LI NANFENG v. WONG CHUN HONG

CAMP 82/2018

[2018] HKCA 471

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 82 OF 2018

(ON AN INTENDED APPEAL FROM HCA NO 3447 OF 2016)

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J U D G M E N T

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Hon Kwan JA (giving the judgment of the court):

1.  On 11 December 2017, Deputy High Court Judge Kent Yee dismissed the summons of the defendant, Wong Chun Hong (“Wong”), for interpleader relief, having concluded that Wong is not entitled to invoke the jurisdiction under Order 17 of the Rules of the High Court (“the Decision”).

2.  Wong applied for leave to appeal to the Court of Appeal.  His application was refused by the judge on 31 May 2018 (“the Leave Decision”).

3.  By a summons issued on 7 June 2018, he makes a renewed leave application to the Court of Appeal.

4.  Having considered the papers, we exercise our power under Order 59 rule 2A(5) to determine this application without an oral hearing.

5.  The background matters to the interpleader summons are set out in the Decision at §§1 to 10.  For present purpose, it suffices to mention the following.

6.  The case of the plaintiff, Li Nanfeng (“Li”), is that he was the beneficial owner of 4.1% of the shareholding in a PRC company SZITIC Property and his indirect ownership of this shareholding (involving the interposing of other entities) was held by his two nominees named Chen and Yu.  Li averred it was agreed that Wong would receive for Li the sale proceeds of his indirect interest in the 4.1% shareholding and his indirect interest in a former subsidiary of SZITIC Property, Shanghai Feng Dan, and pay Li the proceeds with interest upon the happening of certain events, which had materialized.  Li brought this action against Wong alleging breach of contract in failing or refusing to pay him the sale proceeds and interest.

7.  Wong’s position is that he is prepared to return the proceeds claimed to either Li or Chen/Yu, but he wants to ensure that if he pays Li, Chen and Yu would not claim the same sum against him.  Hence, he issued the interpleader summons.

8.  There is no dispute on the relevant legal principles concerning the prerequisites for interpleader relief.  One of them is that there must be a real foundation for the applicant’s expectation to be sued by two or more rival claimants and there can be no real foundation for any such expectation unless a prima facie case exists (Chan King Sheen v K C Tsang & Co & Ors [2002] 3 HKC 209 at §§25 to 26).

9.  The judge analyzed the evidence before him and concluded it is plain that Wong does not have a reasonable expectation of being sued in respect of the amount claimed by Li or the 4.1% shareholding by either Chen or Yu.

10.  Wong advanced six grounds of appeal in the present application.  They are the same six grounds considered and rejected by the judge.

11.  The first four grounds seek to demonstrate the judge was in error in finding that Wong does not have a reasonable expectation of being sued by Chen or Yu.  It was contended that as Chen and Yu are the legal owners of the 4.1% shareholding via another entity, they are legally entitled to claim against Wong for the unpaid sale proceeds, and that would satisfy the test of a prima facie case, no matter how unlikely it is that Chen and Yu would sue.

12.  The judge rightly rejected this contention in §15 of the Leave Decision.  We agree with him that in determining whether there is real foundation for the applicant’s expectation to be sued by rival claimants, it is inappropriate to take the simplistic approach advocated by Wong.  Rather, the court should take into account all the circumstances placed before it.

13.  Except for one error relating to the two bought and sold notes dated 4 January 2008 (mentioned in §5 of the Decision as part of the background, and has no impact whatsoever on the proper analysis of the evidence), we are unable to discern any error in the judge’s evaluation of the evidence.  There is no basis to interfere with his assessment and the conclusion arrived at.

14.  The contention that the judge was mistaken in finding that “Wong accepts in the 2015 Defence that he had to pay Li the Purchase Price and he had indeed made partial payment to Madam Li” (§30 of the Decision) is not borne out on a proper reading of §§40, 41 and 48 to 50 of that pleading.  Further, Wong had re‑confirmed in §16 of his first affirmation that all the facts pleaded in the 2015 Defence are true.

15.  The remaining grounds, grounds 5 and 6, are equally without substance.  The respective positions taken by the leading counsel for Wong and Li are as set out in §§11 and 12 of the Decision.  The judge had noted their respective positions as to adjournment and payment of the amount claimed forthwith, and decided in §13 he should first determine if Wong has the right to interplead.  That is a course the judge was fully entitled to take, and upon being satisfied that Wong is not entitled to interplead, to dismiss his summons.  We do not think any mileage could be made out of the draft consent order placed before the court.

16.  The proposed appeal is hopeless.  We refuse to give leave to appeal.  We make a further order pursuant to Order 59 rule 2A(8) that no party may under rule 2A(7) request the determination to be considered at an oral hearing inter partes, as this application is wholly without merit.

17.  There is no reason why costs should not follow the event.  We make an order nisi Wong is to pay Li’s costs of this application.  Having considered the statement of costs of Li for summary assessment, we assess reasonable costs to be paid in the sum of $60,350.

18.  The costs order nisi and gross sum assessment will be made absolute if no application for variation is made by any party within 14 days of the handing down of this judgment.