BEIJING SONGXIANGHU ARCHITECTURAL DECORATION ENGINEERING CO., LTD v. KITTY KAM also known as WANG YUZHI

HCA 1289/2022

[2024] HKCFI 3614

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1289 OF 2022

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DECISION

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1.  For determination on papers is the Defendant’s summons dated 10 October 2024 applying for leave to appeal against the unless order I made on 27 September 2024, by which I ordered that unless on or before 4:00 p.m. on 25 October 2024 the Defendant pays into Court the sum of HK$170,962,682 in compliance with paragraph 2 of my Order dated 9 August 2024, the Defendant’s Amended Defence in relation to the sum of HK$220,548,682 (Sum A)  be struck out and judgment giving a number of reliefs in respect of Sum A be entered against her (“the Unless Order”).

2.  The Reasons for Decision granting the Unless Order was handed down on 1 November 2024 [2024] HKCFI 3068 (“the Reasons”).  For consistency, I will continue to adopt the terms and abbreviations used in the Reasons.

3.  Upon failure by Kam to comply with the Unless Order, part judgement as aforesaid has been entered against Kam.

4.  Kam in her written submissions stated that her primary position was that her appeal against the Unless Order was as of right and no leave was required.  It was also stated that an appeal was already lodged on 22 November 2024 under CACV 495/2024.  P by a short paragraph in its written submissions submitted that leave was required and cited a number of authorities.  As I am refusing leave substantively as set out below, it is not necessary for me to delve into it any further.

5.  Annexed to Kam’s summons is a draft Notice of Appeal.  In it, Kam raised 3 grounds of appeal.

6.  Of note is that none of the grounds raised seeks to dispute

(a)  my assessment and finding that Kam’s breach of the Repatriation Order was inexcusable, intentional and contumelious, and that her litigation conducts abusive and evident of gamesmanship, the facts and reasons for which were extensively set out in §§22 – 32 of the Reasons;

(b)  particularly, my assessment and view that the form and content of Kam’s Draft 11^th was appalling (§26 of the Reasons)  and that what Kam said in §4 of Kam’s Draft 11^th was disingenuous and hardly believable, and clearly not a full or even meaningful disclosure (§29 of the Reasons); and

(c)  the principles and approach concerning the granting of unless orders as set out in §§39 – 44 of the Reasons.

7.  It is trite that leave will not be granted unless the intended appeal has a reasonable prospect of success or there is some other reason in the interest of justice for the appeal to be heard.

8.  Grounds 1 and 2 can be conveniently dealt with together.  In these 2 Grounds, it was complained that I erred in “failing to consider” the matters listed below.  These matters indeed have been considered by me but I either rejected them altogether or did not consider them of such relevance or weight as would sufficiently sway me to exercise my discretion in refusing to grant the Unless Order.  I will not repeat what I said in the Reasons but would give the reference in respect of each matter.

(a)  That there was no utility in granting the Unless Order (and consequentially, the Unless Order was to punish Kam).  Considered in §45 and §50(a)  of the Reasons.

(b)  That there are “other remedies available to the Plaintiff”, including

i.  bringing committal proceedings against Kam.  Considered in §50(a)  of the Reasons;

ii.  instituting proceedings in Singapore against Kam or against third parties for discovery.  Considered in §49 of the Reasons; and

iii.  enforcing any future judgment against the PRC properties disclosed by Kam.  Considered in §49 of the Reasons.

9.  Ground 3 complains that I erred by failing to consider or give proper weight to the following : (a)  the sanction is disproportionate when the default only related to the repatriation of HK$170,962,682, (b)  the default would not prevent P from having a fair trial, (c)  P’s case involved serious allegations against Kam including fraud, dishonesty etc, (d)  the amount P claims is substantial, and (e)  “the Plaintiff’s position is protected” despite the default in compliance of the Repatriate Order.

10.  I have addressed the question of proportionality in §§44-47 and 51 of the Reasons.  I do not think it is the law that proportionality in this context is to be measured by merely comparing dollar to dollar.  In the overall circumstances of the case, especially Kam’s inexcusable, intentional and contumelious breach and her abusive litigation conducts and the prejudice P would likely suffer due to the failure to comply with the Repatriation Order, I was of the firm view that the sanction imposed was proportionate and just.

11.  A premise unargued but assumed under Kam’s present grounds of appeal and contentions is that the use of unless order with sanction is confined only to ensuring there would be a fair trial procedurally, and the prejudice that P was complaining (alluded to in §45 of the Reasons)  is completely irrelevant or is to be completely ignored.  That premise in my view is not the law.  Rather, I accept the submissions by Ms Ho, citing ORB v Ruhan [2016] EWHC 850 at §178 per Popplewell J that “The interest of a party in seeking an effective and realistic outcome to his litigation, if he succeeds, may be as important in the balance of things” and JSC BTA Bank v Ablyazov & Others [2010] EWCH 2352 at §§41 and 42 per Clark J that “I do not accept that the question is solely whether non-compliance will render further conduct of the proceedings unsatisfactory … the object of the present case is to compensate the bank … by securing a judgment against the wrong-doers which can effectively be enforced so as to make a real recovery.”, that the use of an unless order with sanction is not so narrowly restricted to merely ensuring that there would be a fair trial procedurally, but rather, its use is to ensure and attain the overall justice, including as an important and equally material part of it, that whether the party aggrieved would have an effective and realistic outcome and real recovery.  This Court in §§45 and 50(a)  have alluded to P’s submissions thereon and accepted them as a weighty factor.

12.  Factors (c), (d)  and (e)  of Ground 3 could be factors (among others)  to be considered, which this Court did.  Concerning factors (c)  and (d), I do not agree that they should be so weighty such that a defendant being sued for a very substantial sum on a cause of action involving fraud and dishonest would effectively be treated leniently regarding, if not completely shielded from, the sanction of an unless order.  In such situation, as in the present case, there is much to be said that a plaintiff who has been defrauded of a substantial sum should be afforded the measure to ensure compliance of an unless order by backing it with effective sanction. Conversely, regarding factor (e)  and as I said in §49 of the Reasons, a plaintiff who has “other resorts” should not be disadvantaged in obtaining an unless order backed by sanction in enforcing compliance of an order.

13.  I am of the clear view that in the circumstances of this case, factors (b)  to (e)  were rightly given little or no weight.

14.  In all, there is no reasonable prospect of success for Kam’s intended appeal nor is there any reason in the interest of justice that the intended appeal should be heard.  I thus refuse leave to appeal.

15.  Ms Ho submitted that this application for leave is hopeless and should be visited with disapproval by way of taxation of costs on indemnity basis.  Though I come to a view that this application is of little merits, I do not want to express any disapproval purely on that basis, as the Unless Order with the present sanction does carry serious consequences and a degree of latitude should be afforded to Kam for her to ventilate her stance.

16.  I would order on nisi basis that the costs of this application be to P, to be made absolute in 14 days.  Within 7 days thereafter, and unless there is an application to vary, Kam do lodge and serve her List of Objections to P’s Statement of Costs already lodged and served, and the costs will be summarily assessed on papers.

17.  I thank Ms Ho and Mr Poon and solicitors for Kam for their assistance.