RICHLY BRIGHT INTERNATIONAL LTD v. DE MONSA INVESTMENTS LTD

CACV 247/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 247 OF 2012

(ON APPEAL FROM HCA NO. 548 OF 2012)

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Hon Fok JA (giving the Judgment of the Court):

Background

1.  On 11 July 2013, Yuen JA exercised her discretion to permit 823 Investment Limited (823) to join as an interested party in the appeal by the appellant (defendant below) against the grant of summary judgment in favour of the respondent (plaintiff below).  That appeal is due to be heard on 5 November 2013.

2.  The background to the joinder is fully described in Yuen JA’s judgment at §§2 to 14 and it is not necessary to repeat that background at length in this judgment.  It suffices to state the following short summary of the position:

(a)   On 15 October 2012, the appellant (De Monsa) was adjudged liable to the respondent (Richly Bright) on the latter’s summary judgment application arising from De Monsa’s failure to complete a conveyancing transaction.

(b)   823, who was a vendor further up the chain of confirmors, also obtained judgment against Richly Bright for its failure to complete the transaction.  823 has now obtained a garnishee order absolute ordering De Monsa to pay $8,092,339.50 to 823.

(c)   De Monsa is appealing the summary judgment against it and that is the appeal due to be heard on 5 November 2013.

(d)   On 24 April 2013, Louis Chan J made various orders in the action between Richly Bright and De Monsa (at first instance) following the grant of the garnishee order absolute in favour of 823, which included in particular orders that 823 be joined as a party to that action and that, upon De Monsa paying a sum of money into court, the garnishee order absolute not be enforced pending the outcome of this appeal.

(e)   In the appeal, the first ground of appeal is maintenance and champerty by, amongst others, 823.

(f)    Having been added as a party to the first instance action between Richly Bright and De Monsa, 823 applied by summons dated 3 May 2013 to be added as an interested party to the appeal.  It also sought leave, if added as a party, to introduce various affirmations in the appeal.

The decision of Yuen JA

3.  The joinder application before Yuen JA was based on the fact that, since 823 had a garnishee order absolute, it had a legal proprietary interest in the judgment which is the subject matter of the appeal, and that it was in any event in the interests of justice for it to be joined since it was implicated in the allegation of maintenance and champerty.

4.  De Monsa objected to the joinder on the basis that 823 had no legal interest in the matter and that the payment-in orders sufficiently protected 823 so that its joinder was unnecessary, nor was it just and convenient since it was not a party below.

5.  Yuen JA rejected De Monsa’s arguments and ordered the joinder of 823 and the admission of the further affirmations.

The appeal

6.  On this appeal, De Monsa maintains the same grounds of objection to the joinder as were relied upon before Yuen JA.  Five grounds of appeal are advanced:

(a)   First, that the court has no jurisdiction to add 823 since it has only a commercial interest in the appeal;

(b)   Secondly, that O.15 r.6(2)(b) is not engaged as 823 has failed to show a legal interest in the matter;

(c)   Thirdly, that 823 lacks locus as it is not a party to the summary judgment under appeal;

(d)   Fourthly, that it is neither just nor convenient to join 823 since it did not appear or file evidence below; and

(e)   Fifthly, that 823’s intervention is unnecessary since its financial position is protected at least until determination of the appeal.

7.  In respect of the grant of leave to file the further affirmations, De Monsa appeals on the basis of the same grounds and also on the basis that it is said 823 failed to discharge the burden to show any special ground to justify admission of the affirmations.

8.  The appeal is resisted by 823, whilst Richly Bright takes a neutral stance, as it did on the application before Yuen JA.

The applicable principles

9.  This is an appeal pursuant to RHC O.59 r.14(12) against the determination of a single justice of appeal.  In reviewing the exercise of discretion by a single justice of appeal, this court will not interfere “unless it is satisfied that the judge had applied wrong principles of law or had given a wholly erroneous weight to some matters or failed to take into account some other matters or indeed if the judgment was plainly wrong”: see Mok Pak Keung v Wong Ip Ming, unrep., CACV 78/2000, 8.9.2000 per Rogers JA at pp. 3-4.

The joinder of 823 as an interested party to the appeal

10.  As to the first ground of appeal, we are satisfied that 823 has demonstrated a proprietary interest in the appeal.  That interest is the garnishee order absolute which, on the authority of Astro Nusantara International BV v PT Ayunda Prima Mitra [2012] 4 HKLRD 855 at §21, is a proprietary remedy operating by way of attachment against the property of 823’s judgment debtor, Richly Bright, that property being the chose in action representing the garnishee De Monsa’s debt to 823’s judgment debtor.

11.  De Monsa relies on In re I.G. Farbenindustrie A.G. Agreement [1944] 1 Ch 41 to support the argument that a mere commercial interest is insufficient to give the court jurisdiction to add a party to proceedings.  I.G. Farbenindustrie is distinguishable in that 823 does not merely have a commercial interest here but has a proprietary interest, which as noted by Lord Greene MR in that case (at p. 43) is an interest which the law recognises without any distinction between legal or equitable interest.

12.  The conclusion on the first ground of appeal is sufficient to justify the Judge’s exercise of discretion to add 823 as an interested party to the appeal.  But, in any event, we consider that she was right in also holding that 823’s joinder satisfies O.15 r.6(2)(b) in that there is a present question or issue between it and De Monsa.  In our view, there is clearly an interest between the parties in the light of De Monsa’s grounds of appeal asserting maintenance and champerty.  In those grounds, De Monsa asserts that: 823 had an unlawful champertous arrangement with Richly Bright; that “the conduct of … 823 … pose[s] a genuine risk to the integrity of the Court’s process”; that “the conduct of …823 … constituted a clear abuse of the Court’s process”; that “the conduct of … 823 … was contrary to public policy”; and that De Monsa was “entitled to sue … 823 … as [co-tortfeasor] by way of counterclaim in this action”.

13.  The remainder of De Monsa’s contentions in relation to the second ground of appeal proceed on the basis that 823 only has a commercial interest in the outcome of the appeal.  Since we have concluded that 823’s interest is more than merely commercial, we reject those contentions.

14.  Further, the submission advanced by De Monsa that the Judge erred in principle in finding that 823’s garnishee order absolute would be affected if Richly Bright failed to appear or conceded the appeal is simply wrong since it is plain that, if the judgment below is set aside, the judgment debt and hence garnishee order absolute will also fall away.

15.  The third ground of appeal is circular and we reject it.  As counsel for 823 rightly contends, if this argument were correct, it would mean that no party could ever join as an interested party in an appeal if it had not appeared below.

16.  As to the fourth ground of appeal, the solicitor acting for 823 gave an explanation by affirmation on behalf of 823 that he had not been aware of the existence of the proceedings below until 11 September 2012.  He also deposes that 823 had not been served with the documents in relation to the summary judgment application and only came to know about the allegation of champerty against it after the hearing on 27 September 2012.  That evidence has not been challenged by De Monsa and so, as Yuen JA held (at §15), it cannot be said that 823 chose to allow the action below to proceed without applying to be joined as a party.  For these reasons, we see no injustice in allowing 823 to be joined.

17.  So far as the question of convenience is concerned, we share the view of Yuen JA that, since 823 is now a party to the action, it is both just and convenient to join 823 as a party to the appeal so that it can contest the assertions De Monsa is making against it in the appeal and, if successful, dispose of them in that forum rather than subsequently in the action.

18.  Finally, as to the fifth ground of appeal, we reject the argument that the payment into court is sufficient to protect 823’s interests so that joinder is unnecessary.  The payment in being merely a mechanism to preserve the money pending determination of the appeal, it cannot provide any protection in substance in the event the judgment is set aside on the appeal.

19.  The Judge’s exercise of discretion to order the joinder of 823 as an interested party to the appeal is, in our view, unimpeachable.  It is a plainly correct decision and there is no merit in the appeal against it.

The leave to admit further evidence on the appeal

20.  Turning to Yuen JA’s order to admit the further affirmations on the appeal, the Judge noted that it was agreed that “the disposal of the latter application [i.e. to admit the further affirmations] would depend on the determination of the joinder application.”

21.  That was a perfectly understandable stance for counsel for De Monsa to have taken before Yuen JA and we are not satisfied there has been a good explanation for any change of stance.

22.  In any event, we agree with the submission of counsel for 823 that the evidence sought to be adduced goes to the question of whether there was a champertous arrangement between 823 and Richly Bright, which issue is squarely raised in the appeal.  We are satisfied that the further evidence meets the conditions laid down in Ladd v Marshall [1954] 3 All ER 745 for the introduction of fresh evidence on appeal.

23.  If, as De Monsa contends (in §62 of its skeleton submission), the further evidence “tacitly but ironically concedes that there exists a triable issue over the maintenance arrangement and the matter ought to go to trial”, it is not readily apparent why the application to introduce that evidence is being resisted.

Underlying Objectives

24.  Finally, De Monsa contends that the applications by 823 are contrary to the underlying objectives of increasing cost-effectiveness, promoting procedural economy in the conduct of proceedings and/or ensuring fairness.

25.  We do not agree.  On the contrary, we are satisfied that to allow 823 to meet the allegations of champerty made against it at this stage in the appeal rather than separately in the action in the event the appeal were successful but without 823 being a party to that appeal would increase costs, be inimical to procedural economy and in no way interfere with fairness.

26.  So far as De Monsa contends that it should be allowed to answer or reply to the further affirmations, it is premature to consider whether such an application would be successful since there are no drafts of any such affirmations before us.  It may be that the most cost-effective way of addressing that issue would be for any such application to be made in the appeal itself, which as already noted is due to be heard on 5 November 2013.

Conclusion

27.  For these reasons, we dismiss the appeal.

28.  We order De Monsa to pay the costs of 823 of this appeal, to be taxed if not agreed, with a certificate for two counsel.

(Joseph Fok) Justice of Appeal

(Carlye Chu) Justice of Appeal