RE SUNNI INTERNATIONAL LTD

CACV 201/2019, [2025] HKCA 753

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 201 OF 2019

(ON APPEAL FROM HCCW 121 OF 2013)

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D E C I S I O N

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Hon Au JA (giving the Decision of the Court):

A.  INTRODUCTION

1.  This is the Respondent (“Lo”)’s application by summons (“the Summons”)[1] seeking an extension of time for him to lodge with the Registrar of Civil Appeals (“the Registrar”)  a copy of the sealed order (“the Examination Order”)  made by Harris J (“the Judge”)  dated 5 June 2018.

2.  The Examination Order was granted upon the application by the liquidator (“the Liquidator”)  of Sunni International Ltd (“the Company”)  under sections 286B and 286C of the Companies (Winding Up and Miscellaneous Provisions)  Ordinance, Cap 32 (“the CWUMO”).  By way of the Examination Order, Lo is required to be examined before a Master concerning his knowledge of the affairs or property of the Company on a date to be fixed with 1 day reserved.  Lo later sought leave from the Judge to appeal against the Examination Order, which leave was granted by the Judge on 15 April 2019.  Lo through his former solicitors (“the Former Solicitors”)  filed with the Registrar and served on the Liquidator a Notice of Appeal (“the NoA”)  on 26 April 2019.  The Liquidator then filed and served a respondent’s notice on 9 May 2019.

3.  However, nothing happened to the appeal thereafter for 4 years until 1 June 2023, when Lo filed a Notice to Act in Person.  After the filing of the Notice to Act in Person, the Registrar, by a letter dated 14 June 2023, required Lo to take steps to prosecute the appeal with various directions, including directing Lo to lodge a copy of the sealed Examination Order as required under Order 59, rule 5(1)(a)  of the Rules of the High Court by (a)  first seeking the consent from the Liquidator to do so, and failing which (b)  taking out an application with this court to ask for extension of time to do so.  Lo was further warned that if he failed to comply with the directions, the matter might be referred to this court for dismissal for want of prosecution.

4.  As prescribed by Order 59, rule 5 Lo should lodge, among others, a copy of the sealed Examination Order within 7 days after the service of the NoA.  Hence, Lo was by then out of time for some 4 years.  The Liquidator refused to give his consent for Lo to lodge it out of time, and hence, this application under the Summons.

5.  Lo and the Liquidator have since filed their respective affirmations in relation to this application.  They have also filed their respective written submissions[2] for it to be dealt with on paper.

B.  BACKGROUND

6.  We shall briefly set out the background leading to Lo’s appeal against the Examination Order.

7.  The Examination Order was made in HCCW 121/2013 in which proceedings the Company was wound up upon the petition of a creditor.  The Liquidator then applied and obtained the Examination Order from the Judge for private examination of three entities (including Lo)  which had received considerable sums of money from the Company prior to its winding up.  The application was heard on 25 April 2018 before the Judge and the Examination Order was made on 5 June 2018.  The Judge set out his reasons for granting the Examination Order in his written decision of the same day (“the Examination Decision”)[3].  The Examination Order was sealed on 21 June 2018.

8.  On 19 June 2018, Lo applied for leave from the Judge to appeal against the Examination Order.  Lo’s proposed ground of appeal is in essence that it was unduly oppressive to grant the Examination Order in the circumstances of this case.

9.  After hearing, the Judge granted leave on 15 April 2019, for the reasons given in his written decision of the same day (“the Leave Decision”)[4]. In gist, the Judge accepted that at the hearing of the Liquidator’s application for the Examination Order, the court was not told or made aware of the following matters:

(1)  On 29 May 2018, a Madam Tsen, a creditor of the Company, issued a summons to bring Misfeasance proceedings against Lo in HCCW 121/2013 pursuant to sections 275 and 276 of the CWUMO on 29 May 2018 (“Misfeasance Proceedings”), seeking declarations that Lo be personally liable for payments made by the Company totalling HK$234 million odd with an intent to defraud creditors.

(2)  On 13 August 2018, the Liquidator on behalf of the Company brought a claim in HCA 1884/2018 (“HCA”)  against various entities, which do not include Lo.  In the Judge’s words, the HCA includes claims that “mirror” those in the Misfeasance Proceedings (see [5] of the Leave Decision).

10.  In light of the above, the Judge further accepted that it is reasonably arguable that:

(1)  The Misfeasance Proceedings and the HCA were coordinated;

(2)  Given that both Madam Tsen and the Liquidator were able to plead such detailed claims in their respective proceedings on matters Lo was to be examined, the private examination as sought was not truly necessary but was simply intended to procure additional information to bolster the case against Lo (in the Misfeasance Proceedings and the defendants in the HCA). The grant of the examination order would therefore be unduly oppressive to Lo in the circumstances.

(3)  The court of appeal would allow the new evidence concerning these matters to be adduced in the appeal under the Ladd v Marshal principles and, when so allowed, would allow the appeal and set aside the Examination Order for being unduly oppressive.

See [6] - [13] of the Leave Decision.

C.  DISCUSSION

11.  An application for extension of time to lodge a sealed order is conceptually different from an application for extension of time to serve a notice of appeal, see Park Lomen Inn Limited v Appeal Board (Hotel and Guesthouse Accommodation)  and others [2015] 4 HKLRD 506, at [13], per Lam VP.  The policy which informs the approach to the latter kind of application cannot be applied directly to the former kind of application, see Keen Lloyd Holdings Ltd v Commissioner of Customs & Excise [2015] 2 HKLRD 909 at [29], per Lam VP.  When a notice of appeal had been served within time, an application for extension for time under Order 3, rule 5 for lodging a sealed order is essentially a case management matter, and the overriding consideration is the interest of justice, see Keen Lloyd (supra), at [32].

12.  In the present application, Mr Edward Chan SC[5] for the Liquidator has advanced two arguments to oppose the extension of time as sought: (a)  the delay of more than 4 years is inordinate and without explanation, and (b)  in any event, the appeal has become academic.  The latter argument refers to the fact that the Misfeasance Proceedings and the HCA had already been fixed for trial (“Trial”)  starting 3 January 2024, with 26 days reserved, and, thus, there was no realistic prospect for the Liquidator to examine Lo before the Trial so as to gain any forensic advantage over Lo.

13.  Given that the principal question this court has to consider in this application is whether in the interest of justice, Lo should be given time to lodge the sealed order despite the long delay, we would proceed to first consider Mr Chan’s contention that the appeal has become academic and thus it would be futile to grant any extension of time.

C1.  Is the appeal academic?

14.  The Misfeasance Proceedings and the HCA, together with another action also issued by the Liquidator (under HCA 2380/2018)  had been consolidated to be tried together, starting on 3 January 2024, with 26 days reserved[6]. Mr Chan has thus submitted that Lo’s only ground of appeal – that it was unduly oppressive to grant the Examination Order granted as the Liquidator intended to use the private examination to extract information from Lo to gain forensic advantage over Lo in the litigation – has fallen away as the Liquidator would have no possibility to so make use of the examination.  The appeal has thus become academic.

15.  With respect, we disagree.

16.  As observed by the Judge in the Leave Decision at [6] - [13], had he been made aware of the evidence relating to those identified matters relating to the Misfeasance Proceedings and HCA, which suggested that private examination of Lo was “intended” to procure additional information to bolster the case against Lo and the other defendants in the HCA, he would not have granted the Examination Order as it would be duly oppressive to do so.

17.  In other words, the Examination Order would not have been granted if the court was satisfied at the time of that application that the purpose or one of the purposes of obtaining the order was to gain advantages in aid of the Misfeasance Proceedings and HCA.  Thus, in this appeal, the Examination Order would be set aside if this court is satisfied (as the Judge observed)  that the purpose (or one of the purposes)  of applying for the Examination Order was to seek to extract additional information to aid the Misfeasance Proceedings and the HCA.  This does not depend on whether or not such actual advantage can be or has been obtained after the examination.

18.  In the premises, Mr Chan SC’s contention that the appeal has already been rendered academic as no examination of Lo could be carried out before the Trial is a red herring and incorrect.  The proper question of whether the Examination Order should have been granted in the first place as being unduly oppressive in the appeal is still extant[7].

19.  In this respect, it is also pertinent to note that in the letters to the Registrar respectively dated 3 and 6 July 2023, although the Liquidator’s solicitors stated that the Liquidator had no intention to execute the Examination Order before the Trial, they had expressly reserved the right to do so as and when he sees fit after the Trial[8].  The appeal is therefore still very much relevant to both Lo and the Liquidator’s position and rights.

20.  The appeal is therefore not academic.

C2.  Delay

21.  The delay of more than 4 years is very significant.

22.  In this respect, Lo has sought to explain the delay in his letter dated 21 June 2023 faxed to court[9].  He said he had spent more than HK$3,000,000 on legal costs over the years and had now run out of funds and had to terminate his retainer with the Former Solicitors.  He only became aware of the “outstanding issues” in CACV 201/2019 – presumably referring to the need to lodge a sealed copy – when he received the letter from the Registrar.  He believed the Former Solicitors only “concentrated on HCCW 121/2013 and did not proceed with CACV 201/2019 in the past years”.  In other words, Lo’s explanation is that he had trusted his solicitors to handle everything, and was unaware of the need to lodge the sealed Examination Order, and he did not really know why his solicitors had failed to proceed with CACV 201/2019 by lodging the required sealed order.

23.  The Liquidator said that the delay is not excusable.  There were no extraneous circumstances preventing Lo from lodging the sealed order and as Lo had all along been legally represented until 1 June 2023, his solicitors must have known and advised Lo of the necessary procedural steps.  Yet, the Former Solicitors and Lo had both failed to do so for 4 years.

24.  Moreover, Mr Chan submitted that it is clear from the overall circumstances that Lo has no real intention of pursuing the appeal nor pursuing it in a timely manner and diligently in compliance with the rules, directions and orders of the court:

(1)  The initial Order 59, rule 5(1)(a)  deadline was not complied with despite nothing preventing him from doing so and despite him being legally represented.

(2)  He refused to comply with the court’s direction dated 14 June 2023 to take out the Summons by 27 June 2023.

(3)  When he replied to the court’s directions dated 14 June 2023 by a letter dated 21 June 2023, he did not even have the courtesy of providing the same to the Liquidator’s solicitors nor the Liquidator.

(4)  Only upon the court again ordering him to take out the Summons in any event before 31 July 2023, did he take out the Summons on 24 July 2023.  Yet, he again did not serve the same on the Liquidator’s solicitors nor the Liquidator until 4 September 2023.  The non-service was despite the court’s reminder on 26 June 2023 that all correspondence with the court ought to be copied to all parties.

(5)  On 17 October 2023, when Lo was meant to lodge and serve his submissions, no such submissions were lodged and served.  The same was only lodged and served after the Liquidator’s solicitors wrote to the court on 20 October 2023 and after the court made an unless order on 26 October 2023.

25.  Notwithstanding Mr Chan’s powerful submissions, given that (a)  there is nothing to contradict Lo’s case that the failure to lodge a copy of the sealed order was caused by the oversight of the Former Solicitors, whom Lo was entitled to trust for the conduct of the appeal (in particular on the procedural aspects), and (b)  in light of the Judge’s observations in the Leave Decision, Lo has a realistic prospect of success in the appeal, we are of the view that, despite the very significant delay, it would be in the interest of justice in the particular circumstances of this case to grant an extension of time to Lo to lodge a copy of the sealed Examination Order.

D.  CONCLUSION

26.  For the above reasons, we grant leave to Lo to lodge with the Registrar a copy of the sealed Examination Order within 5 days of the date of this decision.

27.  There is no reason why costs should not follow the event.  We therefore further order on a nisi basis that costs of this application be to Lo to be assessed summarily.  For that purpose, Lo shall file his Statement of Costs (not more than 1 page)  in relation to this application within 14 days of today, and the Liquidator shall file and serve their Statement of Opposition (not more than 1 page)  14 days thereafter.  The court will thereafter assess the costs on paper.  Unless any of the parties applies to vary it, the costs order shall become absolute 14 days from today.