deal with the issue of admissibility of the New Evidence under the Leave Summons;
(c)	if this court had to deal with the Leave Summons pursuant to (b) above but would refuse leave for D to adduce the New Evidence, then this court would dismiss the Appeal;
(d)	if this court had to deal with the Leave Summons pursuant to (b) above but would have granted leave for D to adduce the New Evidence, then this court would further (i) grant case management directions for P to file/serve affirmation in response to the New Evidence and for D to file/serve affirmation in reply, and (ii) adjourn the Appeal for further argument.

52.       Mr Chan SC and Mr Lam also agreed on the following matters:

(a)

should this court allow the Appeal and either dismiss the O14 Summons or grant unconditional leave to defend (see paragraph 51(a) above), this court should (i) grant leave for the Payment Into Court (see paragraphs 47(a) and 48 above) to be paid out of court for return to D, and (ii) the orders in paragraph 47(d) and (f) above under the Wong Oder be discharged;

(b)

should this court allow the Appeal and grant conditional leave to defend (see paragraph 51(a) above) with the relevant condition being payment into court (‘Condition Sum’), then this court should (i) direct that the Condition Sum out of the Payment Into Court be retained in court and the balance of the Payment Into Court (if any) be paid out of court for return to D, and (ii) the orders in paragraph 47(d) and (f) above under the Wong Order be discharged.

There was some debate between Mr Lam and Mr Chan SC as to what should happen if the court should uphold the Master Order and dismiss the Appeal (see paragraph 51(c) above). Mr Lam submitted I should order the Payment Into Court be paid out to P, but Mr Chan SC submitted I should leave it to P to make proper application for such purpose.”

36.  At the Appeal Summons Hearing, Ms So confirmed the above consensus was still valid and effective between P and D, and P would not seek to resile from such consensus.[16] Under such consensus for the Appeal / Leave Summons, if this court would not determine the Appeal in D’s favour (and deciding the Appeal in D’s favour meant allowing the Appeal and granting unconditional/conditional leave to defend, or dismissing the O14 Summons) on the existing evidence, P and D agreed that this court in dealing with the Appeal should adopt the following agreed approach (“Agreed Approach”):

(a)	this court would have to go on to deal with the issue of admissibility of the New Evidence under the Leave Summons;
(b)	if this court would refuse leave for D to adduce the New Evidence, this court would dismiss the Appeal;
(c)	but if this court would grant leave for D to adduce the New Evidence, then this court would proceed to (i) grant case management directions for P to file/serve affirmation in response to the New Evidence and for D to file/serve affirmation in reply, and (ii) adjourn the Appeal for further argument.

37.  By the Reasoned Judgment, this court allowed the Appeal, set aside the Master Order and granted unconditional leave to defend on the existing evidence without turning to the New Evidence,[17] ie this court determined the Appeal in D’s favour (in the manner as explained in paragraph 36 above) on the existing evidence, so there was no need to follow the Agreed Approach. But in case I was wrong (ie this court should not have determined the Appeal in D’s favour in the manner as explained in paragraph 36 above on the existing evidence), in the Reasoned Judgment I went on to follow the Agreed Approach and to consider the New Evidence, and concluded that “…… this was one of the rare cases in which leave to appeal ought to have been granted to adduce the New Evidence for the Appeal had it been necessary. But as explained above, it was not necessary since I have found the Master Order ought to be set aside and the Appeal be allowed with unconditional leave to defend”.[18] There was no application by P in the Draft Notice / Intended Grounds for leave to appeal against such conclusion by this court that D should have leave to adduce the New Evidence (if neceeeary) for the purpose of the Appeal.

38.  More importantly, and quite irrespective of this court’s conclusion on the New Evidence, it was plain that in light of the Agreed Approach, if the Judge Order in terms as set out in paragraph 5(a), (b), (d) and (g) above were to be overturned (ie the Appeal would not be determined in D’s favour in the manner as explained in paragraph 36 above, which would be the result that P intended to seek from the Court of Appeal by way of the Appeal Reliefs in the Draft Notice if leave to appeal were granted), P would not have been able to secure any immediate final or even interlocutory judgment against D, or even any conditional leave to defend. Rather, P had only 2 routes open to him:

(a)

If P accepted the conclusion of this court in the Reasoned Judgment that D should have leave to adduce the New Evidence for the purpose of the Appeal, then the Agreed Approach in paragraph 36(c) above would apply, so at best P could only seek leave to appeal against the Judge Order to have it set aside and to have the present case remitted to the Court of First Instance for granting the case management directions contemplated in paragraph 36(c) above and for further hearing the Appeal in due course based on the totality of the affirmation evidence (including the New Evidence and further evidence to be adduced by P in response thereto and by D in reply thereof under the case management directions to be granted).

(b)

If P would not accept the conclusion of this court in the Reasoned Judgment that D should have leave to adduce the New Evidence for the purpose of the Appeal, then such challenge should have been raised as an intended ground of appeal in the Draft Notice. This was because even if P were able to establish the Intended Grounds, under the Agreed Approach P would still need to go on and show no leave should be granted for D to adduce the New Evidence for the purpose of the Appeal before he could ask the Court to dismiss the Appeal (see paragraph 36(a)-(b) above).

But as referred to in paragraph 37 above, P did not seek leave to appeal against this court’s conclusion that D should have leave to adduce the New Evidence for the purpose of the Appeal, and this was confirmed by Ms So at the Appeal Summons Hearing (and as borne out in her submissions in paragraph 39 below). Further, Ms So also confirmed P would only seek the Appeal Reliefs and not any alternative relief (see eg the italicised part in (a) above) on the intended appeal to the Court of Appeal. That being the case, even if the Intended Grounds had any merits (which matter I will turn to below), there was, quite simply, no arguable basis for allowing the Appeal Reliefs on any intended appeal. I therefore find there were no reasonable prospects of success for P to secure the Appeal Reliefs on any intended appeal to the Court of Appeal.

39.  Ms So submitted that since the Intended Grounds did not challenge the admissibility of the New Evidence, if leave were granted for P to appeal to the Court of Appeal and if the Court of Appeal were to grant leave for P to adduce the Further New Evidence so that the matters in the Hui 2^nd Aff (ie the Further New Evidence) would be “put into the mix” before the Court of Appeal, such Further New Evidence would have considerable influence on the ultimate decision by the Court of Appeal as it would amount to clear evidence that P did not receive the Shares/Certs. I disagree.

40.  First, if the Appeal should not be determined in D’s favour on the existing evidence in the manner as explained in paragraph 36 above (as P contended) but leave should be granted for D to adduce the New Evidence for the purpose of the Appeal (as this court found), case management directions contemplated under the Agreed Approach had yet to be granted for P and D to file affidavit evidence in response to the New Evidence and in reply to such affidavit evidence in response, and for the Court of First Instance to further hear the Appeal on the basis of the totality of the evidence including all new evidence to be filed pursuant to such case management directions yet to be granted (see paragraph 36(c) above), and the Agreed Approach did not allow ipso facto determination in P’s favour by granting the Appeal Reliefs on appeal from the Judge Order. But even if the Further New Evidence were to be regarded as P’s evidence in response to the New Evidence as Ms So suggested (a matter to which I will return to paragraph 41 below), under the Agreed Approach P still could not seek the Appeal Reliefs on appeal to the Court of Appeal against the Judge Order (if leave were granted) because the Court of First Instance had yet (a) to grant case management directions for D to file affidavit evidence in reply, and (b) to further hear the Appeal on the totality of the affidavit evidence which at this stage was still not fully before the court.

41.  Secondly, it was not easy to view the Further New Evidence as P’s evidence in response to the New Evidence. The tenor of the New Evidence (ie the Draft Zhang Aff which had since been affirmed by Zhang) set out in Part X of the Reasoned Judgment was to debunk P’s allegation that he had no idea to whom D transferred the Shares/Certs, and to show P had re-taken the Shares and was in possession of the Share Certificates such that he sold the exact number of 17,360,000 ListCo shares to a third party on exactly the same day of 11 September 2015 that the Shares were transferred out (as confirmed by Tricor). In short, the Draft Zhang Aff dealt with events after 25 August 2015. But the contents of the Hui 2^nd Aff and the Further New Evidence dealt with the ImmD Record which, it was said, went to show P was not in Hong Kong on 25 August 2015. In my view, this was a different factual matter that could not be said to be in response to the New Evidence. Moreover, as explained in the Hui 2^nd Aff, the Further New Evidence was obtained in answer to this court’s views on the ImmD Record in the Reasoned Judgment and not in response to the New Evidence that related to events after 25 August 2015. In my view, even if the case management directions contemplated by the Agreed Approach were granted (although none had been granted as yet), it was strongly arguable that P could not seek to adduce the Further New Evidence on the coattails of the New Evidence, and that P had to independently seek leave to adduce the Further New Evidence for the purpose of the further hearing of the Appeal.

42.  Thirdly, Ms So in her oral reply submissions at the Appeal Summons Hearing argued that as P intended to adduce the Further New Evidence for the intended appeal to the Court of Appeal, so if (a) leave to appeal were granted, and (b) the Court of Appeal allowed the Further New Evidence to be adduced for such appeal, the Court of Appeal would determine such appeal on the Further New Evidence and not on the existing evidence, and the Further New Evidence would so materially affect the Agreed Approach that it would fall by the wayside. In my view, this was a bold argument that essentially ignored the existence of the New Evidence (which in fact was the very reason why the parties agreed to the Agreed Approach in the first place) in respect of which this court concluded ought to be adduced for the purpose of the Appeal (if such Appeal could not be determined in D’s favour in the manner as explained in paragraph 36 above on the existing evidence), and that was nothing more than P trying to pull his argument up by its own bootstraps.

43.  The Agreed Approach was a consensus between P and D reached as a result of having to deal with the Leave Summons (and the New Evidence) returnable at the same time as the Appeal Summons. P’s argument in the above paragraph was to the effect that because he himself wanted to adduce the Further New Evidence for the purpose of his intended appeal to the Court of Appeal to support the Intended Ground 2 that complained this court erred on a point not raised by D at the Appeal Hearing, then the consensus between P and D over the Agreed Approach on how to address the Appeal / Leave Summons (and the New Evidence) would somehow be put asunder, and D would be left without opportunity envisaged under the Agreed Approach to adduce affidavit evidence in reply and to fully address/debate the Appeal by further hearing before the Court of First Instance on the totality of the evidence (including the New Evidence and further evidence yet to be filed in response and in reply by P and D respectively). Even on the basis of P’s complaint, D had done nothing to tempt any departure from the Agreed Approach, and I could hardly see how P’s unilateral wish to adduce further new evidence for the intended appeal to the Court of Appeal would justify P’s unilateral departure from the Agreed Approach. Notwithstanding Ms So’s assurance that P had no intention to resile from the Agreed Approach, P’s such argument appeared to be an attempt to back out of the Agreed Approach on the basis of his own wish to adduce further new evidence for his intended appeal.

44.  On such basis, the Appeal Reliefs could not be supported, and in my view P had no reasonable prospects of success in securing the Appeal Reliefs on any intended appeal. In my view, the Appeal Summons would have to be dismissed. But I shall proceed to deal with the Intended Grounds briefly.

VI.  INTENDED GROUND 1

45.  I have set out P’s pleaded claim in paragraphs 16-22 of the Reasoned Judgment. In short, P averred he was the legal and beneficial owner of (a) a particular block of 17,360,000 ordinary ListCo shares corresponding to the share certificates in (b) below, and (b) ListCo’s share certificates nos 1565-1572, 1973 and 2142-2169 (ie the Share Certificates corresponding to the shares in (a) above). By claiming for loss and damages, in particular loss of the Shares, the Share Certificates and the proprietary rights deriving from and/or arising out of the Shares, and also in light of the reliefs sought in the SoC, P’s claim was predicated on his allegation that he was the legal and beneficial owner of the Shares/Certs that gave rise to proprietary rights in (a)-(b) above.

46.  In paragraph 6 of the Amended Defence (see paragraphs 24-27 of the Reasoned Judgment), D averred inter alia that (a) on 24 August 2015 it received the SW Instruction signed by P (see in particular paragraph 6(b) of the Amended Defence and paragraph 24 of the Reasoned Judgment) and input such share withdrawal instruction into CCASS for withdrawal of 7,360,000 ListCo shares, which resulted in the SW Receipt that referred to the specific Share Certificates, and (b) on 25 August 2015 P came to collect the physical scrips of the Share Certificates, and Lui personally gave such physical scrips and SW Receipt to P together with the Transfer Form.

47.  By paragraph 4(6) of his Reply, P expressly denied paragraph 6(b) of the Amended Defence and averred that:[19]

(a)	P did not give D any verbal/written instruction to withdraw and/or part with the Shares/Certs, and did not authorise anyone to do so on his behalf;
(b)	P did not by himself or direct anyone to fill out / sign / send to D any SW Instruction in respect of the Shares/Certs;
(c)	D failed to verify the signature on the SW Instruction against P’s signature on record;
(d)	if D received the SW Instruction (which P denied), D wrongfully acted upon an incomplete SW Instruction which bore a “false signature” of P.

In short, P averred D carried out the stock withdrawal transaction with CCASS for the Shares/Certs without P’s authority and/or instructions (see paragraph 4(7) of P’s Reply and paragraph 36(e) of the Reasoned Judgment).

48.  In paragraph 145 of the Reasoned Judgment, I was “persuaded D had raised a triable issue over the vitality of P’s own claim premised on alleged legal and beneficial ownership of specific Shares linked to specific Share Certificates such that summary judgment ought not to be entered on P’s case as pleaded”.

49.  Ms So submitted that upon P’s purchase of the Listco shares he had an interest in unspecific Listco shares held by D on his behalf, ie the relevant portion of unspecific shares in D’s holding of ListCo shares with CCASS, and that one can have a proprietary interest in an unappropriated mass.[20] But such argument would not assist P because he asserted proprietary interest in a specific block of Shares linked to the specific Share Certificates. Indeed, D fairly accepted P might have an alternative cause of action which he did not plead or verify by affidavit for the purpose of the O14 Summons (see paragraph 138 of the Reasoned Judgment).

50.  Ms So went on to argue that if a custodian and/or the ultimate trustee (eg CCASS and D in the present case) took it upon themselves to appropriate a particular part of the fund and match the same to a beneficiary (eg P in the present case), the beneficiary’s proprietary interest in the unappropriated mass must continue to exist albeit now attached to a segregated part. Consequently, it was said P’s case was based squarely on interference with and/or loss of such proprietary interest.

51.  Ms So argued that to the extent there was appropriation (regardless of who initiated it), D’s duties to P would be owed vis-à-vis the specific block of appropriated Shares as opposed to unspecific co-ownership shares, and if D failed to keep the specific block of appropriated Shares in safe custody, that would amount to breach of duties by D as a licensed broker. On such basis, Ms So submitted that latest by 24 August 2015 when (a) D effected a withdrawal of 17,360,000 ListCo shares from CCASS and (b) D/CCASS segregated the Shares, P’s proprietary interest became attached to the specific block of Shares even though he did not instruct such withdrawal. In any event, on D’s own case, P did instruct the withdrawal (and hence appropriation), so it lied ill at D’s mouth to now assert P had no interest in the Shares (as defined). It was said that such argument would create a strange situation in which D no longer held any ListCo shares on behalf of P, but P could not assert proprietary interest over the Shares that had been withdrawn from CCASS. Further, it was said given that D admitted P was the beneficial owner of the Shares, if D did not deliver to P the Shares/Certs on 25 August 2015, there must have been a breach of the Duties.

52.  But the short answer to this could be found in P’s pleadings which denied any crystallisation or appropriation of the Shares by D that would make him the legal/beneficial owner of the specific Shares/Certs, and in particular P denied any stock withdrawal from CCASS upon P’s instruction or authority. In fact, P by his pleadings disputed the whole stock withdrawal exercise, and disagreed with any appropriation of the Shares/ Certs on 24-25 August 2015 by virtue of such stock withdrawal exercise. In short, P claimed D went on a frolic of its own in making stock withdrawal which P never authorised or recognised. On P’s own pleaded case, his interest as at 25 August 2015 was in the unspecific ListCo shares, and he had no idea about D’s stock withdrawal under the SW Instruction. That being P’s pleaded case, it appeared odd for P should now claim proprietary interest over specific property (ie the Shares/Certs) it did not recognise and had no idea.

53.  Any appropriation of the Shares/Certs could only have been based on D’s case. But P did not plead any alternative case (which he denied) that had there been appropriation of the specific Shares and specific Share Certificates by D for P pursuant to the stock withdrawal from CCASS on 24 August 2015, P would then have proprietary interest over those specific Shares/Certs withdrawn from CCASS, but which he did not receive on 25 August 2015. Order 18 rule 12A of the RHC provides that a party may in any pleading make an allegation of fact which is inconsistent with another allegation of fact in the same pleading if (a) the party has reasonable grounds for so doing and (b) the allegations are made in the alternative.[21] Ms So referred to P’s plea in paragraph 47(d) above that if D received the SW Instruction (which P denied), D wrongfully acted upon an incomplete SW Instruction which bore a “false signature” of P. But this again was mere denial that the incomplete SW Instruction amounted to P’s authorisation as it bore “false” signature of P.

54.  As Mr Yung pointed out, in an application for summary judgment, P’s pleadings must be regular and complete on its face and verified by supporting affidavit (see paragraphs 126-127 of the Reasoned Judgment). Although D admitted P was a registered shareholder of the ListCo, that was debunked by the reality that P was never the registered shareholder of any ListCo shares as confirmed by Tricor. D admitted P was the beneficial owner of the ListCo (presumably from P’s purchase of unspecific 17,360,000 ListCo shares through D as broker),[22] but that would not be equivalent to admission of beneficial ownership of the specific block of the Shares (see paragraph 143-144 of the Reasoned Judgment). As for Ms So’s reference to paragraph 6(a) of the Amended Defence that averred “[as] registered owner of the Shares, [P] is the beneficial owner of the Shares under CCASS ......”, such mistaken plea that P was the beneficial owner of the Shares “under CCASS” because he was the “registered owner of the Shares” also would not assist because it was common ground that (a) P was not the registered owner of any ListCo shares (including the specific block of the Shares), and (b) the ListCo shares electronically held under CCASS (ie before any stock withdrawal) were unspecific shares and HKSCC did not recognise the rights/interests of any person other than a CCASS Participant.

55.  In my view, Intended Ground 1 would not have reasonable prospect of success.

VII.  INTENDED GROUND 2

56.  Ms So submitted that the crux of Intended Ground 2 rested on a proper understanding of the ImmD Record, which was relevant to the “irreducible core” of P’s case that P did not personally receive the Shares/ Certs on 25 August 2015 as he was not physically in Hong Kong on that day. It was said that at various parts of the Reasoned Judgment this court appeared to assume the ImmD Record was not conclusive evidence of the periods of P’s presence in Hong Kong as it arguably referred to P’s Passport, and as such this court did not accept (as P contended) D’s case had no credible basis. Ms So argued that the ImmD Record even on its face reflected P’s travel records using his Permit (eg his arrival to Hong Kong on 14 April 2015), hence this court misunderstood the significance of the document, and erroneously assumed the ImmD Record only reflected entries and exits with the Passport.

57.  Ms So submitted the ImmD’s clarification as exhibited to the Hui 2^nd Aff clearly showed the ImmD Record contained all of P’s travel records using both the Passport and the Permit, and the Further New Evidence satisfied the Ladd v Marshall conditions because P could not have foreseen this court’s mistaken interpretation, and hence could not have appreciated the significance of adducing this further new evidence earlier.[23] Since this further new evidence would have had a critical impact on this court’s reasoning as to whether or not P could prove he was not in Hong Kong on 25 August 2015, it would go to show P had not received the Shares/Certs, and D must have parted with possession of the Shares/Certs without authority.

58.  On the other hand, Mr Yung submitted the Further New Evidence failed to satisfy the 1^st and 2^nd Ladd v Marshall conditions in that it was P who produced and relied heavily on the ImmD Record to support his assertion as to the conclusiveness of such record, so it was for P to make clear the extent of its implication. Mr Yung argued it was logical for this court to have read the ImmD Record as it did in light of its genesis (see paragraph 171 of the Reasoned Judgment), and it remained unclear whether P’s entry(ies) via the Permit would match with the ImmD Record. Mr Yung further submitted that with the weight P intended to put on such ImmD Record to support his pleaded claim, P should have obtained the Further New Evidence when he first adduced the ImmD Record, and the Further New Evidence should and could readily have been made available at that stage had P exercised due diligence.

59.  I believe the Intended Ground 2, which rested largely on the intended introduction of the Further New Evidence to demonstrate that this court had erred on its reading of the ImmD Record, could be dealt with shortly on the assumption that the Further New Evidence could be taken into account without this court forming any definitive view as to whether or not the Further New Evidence satisfied the Ladd v Marshall grounds.

60.  Even if the Further New Evidence were to be taken into account, the discussion in Part V(c) above has dealt with the correct approach to be adopted if the Appeal would not be determined in D’s favour in the manner explained in paragraph 36 above (eg if the court were to grant the Appeal Reliefs in the Draft Notice as P contemplated). This meant the New Evidence could not be ignored, and the parties would have to follow the Agreed Approach to deal with the New Evidence. As explained above, this court took the view that had it been necessary the New Evidence would have been admitted for the purpose of the Appeal (and P did not challenge such decision to admit the New Evidence) and noted such evidence “might suggest that P’s claim was a false one in the sense that P had in fact retaken possession of the Shares/Certs and had sold them to a third party for consideration received”,[24] which (depending on the further affirmation evidence in response/reply yet to be filed pursuant to case management directions also yet to be granted under the Agreed Approach) might raise query over the alleged conclusiveness of the ImmD Record as to P’s alleged absence in Hong Kong on 25 August 2015 notwithstanding the clarification by way of the Further New Evidence.

61.  In light of the New Evidence, I am unable to accept the Further New Evidence would necessarily and conclusively show P did not receive the Shares/Certs pending further evidence in reply by D pursuant to case management directions yet to be granted and further hearing yet to be heard under the Agreed Approach. Ms So submitted the Further New Evidence that showed P could not have been in Hong Kong on 25 August 2015 to receive the Shares/Certs would so undermine the New Evidence which showed P subsequently dealt with and sold the Shares (notwithstanding (a) affirmation evidence by Zhang (who knew P) about P’s dealings/sale of the Shares after 25 August 2015, (b) Zhang’s evidence was supported by documentary evidence, and (c) there was to date absence of explanation by P in respect of his dealings/sale with the Shares after 25 August 2011 as referred to in the Draft Zhang Aff (now affirmed)). But these matters raised factual disputes, and in the Order 14 context which might put in issue the asserted conclusiveness of the ImmD Record even as clarified by the Further New Evidence, but whether it would actually do so would require consideration of further evidence to be filed and further hearing of the Appeal as contemplated under the Agreed Approach (see paragraph 36(c) above).

62.  Additionally, there were further countervailing considerations and/or unexplained features independent of the ImmD Record and the New Evidence that this court considered would invite investigation at trial on the Miles v Bull ground,[25] eg (a) P’s long period of inaction after the Shares/Certs were withdrawn,[26] (b) P’s lackadaisical approach to enquiries and police complaints,[27] (c) P’s issuance of the Apology Letter (which arguably suggested all issues between P and D regarding the Share/Certs were resolved),[28] and (d) the inherent improbability of P’s explanation for such letter.[29] This is particularly so when, as Mr Yung submitted, the ImmD Record (even as clarified by the Further New Evidence) only showed someone in P’s name with his date of birth was not in Hong Kong via immigration checkpoints on 25 August 2015,[30] which would not preclude the possibility that P might have used another passport in another name from a different issuing authority[31] during the relevant period. I note also that D had not abandoned the “illegal entry” point.[32]

63.  It is trite that the decision whether to dismiss an application for summary judgment or to grant unconditional/conditional leave to defend is a matter within the discretion of the judge. It is also useful to note the guidance by Kwan JA (giving the judgment of the Court of Appeal) in Chu Yin Fan v Inter Rivers Limited[33] as follows:

“9. …… In an appeal against the granting of unconditional leave, the Court of Appeal will examine whether the judge’s reasons disclose any errors of law or misapprehension of material fact, or whether it can be said that the order granting unconditional leave was so plainly wrong that an appeal court had to interfere with the judge’s exercise of discretion (Shek Sau Mui v Poon’s (Sun Kee) Co Ltd, HCMP1397/2008, 13 August 2008, Yuen JA).

10.       Where the triable issue is on a question of fact (as opposed to a question of law), it would be most unlikely for the Court of Appeal to interfere (Ng Lung Sang Anita v Lam Yuk Lan [1999] 4 HKC 106 at 109I to 110F; Treewell Development Ltd v Tsang Chun Wah [2003] 4 HKC 401 at §§10 to 11), as an appellate court would rarely disturb the decision of a lower court on matters of fact as long as a judge had arrived at a reasonable view and it had to be an exceptional case before an appellate court would disturb the order.”

64.  On such basis (see paragraphs 60-63 above), I am not satisfied there would be reasonable prospects of success in respect of the Intended Ground 2 on the premise that the ImmD Record was such certain or conclusive evidence of P’s alleged absence in Hong Kong on 25 August 2015 that would overcome all the other evidence referred to above (including the New Evidence) for the purpose of the O14 Summons. Further, by reason of the discussion in Part V(c) above, even if P were allowed to rely on the Further New Evidence, the Agreed Approach would preclude P from directly obtaining the Appeal Reliefs on appeal.

VIII.  CONCLUSION

65.  For all of the above reasons, I am not persuaded I should grant leave to appeal, and consequently there is no basis to stay execution of the Judge Order pending any intended appeal. In the circumstances, the Appeal Summons is dismissed.

66.  There is no reason why costs should not follow event. I therefore grant a costs order nisi that P shall pay D costs of and occasioned by the Appeal Summons (including all costs reserved, if any) to be taxed if not agreed.