GLOBAL BRIDGE ASSETS LTD AND ANOTHER v. SUN HUNG KAI FINANCIAL LTD

HCA 1701/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1701 OF 2014

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REASONS FOR DECISION

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1. This was an application by the plaintiffs for leave to appeal my decision handed down on 29 September 2015 (“the 2015 decision”) ordering that there be a trial of preliminary issues. At the conclusion of the hearing the application was dismissed with costs to the defendant with certificate for two counsel. My reasons appear below.

Background

2. The material background is set out in the 2015 decision to which reference should be made.

3. The application for leave to appeal was made by the plaintiffs and set down on 2015 for a 30‑minute hearing.  On 14 January 2016 the defendant lodged its skeleton submissions based on the plaintiffs’ draft notice of appeal dated 12 October 2015, that document being the only indication then available of the intended grounds for appeal.

4. It was not until the following day that the plaintiffs lodged their skeleton.  It was apparent from a perusal of the plaintiffs’ skeleton that, while ostensibly still relying on the draft notice of appeal, the plaintiffs (who were represented at this hearing by new counsel) were seeking to appeal on a fundamentally different basis from that contained in their draft notice of appeal and, indeed, the new arguments had never featured at the substantive hearing that culminated in the order from which the plaintiffs seek leave to appeal and in certain respects were in direct contradiction to what had been advanced by the plaintiffs’ former counsel at that hearing. 

5. Be that as it may, it was not until 18 January 2016 that the plaintiffs issued a summons for leave to amend the draft notice of appeal together with a bundle containing 20 authorities.  A supplemental skeleton was submitted late on 20 January 2016.  In the event, at the hearing, reference was made to only two of the 20 authorities (and even then those had marginal, if any, relevance).  A more unproductive and wasteful exercise is difficult to imagine. 

6. At the outset of the hearing it was made clear that should the parties wish to proceed with the application, the allotted hearing time would not be extended in view of the state of the court’s diary.  The parties chose to proceed and in the interest of saving time the defendant did not oppose the plaintiffs’ application to leave to amend.

The plaintiffs’ grounds of appeal

7. Insofar as the new case is concerned, it was said that the jurisdiction to strike out for abuse of process based on non‑payment of costs in previous proceedings is not applicable because the present claim involves a “new cause of action based on the facts”.

8. Mr Chan, the plaintiffs’ new counsel contended that the plaintiffs’ claim in fraud (namely, the present action HCA 1701/2014) was “a new claim based on new facts”, relying on the Court of Appeal’s observation to that effect when it allowed the defendant’s appeal on 3 August 2012 and also on the statement in §66 of DHCJ Carlson’s decision of 2011 when he granted leave to amend the pleadings in the first action that the plaintiffs’ claim in fraud was “a new cause of action based on new facts”.

9. So far as the latter is concerned, that statement was made with reference to the application before DHCJ Carlson with the one that had been before that and was not made with reference to the present action. 

10. As alluded to in paragraph 3 of the 2015 decision, the litigation between the parties concerning the matters first raised in 2008 in HCA 317/2008 has a long and convoluted history which is not at all easy to follow.  But anyone with a degree of familiarity with this litigation and the underlying events giving rise to the litigation will appreciate that irrespective of the cause of action the litigation revolves and concerns the same events and essentially the same allegations are made.  It is undeniable that the underlying matters are substantially similar.

11. For this reason I do not accept that this court lacked jurisdiction on the basis that the present action is a ‘new’ action.

12. So far as the myriad other grounds appearing in the draft notice of appeal are concerned, almost every reason stated in the 2015 decision has been turned into a ground of appeal.  But importantly, those other grounds relate to an order which is a case management decision.  Accordingly, to succeed, the plaintiffs must demonstrate that there is a reasonable prospect of this court having gone clearly wrong or has erred in principle or that the order made is irrational.  That the plaintiffs face a high hurdle requires no elaboration. 

13. It is unnecessary to address each and every ground itemised.  I propose to address only the more significant of the criticisms put forward by the plaintiffs.

14. As far as I could understand the plaintiffs’ submissions, it was said that the court had exercised its discretion to order a trial of preliminary issues on a wrong premise and that in fact it was open to the court to determine the striking out application without resorting to a preliminary trial.  It was contended that the only issue for determination was whether the plaintiffs were in all the circumstances misusing or abusing the process of the court and in so doing, the court only had to apply what was called the “prima facie” test.  Mr Chan cited the case of Waxman v Li Fei Yu & Others, HCA 1973/2012 at §§23 to 25, unreported, 23 August 2013 in support.

15. The Waxman case is a striking out application involving a locus challenge in a derivative action and the requisite standard of proof required was held to be the prima facie standard.  I confess that I cannot see the relevance of that authority given the very different facts of the present case.

16. It was also submitted that the court could have heard the strike out summons as the only question was whether the plaintiff was in all the circumstances misusing or abusing the process of the court or whether it is a “vexation and harassment”.

17. I do not accept that submission.  It wholly disregards the established principles that the court must apply in relation to a strikeout application. That was common ground at the substantive hearing. The plaintiffs then accepted that no legitimate criticism could be levied at the defendant for taking out the strike out summons: see §31 of the 2015 decision.

18. Insofar as it was said that the defendant has not commenced separate proceedings to declare the documents supporting the new allegation to be forged, it would appear that the plaintiffs have overlooked the fact that it is the plaintiffs rather than the defendant who have the legal burden of proving the genuineness of the documents put forward in support of the new allegation and there is no obligation on the defendant to commence separate proceedings to have them declared forged: see Club Deluxe Ltd v Club Metropolitan Ltd [1995] 2 HKLR 69 at 82.

19. The plaintiffs also sought to contend that this court had no jurisdiction to order a simultaneous exchange of witness statements.  That is plainly wrong: see Order 38, rule 2A(17) of the Rules of the High Court.

20. Finally, as regards the suggestion that the existence and validity of the assignment of debt and notice thereof is only part of the ‘whole subject matter’ of an independent civil action involving mixed questions of law and facts, as stated in §47 of the 2015 decision, the second plaintiff could have asserted claim since early April 2009.  It has done nothing since then.  On that basis any claim for reimbursement would appear to face obvious limitation difficulties.