TREASURE CHAIN (HK) HOLDINGS LTD v. TREASURE HOUSE VENTURES LTD AND OTHERS

HCA 1789/2018 & HCA 1790/2018

[2021] HKCFI 316

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1789 OF 2018

________________________

________________________

AND

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1790 OF 2018

________________________

________________________

(HEARD TOGETHER)

________________________

________________________

D E C I S I O N

________________________

1.  The Plaintiffs apply for leave to appeal against the dismissal of the Order 14 applications in these actions. They were dismissed at the conclusion of the hearing on before me 8 September 2020.

2.  My reasons for decision were handed down on 24 September 2020 (“Reasons”).  I do not propose to repeat the relevant factual background to these actions which are set out in the Reasons. 

3.  On 22 September 2020, the Plaintiffs applied for leave to appeal.  The parties submitted agreed directions for the paper disposal of the applications.  I received the Plaintiffs’ submissions on 29 November 2020 and the Defendants’ submissions on 4 January 2021.

4.  At the outset, I must point out that these leave applications have been advanced by the Plaintiffs in an unsatisfactory manner.

5.  The summons for leave to appeal was originally supported by draft notices of appeal which simply alleged that the decisions were wrong because there were errors of law or fact.  There were no substantive grounds of appeal stated.  My reasons for decision were handed down shortly after the leave applications were filed.  As such, the filing of a “holding” notice of appeal is understandable.  However, the Plaintiffs did not seek to amend their draft notices of appeal to address the reasons given.

6.  On 29 November 2020, the Plaintiffs filed their submissions in support of the leave applications.  These submissions were not drafted with reference to any properly formulated grounds of appeal, and largely repeated the submissions made before me at the hearing below.  At §§50-52 of the Plaintiffs’ submissions, it was stated that leave was sought to amend their draft notices of appeal.  However, no draft notices of appeal were enclosed leaving it completely unclear what the actual grounds of appeal relied upon by the Plaintiffs were.

7.  On 11 December 2020, the solicitors for the Defendants pointed out that they had not been provided with a draft amended notice of appeal, and requested a copy for their consideration.  Surprisingly, on 16 December 2020, the solicitors for the Plaintiffs replied that, in hindsight, their clients did not intend to make any application for leave to amend.

8.  I am informed by Mr Bernard Mak in his written submissions that he was only provided with the Amended Draft Notices of Appeal on 30 December 2020 by counsel for the Plaintiffs.  This shortly before the deadline for the Defendants to file their submissions in opposition, and that the solicitors for the Plaintiffs did not even provide a copy of the Amended Draft Notices of Appeal to the solicitors for the Defendants.

9.  There is no explanation as to why the Amended Draft Notices of Appeal were provided so late to the Defendants, or why the Plaintiffs should be permitted to change their position from their stance contained in their solicitors’ letter dated 11 December 2020.   Nor is there any explanation as to why an amended draft was not provided on or before 29 November 2020 when counsel for the Plaintiffs indicated an intention to amend.  The Defendants have rightly, in my view, complained that the situation was unfair to them because they were essentially deprived of knowing the precise grounds of appeal relied upon in support of the application until shortly before they were due to file their submissions in opposition.  In my view, the unusual manner in which these applications have been taken forward should be strongly discouraged. 

10.  Fortunately, with the industry of Mr Mak, the Defendants have been able, in their written submissions, to address the grounds stated in the Amended Draft Notices of Appeal.  I will proceed to consider the merits of these grounds, although by doing so I should not be taken to approve of the Plaintiffs’ conduct in this matter.

11.  It is established that in order to obtain leave to appeal, the applicant must show that the intended appeal has a reasonable prospect of success: Harbour Front Ltd v Money Facts Ltd [2019] HKCA 916 at §5.  

12.  The Plaintiffs submit that there was a failure to consider the Undated Guarantee in HCA 1789/2018 and the personal guarantees in HCA 1798/2018.   I have specifically addressed the guarantees at §63 and §81 of the Reasons, and I am not satisfied that there is a reasonable prospect of asserting that my conclusions in that regard are wrong.  Further, I also agree with Mr Mak that even if the Plaintiffs were entitled to rely on the guarantees, there are still genuine weaknesses and/or triable issues in relation to both of the underlying actions.  These matters were explained at §§52-61 and §§69-76 of the Reasons, and the Plaintiffs have not satisfied me that it is reasonably arguable that this analysis is incorrect.

13.  In relation to the pleadings, in HCA 1789/2018, upon Mr Wong’s express confirmation at the hearing that his client was suing on the Supplemental Deed of Loan Agreement, I proceeded to evaluate the claim on that basis.  For the reasons I gave, obtaining summary judgment against Mr Chan on the basis of that agreement was hopeless since it not provide for any repayment obligation the part of Mr Chan. 

14.  The Plaintiffs argue that there was a failure to consider the cause of action of money had and received.  As stated in §62 of the Reasons, there was no cause of action for money had and received pleaded in the ASOC against Mr Chan in HCA 1789/2018.   The fact that the cause of action was mentioned in the Reply to the Defence of the 2^nd Defendant at §3(5)-(6) does not assist because a cause of action cannot be advanced for the first time in a reply.  Had the matter been pleaded properly, Mr Chan would have been entitled to raise defences to such a claim.  I also agree with Mr Mak that there was a deliberate choice not to plead money had and received against Mr Chan in the ASOC in HCA 1789/2018 because such a claim was made as against the 3^rd Defendant, but not against Mr Chan.  In my view, there is simply no merit in this point.

15.  The Plaintiffs next contend that there was a failure to give sufficient weight to the WhatsApp communications from Mr. Chan in November 2017 and the draft Chinese repayment agreement.  Although I accepted that these documents did tend to undermine Mr. Chan’s case, I did not agree that they provided a conclusive answer as to whether the Plaintiffs had a case, as pleaded, which merited summary judgment.  These documents can be examined with Mr Chan at trial, and they were expressly taken into account in my decision §§83-85 of the Reasons.  I am not persuaded that there are reasonable prospects of success in this regard. 

16.  Lastly, the Plaintiff refers to my observations concerning the lack of a notice of drawing by Mr Chan at §28 & §58 of the Reasons.  It is not suggested that these were factually wrong, and contrary to what appears to be suggested in §5 of the Draft Amended Notice of Appeal in HCA 1790/2018, I did not hold that the absence of a notice of drawing by Mr Chan affected the enforceability of the loan agreement.  At §58 of the Reasons, I referred to this as a fact which indicated that the parties did not proceed on the basis of what was recorded on the Undated Loan Agreement.  The Plaintiff has not addressed this point, or any of the other facts mentioned in §58.  I do not consider there is any merit in this point.

17.  For all the above reasons, I do not consider that the intended appeals have reasonable prospects of success.  I dismiss the leave applications.  Given the clear lack of merits in these applications, and the unsatisfactory manner in which they were advanced, I am satisfied that indemnity costs should be ordered.  I order that the Plaintiffs in these actions do pay the costs of the respective Defendants of the leave applications forthwith on an indemnity basis, to be taxed if not agreed.