GREEN LACONIC LTD AND OTHERS v. FAN CHIN WA

HCA 1376/2019, HCA 1377/2019 & HCA 1378/2019

[2021] HKCFI 1884

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1376, 1377 and 1378 OF 2019

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D E C I S I O N

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A.   INTRODUCTION

1.  I refer to my Decision dated 26 March 2021 ([2021] HKCFI 749). By a summons dated 9 April 2021 (“D’s Summons”), D seeks leave to appeal against the following parts of my Decision:

(a)  The interlocutory mandatory injunction granted in §52 thereof concerning 4 pieces of land described as Green Laconic’s Co-owned Lands in §4 thereof (save and except 649) i.e. Section A of Lot No. 593, Sub-section 1 of Section B of Lot No. 593, Section A of Lot No. 595 and Section B of Lot No. 595;

(b)  The order in §52 thereof that Ps be entitled to dispose of those structures, equipment, or chattels as materials abandoned by D on those lands;

(c)  The costs order in §52 thereof that, in respect of P’s summons dated and filed on 6 May 2020, Ps’ costs be in the cause to be taxed if not agreed.

2.  D also seeks a stay of execution of the above orders pending the determination of the appeal assuming that leave to appeal is granted. Alternatively, D seeks a stay of execution of the said orders in relation to the 4 said pieces of lands plus Lot No. 649 in D.D.76 (i.e. all Green Laconic’s Co-owned Lands) till further order by reason of a tenancy agreement entered on 8 April 2021 between Tang Yun Loi as representative of the landlord Tang Kun Yau and D in respect of Tang Kun Yau’s share and interest in the said lands for the period commencing on 7 May 2021 and ending on 6 May 2025 (“the 8 April 2021 Tenancy”).

3.  By a letter dated 23 June 2021, D further seeks an extension of time to comply with the other parts of my order which do not fall within D’s Summons.

4.  I have read the parties’ written submissions and evidence filed for the purpose of D’s Summons.

B.   THE LEAVE TO APPEAL APPLICATION

5.  D seeks leave to appeal as per the grounds set out in the draft Notice of Appeal attached to D’s Summons on the ground that the intended appeal has a reasonable prospect of success and there is some other reason in the interest of justice which warrants the appeal to be heard. The draft Notice of Appeal consists of 5 grounds.

6.  It is trite that reasonable prospects of success involve the notion that the prospects of succeeding must be “reasonable” and therefore more than “fanciful” without having to be “probable”. An applicant is required to show more than just an arguable case. In this case, the orders in issue relate to the exercise of discretion in granting interlocutory injunctions. Where the intended appeal is an appeal against the exercise of discretion of the judge below, the applicant would have to show that he has an arguable case with reasonable chances of success that the relevant decision exceeds the generous ambit within which reasonably disagreement is possible, and is in fact plainly wrong, and not merely the appellant court would prefer a solution which the judge had not chosen. The same principle applies to an intended appeal against a costs order. See, generally, Hong Kong Civil Procedure 2021, vol. 1, §59/2A/4 at p 1206.

B1.   Ground 1

7.  Ground 1 concerns the issue whether D was entitled to remain in possession of the Green Laconic’s Co-owned Lands (except 649) because it was the tenant in its own capacity instead of as agent of an unnamed principal i.e. Green Laconic.

8.  To put the matter in context, I shall recite §§34-36 of my Decision:

“34. In respect of the Green Laconic’s Co-owned Lands (except 649), Ps’ case is that they had been let to Green Laconic as an unnamed principal, with D being its agent, by the other co-owner i.e. Tang KY, represented by Tang Yun Loi (鄧潤來), of his share and interest thereof under a tenancy agreement dated 7 May 2017 for the period from 7 May 2017 to 6 May 2021 at an annual rent of HK$8,000. D’s case is that he rented those lots for his personal use but not as agent for Green Laconic.

35. Ps contend that D’s claim is unarguable. First, P referred me to another set of tenancy agreements covering the said lots under which Green Laconic let to D the subject lots for the period between 1 June 2016 and 31 May 2017; and 1 June 2017 and 31 May 2018 (which overlapped with the period under the said tenancy agreement signed between D and Tang Yun Loi). P asked rhetorically, if D was the tenant in his own right pursuant to the agreement between him and Tang Yun Loi, why it was necessary for D to sign the agreements with Green Laconic. More importantly, Ps relied on a reimbursement form signed by D in which D claimed reimbursement of expenses from Green Laconic in the sum of HK$8,000. The crucial point is that D explained the sum of HK$8,000 as “鄧潤來租金”in respect of the relevant lots for the period between 7 May 2017 and 6 May 2021. D claims that, M Ying asked him to sub-lease the lots to him at the same rent of HK$8,000 which he agreed, and therefore he demanded M Ying to pay HK$8,000 by filling in the reimbursement form as a matter of convenience. D’s assertions are incompatible with the reimbursement form. Properly and objectively construed, D was asking for reimbursement of the sum of HK$8,000 which he had paid for and on behalf of Green Laconic. This piece of contemporaneous document supports Ps’ case.

36.  Having said that, D contends in the alternative that, if the Court does not accept that he was the true tenant in his own right in respect of the Green Laconic’s Co-owned Lands (except 649), these lots are nevertheless subject to the Supplemental Agreement. The main battleground between the parties for the present purpose becomes whether D’s claim that the parties had entered into the Supplemental Agreement, which would potentially apply to all the lands in issue, is arguable or believable in fact.”

9.  D complains that I erred in accepting Ps’ case on the grounds set out in §35 of the Decision:

(a)  First, I showed support to Ps’ rhetorical question that, if D was the tenant in his own right pursuant to the agreement between him and Tang Yun Loi, why it was necessary for D to sign the agreements with Green Laconic. However, this was conflicted by my subsequent view (at §38(a) of the Decision) that the parties’ relationship in the long course of dealings were rather complicated and that even on P’s own case they had entered into some rather unusual agreements.

(b)  Second, I erred in accepting the reimbursement form for reasons set out in §2(a)-(e) of the draft Notice of Appeal, which I will not repeat.

10.  As to the first point, I am unable to see any conflict.  In §38(a) of the Decision when I observed that, even on Ps’ own case, they had entered into some rather unusual agreements, I referred specifically to the 1^st, 2^nd, 3^rd batches of TAs, and the Tenancy Agreements as defined in §§7-8 of the Decision. I was not referring to the set of tenancy agreements, as mentioned in §35 of the Decision, which covered Green Laconic’s Co-Owned Lands under which Green Laconic let to D the subject lots for the period between 1 June 2016 and 31 May 2017; and 1 June 2017 and 31 May 2018 (which overlapped with the period under the tenancy agreement signed between D and Tang Yun Loi). Furthermore, §38 of the Decision is concerned with an entirely different issue, namely, the alleged existence of the Supplemental Agreement.

11.  As to the second point, in considering the probative value of the reimbursement form, I had taken into consideration D’s evidence and submissions as set out in the draft Notice of Appeal. The significant point is that D’s evidence must be tested against the reimbursement form, being a contemporaneous document. The reimbursement form must, of course, be construed objectively. My view was that D’s assertions are incompatible with the reimbursement form properly and objectively construed. And therefore, the document casts very serious doubts on the credibility of D’s evidence in this regard.

12.  It must be noted that I had not made any “finding” against D in this respect because I decided that the case should go to trial. §35 of the Decision was part and parcel of my reasoning which led to my conclusion that interlocutory injunctions should be granted in favour of Ps.  Furthermore, on D’s own case, the tenancy agreement that it had entered into in his own capacity has already expired on 6 May 2021.  The issue in this respect has ceased to be of any real significance.

13.  In the circumstances, I am not satisfied that Ground 1 has any reasonable prospect of success.

B2.  Ground 2

14.  Under Ground 2, D claims that the error I made as per Ground 1 contributed materially and significantly to my erroneous view that there was a high degree of assurance that at the trial Ps’ claim for possession of the Green Laconic’s Co-owned Lands would succeed. This is not a free-standing ground of appeal. As I have concluded that Ground 1 does not have any reasonable prospect of success, it must follow that Ground 2 does not have any reasonable prospect of success either.

B3.  Ground 3

15.  Under Ground 3, D claims that by reason of my erroneous view as per Ground 2, my exercise of discretion in granting the interlocutory injunction, etc., in respect of the Green Laconic’s Co-owned Lands was plainly wrong. Again, this is not a free-standing ground of appeal.  As I have concluded that Ground 1 (and hence, Ground 2) do not have any reasonable prospect of success, it must follow that Ground 3 cannot have any reasonable prospect of success.

B4.  Ground 4

16.  As an alternative, under Ground 4, D claims that I erred in principle when granting the interlocutory injunction, etc., in that I failed to have any or any sufficient regard to, first, Ps’ failure to explain the delay in applying for the interlocutory injunction (which suggested that Ps would not suffer any irreparable harm and that the application was oppressive and an abuse or process); and, second, D’s loss of clientele for the reptile pet business.

17.  It is correct that I did not refer to these two factors expressly in the Decision.  However, it does not follow that I had not taken them into consideration.  They were matters raised in the parties’ submissions that I had in fact considered.

18.  As to the point about delay, Ps explained at the hearing that Ps’ summons dated 6 May 2020 were taken out after the filing of the Consolidated Defence and Counterclaim on 3 February 2020 and before the filing of the Consolidated Reply and Defence to Counterclaim on 8 February 2021. It was at a time when pleadings had not yet been closed.  I did not think Ps were guilty of any unreasonable delay.

19.  As to the point about loss of clientele, D has not adduced any evidence to substantiate his assertion that he would lose his clients if he has to move his business to another place.  I recall vividly that there were exchanges between me and counsel for D at the hearing on this issue.  In particular, I observed that the nature of D’s business (i.e. reptile pets) is quite unique, and not easily replaceable (unlike, for example, a grocery store); and it would seem unlikely that D’s clients would leave simply because D moves to another place to run his business.  I do not recall D’s counsel providing any convincing answer to my observation.  Furthermore, even on D’s own case, he is not entitled to use the lands in question permanently.  In particular, under the alleged Supplemental Agreement, he would be obliged to vacate the lands in any event if Ps pay him the outstanding construction costs.  The injunction that I granted was conditional upon Ps’ payment into court of the specific sum claimed by D.

20.  For these reasons, I am not satisfied that Ground 4 has any reasonable prospect of success.

B5.  Ground 5

21.  Ground 5 concerns the costs order made by me.  D claims that as Ps’ application for summary judgment has been dismissed, and Ps would be entitled to interlocutory injunction in respect of 19 out of 23 lots only should his present intended appeal succeeds, the appropriate costs order of Ps’ Summons should be costs in the cause of the action to be taxed if not agreed.

22.  First, for reasons stated above, I am not convinced that D’s intended appeal in relation to the orders I made concerning the Green Laconic’s Co-owned Lands has any reasonable prospect of success.  Second, though Ps did not get summary judgment, they succeeded in their alternative application for interlocutory injunctions.  Having considered all relevant considerations, I ordered that the costs of P’s Summons should be Ps’ costs in the cause.  In the circumstances, I fail to see how it can be reasonably argued that the costs order that I made falls within any ground on which the appellate court would intervene. I am not satisfied that Ground 5 has any reasonable prospect of appeal.

23.  For the above reasons, none of the intended grounds of appeal has any reasonable prospect of success.  D’s application for leave to appeal must be dismissed.

C.   THE STAY OF EXECUTION APPLICATION

24.  As I have dismissed D’s application for leave to appeal, there is no basis to seek a stay of execution pending such an intended appeal. However, D has put forward a separate ground to support its application by relying on the 8 April 2021 Tenancy.

25.  This is an extraordinary application because D is seeking to rely on a matter which allegedly happened after I had handed down my Decision on 26 March 2021. On D’s case, the 8 April 2021 Tenancy was entered into between the parties just one day before D took out the present summons.

26.  P relies on Order 45, rule 11 of the Rules of the High Court, which provides that: 

“Without prejudice to Order 47, rule 1, a party against whom a judgment has been given or an order made may apply to the Court for a stay of execution of the judgment or order or other relief on the ground of matters which have occurred since the date of the judgment or order, and the Court may by order grant such relief, and on such terms, as it thinks just.”

He also relies on the inherent jurisdiction of the court (Credit Lyonnais v SK Global Hong Kong Ltd [2003] 4 HKC 104).

27.  It is significant to note that “matters which have occurred since the date of the judgment or order” under Order 45, rule 11, have been interpreted as referring to “matters which went to the validity of the judgment and which, if established before the court, might justify the court in saying that this was not a judgment which on the material now placed before it, it would allow to be exercised (Hong Kong Civil Procedure 2021, vol. 1, §§45/11/2 at pp 1027-1028; Credit Lyonnais v SK Global Hong Kong Ltd [2003] 4 HKC 104 at 115A-B, §28, per Cheung JA).  In Tam Ho Man v Wong Kwok Tai, HCA4736/1985 (20 October 1986, unreported) (cited by Cheung JA in Credit Lyonnais), Hunter J observed at p 2 that the examples given in the authorities are “matters which go to question the validity of that judgment as against the defendant”, which are “very far removed from matters which go to the enforcement of that judgment”.  In Wong Wah On v Tsung Tsin Association [2019] HKCA 795 at §12, the Court of Appeal held that “It was only available when a defendant sought to recall or prevent execution on account of ‘some matter occurring after the judgment amounting to a discharge and which could not have been and cannot be taken advantage of otherwise’”.

28.  Here, D is seeking to rely on an entirely new ground to justify his right to possession of the lands in question. Such ground has nothing to do with the validity of my Decision. Ps have made it clear that they do not accept the genuineness or validity of the 8 April 2021 Tenancy.  In any event, the genuineness or validity of the 8 April 2021 Tenancy is not an issue on the face of the existing pleadings in this action.  I take the view that, for the present purpose, I do not have the jurisdiction to consider the dispute between the parties in this respect; and even if I do, it would not be appropriate for me to do so.

29.  In my view, it is wrong for D to seek a stay of execution on such ground.  It seems that what he might do is to amend the Defence and Counterclaim by pleading the 8 April 2021 Tenancy; and then to apply for a variation or partial discharge of the injunctions granted by me (if necessary, with an application for an interim stay pending the disposal of such an application).  That said, it is not for court to advise D on how he should conduct his case.

30.  For the above reasons, D’s application for stay of execution is dismissed.

D.   THE EXTENSION OF TIME APPLICATION

31.  D was required to deliver vacant possession of the lands covered by P’s Summons within 90 days upon Ps’ payment into court of HK$12,729,000. P paid into court the said sum on 1 April 2021.  Hence, the 90 day period would expire on 30 June 2021.

32.  D claims that he has recently successfully negotiated and entered into a tenancy agreement in respect of a nearby land for storing his construction materials after vacant possession of the lands in question are delivered to P.  However, he would still need time to build fences around the nearby land, and to apply for water and electricity supply.  He estimates that all these could be completed within 1 month. He therefore seeks an extension of 1 month from 30 June 2021 to 31 July 2021.  Ps oppose D’s application.

33.  It is most unsatisfactory that D made the application in such informal manner just a week before the deadline.  His assertions are lacking in particulars and not verified by affirmation evidence. For example, he has not even produced a copy of the alleged tenancy agreement in relation to the so-called nearby land.  While it might be tempting to say that it would not matter much in practice to give D an additional one month.  However, I take the view that the matter must be decided as a matter of principle. His informal application for extension of time is rejected.

E.   CONCLUSION

34.  For the above reasons, I dismiss D’s Summons and also his application for an extension of time to comply with my order with costs to be paid by D.  I direct that Ps’ costs should be assessed summarily.  Ps shall submit a statement of costs within 7 days hereof, and D shall submit a list of objections within 7 days thereafter.  I shall then assess the costs on paper.