HUEN WAI KEI AND ANOTHER v. CHOY KWONG WA CHRISTOPHER AND ANOTHER

CACV 140/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 140 OF 2013

(ON APPEAL FROM HCA NOS. 1093, 1242 AND 2140 OF 2006)

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REASONS FOR DECISION

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1. This is the plaintiffs’ application for extension of time to file a Respondents’ Notice. At the conclusion of counsel’s submissions, I dismissed the application with costs of the hearing to the defendants to be taxed if not agreed. My reasons appear below.

2. On 28 May 2013, Suffiad J (“the Judge”) handed down a judgment (“the Judgment”) in favour of the plaintiffs, the material terms of which are:

(a) The 1^st defendant pays the 1^st plaintiff $30 million together with interest; and

(b) As an alternative to (a), an order for specific performance by the 2^nd defendant of a sale and purchase agreement by assigning a duplex and two car parking spaces in Residence Bel-Air, Island South (“the Properties”) to the 2^nd plaintiff free from incumbrances for the consideration of $38.4 million, which is to be set off against the judgment sum of $30 million. 

3. On 5 June 2013, the plaintiff’s solicitors wrote to call upon the defendants to assign the Properties in accordance with the order for specific performance.  The defendants took no action.

4. Then on 25 June 2013, the defendants commenced the present appeal against the Judgment.

5. In the meantime, unbeknown to the plaintiffs, the 2^nd defendant had defaulted in the mortgage payments and surrendered the Properties to the mortgagee, Standard Chartered Bank (“the Bank”).   Subsequently, the Bank sold the Properties for $74 million and completion took place on 11 March 2014.

6. On 10 March 2014, the plaintiffs issued a Notice of Motion in the actions below, seeking an order supplement to the Judgment that:

(a) The net proceeds of the sale of the Properties be paid by the Bank to the plaintiffs; and

(b) The defendants pay to the plaintiffs the amount of the outstanding unpaid mortgage loan and of the expenses incurred by the Bank, both of which had been deducted from the proceeds of sale of the Properties.

7. The Notice of Motion was heard by the Judge on 4 June 2014 and the decision is pending.

8. In the interim, on 14 April 2014, the Bank issued interpleader proceedings to deal with the balance of the proceeds of sale.  The matter has yet to be heard.

9. Then on 9 May 2014, the plaintiffs issued the summons for leave to file the Respondents’ Notice pursuant to Order 59 rule 6(1)(b) of The Rules of the High Court, Cap. 4A.  On 16 June 2014, the plaintiffs applied by summons to amend the summons so as to rely also on rule 6(1)(a).  The amendment application was not opposed.

10. By the proposed Respondents’ Notice, the plaintiffs seek to cross-appeal the order for specific performance and apply for orders in substantially the same terms as those sought in the Notice of Motion.

11. The plaintiffs’ primary reason for pressing ahead with the application for leave to serve the Respondents’ Notice out of time is that they wish to safeguard their position, in the event the Judge were to decide against them on the Notice of Motion or the Judge’s decision, though in favour of the plaintiffs, were reversed on appeal.

12. In my view there is a fundamental difficulty in the plaintiffs’ application.  The plaintiffs have been successful in their claims.  The order for specific performance is a relief claimed in the actions below.  Being wholly successful on their claim, the plaintiffs cannot appeal, especially when the order for specific performance was an order in their favour and based on their claim.

13. Indeed, the plaintiffs are not saying that the Judge erred in making the order of specific performance.  They are only seeking to vary or supplement the specific performance order as a result of events subsequent to the Judgment.  In the circumstances, the cross-appeal in the proposed Respondents’ Notice is inappropriate.

14. Insofar as the plaintiffs say the Respondents’ Notice is a measure to safeguard their position, it is premature given that the Notice of Motion has now been heard. If the Judge decides the Notice of Motion in their favour, the plaintiffs need not appeal.  If the defendants were to appeal, and if the plaintiffs deem it appropriate, they can then issue a respondents’ notice.  Alternatively, if the Judge decides against them on the Notice of Motion, the plaintiffs may, if so advised, appeal against the determination by way of a notice of appeal.  In either of these scenarios, for the sake of good case management, the parties may seek to have the two sets of appeal being heard together, either by expediting the appeal from the Notice of Motion or by adjourning the present appeal of the defendants.

15. For the above reasons, the summons as amended is dismissed. 

16. As to costs, in the light of the circumstances that render the specific performance of the sale and purchase agreement impossible, it is understandable for the plaintiffs to take steps to safeguard their interests under the Judgment.  It is appropriate to make no order as to the costs of the summons.  With the Notice of Motion having been heard, the costs of the hearing stand in a different light.  The usual order of costs follow event should apply.  Accordingly, I ordered that there be no order as to costs save that the plaintiffs pay the defendants the costs of the hearing.