WU KEXUAN v. JIANG JINZHI

CAMP 279/2023, [2024] HKCA 215

On Appeal From [2023] HKCFI 166

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 279 OF 2023

(ON AN INTENDED APPEAL FROM HCPI NO. 127 OF 2020)

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DECISION

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Hon Cheung JA (giving the Decision of the Court) :

1.  This is the defendant’s renewed application for leave to appeal against the decision of Deputy High Court Judge Simon Leung (‘the Judge’) dated 18 January 2023 (the ‘Decision’) dismissing his application for a stay of the action pursuant to section 20 of the Arbitration Ordinance (‘the Ordinance’), Cap. 609 and under the Court’s inherent jurisdiction.

2.  The Judge had already refused the defendant’s application for leave to appeal on 28 July 2023 (the ‘Leave Decision’).

3.  Having considered the papers and the submissions, we think that it is appropriate for us to exercise our power under Order 59, rule 2A(5)(a) to determine this application without an oral hearing.

I.  Background

4.  The relevant facts may be summarised as follows.

5.  The parties came to know each other in 2016 and later became romantic partners. Their relationship turned sour in around March 2017, and it broke down completely by May 2017, when the plaintiff represented to the defendant that she was pregnant with his baby.

6.  The plaintiff commenced this action on 29 April 2020. Her claim is based on the alleged physical and psychiatric injuries said to be inflicted on her by the defendant between May and August 2017. The writ was served on 31 December 2020. The defendant acknowledged service and indicated his intention to contest this action on 4 January 2021.

7.  On 15 March 2021, Master Roy Yu made a unless order in respect of the filing and service of the plaintiff’s statement of claim, statement of damages and medical reports. Later, the plaintiff failed to file and serve her medical reports in time. Consequently, the defendant obtained judgment against the plaintiff (the ‘Judgment’) and the action was dismissed on 7 April 2021.

8.  By summons dated 30 April 2021, the plaintiff applied to seek relief from sanction and to set aside the Judgment which was entered against her (the ‘Relief Application’). The defendant filed his evidence to oppose the Relief Application. After hearing substantive arguments, Master Kot granted relief and set aside the Judgment on 29 October 2021.

9.  Dissatisfied with the result of the Relief Application, the defendant filed his notice of appeal against Master Kot’s order on 12 November 2021. However, the defendant later sought to abandon his appeal, and leave to do so was granted by the Judge on 24 January 2022.

10.  Shortly thereafter, by summons dated 8 February 2022, the defendant applied to stay this action. The defendant also commenced arbitration by filing a notice of arbitration at the Hong Kong International Arbitration Centre on the same day (the ‘Arbitration’).

11.  The application was the first time since the commencement of the action that the defendant sought a stay on the basis of an arbitration agreement in the written separation agreement between the parties dated 30 May 2017 (the ‘Separation Agreement’).

12.  The defendant’s primary contention in the Arbitration is that the Separation Agreement has been rescinded. Alternatively, he claims that the plaintiff has breached the Separation Agreement by, inter alia, commencing this action and falsely alleging that he had committed various acts of harassment and assault against her.

13.  The Judge found that the defendant had submitted to the jurisdiction of the Hong Kong court, meaning that he was not entitled to a mandatory stay under section 20 of the Ordinance. The Judge also refused to stay the action by way of discretion.

14.  By the time the defendant renewed his application for leave to appeal before this Court, the defendant made clear that he only seeks leave to appeal against the Judge’s refusal to grant the discretionary stay and that he would not challenge the Judge’s decision regarding the mandatory stay.

15.  Insofar as the Arbitration is concerned, as things stand, the parties have filed their pleadings and the defendant has filed his Redfern request for documents.

16.  Subsequent to the lodging of the present application and written submissions by the parties the defendant’s solicitors by a letter dated 8 February 2024 sought to ‘update’ the Court on the Judge’s decision of 7 February 2024 which refused the defendant’s application for an interim stay pending the decision of this Court on the present application and the Tribunal’s decision of 4 December 2023 which refused the plaintiff’s application to stay the Arbitration.

II.  Legal principles

17.  Under section 14AA(4) of the High Court Ordinance, Cap. 4, leave shall not be granted unless the intended appeal has a reasonable prospect of success, or there is some other reason in the interests of justice why the appeal should be heard.

18.  To meet the threshold of reasonable prospect of success, it must be shown that the prospect of succeeding is more than fanciful, without having to be probable. In other words, the applicant is required to show more than just an arguable case, although he does not have to demonstrate that the appeal will probably succeed.

19.  The defendant seeks to challenge the Judge’s exercise of discretion. It is well established that generally an appellate court will not interfere with a judge’s exercise of discretion unless the judge has misunderstood the law or the evidence or the exercise of his discretion was plainly wrong such that it was outside the generous ambit within which a reasonable disagreement is possible.

20.  In relation to case management decisions, an applicant who seeks to appeal faces a very high hurdle. He must show that the Judge has gone clearly wrong and made orders which will clearly involve an injustice or an inability for the trial court to carry out its task, or had erred in principle or that the order was irrational having regard to the issues that had to be resolved: Fortune Pharmacal Co., Ltd v. Falcon Insurance Company (Hong Kong) Ltd & Anor [2023] HKCA 66 at [19].

III.  Our view

21.  The defendant’s draft notice of appeal contains five grounds of appeal. Only the last ground relates to the discretionary stay and is the only ground which is relevant for present purposes. The crux of the defendant’s complaint is that the Judge has overlooked or failed to address the risk of inconsistent findings and wastage of costs arising from two parallel sets of proceedings in refusing to grant a discretionary stay.

22.  We are not persuaded by this submission.

23.  The Judge was plainly aware of the defendant’s argument that there may be a risk of inconsistent findings and wastage of costs arising from parallel proceedings. These arguments and the defendant’s position that the plaintiff’s breach of the Separation Agreement through the commencement of this action should be resolved at the same time in the Arbitration were stated in [79] of the Decision. These are clearly relevant considerations for the exercise of discretion. However, apart from these considerations, the Judge had also considered other relevant factors, such as the nature of the two proceedings, the extent of the defendant’s participation in this action and the procedural history of these two proceedings : see the observation of Lord Goff at 108B-D in de Dampierre v. de Dampierre [1988] AC 92. The Judge was entitled to take the view that, notwithstanding the considerations urged upon him by the defendant, his discretion ought not be exercised in favour of a stay.

24.  The Judge first identified in [58] of his decision the nature of the plaintiff’s claim in this action, namely, she is pursuing a tortious claim against the defendant in that his acts that allegedly happened subsequent to the Separation Agreement (which include intimidation, harassment and physical assault) had caused her personal injuries which, if proved, would entitle her to damages or other relief under common law. The Judge held that this is not a matter that the parties would have contemplated under the terms of the Separation Agreement.

25.  The Judge also considered the defendant’s argument that his claim in the Arbitration should be viewed as his counterclaim in the present action and it is relevant and ought to be resolved at the same time by the same arbiter. The Judge held :

‘ 75. Perhaps save as a background fact, the Separation Agreement or its terms, on which Jiang [i.e. the defendant] formulates his contractual claim, has nothing to do with the formulation and proof of Wu’s [i.e. the plaintiff] claim of her claim for personal injuries resulting from the alleged specific tortious acts of Jiang against her subsequent to the agreement.

76. Again, putting aside his primary contention that the Separation Agreement has already been rescinded, Jiang’s potential reliance on its terms in his possible defence in respect of causation and quantum of Wu’s claim, as discussed above, will not take the dispute out of the application of the principles governing a claim in tort for personal injuries. Substantiation of Wu’s claim in tort in the present action has nothing to do with the Separation Agreement and its terms or the dispute in respect of them raised by Jiang in his claim in the arbitration. As to the alleged breach of the confidentiality provisions under the Separation Agreement, which Jiang considers to have been rescinded, the above discussion refers.’

26.  The Judge had held in his Decision :

‘ 80... The undeniable fact is that Jiang positively participated in the proceedings in the present action until he had the chance but failed to shut them down. Only then did he seek to pull Wu out of the action by seeking reliance on the agreement to arbitrate and initiating arbitration.’

27.  Contrary to the submission of the defendant, we are of the view that these are relevant matters that the Judge was clearly entitled to consider on his refusal to grant stay based on discretion. It was open to the Judge to give limited weight to the consideration of parallel proceedings and the concomitant risk of inconsistent findings and increased costs in the exercise of his discretion.

28.  We do not regard it is reasonably arguable that the Judge was plainly wrong in the exercise of his discretion or his case management decision which would require us to intervene.

29.  In respect of the letter dated 8 February 2024 from the defendant’s solicitors, the plaintiff’s solicitor objected to the production of the new documents without leave of the Court. Generally speaking, we agree that leave should be sought before new matters are laid before the Court. However, in this case, the Judge’s decision dated 7 February 2024 touches on the procedural aspect of this case that this Court should be apprised of and we see no objection for the defendant to provide the Court with the decision. The decision at [15] had referred to the view of the Tribunal on effective case management to avoid inconsistent finding of facts between the two proceedings. It would be artificial for us to ignore the Tribunal’s decision simply on the ground that leave for its production had not been obtained. In any event, we are of the view that the reasons given by the Judge in his Decision are sufficient to dispose of the present application without the need to rely on the new documents.

IV.  Conclusion

30.  For the above reasons, we refuse to give leave to appeal and dismiss the defendant’s summons dated 11 August 2023.

31.  As the present application is entirely without merit, we make a further order under Order 59, rule 2A(8) that no party may request the application be reconsidered at an oral hearing inter partes.

V.  Costs

32.  Costs of the application should follow the event. We order that the defendant do pay the plaintiff’s costs of this application, to be summarily assessed. We have considered the statement of costs of the plaintiff and consider that the amount claimed of $488,325 (which includes $325,000 for two counsel) is on the high side having regard to the nature of the application, the fact that the application for leave to appeal was solely on the discretionary ground which was also advanced before the Judge and that the plaintiff is represented by the same team of lawyers throughout. Taking a broad‑brush approach, we summary assess the plaintiff’s costs at HK$260,000 which includes fee of $170,000 for two counsel.

33.  The costs order and summary assessment are in the nature of orders nisi. If there is no application for variation within 14 days of the handing down of this judgment, the orders will be made absolute.