SUN FOCUS INVESTMENT LTD v. TANG SHING BOR AND ANOTHER

HCMP 1460/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 1460 OF 2013

(On an intended Appeal from HCA No. 538 of 2007)

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BETWEEN

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JUDGMENT

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Hon Lam JA (giving the Judgment of the Court):

1.  On 22 January 2013, Anthony Chan J [“the Judge”] held that the new cause of action based on what is pleaded as the Co-operation Agreement claim in the fresh statement of claim filed on 20 September 2010 is permissible under Order 20 Rule 5(5) as they arise out of substantially the same facts as a cause of action in respect of which relief has already claimed in HCA 538 of 2007. The Defendants sought leave to appeal against that decision. Leave was refused by the Judge on 3 June 2013. They now apply to this court for leave.

2.  Mr Cheuk accepted that the Defendants need to show that the proposed appeal has a reasonable prospect of success.

3.  Having read the judgment of the Judge, the submissions of the parties and having compared carefully the pleaded case of the Plaintiff in the Amended Statement of Claim filed on 18 January 2008 and the pleaded case in the fresh Statement of Claim of 20 September 2010, we come to the firm conclusion that the Judge was plainly correct.

4.  Despite the reformulation of the Plaintiff’s cause of action from a claim based on a partnership agreement to one based on co-operation agreement, it is crystal clear that the substance of the allegations against the Defendants is in respect of the alleged misleading picture set out in the Haijia Report and the 2^nd Defendant’s Accounting Report.  And it is equally plain that the main complaints, in both statements of claim, are in respect of the Macho Loan and the management fee paid to Master Kingdom.

5.  We do not accept Mr Cheuk’s submission that these two items were just background investigation under the Amended Statement of Claim. We agree with the Judge’s conclusion that even under that Amended Statement of Claim, the court would have to investigate those transactions at the trial.

6.  Granted that the way the allegations were put were different: in the Amended Statement of Claim, the Plaintiff alleged that the Joint Venture Company had not advanced the Macho Loan (para 16(c)) and that the management fee had not been paid (para 25(g)); in the fresh Statement of Claim, the Plaintiff alleged that the management fee exceeded the 1% of the construction expenses as agreed, paras 8(f) and 25(c) and that the Defendants wrongly passed a board resolution to abandon the Macho Loan, para 26(a).  In the context of the pleadings and facts of the present case, we are of the view that these differences only introduced minor differences in the investigation.

7.  We do not think it is reasonably arguable that the Judge had not applied the correct test which he had cited extensively from Moulin Global Eyecare Holdings (in liquidation) v Olivia Lee Sin Mei, CACV 155 & 161 of 2012, see para 17 of the judgment of the Judge.

8.  The proposed appeal has no prospect of success.  We therefore refuse to grant leave to appeal.

9.  Further, we are of the view that the application for leave is totally without merit.  We order that no party may request the determination to be reconsidered at an oral hearing inter partes.

10.  We also order the Defendants to pay the costs of the Plaintiff in respect of this leave application.  We make an order nisi fixing such costs at $30,000.  Any party who wishes to seek to vary such order nisi should lodge written submissions within 7 days, failing which such order shall become absolute. 

11.  Lastly, now that the issues relating to the pleadings have been settled, the parties should take prompt action to finalize the preparation of the case for trial.  In our view, the trial of this action has been put off for too long.  The parties and those advising them should be mindful of their duties under Order 1A Rule 3.  They should not lose sight that one of the underlying objectives of the Rules is, as stated in Order 1A Rule 1(b), to ensure that a case is dealt with as expeditiously as is reasonably practicable.