KUAN TAO SHENG v. THE HONG KONG AND SHANGHAI BANKING CORPORATION LTD

FAMV No.10 of 1998

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 10 OF 1998 (CIVIL)

(ON APPLICATION FOR LEAVE TO APPEAL

FROM CACV No.101 OF 1997)

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D E T E R M I N A T I O N

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Mr Justice Bokhary PJ:

1. This is an application for leave to appeal to the Court of Final Appeal. It is made by the 1st defendant. He is one of three persons sued by the plaintiff bank as guarantors of the indebtedness of a company named Enstrong Ltd. in the sum of $166 million plus interest. The 2nd defendant is his son. As for the 3rd defendant, a company which has gone into voluntary liquidation, judgment has gone against it in default of acknowledgement of service. But that judgment has proved an empty one.

2. The writ was issued on 8 September 1990. On 30 August 1996 the father issued a summons for the dismissal of the action for want of prosecution. The son took out a similar summons on the 2nd of the following month.

3. Those two summonses were heard together by Jerome Chan J who dismissed them on 29 April 1997, and handed down his reasons on the 7th of the following month.

4. Both the father and the son appealed to the Court of Appeal, which heard their appeals on 25 and 26 November 1997, and handed down its judgment on 17 February 1998 dismissing the same.

5. While the son left it there, the father sought the Court of Appeal's leave to appeal to the Court of Final Appeal. On 17 June 1998 the Court of Appeal refused such leave. And the father now seeks such leave at the hands of this Committee.

6. The Court of Appeal's reasons may be summarised thus:

(1) They were unanimously of the view that, contrary to the judge's view, it was permissible to treat delay after the writ but before the expiration of the limitation period as inordinate even in the absence of any delay after such expiration.

(2) And they were unanimously of the view that, contrary to the judge's view, the delay was inordinate.

(3) But they were unanimously of the view that the judge was entitled to find, as he did, that the delay was excusable or at least that the defendants were not entitled to contend otherwise.

(4) On the basis of (3) above, they were unanimous in dismissing the appeal.

(5) But Mortimer VP (with whose reasons Keith J agreed) said that the father had established serious prejudice and that he would have allowed the father's appeal if the bank's delay

has been inexcusable. The point here is that the father suffered a stroke in 1995 leaving him in no fit state to give evidence. Godfrey JA declined to consider the question of prejudice.

7. The Court of Appeal's judgment being interlocutory, leave to appeal to the Court of Final Appeal is sought under s.22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, Cap. 484, under which such leave may be granted if "the question involved in the appeal is one which, by reason of its general or public importance, or otherwise, ought to be submitted to the Court for decision". The father seeks leave under the "or otherwise" limb of that formula.

8. In his Application for Leave to Appeal dated 24 June 1998, the father seeks leave to appeal to the Court of Final Appeal on the ground:

"That the question involved in the proposed appeal is one which is practically determinative of the Applicant's case and is one which there is no other way in which it could be put right other than by the Court of Final Appeal; that the judgment of the Court of Appeal was demonstrably wrong in that the Court of Appeal on the question of whether the Respondent's delay was inexcusable had failed to consider the case of the Applicant separately from that of his son the 2nd Defendant, and the Applicant would suffer a

grave injustice if the judgment of the Court of Appeal should stand."

9. The judge in concluding that the bank's delay was excusable said this:

"Taking an overall view of the various periods of alleged delay against a consideration of the conduct not only of the Plaintiff but of the Defendants as well, I was not satisfied that there had been inordinate and inexcusable delay..."

This was after a careful review of the period of 19 months between December 1994 and July 1996 during which the bank's solicitors acted to reduce costs and issues by writing to the father and the son's solicitors. They succeeded to the extent that the liability (if any) of the father and the son was reduced by over 15 percent. In such circumstances the Court of Appeal was clearly entitled to uphold the judge's conclusion that the bank's delay was excusable.

10. We would, however, add this. It is said on the father's behalf that he would, but for the condition in which his stroke has left him, have given evidence in support of defences of undue influence and misrepresentation. But we are unable to see any substance at all in those defences. For there is no averment in the father's defence that the person said to have exercised such undue influence or made such misrepresentation, the son, did so (if he did so) on behalf of the bank or even with its actual or constructive knowledge.

11. There is accordingly nothing in the pleaded circumstances of the present case which could reasonably be regarded as having put the bank on inquiry as to the possibility of undue influence exercised or misrepresentations made by the son. This case is therefore not like the ones in which a spouse or cohabitee has joined in creating a legal charge over a co-owned and co-occupied home to secure the indebtedness of the other spouse or cohabitee's indebtedness to a bank.

12. This application for leave to appeal to the Court of Final Appeal is dismissed.