CHEONG SHING LTD v. YU KWAN

FAMV No. 40 of 2010

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 40 OF 2010 (CIVIL)

(ON APPLICATION FOR LEAVE TO APPEAL

FROM CACV NO. 68 OF 2010)

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Between:

HCA 12021/1998

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DETERMINATION

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Mr Justice Ribeiro PJ:

1.  On 14 March 2011, we dismissed this application for leave to appeal with costs and reasons to be given later.  These are our reasons.

2.  The plaintiffs sued the 1^st defendant, Mr Lo Kam Wing (“Mr Lo”) and the 3^rd defendant (the present applicant) Mr Kong Kai Cheung (“Mr Kong”) inter alia on the basis that they had made a loan of $38.76 million to Mr Lo and/or Mr Kong.  However, their claim was confined to the sum of $28.26 million, giving credit for two payments totalling $10.5 million which they had received.

3.  On 29 October 2008, this Court[1] held that the evidence did not establish the alleged loan (or various other suggested arrangements) but that the 2^nd plaintiff was entitled to restitution from Mr Lo, as the unjustly enriched recipient of the $28.26 million.    The action against Mr Kong was dismissed since there was no evidence that he had been enriched at the plaintiffs’ expense.[2] 

4.  Mr Kong had brought a counterclaim against the two corporate plaintiffs and Mr Yu Kwan (“Mr Yu”), then suing as the 3^rd plaintiff, claiming to recover the $10.5 million referred to above, alleging that $6 million had been lent by him to Mr Yu and that $4.5 million had been extracted from him under duress by the plaintiffs. 

5.  The trial judge, Burrell J[3], rejected the counterclaim for $6 million based on a loan to Mr Yu, preferring the explanation that it was a partial repayment by Mr Kong of money due to Mr Yu.  His Lordship also held that the suggestion of duress was “borderline, but in any event academic” since the entire amount was found due to the plaintiffs from Mr Kong in any event.[4] Duress was not argued by Mr Kong in the Court of Appeal.[5]

6.  In giving judgment for the 2^nd plaintiff, it is clear that this Court treated Mr Kong’s payments as having been made to the plaintiffs on behalf and for the benefit of Mr Lo, reducing by $10.5 million Mr Lo’s liability to make restitution to the plaintiffs.  Thus, Mr Justice Litton NPJ stated:

“Any claim on the basis of unjust enrichment must then be confined to the sum of $28.26 million, leaving it to the party who had partially relieved Mr Lo of his personal liability to seek repayment from him.”[6]

7.  Mr Kong was therefore held to have “partially relieved Mr Lo of his personal liability” to the plaintiffs.  His Lordship added:

“The judge had made no findings with regard to those two sums upon which this Court, in its appellate capacity, can act. Whether Mr Kong has some claim by way of subrogation against Mr Lo in consequence of the judgment of this Court is not something which requires our consideration.”[7]

He was obviously referring to the absence of findings in the context of any possible claim by Mr Kong against Mr Lo.

8.  On 19 June 2009, solicitors for Mr Kong wrote to the Registrar asserting that the Court had not dealt with Mr Kong’s counterclaim, seeking directions “as to the determination of the counterclaims of our client”.  In the reply dated 7 December 2009, the Registrar stated that after consulting other members of the Court, Mr Justice Chan PJ had directed that Mr Kong’s “counterclaim and any matter relating thereto including the costs of such counterclaim be remitted to the trial judge for disposal”.

9.  The matter then came before the trial judge (sitting, after retirement, as Deputy High Court Judge Burrell)[8] on the plaintiffs’ striking out application.   His Lordship in our view correctly confirmed that the counterclaim had indeed been dismissed when tried before him and accurately noted that this Court had left Mr Kong to look (if at all) to Mr Lo (and not the plaintiffs) insofar as he might be able to claim reimbursement from the latter.[9] His Lordship accordingly “disposed of the counterclaim” as directed by striking out its attempted resurrection as an abuse.  The Court of Appeal[10] upheld the Judge and rejected the submission that Chan PJ’s direction amounted to an order for there to be a full trial of the counterclaim.

10.  Mr Benjamin Chain who appeared for Mr Kong on the present application endeavoured to argue that pursuit of the counterclaim involves no attempt at re-opening the decision of this Court and therefore no abuse.  We do not agree.  As noted above, in holding that Mr Kong’s payments “partially relieved Mr Lo of his personal liability” the Court necessarily rejected the counterclaim based on debt and duress, leaving Mr Kong to look toMr Lo for re-imbursement on such grounds, if any, as might be open to him. Moreover, not having raised the issue of duress in the Court of Appeal, Mr Kong cannot now be permitted to complain that the Judge wrongly failed to deal with that issue at the trial.

11.  We respectfully agree with the Courts below that permitting the matter to be re-litigated would involve an inadmissible attempt at re-opening the decision of the Court.  Leave must therefore be refused.