MENNO LEENDERT VOS v. GLOBAL FAIR INDUSTRIAL LTD AND OTHERS

CACV 282/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 282 OF 2009

(ON APPEAL FROM HCA NO. 4200 of 1995)

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REASONS FOR JUDGMENT

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Hon Yuen JA (giving the Reasons for Judgment of the Court):

1.  This is an application to strike out a notice of appeal on the ground that the appellant has no locus standi, alternatively that it is oppressive or vexatious, or that it is an abuse of the process of the court.  There is an alternative application that should the notice of appeal not be struck out, the appellant be ordered to pay security for costs.

Background

2.  In HCA4200/1995, Goldmark Agents Ltd and World Champ Ltd sued a number of defendants for breach of fiduciary duty and for dishonest assistance in the breach of duty and for knowing receipt of the companies’ properties. 

3.  Amongst the defendants were the 2^nd defendant and his wife the 7^th defendant.

Default judgment

4.  In April 2001, default judgment was entered against the 7^th defendant with damages to be assessed.  No application to set it aside was made.

Bankruptcy

5.  A few months later in November 2001, a bankruptcy order was made against the 7^th defendant.  Her trustee in bankruptcy did not take steps to set aside the default judgment. 

6.  The companies (by now in liquidation) did not apply to continue the action against her.      

7.  In 2005, the 7^th defendant was discharged from bankruptcy.

Trial and judgment

8.  In 2008-9, the trial of HCA4200/1995 took place before Deputy Judge To (now To, J).  By now the plaintiff had been substituted for the companies by order of the court.  The 2^nd defendant was present and took part in the proceedings.  The 7^th defendant was absent.

9.  In a judgment handed down on 1 December 2009, the judge found the defendants liable to the plaintiff.  In respect of the 7^th defendant, the judge found she was jointly liable with her husband the 2^nd defendant in respect of a claim which was called the Attempted Secret Profit Claim, and jointly liable with the 2^nd defendant and the 1^st, 3^rd and 6^th defendants in respect of a claim which was called the Sale of Units Claim.  She was also ordered to pay the costs of the action together with those defendants.

7^th defendant’s appeal

10.  On 28 December 2009 the 7^th defendant filed a Notice of Appeal with an 89-page “Summary of Grounds of Appeal” against the judgment.  This was despite the fact that she had not set aside the default judgment and had not participated at the trial.

Summons to strike out appeal

11.  On 11 June 2010 the plaintiff issued a summons to strike out the notice of appeal on similar, but not identical, grounds to those before us.

12.  The summons was due to be heard before the Court of Appeal (differently constituted) on 26 October 2010.  The 7^th defendant however did not appear.  

13.  It was conceded by the plaintiff’s counsel that as the damages were a debt provable in bankruptcy, he (or more accurately, the companies) can no longer enforce the judgment against her.  Although the plaintiff asserted that liability for costs before the date of the bankruptcy order was not provable in the bankruptcy, he indicated that in any event he will not seek to enforce that order against her.  In light of that, on the assumption that the 7^th defendant would therefore not need to continue with the appeal, the court dismissed the summons to strike out.

14.  However the 7^th defendant has not withdrawn the appeal, despite having these matters explained to her at a directions hearing before the Registrar of Civil Appeals.  Hence the plaintiff’s fresh application to strike out the appeal. An affirmation of service was filed showing the 7^th defendant had been served with the application documents.  

15.  At the hearing of the application on 16 February 2012, the 7^th defendant did not appear but caused to be handed up to the court an affirmation complaining about the plaintiff’s conduct of the proceedings together with some other documents regarding her divorce proceedings.    

Discussion

16.  However the fact of the matter is that under the rules of court, the 7^th defendant cannot lodge an appeal when she has not set aside the default judgment.  If only for that reason, the notice of appeal must be struck out.   Although a similar strike-out application had been dismissed in October 2010,  that application had not been determined on the merits and we are satisfied that there is no problem with res judicata or issue estoppel.                                   

Order

17.  For these reasons, on the plaintiff’s undertaking by his counsel that he will not enforce the judgment against the 7^th defendant, we made an order in terms of para. 1 of the summons filed on 28 September 2011.  It was not necessary therefore to deal with para. 2.  We also ordered that the 7^th defendant do pay the plaintiff’s costs of this application.