SHEK SAU MUI v. POON’S (SUN KEE) CO LTD

HCMP 1397/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 1397 OF 2008

(On an Intended Appeal from HCA 2130 of 2007)

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JUDGMENT

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Hon. Yuen JA:

1.    This is the Plaintiff’s application for an extension of time to appeal     Fung J’s order dismissing her application for summary judgment.   The hearing was conducted in Chinese as the Plaintiff is now acting           in person but this judgment is written in English as that was the     language used in Fung J’s Decision.  I have however informed the        Plaintiff that a Chinese translation of this judgment will be made    available to her should she wish to have one.

Background

2.  The Plaintiff had made a loan of $1,108,952 to the Defendant Company, whose shareholders and directors are her son-in-law (“Poon”) and her daughter-in-law (“Leung”).  On 9 October 2007 the Plaintiff issued a writ for the repayment of this sum and interest. 

3.  In support of the Plaintiff’s claim, she has exhibited a document written in Chinese and dated 19 April 2007 signed by both parties recording that she has agreed to refinance 2 mini-buses (LL1975 and LK9580) in her name and that the net proceeds would be lent to the Defendant company for the acquisition of another mini-bus (KN7754) (“the loan document”).  No repayment date or interest rate was stated in the loan document.  

4.  The Defendant company does not dispute that it had received that sum on loan.  The Defendant company has alleged however that the Plaintiff is undergoing divorce proceedings and that her daughter-in-law (Leung) is simply holding her shares in the Defendant company on trust for the Plaintiff.

5.  The Defendant company has also alleged that although the loan document did not provide for a repayment date, the Plaintiff had orally agreed that the loan would not be repayable until the end of the Chinese calendar year 2007-2008 in consideration of Poon and his wife agreeing to withhold proceedings against their daughter Vicky (the Plaintiff’s granddaughter) for money which Mr and Mrs Poons allege Vicky holds on trust for them.  Accordingly the Defendant company alleges that the Plaintiff’s demand for repayment in 2007 was premature.

6.  The Defendant has also alleged that it was agreed that the Plaintiff was not entitled to demand repayment without the prior approval of the Defendant’s shareholders and directors, and that such approval has not been obtained.

7.  The Defence filed on 5 November 2007 also pleaded an estoppel.

8.  There has been other litigation between the members of this family – in August 2007 the Plaintiff’s husband Chui Sun issued a writ in HCA 1692/2007 against his granddaughter Vicky, and in December 2007, Mrs Poon issued a writ in HCA2658/2007 against her brother Chui Kwok Keung and her daughter Vicky.

Order 14 summons

9.  Three weeks after the Defence was filed, the Plaintiff issued a summons for summary judgment.   Affirmations in support of the summons were made by the Plaintiff and Vicky.  Affirmations opposing were made by Mr and Mrs Poon and Leung.

Fung J’s Decision

10.  Fung J heard the summons on 5 March 2008 and gave his decision on the same day.  Reasons for Decision were handed down on 7 March 2008. 

11.  The Reasons for Decision contain an apparent inconsistency in that in para. 2, the judge said that he dismissed the O.14 application but in para. 20, he said he granted unconditional leave to defend.  (Of course a judge may give unconditional leave to defend instead of dismissing an O.14 summons so that he can give orders as to the further conduct of the action under O.14 r.6, but that was not the case here as the judge did not proceed to give procedural directions). There is an important difference between dismissing an O.14 summons and giving unconditional leave to defend – usually where unconditional leave to defend is given, the costs of the summons are in the cause (Hong Kong Civil Procedure 2008 vol. 1 §14/7/13), whereas if the summons is dismissed, costs are usually ordered against the plaintiff (Hong Kong Civil Procedure 2008 vol. 1 §14/7/4).  However since Fung J’s sealed order stated that the O.14 summons was dismissed (consistently with para. 2 of the Reasons for Decision) and since the judge ordered the Plaintiff to pay the costs of the O.14 summons, I take it that the reference to “unconditional leave to defend” in para. 20 of his Reasons for Decision was an inadvertent error on the judge’s part.

12.  Fung J’s order was sealed on 8 April 2008. 

Application for extension of time to appeal

13.  The Plaintiff did not seek to lodge an appeal against Fung J’s order until 25 July 2008.  This was out of time, hence the Plaintiff lodged the present summons for extension of time. 

Guidelines

14.  It is well-established that in the exercise of its discretion whether to extend time to lodge a notice of appeal, the court would normally take into account: (1) the length of the delay; (2) the reasons for the delay; (3) the chances of the appeal succeeding; and (4) the prejudice to the other party to the appeal (Chiu Sin Chung v Yu Yan Yan, Angela [1993] 1 HKLR 225). 

15.  As for the balancing of these factors, it is well-established that where the delay is short and there is an acceptable excuse for it, an extension of time will not be refused on the basis of the merits of the intended appeal, unless the appeal is hopeless. 

16.  However, even though the delay is unsubstantial, if the delay was inexcusable, the intended appellant must show a real prospect of success on the merits (Secretary for Justice v Hong Kong and Yaumatei Ferry Co [2001] 1 HKC 125). 

17.  As for prejudice to the other party, the mere fact that it would suffer no prejudice if time is extended is not by itself a ground for extending time.

Discussion

18.  I have considered the Plaintiff’s affirmation filed on 25 July 2008 in which she sought to address the issues of delay and the merits of her intended appeal.  I have also considered her written reply to the Defendant’s counsel’s skeleton submissions. 

19.  As far as the delay is concerned, she says that after Fung J gave his order on 5 March 2008, her lawyers had advised her that she did have grounds of appeal but that if she failed her expenses would be more than $500,000, and that the Defendant’s costs were estimated at $70,000.  However in July 2008 she received the Defendant’s bill of costs which came up to $180,000.  In the meantime she also came to know that she could act in person on appeal, and that one of Fung J’s judgments had been overturned on appeal.

20.  There can be no dispute that the delay of 3 months is substantial.  In my view the Plaintiff has provided no acceptable excuse for it.  She was given certain advice on the merits of an appeal by her lawyers on 5 March 2008 and she was also told that day that Fung J’s order required her to pay the Defendant’s costs of the O.14 application.  She obviously chose not to pursue an appeal and was prepared to have to pay costs to the Defendant in the region of $70,000.  It was only when the Defendant rendered its bill of costs in July 2008 that the Plaintiff considered an appeal.  However if she considers the bill unjustified, she can challenge it on taxation.  Her dissatisfaction with the Defendant’s bill of costs cannot provide an excuse for ignoring deadlines set by rules of court.  And as for her allegation that between March and July 2008 she came to know that she could act in person on appeal, that is not an acceptable excuse either.  If she had exercised reasonable diligence, she could have easily found out from her former lawyers or the Court’s unrepresented litigants resource centre that she could act in person on appeal.  As for her reference to an appeal from Fung J in which the successful appellant was acting in person, it is only common sense that appeals are allowed or dismissed depending on the individual circumstances of each case. 

21.  Accordingly I take the view that the Plaintiff’s delay was both substantial and inexcusable.

22.  As such it is not really necessary to consider the merits of her intended appeal.  In the Plaintiff’s affirmation she says that it was contrary to the principles of litigation for her to be ordered to pay costs before the trial.  She says that her case is supported by documentary evidence whereas the Defendant’s case was based on oral allegations only.  Accordingly the judge should have ordered leave to defend conditional on payment into court of part of the sum loaned.

23.  The decision whether to dismiss the O.14 summons, or to grant unconditional leave, or conditional leave is a matter within the judge’s discretion.  If a plaintiff knew that there was an arguable defence and yet persists in an O.14 application (where she has to depose on affirmation that in her belief there is no defence to the claim), the judge is entitled to dismiss the summons and order costs to be payable by the plaintiff in any event or forthwith (Hong Kong Civil Procedure 2008 vol. 1 §14/7/3-4).  In the present case the O.14 summons was issued three weeks after the Defence was filed.  Accordingly the Plaintiff knew that the Defendant was alleging that this was not a common loan transaction but one involving monetary dealings between family members and allegations of trust and secreting of assets in matrimonial proceedings.  Fung J’s reasons do not disclose any errors of law or misapprehensions of material fact, nor can it be said that his order dismissing the O.14 summons was so plainly wrong that an appellate court had to interfere with the exercise of his discretion.  Accordingly I do not think it can be said that the Plaintiff has a real prospect of success on her intended appeal.  Of course after the dismissal of the O.14 summons, the Plaintiff can continue with the action taking its normal course.

Order

24.  For the reasons I have set out above I would dismiss the Plaintiff’s summons for extension of time to appeal.  The parties having agreed with the usual order that costs should follow the event, I would order that the Plaintiff pay the Defendant’s costs of the application in any event to be taxed if not agreed.