CHEUNG SUI KAN v. BOOKBACK LTD AND OTHERS

HCMP 1598/2022
HCMP 2078/2022
(Heard together)

[2023] HKCFI 3179

HCMP 1598/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1598 OF 2022

____________________

____________________

____________________

HCMP 2078/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2078 OF 2022

____________________

____________________

____________________

(Heard together)

____________________

D E C I S I O N

____________________

A.  Background

1.  Relevant to the present hearing are the following three actions (collectively the “3 Actions”):

(a)  HCMP 1598/2022 (“HCMP 1598”):

(i)  By Originating Summons of 17 October 2022, the plaintiff (“Cheung”) seeks against the defendants (the 1^st defendant “Bookback”, the 2^nd defendant “Spiegel”, the 3^rd defendant the “Occupiers/Dragonara”) possession of the property known as All That piece or parcel of ground registered in the Land Registry as Lot No. 248 in Demarcation District No. 252 and the Extension thereto and of and in the messuages erections and buildings erected thereon now known as DRAGONARA also known as HARVEST MOON, Sai Kung, New Territories, Hong Kong (“Dragonara”);

(ii)  Only Spiegel has entered appearance;

(b)  HCMP 2078/2022 (“HCMP 2078”):

By Originating Summons of 9 December 2022, the plaintiff (“Right Honour”) seeks against the defendant (“Urban Entertainment”) possession of the property known as 4^th Floor and Flat Roofs, Centro, No.1A Chui Tong Road, Sai Kung, New Territories (“4/F Centro”, and the entire building “Centro”);

(c)  HCA 1551/2023 (“HCA 1551”):

(i)  The action was only commenced recently. The Writ was issued on 27 September 2023;

(ii)  There are 2 plaintiffs, being Albury Garden Investments Limited as the 1^st plaintiff (“Albury”) and Bookback as the 2^nd plaintiff;

(iii)  There are 11 defendants. Lei Shing Hong Credit Limited (“LSH”), Capital One Asia Limited (“Capital One”), H.K. Sources Finance Limited (“HK Sources”，Right Honour and Cheung are respectively the 1^st, 2^nd, 3^rd, 10^th and 11^th defendants. The other defendants, who are natural persons, are variably the directors or officers of the corporate defendants;

(iv)  Various causes of action have been pleaded, which include fraudulent misrepresentation and conspiracy to defraud or injure by unlawful means;

(v)  Various forms of relief are consequently sought, which include declaratory relief that the disposition of Centro and Dragonara respectively to Right Honour and Cheung are void.

2.  There were several matters before this Court on 5 October 2023:

(a)  Cheung’s appeal under HCMP 1598 against the Decision of Master Lai (“Master Lai”) of 25 May 2023 refusing Cheung’s application for order for possession of Dragonara (“Master Lai’s Decision”, and the “Dragonara Appeal”);

(b)  The appeal by Urban Entertainment under HCMP 2078 against the Decision of Master Keith Lam (“Master Lam”) of 12 May 2023 granting Right Honour order for possession of 4/F Centro (the “4/F Centro Possession Order”, and the “4/F Centro PO Appeal”);

(c)  Urban Entertainment’s appeal also under HCMP 2078 against Master Lam’s Decision of 25 August 2023 refusing its application for stay of the 4/F Centro Possession Order (the “4/F Centro Stay Appeal”); and

(d)  The applications by Spiegel (as the 2^nd defendant in HCMP 1598), Unban Entertainment (as defendant in HCMP 2078), and Albury and Bookback (as plaintiffs in HCA 1551) by 3 summonses of 29 September 2023 (one summons in each of the 3 Actions (“the “Spiegel Summons/1598”[1], “UE Summons/2078”[2] and “Albury Bookback Summons/1551”[3], and collectively the “Consolidation Summonses”) for:

(i)  as sought by all 3 Consolidation Summonses, consolidation of the 3 Actions (the “Applications for Consolidation”);

(ii)  as sought by Spiegel Summons/1598 and UE Summons/2078, in addition:

(1)  Stay of HCMP 1598 and HCMP 2078 pending final determination of the Applications for Consolidation; and

(2)  Leave to adduce fresh evidence

(e)  Also before the Court, as a result of Urban Entertainment’s urgent application explained below, is the stay of the Writ of Possession.

B.  Previous case management orders

3.  On 14 July 2023, this Court gave an order nisi that the Dragonara Appeal and the 4/F Centro PO Appeal be heard together. That order was given in the light of the involvement of some common parties and common legal issues. I further directed parties to deal with, amongst other relevant issues, the combined operation of Orders 83A, 88 and 113 of the Rules of the High Court, Cap 4A and section 52 of the Conveyancing and Property Ordinance, Cap 219 (“C&PO”), and whether such combined operation bears upon the respective parties claim.

4.  In the absence of any application for variation, that order nisi has since become absolute.

5.  On 11 September 2023, upon the application by Right Honour through its solicitors, I directed further that the 4/F Centro Stay Appeal be heard together with the Dragonara Appeal and the 4/F Centro PO Appeal.

C.  Urban Entertainment’s urgent application for injunction

6.  This Court happened to be the Duty Judge for the week commencing 2 October 2023.

7.  On 3 October 2023 close to mid-night, the solicitors for Urban Entertainment telephoned me as the Duty Judge and sought an urgent hearing. In essence, they intended to seek an urgent injunction restraining Right Honour from executing through the bailiffs a Writ of Possession and Fieri Facias combined of 5 July 2023 for possession of 4/F Centro (the “Writ of Possession”). They said that despite the date when the Writ of Possession was filed, they only had notice in late afternoon on 3 October 2023 that the bailiffs would attend Centro at 11:30 am of 4 October 2023 to recover possession of 4/F Centro – and hence the alleged urgency of the matter.

8.  This Court convened at 07:45 am on 4 October 2023 to hear the application. Mr Derek Cheuk of Bowers appeared for Urban Entertainment. This Court enquired, and was told that no notice of the ex parte application had been served on Right Honour. I found that highly unsatisfactory. I stood the application down to 10:00 am on the same morning so that that could be done.

9.  The Court reconvened at 10:10 am on 4 October 2023. Mr Sunny Chan appeared for Right Honour upon short notice. He objected to the injunction being sought. He made reference to the written submissions filed by Mr Bowers on behalf of Urban Entertainment for the purposes of the 4/F Centro PO Appeal and the Applications for Consolidation. Those submissions focus only on the latter but not the former. Mr Chan submitted that if Urban Entertainment is no longer pursuing the 4/F Centro PO Appeal, there is no point in delaying the execution of the Writ of Possession which he submitted Urban Entertainment was seeking to do.

10.  Unfortunately, Mr Cheuk, not being the advocate who would appear for Urban Entertainment during the appeals (at least not according to the written submissions), was with respect not entirely familiar with the effects of the written submissions which had been filed on his client’s behalf.

11.  During the hearing, this Court expressed concern as to the appropriateness of issuing an injunction against the bailiffs, bearing in mind the fact that the Writ of Possession, as it is, was validly issued. I also bring to parties’ attention DBS Bank (Hong Kong) Ltd v Ngai Yim Shing & Another [2005] 2 HKLRD 740.

12.  Having heard parties, I decided to grant a stay of the Writ of Possession until 11:59 pm of 5 October 2023 (the “WP Interim Stay”). 5 October 2023 is the date set for the hearing of the various appeals and matters set out above. I anticipated that further submissions can be made during that hearing, and if necessary further directions may be given. Bearing in mind parties’ respective cases, the facts of the case, the state of affairs as briefly summarized above, and the short duration of the stay, I was of the view that that course would carry the lowest risk of injustice, and was the most appropriate step to take on balance of fairness, if not as a matter of indulgence[4].

D.  The hearing on 5 October 2023.

13.  On 5 October 2023, the appeals did not proceed. I, having heard parties, instead gave some directions. I gave in court the reasons why I did so. Below is a brief recap.

14.  On 5 October 2023, the houses of Spiegel, Urban Entertainment, Bookback and Albury were not in order. A lot of submissions criticizing the state of play were made by Mr Rimsly Yuen SC and Mr Sunny Chan, counsel respectively for Cheung and Right Honour. A lot of them were not unjustified. The proposed new evidence which Spiegel and Urban Entertainment sought to adduce had not been particularized. The bases of the complaints against the 11 defendants in HCA 1551 had not been fully articulated. It might not be easy at that stage to even consider whether the Ladd and Marshall rules can be satisfied.

15.  Mr Cheuk, the solicitor for Bookback, Spiegel, Urban Entertainment and Albury, accepted that a lot of matters which the Court and parties were facing should not have happened, and were not justified. He put forward the fact that his firm only received instructions the week before. That was by no means any justification for what had had happened, though was a matter that I could take into account.

16.  Appreciating no doubt the reality, Mr Cheuk accepted that if this court was to allow his application and to deal with the Applications for Consolidation and production of fresh evidence first before dealing with the appeals, his client would have to bear the costs of the adjournment thrown away on an indemnity basis.

17.  I stated that when viewed independently and divorced from the background, each of HCMP 1598 and HCMP 2078 was simple and straightforward. Each involved only the purchasers from the receivers apparently having nothing to do with the historical facts seeking to obtain possession of the properties concerned. But when viewed with some of the historical facts not yet fully before the court at that stage, the matters involved some common money lenders, common borrowers, common credit documents, common mortgagors, and common receivers. The properties were also extremely valuable, and had been occupied by some of the parties for years if not decades.

18.  In the light of the highly unusual factual background of the cases, I was persuaded that the overall fairness of the cases warranted this court giving Bookback, Spiegel Urban Entertainment, and Albury an opportunity. I stated in court that that was possibly the last one for them to put their houses together. I adjourned the appeals and various applications to be heard together. I made a number of orders and directions (the “5/10 Orders”). I granted Spiegel and Urban Entertainment leave to file within 14 days affirmations setting out the precise further evidence which they seek to rely on[5], and that the proposed additional evidence be dealt with by parties in their written submissions to be filed on a de bene esse basis. On the question or costs. I dealt with the costs of Cheung and Right Honour in 2 separate paragraphs:

(a)  The costs of Cheung was dealt with at §15 (“§15”), that those costs be summarily assessed, which I assessed to be HK$1,400,000, and that they be paid by Spiegel by 4 pm on 2 November 2023, failing which she be debarred from pursuing the Spiegel Summons/1598” (the “Spiegel Payment Condition”);

(b)  The costs of Right Honour was dealt with at §16 (“§16”), that those costs be summarily assessed, which I assessed to be HK$290,000, and that they be paid by Urban Entertainment by 4 pm on 2 November 2023, failing which Urban Entertainment be debarred from pursuing the UE Summons/2078 (the “UE Payment Condition”, and with the Spiegel Payment Condition, collectively the “Payment Conditions”).

19.  On 5 October 2023, I also extended the WP Interim Stay till further order.

E.  Applications for leave to appeal and related stay

20.  By summonses of 2 November 2023 (the “Leave Summonses”), Spiegel and Urban Entertainment seek:

(a)  Leave to appeal against respectively §15 of the 5/10 Orders and §16 of the 5/10 Orders (the “Leave Applications”);

(b)  A stay of execution of those paragraphs pending the Leave Applications (the “Stay Applications”);

(c)  There be relief from sanction for non-compliance of the condition specified in those paragraphs, or alternatively an extension of time to comply with the same, and an interim stay pending the Stay Applications (the “Relief and Interim Stay Applications”);

(d)  A direction that the Leave Summonses be dealt with on the papers.

F.  Discussion

F.1.  Leaves to appeal

21.  60 minutes have been sought and reserved for the Leave Summonses.

22.  Parties have filed their written submissions. This Court is familiar with the facts and background of the case. I see no reasons why adjudication of the Leave Summonses need to be delayed for another round of written submissions. Indeed, during this hearing, there was no further request for directions on paper disposal.

23.  For the following reasons, I refuse both of the Leave Applications:

(a)  The intended appeals are against a costs order only. Leaves are required – see section 14(3)(e) of the High Court Ordinance;

(b)  The nature of the proposed grounds of appeal which Spiegel and Urban Entertainment seek to rely upon are similar. They concern both the quantum of the summary assessment and the Payment Conditions;

(c)  In relation to the quantum:

(i)  During the hearing on 5 October 2023, Mr Cheuk for Spiegel and Urban Entertainment conceded not just that they should bear costs, but also that the costs should be assessed on indemnity basis. Only very general submissions on quantum were made to me;

(ii)  I have considered Re Wing Fai Construction Co Ltd (Costs: Taxation) (2012) 15 HKCFAR 657. My discretion was engaged. The properties are valuable, the Dragonara in particular. The issues involved are not straightforward. The engagement by Cheung of senior counsel is justified. The authority relied upon by Mr Bower on the hourly rate of P’s solicitors is out of date. Disparity of costs of 2 different legal teams, in the absence of any analysis of the individual items, means little. Summary assessment was not resisted during the hearing on 5 October 2023. Summary assessment is carried out on a broad-brush basis. My assessment was that the costs claimed are not unreasonable. I am not satisfied that any ground with any reasonable prospect of success has been shown;

(d)  In relation to the Payment Conditions:

(i)  The Consolidation Summonses were issued very late. The precise nature of the additional evidence which Spiegel and Urban Entertainment intended to rely on was not even set out. The affirmations in support were those of Mr Cheuk, a partner of Bower. He did not have personal knowledge of the factual matters which he sought to put forward, which included fraud. Those affirmations ought not to have come from him. Houses of Spiegel and Urban Entertainment were with respect, in disarray, and this Court was giving them the last opportunity to put them in order. In the meantime, Spiegel and Urban Entertainment remained in possession of the 2 very valuable properties. Unless with consequences, the benefits to them of stretching out the proceedings would be clear. That was the main basis put forward by Mr Yuen in support of his request for the Spiegel Payment Condition. Mr Cheuk proposed the term of payment forthwith, which he understood to mean variably 7 or 14 days. This Court granted them a much longer period of 28 days. No submissions were made to any effect that either Spiegel or Urban Entertainment could not pay by that extended period, and this is despite the facts that (1) Mr Cheuk had informed this court that his clients had been advised of the costs consequences, and that (2) time had been provided to Mr Cheuk to consider the statements of costs and if necessary to take instructions on them;

(ii)  Marstons Plc v Charman [2009] EWCA Civ 719, which Spiegel and Urban Entertainment rely on, concerned payment into court in the context of an application for summary judgment. I accept Mr Yuen’s submissions that case is distinguishable, and is irrelevant;

(iii)  On the facts of the case, I am of the view that the Payment Conditions are entirely justified, and no arguable ground arises therefrom.

24.  I refuse leaves to appeal.

F.2.  The Stay Applications

25.  The proposed grounds of appeal are in my view not arguable.

26.  There is no evidence to suggest that Cheung or Right Honour would not or could not repay any costs which they might have received should any need arise. Any allegation that the absence of any stay would render any appeal nugatory is a bare one.

27.  I refuse the Stay Applications.

F.3.  The Relief and Interim Stay Applications

28.  No reason or basis has been put forward in support of the application for relief. It is conspicuous that Spiegel has not even in her latest affirmation filed in support said that she could not pay the assessed costs. All she has said is that in the absence of any stay, “I would have already paid the significant costs ordered against me at my expense and imposing significant financial hardship to me”. She fails to give any details as to what that alleged “significant financial hardship” is, what it entails, and what effect if would have on her, if any.

29.  That, together with the matters set out above, justify the refusal of the Relief and Interim Stay Applications.

G.  Right Honour’s application to lift the WP Interim Stay

30.  Right Honour also by summons sought an order that the WP Interim Stay be lifted. With or without any additional evidence from Urban Entertainment, the 4/F Centro PO Appeal will still have to be considered. The basis of the imposition of the WP Interim Stay remains. I refuse to lift the same.

H.  Costs

31.  I proceeded to hear parties on costs. Mr Yuen and Mr Chan sought costs on an indemnity basis. Mr Bower resisted any enhanced basis. In my view, the intended appeals, seeking to challenge principally the quantum of summary assessment[6], in respect of which this Court’s discretion is engaged, is devoid of merits. On that basis alone, I found that indemnity costs were justified. If necessary, I would also accept Mr Yuen’s submissions that these applications were attempts to delay the adjudication of the matters further.

32.  I proceed to consider the statements of costs. I was of the view that the claimed costs were in general reasonable. I summarily assessed Cheung’s costs at HK$400,000, and those of Right Honour at HK$200,000. 5% of the costs assessed in favour of Right Honour was to be deducted to account for my dismissal of its application to lift the WP Interim Stay.