WONG, CHI HUNG v. LO, WING PUN AND ANOTHER

DCCJ 1960/2019

[2023] HKDC 1663

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1960 OF 2019

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BETWEEN

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DECISION

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I. INTRODUCTION

1.  This is the 2^nd defendant’s summons for leave to appeal against my judgment handed down on 6 October 2023 (the “Judgment”). I am not to repeat the background of the case, and shall adopt the same definitions and abbreviations used in the Judgment. The present decision should be read together with the Judgment.

2.  The 2^nd defendant’s draft notice of appeal (the “draft Notice of Appeal”) attached to the summons runs more than 25 pages. It contains 9 grounds of appeal, and 95 paragraphs under the grounds in total. Those paragraphs are more of submissions than grounds of appeal “clearly and succinctly” set out, as required by §20 of Practice Direction 4.1, and contrary to §22 of the said Practice Direction 4.1 expressly requiring that “a notice of appeal must not be prolix… or submissions at length”. The 2^nd defendant does intend to treat the draft Notice of Appeal as his full submissions because the 2^nd defendant’s skeleton submissions are almost a word-by-word replica of the draft Notice of Appeal. I need to say no more than to repeat the constant reminders of the Court of Appeal concerning §§20-24 of Practice Direction 4.1.

3.  For convenience, I shall deal with the submissions made in the paragraphs of the draft Notice of Appeal without referring to the skeleton submissions.

4.  I shall analyse below each of the grounds raised by the 2^nd defendant, with a modification to Ground 6 by dividing Ground 6 into Ground 6A and Ground 6B.

II. GROUND 1: THE JUDGE ERRED IN FAILING TO FORMULATE / APPLY THE CORRECT TEST REGARDING FOREIGN ILLEGALITY IN THE CONTEXT OF UNJUST ENRICHMENT CLAIM

5.  Ground 1 (consisting of paragraphs 1-12 of the draft Notice of Appeal) concerns a question of law of whether, and if so, how, the test in Ryder Industries Ltd v Chan Shui Woo (2015) 18 HKCFAR 544 should be applied to an unjust enrichment claim.

6.  In essence, Mr Joseph Wong, counsel for the 2^nd defendant, submits that the test in Ryder Industries Ltd v Chan Shui Woo (2015) 18 HKCFAR 544 should be applied without the modification set out in §46 of the Judgment. He submits, among others, that Ryder does not indicate that such modification is necessary even though the present claim is not a contractual claim, because in Ryder, the focus was not on whether the claim was a contractual claim but was on the contract itself. He also submits, among others, that She Ching Yan v Cai Yunxiang & ors [2023] HKCFI 592 is binding on this Court so that I should follow strictly She Ching Yan.

7.  I disagree that there would be any difference in this context as submitted by Mr Wong that Ryder was focused on the contract rather than the contractual claim. Further, contrary to Mr Wong’s submissions, She Ching Yan, being a Court of First Instance decision, is not binding on District Court. Further, that case is not a case concerning the defence of foreign illegality to an unjust enrichment claim.

8.  That said, the present case is the first of its kind at least in Hong Kong. In fact, at the Closing Submissions of the trial, Mr Tommy Cheung, counsel for the plaintiff, invited me to hold that given the Court of Appeal’s judgment in Monat Investment Ltd v All Person(s) in Occupation of No 16 Ma Po Tsuen [2023] 2 HKLRD 1311, I should adopt a general flexible approach as in Patel v Mirzai [2016] UKSC 42 in determining foreign illegality, although I declined to do so given that Ryder is binding upon me (see paragraph 35 of the Judgment). Mr Cheung rehearsed this submission in the present application as well. I can well see that he would take this point again if leave would be granted for this Ground. This shows that this Ground may provide an opportunity for the Court of Appeal to consider how foreign illegality should be approached, with or without reference to Ryder and Monat. Depending on how Ryder, if at all, should be applied, the outcome of the present case may well be different, and thus I disagree with Mr Cheung’s submissions that the appeal would be academic in any event despite the question of law.

9.  Having considered all these, I take the view that there are reasonable prospects of success of appeal in this ground, and thus leave should be granted.

10.  Also, exchanges of RMB-other currencies have been an issue visiting Hong Kong Courts very often especially in the context of foreign illegality (and in this regard, possibly relatedly, the defence of bona fide change of position and bona fide purchaser). Coupled with the fact that the present case is the first of its kind as explained above, I am of the view that it is also in the interests of justice that leave should be granted in respect of Ground 1 since this question of law involved would be of great general or public importance.

III. GROUND 2: THE JUDGE ERRED IN APPLYING EMERALDIAN TO GRANT THE UNJUST ENRICHMETN CLAIM BY P AGAINST D2

11.  Ground 2 (consisting of paragraphs 13-16 of the draft Notice of Appeal) concerns Emeraldian Ltd Partnership v Wellmix Shipping Ltd [2010] 1 CLC 993. In §7 of the Judgment, I referred to §179 of this case in support of my opinion that where the foreign country will grant civil remedies to a claimant notwithstanding the illegality in that country, then it would not offend the principles of international comity for a local court to grant such civil remedies. Mr Wong submits that that case does not stand for such a proposition because that case involved a Type 4 situation in Ryder such that the Court would analyse various factors to determine whether public policy would prevent the local court from granting the remedies, and Emeraldian is inconsistent with She Ching Yan.

12.  I disagree with Mr Wong. In coming to the proposition in §179 in Emeraldian, Teare J did not analyse the case before him with reference to what type of the foreign illegality it would be according to Ryder. At §179, the learned judge simply said:-

“… In China the fact that an overseas guarantee is issued without authorization of SAFE does not result in the unenforceability of the civil liability otherwise arising from the guarantee, notwithstanding that the issue of the guarantee is an offence and that the guarantee is ‘null and void’. That civil liability is still enforceable where the guarantor is at fault… In these circumstances it does not appear to me that English public policy requires the court to refuse to enforce a guarantee governed by English law which was issued in China in breach of the local law. If Chinese law does not regard the civil liability otherwise arising from the guarantee to be unenforceable there is no reason why English law should so regard it. It would not, it seems to me, be contrary to principles of comity to enforce it…”

13.  I also fail to see how §179 of Emeraldian is inconsistent with She Ching Yan, which, as I said above, is not binding on me in any event.

14.  That said, this ground of appeal is incidental to Ground 1 in that if Mr Wong is right that Ryder should apply without any modification, then it would be reasonably arguable that §179 of Emeraldian is inapplicable. I would thus grant leave in respect of Ground 2 as incidental to Ground 1.

15.  Similarly, as it would also be in the interests of justice to grant leave for Ground 1, it would also be in the interest of justice to grant leave for Ground 2, given that Ground 2 is incidental to Ground 1.

IV. GROUND 3: THE JUDGE ERRED IN FINDING IN FAVOUR OF PLAINTIFF BASED ON HIS PLEADED ALTERNATIVE CASE OF UNJUST ENRICHMENT FOR MISTAKEN PAYMENT

16.  Ground 3 (consisting of paragraphs 17-27 of the draft Notice of Appeal) is a pleading point. Mr Wong submits that the plaintiff’s plea in the amended statement of claim §9A that the plaintiff “has made a mistake as to the proper account nominated by the 1^st and/or 2^nd defendant(s)” would not permit me to find that there was an unjust enrichment for mistaken payment upon my finding that the Agreement was objectively intended to mean that the Sum should be deposited into Ms Kwok’s BOC Account, which means that there was no mistake.

17.  As I said in §39 of the Judgment, the plea could have been put better, but it is reasonably clear that irrespective of the objective agreement in the Agreement, the money was deposited into an account (namely, Mr Kwok’s BOC Account) which the defendants subjectively said was a mistaken account. In other words, from the defendants’ subjective perspective, the Sum was deposited into the account without any proper basis, and of course the defendants ran their case on this basis because the defendants never conceded that the Agreement provided for Ms Kwok’s BOC Account but instead the defendants’ case was that it provided for Ms Kwok’s ICBC Account. Thus, the defendants’ defence was always there to meet a case where the Sum was deposited into Ms Kwok’s BOC Account without any agreement which the defendants pleaded to refer to Ms Kwok’s ICBC Account rather than Ms Kwok’s BOC Account, or any other proper basis.

18.  In §§26-28 of the draft Notice of Appeal, Mr Wong submits that the Sum was transferred under a valid (though unenforceable) contract, and thus it would be wrong for me to say that the Agreement was non-existent. This is besides the point. In running this pleading point, in my view, the gist is whether the pleadings would enable the defendants to know and then meet the plaintiff’s case that the Sum was paid to the 2^nd defendant without any proper basis. Upon my analysis in §39 of the Judgment (set out above), my answer is in the affirmative.

19.  In any event, given my view that the plaintiff effectively pleaded a total failure of consideration (being subject matter of Ground 4 for which I shall refuse leave) and I found as a matter of fact that there was such a total failure of consideration, Ground 3 would be academic in any event.

20.  In the premises, I see no reasonable prospects of success in Ground 3. Therefore, I refuse leave for it.

V. GROUND 4: THE JUDGE ERRED IN FINDING AN IMPLIED PLEA OF AN UNJUST FACTOR OF “TOTAL FAILURE OF CONSIDERATION”

21.  Ground 4 (consisting of paragraphs 28-39 of the draft Notice of Appeal) is another pleading point. In essence, Mr Wong submits that the plaintiff never pleaded the phrase “total failure of consideration” and thus the Court should not be permitted to consider the plaintiff’s case on total failure of consideration.

22.  As I said in §41 of the Judgment, only facts need be pleaded, and the requisite facts for the total failure of consideration had all been pleaded. In essence, the plaintiff pleaded that it transferred the Sum to the 2^nd defendant pursuant to the Agreement, the 2^nd defendant did not perform the Agreement, not even paying a single penny to the plaintiff, and thus claimed for the Sum. This is a typical factual scenario for a total failure of consideration. While it is a good practice expressly to plead the name of the cause of action (or the defence) or the name of the unjust factor, this good practice is not a perquisite for running the cause of action (or the defence). As well put by Chu JA (now Chu VP) on behalf of the Court of Appeal (Kwan VP and Au JA) in Ng Po Yu & another v Lam Kai On [2021] HKCA 263 at §48, “if the facts were sufficient it would not matter that there is no pleading of some particular category of restitutionary claim”. See also Credit One Finance Ltd v Yeung Kwok Chi [2021] 1 HKC 598 at §39(4) per Recorder Eugene Fung SC. Mr Wong attempts to distinguish Ng Po Yu, supra by contending that unlike Ng Po Yu, supra, in the present case, the plaintiff had pleaded “mistake” as the unjust factor, and thus the plaintiff should not be permitted to run other categories of unjust enrichment. I disagree. The Court of Appeal in Ng Po Yu did not limit the dicta I quoted above so narrowly, and Mr Wong fairly accepts that there is not authority in support of his such contention.

23.  Mr Wong’s reliance in §37 of the draft Notice of Appeal on Liu Hon Wong v Liu Chee Kwan & another [2023] HKCFI 1657 does not assist him. In that case, evidence came up which might support a claim, for example, on unjust enrichment. However, it is trite that the issues are defined by the pleadings but not the evidence, and thus unsurprisingly, the court there refused such a claim.

24.  In contrast, in the present case, as mentioned above, the requisite facts had all been pleaded. Evidence was adduced on the pleaded facts. In such circumstances, I do not accept that because of the lack of the express plea of the phrase “total failure of consideration”, the plaintiff would be barred from running this cause of action.

25.  Therefore, I refuse leave for Ground 4.

VI. GROUND 5: THE JUDGE ERRED IN FINDING THAT THERE WOULD BE NO SUBVERSION OF A VALID CONTRACT IN AWARDING THE RESTITUTIONARY REMEDY TO D2

26.  Ground 5 concerns a question of law whether the no-subversion principle applies to prevent a restitutionary claim arising from a contract which has been found to be unenforceable due to foreign illegality. This Ground consists of paragraphs 40-50 of the draft Notice of Appeal, and paragraph 43 of the draft Notice of Appeal also refers to paragraphs 25-26 as well.

27.  Mr Wong’s submissions, in essence, are those made before me at Closing Submissions of the trial, namely, the Agreement, though unenforceable due to foreign illegality, remains a valid contract, and according to the no-subversion principle as expounded in Chitty on Contracts (34^th ed) Vol 1 §32-094 (mentioned in paragraph 42 of the Judgment) would apply to prevent the restitutionary claim. Mr Wong cited various authorities to make good the point that there is a distinction between an unenforceable contract which remains valid and an invalid contract.

28.  I have no qualm that there is such a distinction, but the question is whether the no-subversion principle would apply to prevent a restitutionary claim in this context. Indeed, on the face of the text of Chitty on Contracts (34^th ed) Vol 1 §32-094, Mr Wong would be right. However, having reviewed the relevant authorities, I came to the conclusion that differs from Chitty on Contracts. I also appreciate that an incidental question of law may arise as to when a contract would be enforceable due to foreign illegality and when a contract would be valid due to foreign illegality. I do appreciate that these questions of law are specific questions that appear to arise for the first time. Further, given the weight of Chitty on Contracts, but for the reason stated in the following paragraph, I would have granted leave.

29.  The only reason compelling me to refuse leave is this: given that even Chitty on Contracts states (which Mr Wong does not challenge) that in the scenario where the contract is unenforceable though remaining valid, restitutionary claim would still be permitted if total failure of consideration is proved (see §42 of the Judgment), and given that the only challenge to my finding of total failure of consideration is a pleading point in Ground 4 which I refuse leave for reasons explained above, logically, Ground 5 is at best an academic ground of appeal only. Therefore, I have to refuse leave for Ground 5.

VII. GROUND 6: THE JUDGE ERRED IN FINDING THAT THE SUM MAY (AS OPPOSED TO MUST OR OUGHT TO / IS LIABLE TO) BE CONFISCATED UNDER THE PRC LAW

30.  Ground 6 is relevant only if the general flexible approach in Monat and Patel would be adopted in approaching the foreign illegality here. This is because by applying the modified Ryder test, on my findings that article 157 would require the return of the Sum to the plaintiff irrespective of whether there would or would not be any confiscation (§§48(3), 51, 57 and 58(6) of Judgment), the unjust enrichment claim would not be barred by foreign illegality in any event. As I made it clear in the opening paragraph of §66 of the Judgment, the matters set out in §66 (including how the relevant regulations were in general enforced in practice in §66(6)) were considered only if a general flexible approach like Patel was adopted.

31.  Further, Ground 6 should be divided into two grounds. I shall group paragraphs 51(1), 52-55 and 58 of the draft Notice of Appeal under Ground 6A concerning my factual finding that the Sum may (as opposed to must or ought to / is liable to) be confiscated under the PRC law, and group paragraphs 51(2) and 56-57 under Ground 6B concerning a question of law whether how a foreign law would generally be enforced in practice is a relevant consideration in determining whether foreign illegality is established.

A. Ground 6A

32.  The factual findings under Ground 6A concern how the relevant regulations would in practice be enforced. Mr Wong does not challenge my findings in §54 of the Judgment, which I set out for convenience:-

“In relation to the Existing Confiscation Point, the defendants’ expert is frank and honest – she told this court that if there is no existing confiscation, article 157 may be applicable to assist the plaintiff’s claim subject to the Future Confiscation Point. She also accepts that this Existing Confiscation Point means that whether the claimant may invoke article 157 may depend on his luck – if he is lucky, he may be quick enough to make the claim before there is any confiscation, and the converse is also true. This is not challenged by Mr Cheung during cross-examination.”

33.  What Mr Wong challenges is that the Sum had already been confiscated and thus it is wrong for me to find only that the Sum may be confiscated. Alternatively, Mr Wong argues that if the relevant regulations would be enforced strictly according to the text, then the eventuality must be that the Sum would be bound to be confiscated.

34.  I have no problem about Mr Wong’s alternative argument about what would happen if the regulations would be enforced strictly. In fact, this was not in dispute. However, on my view in §66(6) of the Judgment (which is subject to challenge in Ground 6B) that in considering foreign illegality, how the relevant regulations are generally enforced in practice (or whether they are enforced strictly according to the texts) is a relevant consideration, this alternative argument does not give Mr Wong any mileage.

35.  As regards Mr Wong’s challenge that the Sum had already been confiscated, it must be noted that the Sum had been confiscated for matters unrelated to the unauthorised foreign exchange under the Agreement, and there is no proper evidence to suggest otherwise. Thus, on my view in §66(6) of the Judgment, by which I was concerned about how the relevant regulations would generally be enforced in practice, I was perfectly entitled to find as a matter of fact that under the relevant regulations, the Sum may (as opposed to must) be confiscated.

36.  Therefore, I fail to see any reasonable prospects of success in Ground 6A, and refuse leave for this Ground.

37.  The real complaint, in my view, is that I simply should not have considered how the relevant regulations would generally be enforced in practice. This is Ground 6B, which I shall now consider.

B. Ground 6B

38.  For Ground 6B (which is a question of law of whether how a foreign law would generally be enforced in practice is a relevant consideration in determining foreign illegality), Mr Wong relies on the following sentence in §41 of DBS Bank (Hong Kong) Ltd v Pan Jing [2020] 4 HKC 395:-

“a determination or sanction by the relevant authorities cannot be a prerequisite for the doctrine of illegality to bar a claim or defence if otherwise available”.

39.  It is important to understand this sentence in context by quoting the whole §41:-

“The question is as to the effect of this illegality on the defence to the claim. The bank submits that illegality when raised as a defence to claim for unjust enrichment is concerned with acts which are contrary to public law and engage the public interest, and may extend to the infringement of rules attracting civil sanctions of a penal character… I accept this submission. It is unusual for breaches of financial regulations to attract civil rather than, or as well as, criminal penalties. I agree that the PRC law provisions relating to exchange transactions applicable in the present case may fall within this category. The defendant’s response is that no such administrative sanctions have actually been imposed, but this is irrelevant, because a determination or sanction by the relevant authorities cannot be a prerequisite for the doctrine of illegality to bar a claim or defence if otherwise available”

40.  In other words, the sentence relied upon by Mr Wong was a response to the defendant’s submissions that in that particular instance, no sanctions had been imposed. That sentence in the context was not saying that how a relevant regulation would generally be enforced in practice is irrelevant. As I said in §66(6) of the Judgment, if a law is never enforced in the foreign jurisdiction, it is legitimate to query whether it would really be contrary to comity. This is a matter of degree.

41.  All that said, this is a question of law on which the parties have been really able to refer me to one authority only, namely, DBS Bank (Hong Kong) Ltd v Pan Jing (although Mr Wong also lukewarmly referred to §125 of She Ching Yan, supra, which, in my view, is not any authority on this point at all). Further, I accept that on the general flexible approach were adopted as in Monat and Patel, if I should not consider how the relevant regulations were generally enforced in practice but should only consider the texts of the regulations, I might have come to a different view in §66 of the Judgment. In the circumstances, I agree that there are reasonable prospects of success, and in any event, it is in the interests of justice, for leave for Ground 6B, taking into account that it may be an opportunity to consider in Ground 1 whether a general flexible approach should be adopted as in Monat and Patel.

VIII. GROUND 7: THE JUDGE ERRED IN FINDING AGAINST D’S EXPERT ON THE CRUCIAL ISSUE ABOUT THE SUM BECOMING SPECIFIED / IDENTIFIED UPON CONFISCATION

42.  Ground 7 (consisting of paragraphs 59-69 of the draft Notice of Appeal) concerns a question of fact, challenging my refusal to accept the defendants’ expert evidence that the Sum would become “identified” upon confiscation and that the amount (whether it was the same money or just the same amount) could not be returned under article 157 (see §§53 and 57 of the Judgment). As in the Judgment, I shall here refer to this as the “Identification of Amount Point”. If I were to accept her evidence, I would be bound to find that under article 157, the return of the Sum would be impermissible, and thus the plaintiff’s unjust enrichment claim should not be permitted.

43.  Mr Wong’s submissions are, in essence:-

(1) The plaintiff’s expert evidence was generally not satisfactory (and here paragraph 62 of the draft Notice of Appeal refers to Ground 8 consisting of paragraphs 70-90 thereof).

(2) There is no reason for me to find that the plaintiff’s expert evidence is more in line with the texts of article 157.

(3) I was wrong in requiring “authorities such as legislation, interpretations, textbooks or decided cases” in support of the defendant’s Identification of Amount Point.

44.  It is trite that the Court is entitled to accept certain parts of a witness’ evidence but rejects the others of the same witness. Here, the plaintiff’s expert evidence that it is not necessary that the Sum to be returned under article 157 should be the same money but can be the same amount is entirely consistent with the texts of article 157 taking into account common ground between the two experts that money is “general property of equivalent value” (see §57 of the Judgment). It is only where the Identification of Amount Point over which the experts differed. Thus, I was perfectly entitled to prefer the plaintiff’s expert evidence as more in line with the texts of article 157.

45.  From this common ground as a starting point, the defendants’ expert added the Identification of Amount Point. Mr Wong submits that in §59 of the Judgment, I observed that the various decided cases referred to me by both parties carried little referential value and thus my requirement for authorities in support of the Identification of Amount Point was unwarranted. I disagree. The Identification of Amount Point, if true, would be a general legal concept in the PRC law, and is not a fact-sensitive point where cases may be of little referential value if the material facts of those cases differ. For such a general legal concept in the PRC law, I would expect that there would be some interpretations or textbooks, in the absence of such which it was perfectly legitimate for me to refuse to accept there being such a concept.

46.  In the premises, the 2^nd defendant has failed to explain why my fact-findings here are palpably wrong, and therefore, I refuse leave for Ground 7.

IX. GROUND 8: THE JUDGE ERRED IN FAILING TO PROPERLY ASSESS THE CREDIBILITY OF EACH PARTY’S EXPERT EVIDENCE AND IN FAILING TO REJECT THE ENTIRETY OF P’S EXPERT EVIDENCE DUE TO ITS EXTREMELY POOR QUALITY

47.  Ground 8 (consisting of paragraphs 70-90 of the draft Notice of Appeal) concerns how I assessed the credibility of the witnesses’ evidence.

48.  Mr Wong gave a few examples in support of his submissions that the plaintiff’s expert evidence was of extremely poor quality, while the defendants’ expert evidence was of better quality. He also submits that I failed to analyse certain parts of the plaintiff’s expert evidence and certain parts of the defendants’ expert evidence. He submits that upon proper analysis of their respective evidence, I should reject the plaintiff’s expert evidence in its entirety and accept the defendant’s.

49.  As mentioned above, it is trite that the Court is entitled to accepts some parts of a witness’ evidence and reject the others. I focused my judgement on those salient points of the expert evidence. While I did consider each and every point of the expert evidence, it is trite that it was not necessary for me to detail point by point, however peripheral, expressly in the Judgment. I do not see how I failed to properly assess the witnesses’ credibility as submitted or at all, and therefore I refuse leave for Ground 8.

50.  For completeness sake, there are a few paragraphs I need specifically to deal with under Ground 8.

51.  In paragraph 83 of the draft Notice of Appeal, Mr Wong submits that the plaintiff’s expert did not provide any meaningful answer or analysis to the applicability of Limb 1 of article 157 in the factual scenario that the Sum had been confiscated. I disagree. The plaintiff’s expert evidence was clear – it was the amount but not the same money that would have to be returned under Limb 1 of article 157, consistent with the defendants’ expert evidence that money is “general property of equivalent value” (see §57 of the Judgment). Accordingly, the plaintiff’s expert evidence was that it did not matter whether the Sum was confiscated or not, because it was the amount, but not the same money, that would have to be returned. That was a complete answer to Mr Wong’s query here.

52.  In paragraph 84 of the draft Notice of Appeal, Mr Wong submits that if the defendants would have to return the amount out of their own pocket, they would suffer loss, and this would appear inconsistent with his own evidence that a PRC Court would treat both parties to be equally at fault. Be that as it may, the common ground between the experts was that Limb 2 of article 157 (about compensation of loss according to the parties’ faults) would not apply (see §52(8) of the Judgment), which means that this out-of-pocket loss was not a loss withing Limb 2. Therefore, this “equally at fault” (which would only arise from the application for Limb 2) is simply irrelevant.

53.  In paragraph 92(1) of the draft Notice of Appeal, Mr Wong submits that I was not accurate in saying in §48(3) of the Judgment that the defendants’ expert evidence was that article 157 is applicable in the present circumstances. Mr Wong submits that more accurately, the evidence was that the primary position was that article 157 was not applicable at all because the PRC courts would not support a civil claim for return of monies or properties being used in a commission of a crime.

54.  I disagree. The defendants’ expert did say during the trial that article 157 would have been applicable but for the reasons recorded in §§52 and 53 of the Judgment, which should be read together with §48 of the Judgment. Of course, she took the view that her reasons were valid in the present case and thus she would say that article 157 would not be applicable in the present case. However, it is another matter to say that certain selected part of the evidence, without the context including §§52 and 53 of the Judgment, was not accurately recorded. In any event, if she did mean that her primary position was that article 157 did not apply at all, she did not provide any reason for her primary position, which would go contrary to the text of article 157, and thus I would have rejected her such primary position in any event.

X. GROUND 9: THE JUDGE ERRED IN FAILING TO FIND THAT THE JUDGMENT WOULD HAVE THE PRACTICAL EFFECT OF ENFORCING THE AGREEMENT WHICH WAS TAINTED BY FOREIGN ILLEGALITY

55.  Ground 9 (consisting of paragraphs 91-95 of the draft Notice of Appeal) concerns whether allowing the plaintiff’s claim would have the practical effect of enforcing the Agreement.

56.  In §64 of the Judgment, I concluded that because allowing the claim would not be an exchange but damages (or more accurately, restitution) only, it is not the same as enforcing the Agreement. I then concluded that it would not be the second scenario in the modified Ryder test set out in §46(2) of the Judgment.

57.  This Ground is incidental to Ground 1 in that it involves the question of how Ryder should be applied in the present case (if at all). In particular, whether the application Ryder would regard the claim as an effective enforcement of the Agreement under scenario 2. Accordingly, I grant leave for Ground 9.

XI. CONCLUSION

58.  In the premises, I make the following order:-

(1) Leave be granted to the plaintiff to appeal per Grounds 1, 2, 6B (as defined above) and 9.

(2) Leave be refused for Grounds 3, 4, 5, 6A (as defined above), 7 and 8.

(3) 40%[1] of the costs of the 2^nd defendant’s application for leave to appeal be in the appeal.

(4) The 2^nd defendant do pay 60% of the plaintiff’s costs of the 2^nd defendant’s application for leave to appeal (as summarily assessed below) forthwith.

(5) The plaintiff’s whole costs of the 2^nd defendant’s application for leave to appeal be summarily assessed at HK$100,000.