SUCCESS LEADING INVESTMENT LTD v. SZE KIN YU

DCCJ 6723/2020

[2026] HKDC 855

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 6723 OF 2020

-------------------------

BETWEEN

--------------------------

--------------------------

DECISION

--------------------------

A. Introduction

1.  This is my decision on the following matters: -

(1) the plaintiff’s summons dated 17 June 2025 (the “Leave Summons”) for: -

(i) leave to appeal against my decision dated 3 June 2025 (the “Decision”) whereby I dismissed the plaintiff’s appeal against the decision of Master Isaac Yung dated 17 February 2025[1] (“Security Order”) to (a) order the plaintiff to pay security for costs; and (b) dismiss the plaintiff’s summons dated 10 February 2025 to adduce further evidence in opposition to the defendant’s application for security for costs; and

(ii) stay of execution pending appeal;

(2) the defendant’s summons dated 19 December 2025 (“19/12/25 Summons”) for leave to adduce the 3^rd and 4^th affirmations of Lam Hiu Kwong (“Lam 3rd” and “Lam 4th” respectively); and

(3) the defendant’s summons dated 15 April 2026 (“15/4/26 Summons”) for leave to adduce the 5^th affirmation of Lam Hiu Kwong (“Lam 5th”).

B. Background

2.  The background facts and the procedural history leading to the Decision are set out at §§1-2 and 16-18 of the Decision and shall not be repeated herein for brevity. For convenience, unless otherwise stated, the definitions and abbreviations used in the Decision shall be adopted herein.

C. Developments subsequent to the Decision

3.  At the time the Decision was handed down on 3 June 2025, the plaintiff’s claim in the present action was already dismissed as the plaintiff had failed to pay security into court pursuant to the Security Order and he had not applied for a stay of execution of the Security Order.

4.  On 17 June 2025, the plaintiff filed a Notice to Act in Person in Place of Solicitors (“Notice to Act In Person”) and issued the Leave Summons. It was supported by the 13^th Affidavit of Mr Yeung (“Yeung 13th”) which sets out the plaintiff’s 5 proposed grounds of appeal as follows: -

(1) The court had erred in its factual findings concerning: (i) the value of the Tai Po Property and Yuen Long Property; (ii) the risk of transfers of such property; and (ii) the nature of the plaintiff’s businesses.

(2) It was procedurally unfair for the court to dismiss the plaintiff’s New Evidence Summons concerning the Tai Po Property.

(3) The court was wrong to find that the plaintiff would be unable to pay the costs of the defendant given the alleged combined value of the plaintiff’s assets. The plaintiff also complained about the court’s finding concerning the lack of business activities of the plaintiff based on the low electricity usage.

(4) The court had wrongfully exercised its discretion to grant security for costs, having regard to: (i) the value of the plaintiff’s assets; (ii) the fact that the grant of the Security Order would stifle the plaintiff’s claim; and (iii) the defendant’s delay in making the application for security.

(5) The grant of the Security Order was oppressive and deprived the plaintiff’s right of access to justice.

5.  On 28 July 2025, the court by letter directed that the Leave Summons be dealt with on paper and laid down a timetable for the lodging and service of written submissions (the “1^st Directions”). It was also expressly provided therein that no further submissions shall be lodged and no further evidence shall be adduced without leave of the court.

6.  Regrettably, both parties did not comply with the 1^st Directions:-

(1) Pursuant to the 1^st Directions, the plaintiff was required to lodge and serve its written submissions by 18 August 2025 (i.e. 21 days after the 1^st Directions) but had failed to do so.

(2) On 4 September 2025, the defendant filed Lam 3rd without seeking leave. Lam 3rd contained (amongst others) an account of the events which took place after the Decision. In particular, it was deposed that the plaintiff had failed to serve the Leave Summons and Yeung 13th on the defendant and the said documents were only made available to the defendant’s solicitors, Messrs. Tung, Ng Tse & Lam (“TNTL”) on 28 August 2025.

7.  On 6 October 2025, the plaintiff filed with the court registry a document titled “Plaintiff’s Application for Time Extension of Filing for Leave to Appeal” (“Purported Extension Request”) whereby the plaintiff purported to seek leave for (amongst others) (i) filing further rounds of evidence; and (ii) filing written submissions thereafter. However, the application was not properly made by way of summons[2].

8.  Due to the unsatisfactory developments as set out above and in order to actively manage the case so that the Leave Summons could be dealt with expeditiously, on 3 November 2025, I issued another set of directions by letter on 3 November 2025 (the “2^nd Directions”) whereby: -

(1) It was noted that: -

(i) no written submissions were provided to the court since the 1^st Directions;

(ii) the defendant filed Lam 3rd without seeking leave as expressly required in the 1^st Directions; and

(iii) the plaintiff filed the Purported Extension Request without issuing a summons.

(2) On the court’s own motion, the deadline for the plaintiff to provide its written submissions was extended to 14 days after the date of the 2^nd Directions (i.e. 17 November 2025).

(3) The parties were also expressly reminded that (amongst others): -

(i) It was the duty of the parties to comply with the court’s directions and procedural rules. Applications for time extension must be made by way of summons as soon as possible.

(ii) Any further non-compliance may result in the court making an “unless” order with automatic sanction for failure to comply.

(iii) Any application for leave to adduce further evidence must be made by way of summons.

(iv) All documents filed or lodged with the court must be served on the other party.

(v) Going forward, any attempt to adduce further evidence or make further submissions without complying with the court’s directions or procedural rules will be disregarded. There may also be costs consequences for non-compliance.

9.  Despite the court’s indulgence by granting a time extension on its own motion, the plaintiff again failed to lodge and serve its written submissions by the revised deadline of 17 November 2025.

10.  Following the Court of Appeal’s guidance in Tsang Wing Kwai v Tsang Wing Fai [2018] 5 HKLRD 350 on proper case management of leave applications (which applies equally to litigants in person), the court on its own motion issued a third set of directions by letter on 20 November 2025 (the “3^rd Directions”): -

(1) It was noted that the plaintiff was given more than 3 months to file its written submissions but had failed to do so. No explanation was given for the delay and no proper application for time extension was made.

(2) With a view to giving the plaintiff a final opportunity, it was ordered that “Unless the Plaintiff comply with paragraph 2 of the [2^nd Directions], i.e. to lodge and serve its written submissions in support of the [Leave Summons] (together with a list of authorities, if any) within 21 days from the date hereof, [the Leave Summons] shall be dismissed with costs” (the “Unless Order”).

11.  The court did not receive any written submissions from the plaintiff by the final deadline imposed in the Unless Order (i.e. 11 December 2025).

12.  On 18 December 2025, the plaintiff finally lodged its written submissions dated 15 December 2025 with the court (“P’s Submissions”), while the plaintiff accepted that P’s Submissions were lodged out of time, it was claimed that there was a “mis-posting by the post office of the letter dated 3^rd November 2025 [i.e. the 2^nd Directions] of this Court, [the plaintiff] actually received the above letter on 12^th December 2025”. The plaintiff sought leave to lodge and serve P’s Submissions out of time.

13.  On 19 December 2025, the defendant issued the 19/12/25 Summons for (i) retrospective leave to adduce Lam 3rd; and (ii) leave to adduce Lam 4th. Importantly, in Lam 4th, it was confirmed that the defendant’s solicitors had not received any written submissions from the plaintiff as at 19 December 2025.

14.  On 9 January 2026, it was directed by Master J Chow that the 19/12/25 Summons be fixed before me.

15.  Having considered the latest developments, it was no longer appropriate for the Leave Summons to be dealt with on paper. By letter dated 9 February 2026, I directed that an oral hearing be held on 27 April 2026. The parties were also reminded to comply with Practice Direction 5.4[3].

16.  On 15 April 2026, the defendant issued the 15/4/26 Summons for leave to adduce Lam 5th. According to the updated land search records exhibited to Lam 5th: -

(1) Ownership of the Yuen Long Property was assigned by the plaintiff to Lolo Limited on 19 June 2025 (i.e. 2 weeks after the Decision was handed down) at a consideration of $148,000.

(2) Similarly, the 50% interest of the Tai Po Property owned by the plaintiff was sold to Winall Limited under an Agreement for Sale and Purchase on 19 June 2025 at a consideration of $1,700,000, followed by an assignment of the property on 24 June 2025.

D. New Evidence under the 15/4/26 Summons

17.  The oral hearing of the Leave Summons, the 19/12/25 Summons and the 15/4/26 Summons took place on 27 April 2026 (the “Hearing”). At the Hearing, Mr Yeung expressed no objection against admitting Lam 3th and Lam 4th, so I made an order in terms of §§1-3 of the 19/12/25 Summons[4] and admitted Lam 5th on a de bene esse basis.

18.  Hence, before dealing with the Leave Summons, it is convenient to first consider Lam 5th which the defendant sought to admit in the 15/4/26 Summons.

19.  As summarised above, Lam 5th concerns events which took place subsequent to the handing down of the Decision on 3 June 2025. In this regard, I agree with the submissions of Ms Nicole Li, counsel for the defendant that: -

(1) Where the new evidence concerns events which occurred after the hearing, the Ladd v Marshall rule does not apply and the court has a wide discretion to admit fresh evidence, bearing in mind the principle of finality in litigation and that evidence could not be admitted of every change that has occurred since the trial.

(2) There is no exhaustive list of considerations, but the following factors are generally relevant:- (i) the extent to which the fresh evidence may affect the case; (ii) the timing when the fresh evidence emerged; and (iii) the conduct of the parties.

(3) The evidence should be admitted in all cases where it would be an affront to one’s sense of fairness not to admit it, taking into account all the circumstances before, during and after trial.

See: Cheung Wing Kuen Samuel v Ip Chui Sum [2022] 3 HKLRD 709 at §§40-43; Tobrix B.V. v HongKong Tripod Limited [2025] HKDC 1682 at §6 per Deputy District Judge YW Hew.

20.  In my view, the new evidence in Lam 5th constitutes material developments or change of circumstances which should be brought to the court’s attention. Lam 5th concerns the disposal of the ownership of the plaintiff’s interests in the Yuen Long Property and the Tai Po Property shortly after the Decision was handed down. Both properties were heavily relied upon by the plaintiff in its attempt to resist payment of security for costs before the learned Master and in the appeal before me. Hence, in my view, it would be an affront to the court’s sense of justice not to admit the new evidence.

21.  Further, I am of the view that the admission of Lam 5th does not result in any unfair prejudice to the plaintiff: -

(1) Lam 5th[5] is limited in scope as it is largely confined to exhibiting the Land Registry records showing the changes of ownership of the Yuen Long Property and the Tai Po Property.

(2) At the Hearing, Mr Yeung did not dispute the accuracy of the property transactions or asked for an opportunity to file evidence in reply. He only claimed that they were irrelevant as they occurred subsequent to the Decision. With respect, I disagree. The disposal of the two properties is clearly a material change of circumstances which arguably render any proposed appeal academic.

22.  Accordingly, I give leave to admit Lam 5th.

E. Whether the Plaintiff failed to comply with the Unless Order

23.  It is not disputed that the plaintiff has failed to comply with the Unless Order which required the plaintiff to both lodge with the court and serve on the defendant its written submissions by 11 December 2025:-

(1) P’s Submissions were only lodged with the court on 18

December 2025, i.e. 7 days after the deadline.

(2) P’s Submissions were not served on the defendant as at 19 December 2025[6].

(3) At the Hearing, Mr Yeung admitted that the plaintiff had breached the Unless Order.

24.  It is trite law that the sanction imposed in an unless order takes effect automatically upon a party’s default in compliance. Once the automatic sanction is triggered, there is no need for the non-defaulting party to apply to enforce the sanction but the burden is on the defaulting party to see relief from sanction, see: RDC O.2 r.4; Daimler AG v Leiduck [2012] 3 HKLRD 119 at §§47-48 per Fok JA (as Fok PJ then was); Lee Sai Nam v Li Shu Chung (unreported, 31 May 2013 at §69-71 per DHCJ Marlene Ng (as she then was)); Duracell U.S. Operations, Inc. v Matsushima Electric (H.K.) Co. Limited & ors [2018] HKCFI 347 at §24-25 per DHCJ Joseph Kwan.

25.  Accordingly, on account of the matters set out above, the automatic sanction has taken effect and the Leave Summons is dismissed.

F. The Plaintiff’s Failure to Apply For Relief From Sanction

26.  Pursuant to RDC O. 2 rr. 4&5:-

(1) Applications for relief from sanction should be made within 14 days of the failure. Such application shall be supported by evidence.

(2) On an application for relief, the court shall consider all circumstances, including the matters set out in O.2 r.5(1).

27.  Notwithstanding the non-compliance, the plaintiff has inexplicably failed to issue any summons supported by evidence for relief from sanction. In P’s Submissions, the plaintiff only informally requested the court to allow P’s Submissions to be lodged and served out of time.

28.  At the Hearing, Mr Yeung orally asked me to grant relief. He claimed for the first time at the Bar table that he was unable to comply with the Unless Order because his relative in the area was affected by the tragic Wang Fuk Court fire in Tai Po.

29.  Having considered the overall circumstances (including the factors set out in RDC O.2 r.5(1)), I see no basis for me to grant any relief for the reasons set out below.

30.  First, I am not satisfied that there is any good explanation for the non-compliance:-

(1) At first, in P’s Submissions, Mr Yeung claimed that he only received the 2^nd Directions from the court on 12 December 2025 due to “mis-posting” by the post office.

(2) Such explanation was not given by way of affidavit evidence. Mr Yeung’s account of the circumstances of the alleged “mis-posting” was also vague, unparticularised and not supported by any corroborating evidence. There has been no explanation at all in P’s Submissions about whether the plaintiff in fact received the 3^rd Directions.

(3) I do not find Mr Yeung’s explanation to be credible. At all material times since 17 June 2025 when the plaintiff filed its Notice to Act In Person, documents in these proceedings (including correspondence from the court) were sent to the plaintiff’s address at Laguna City, Kwun Tong[7]. There has never been any other suggestion from the plaintiff about encountering difficulties in receiving documents. There is no indication that any of the correspondence or documents sent to the plaintiff were returned undelivered.

(4) In the circumstances, the court is entitled to take the view that the plaintiff had received the 3^rd Directions containing the Unless Order in the ordinary course of postage, see: Re Bui Van Dai [2022] HKCA 1289 at §§13-15 per Barma JA.

(5) More fundamentally, as reflect by P’s Submissions which was dated 15 December 2025 and lodged with the court on 18 December 2025, the plaintiff must have been aware of the need to serve the same on the defendant as soon as possible. Yet it had failed to do so.

(6) Further, I do not accept Mr Yeung’s latest explanation that the delay was caused by the Wang Fuk Court fire:-

(i) Mr Yeung claimed for the very first time at the Hearing that the non-compliance was caused by the Wang Fuk Court fire which took place on or about 26 November 2025. Yet, this reason was not mentioned at all in P’s Submissions dated 15 December 2025 which only mentioned the alleged “mis-posting” of the court’s letter.

(ii) His account of the new explanation was again vague and unparticularised. At the Hearing, there was no attempt by Mr Yeung to explain how his relative was affected by the fire and how it had affected Mr Yeung’s ability to comply with the Unless Order.

(iii) In any event, he had failed to put his explanation in affidavit evidence.

31.  Second, the plaintiff’s pattern of non-compliance with the court’s directions has continued even after the breach of the Unless Order:-

(1) In my view, the plaintiff is reasonably capable of conducting these proceedings without legal representation. Since becoming unrepresented from 17 June 2025 onwards, the plaintiff had no difficulty issuing the Leave Summons and preparing Yeung 13th without professional legal assistance. At the Hearing, Mr Yeung also confirmed with me that he was able to look up the relevant procedural rules on the internet.

(2) Yet, Mr Yeung was unable to offer any explanation as to why the plaintiff did not properly issue a summons for relief sanction with supporting evidence as required.

(3) Further, in the court’s letter dated 9 February 2026 which contained the direction for the Hearing be held on 27 April 2026, the parties were expressly reminded to comply with Practice Direction 5.4 (see §15 above). The plaintiff again disregarded the court’s procedural rules by failing to lodge and serve its skeleton submissions before the Hearing. Mr Yeung was unable to offer any explanation for the failure.

32.  Third, even if I were to assume that the non-compliance with the Unless Order was innocent, the interest of justice cannot be served if the proposed appeal is unmeritorious, see: Re Bui Van Dai (above) at §16. In my view, the appeal is bound to fail for the reasons given below.

33.  Looking at the proposed grounds of appeal (as set out in Yeung 13th[8]), they were largely concerned with factual findings or an exercise of discretion of this court:-

(1) Grounds 1 and 3 challenge the court’s factual findings on the Yuen Long Property, the Tai Po Property and the existence of the plaintiff’s alleged business and in turn, the court’s conclusion that the stage 1 requirement (i.e. the plaintiff’s inability to pay costs) was satisfied.

(2) Ground 2 challenges the court’s dismissal of the New Evidence Summons concerning the Tai Po Property. Mr Yeung argued at the Hearing that the introduction of the new evidence 5 working days before the hearing was sufficient and that the learned Master could have granted an adjournment of the substantive hearing in light of the new evidence.

(3) Ground 4 concerns the court’s finding on the defendant’s delay in bringing the security for costs application. It is also claimed that the court had wrongly assumed that the plaintiff had waived its argument that the grant of security would stifle the plaintiff’s claim.

(4) In Ground 5, the plaintiff complains that the Security Order was oppressive and deprived the plaintiff’s access to justice.

34.  It is trite law that:-

(1) Leave to appeal shall not be granted unless the appeal has reasonable prospects of success or where there is some other reason in the interests of justice why the appeal should be heard, see: District Court Ordinance (Cap 336), s.63A.

(2) Where the appeal involves a challenge against findings of fact, an appellate court can only intervene if the findings are plainly wrong. It is incumbent on the appellant to identify palpable errors in the findings which warrant appellate intervention, see: China Gold Finance Limited v CIL Holdings Limited & Ors CACV11/2015 (unreported, 27 November 2015) at §§11-25 per Lam VP (as he then was).

(3) Similarly, in an exercise of discretion on whether to order security for costs having regard to all the circumstances, the Court of Appeal will not lightly interfere unless the decision proceeded from some error of principle, or reliance on irrelevant considerations, or disregard of relevant considerations, or is plainly wrong, see: Olena Ponomarova v Northcroft Hong Kong Limited [2024] HKCA 148 at §7.

35.  Before considering each Ground individually, as a general observation, Grounds 1 to 3 and the part of Ground 4 concerning the delay in bringing the security for costs application involve repetition of arguments which were already canvassed in the appeal hearing before me on 6 May 2025. This is reflected in P’s Submissions which are, to a large extent, substantially identical to the skeleton submissions lodged by the plaintiff’s counsel for the 6 May 2025 hearing. In my view, none of the proposed grounds give rise to a reasonably arguable case concerning any pulpable errors in the Decision.

36.  For Grounds 1 and 3:-

(1) What the plaintiff sought to do is to cherry pick certain aspects of the evidence, whereas the court’s findings were based on a comprehensive evaluation of the evidence as a whole.

(2) The court’s finding on the plaintiff’s lack of operating business was not solely premised on the small value of the electricity bills but also the plaintiff failed to explain what its business was, and there was a lack of objective evidence of a tangible business establishment, even in the case of an alleged online business.

(3) Similarly, the court reached its conclusion that the plaintiff’s would be unable to pay costs having regard to the overall circumstances:-

(i) As already discussed in the Decision, Mr Yeung’s evidence on the value of the two properties was open to serious doubt and could not be accepted on face value, see: Decision at §§8 and 23(2).

(ii) There was no evidence that the Tai Po Property or the Yuen Long Property were used in the plaintiff’s business operations. In turn, this gave rise to concerns from the court that the assets were used to frustrate a security for costs application and they could be easily disposed of due to the low stamp duty, see: Decision at §13.

(4) In any event, it appears that the court’s concern at the time was in fact justified as both properties were sold by the plaintiff about 2 weeks after the Decision was made, according to the land searches records exhibited to Lam 5th. The Yuen Long Property was sold at a consideration of only $148,000 which was much lower than the $2.5 million in value asserted by Mr Yeung, see: Decision at §§10-13.

(5) At the Hearing, Mr Yeung readily accepted that the stamp duty payable for the disposal was only $100. If anything, the concession affirmed the view expressed in the Decision at §23(3) that the ownership of the two properties could be easily transferred at low cost.

37.  For Ground 2, Mr Yeung’s argument that the defendant had sufficient time and that adjournment could have been granted is unmeritorious:-

(1) As I have pointed out in the Decision, the defendant was obviously prejudiced by the New Evidence Summons (which was only issued 5 working days before the substantive hearing) since the defendant was deprived of the opportunity to investigate the plaintiff’s valuation, and the defendant’s preparation for the hearing would inevitably be disrupted, see: Decision at §18.

(2) Mr Yeung’s argument that the learned Master could have easily adjourned the hearing to allow the defendant time to obtain valuation evidence is plainly contrary to the Underlying Objectives of the Civil Justice Reform and the approach endorsed in Jose Miranda Da Costa Junior & Another v Lorenzo Yih, also known as Yu Chuan Yih & Others HCA 156/2010 (unreported, 28 April 2014) as discussed in the Decision at §§20 and 21(2).

38.  For Ground 4: -

(1) The effect of the defendant’s delay in bringing the security for costs application was considered in the Decision at §§28-29. Other than repeating its previous argument, the plaintiff was unable to point to any palpable errors in the relevant analysis. In particular, there is no basis to challenge the court’s finding that the delay did not result in an any material prejudice to the plaintiff.

(2) The allegation that the grant of security would stifle the plaintiff’s claim was made for the first time in these proceedings. As recorded in §25 of the Decision, the plaintiff’s counsel at the time expressly confirmed with the court that she did not pursue this line of argument.

(3) In any event, insofar as the plaintiff would like the court to consider whether its claim would be stifled, the onus is on the plaintiff to produce evidence to show that it has no other resources to pay for the security ordered (including the possibility of raising funds from shareholders and third parties), see: Hin Fai Limited trading as Sun Food Seafood v Longrace Development Limited & Anor HCA 1788/2003 (unreported, 18 July 2003) at §71 per DHCJ Wong Yan Lung SC; Hong Kong Civil Procedure 2026, vol.1 at §23/3/14.

(4) There is no evidence that the plaintiff had no available funds to pay the security (hence stifling its claim). On the contrary, as found in the Decision (at §§13(5), 23(4)), the plaintiff has failed to give a full disclosure of its financial condition. There is also no evidence that the plaintiff has made any attempt to obtain funds from other sources.

39.  Ground 5 is a bare assertion of a general nature and does not add anything to the plaintiff’s case. The plaintiff’s right of access to the court is not absolute and must only be exercised in accordance with the court’s procedural rules and in compliance with the court’s orders. The complaint that the Security Order is oppressive is not supported by any evidence.

40.  Finally, at the Hearing, Mr Yeung also placed reliance on the defendant’s past breaches (including directions to file and exchange evidence) to support his case for relief from sanction. I do not see how that is relevant or would make any material difference in light of the analysis above.

H. Conclusion on the Leave Summons

41.  By reason of the matters set out above, leave to appeal should be refused. For the same reasons, I also see no basis to accede to the plaintiff’s application to stay the Security Order (which in any event is not supported by evidence as to why a stay should be granted). Accordingly, the Leave Summons is dismissed.

I. Costs

42.  Given the automatic sanction for breach of the Unless Order, the plaintiff shall pay the defendant’s costs of the Leave Summons. I also find it appropriate to grant a certificate for counsel. Such costs are to be summarily assessed as directed below.

43.  I also make an order nisi that the plaintiff do pay to the defendant the costs of the 19/12/25 Summons and the 15/4/26 Summons (including any costs reserved), again with certificate for counsel. Unless there is an application for variation of the costs order nisi made by summons within 14 days after this decision is handed down, the costs order nisi shall become absolute.

44.  Costs of §§42-43 above are to be summarily assessed as follows: -

(1) The plaintiff do lodge and serve its statement of objections to the defendant’s statement of costs (which was provided at the Hearing) within 7 days from the date on which the costs order in §43 above is made absolute.

(2) The defendant do lodge and serve the statement of reply within 7 days thereafter.

(3) The costs are to be summarily assessed on paper.

45.  It remains for me to thank Ms Li for her helpful assistance.