CHAN SZE WING v. CONGRUENCE CHINESE MEDICINE & JING LUO HEALTH LTD AND ANOTHER

HCA 866/2012

[2021] HKCFI 3355

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 866 OF 2012

________________________

________________________

________________________

J U D G M E N T

________________________

A.  Introduction

1.  On 15 October 2020, I handed down my Judgment [2020] HKCFI 2596, after trial in this action.  The background factual circumstances can be seen in that Judgment.

2.  For this Ruling, I shall continue to adopt the definitions and abbreviations used in that Judgment.  Therefore, amongst other things, I shall continue to refer to the 1^st defendant as the “Company”, the 2^nd defendant as the “defendant”, and her younger sister as “TPC”.  (For the avoidance of doubt, I know that TPC has changed her name from Tsang Pui Chong to Tsang Hing Wai, but I shall continue to adopt the same definition for convenience.)

3.  By the written Judgment and §2 of the sealed Judgment and Order, I ordered, amongst other things, that the title deeds of the Property be delivered up to the Plaintiff’s solicitors.

4.  By summons dated 29 July 2021, the plaintiff applies to vary that paragraph so as to add the words “1^st Defendant and/or”, so that §2 should read (as amended):

The title deeds of the Property be delivered up by 1^st Defendant and/or the 2^nd Defendant to the Plaintiff’s solicitors forthwith for them to hold pending the correction of the Land Register necessitated by the annulment of the Assignment, and until satisfaction of the Judgment Debt in DCPI 2692/2009 together with all interest and costs owed to the Plaintiff, or until further order of the Court.

5.  Whilst the correction of the Land Register necessitated by the annulment of the Assignment has been completed, neither of the 1^st or 2^nd defendant, nor TPC, have paid anything in even any partial satisfaction of the Judgment debts, interest and costs in DCPI 2692/2009, this Action and related enforcement actions.

6.  Whilst the matter was originally fixed for oral hearing, I directed the matter to be dealt with on paper.

7.  An issue also arises as to TPC’s request and ability to represent the Company.

B.  Basis of Application

8.  The application is based on (1) the ‘slip rule’ under RHC Order 20 rule 11, and (2) the inherent jurisdiction of the Court.  Specific reference is made to §127 of the Judgment which stated:

In the circumstances, the plaintiff is entitled to the relief sought.  She is entitled to it against the Company and the defendant.  I make a declaration that the Assignment was voidable, and it should be set aside.  I order the title deeds to the Property to be delivered up by the defendant to the plaintiff’s solicitors for them to hold pending the correction of the Land Register necessitated by the annulment of the Assignment, and until satisfaction of the Judgment Debt together with all interest and costs owed to the plaintiff, or until further order of the Court.

9.  For the plaintiff, Mr Lam submits that the finding of a sham conveyance necessarily means that the defendant is the puppet of TPC, the sole director and shareholder of the Company.  The Court’s intention is clear that the title deeds should be delivered up, but neither the Company nor the defendant has delivered up those deeds as would facilitate the ultimate enforcement steps based upon an intended sale of the Property.  Therefore, the failure to have included specific reference to the Company (as 1^st Defendant)  in §2 of the sealed was the kind of slip at which the potential invocation of the slip rule is intended.  Alternatively, the inherent jurisdiction should be invoked to effect the necessary amendment.

10.  Mr Lam also makes the submission that, given that the defendant has left the picture, and the ‘real’ defendant TPC has emerged to continue to try to defend it, the continued uncooperative attitude adopted by her makes this application inevitable.

C.  TPC as representative of the Company

11.  Before dealing with the variation/amendment application itself, it is convenient to deal with the position of TPC who now seeks to represent the Company.

12.  TPC has complied with my direction that she should identify the reasons why she says I should permit her to represent the Company.

13.  However, TPC’s starting point is to assert that the Judgment was contrary to legal principles following a determination without a full trial of the case, disregarding the merits of the facts or the evidence.  There then follows her airing of grievances about the judgment in the PI Action, which was given as long ago as 2012.  TPC also makes various criticisms and allegations of misconduct against some of the plaintiff’s legal representatives.  TPC also says that she has submitted a “submission” of 5000 words to the Appeal Committee of the Court of Final Appeal on 16 June 2021 (apparently under FAMV 74/2021)  pointing out various errors in the findings of fact of the trial judge in the PI Action, and requesting an enquiry to be held with jurisdiction and Chinese medicine experts.

14.  None of those points are of any relevance to whether or not I should permit TPC to act as the representative for the Company for the purposes of the present summons.  Now is not the time for any attempted re-analysing of the case and to make any new decisions on legal liabilities for personal injury and financial payments, as TPC now suggests.

15.  The time has long expired for any appellate challenge to the Judgment.  Further it is now almost a decade since the underlying judgment in the PI Action, and many years after leave to appeal out of time from that judgment was refused by the Court of Appeal (and it appears to be from that decision that TPC now seeks leave from the CFA).

16.  Further, as is clear from the Judgment, I think it wholly unrealistic to think that TPC was not aware of this Action, and she must be taken to have chosen not to have taken part.  She neither gave instructions on behalf of the Company, nor acted as a witness for the defendant.  As I said at §§124-125 of the Judgment, that TPC was helping from the shadows, whilst avoiding the obligations of the Company as a litigant and failing to put forward the Company’s side of the story, was deeply unimpressive.  Further, the almost complete failure on the part of the defendant to have produced any witness or any documents (including TPC and TPC’s documents)  as would obviously have been expected so as to provide at least some support for the largely bare assertions that the defendant made had led me to draw significant adverse inferences against her.

17.  The only potentially relevant point made by TPC as to why she might be permitted to represent the Company is her reference to RHC Order 1B rule 2.  But her reliance on rule 2 is misplaced, as that relates to the circumstances where the Court proposes to make an order of its own motion (not the present circumstances).  TPC’s reference also to Order 14A, which relates to disposal of cases on points of law, is also obviously misplaced.

18.  In the plaintiff’s response to TPC’s attempt to represent the Company, Mr Lam refers to the history of litigation.  As he identifies, the Company has never been legally represented even from the commencement of the PI Action in 2009, nor was any application made in the District Court for TPC to represent the Company.  Nor did the Company ever file an acknowledgement of service or appear in this Action (notwithstanding, as I have already said, that TPC must have known of these proceedings, was acting in the shadows, and also when the defendant was represented by solicitors including those who had represented TPC in the PI Action).

19.  Mr Lam reminds me that a body corporate cannot be represented by one of its directors, unless leave for that is granted by the Registrar under RHC Order 5 rule 6.  (Reference can also be made to Order 9 rule 6 and Order 12 rule 1.)  Further, in Re China Northern Newenergy Investment Ltd (unreported, HCCW 120/2014, 8 September 2014), Harris J emphasised that the rules require shareholders and directors of the relevant company to demonstrate that they cannot either inject new capital or lend money to the company to cover its legal costs.

20.  This requires making an affirmation to disclose all of the director’s/shareholder’s assets, properties, savings and income, exhibiting all relevant financial documents such as bank statements for the last six months, so as to demonstrate inability to fund by way of capital injection or shareholder’s loan.

21.  As a matter of the rules, only the Registrar may grant an order under Order 5 rule 6, so I cannot grant any such order.  But, in any event, in my view there is clearly no material properly before the Court on which anyone would likely grant permission to TPC to represent the Company.  Indeed, from her own letter to the Court, it seems that TPC has twice applied to a Master for such an order, and has twice been refused on 17 August 2021 and 3 September 2021.  Under the rules, no appeal lies from such a refusal.

22.  Nothing in the lengthy reply to Mr Lam’s submissions filed in a further document from TPC adds to the analysis.  Indeed, most of it is simply further or repeated criticism of the judgment in the PI Action.

23.  In the circumstances, the Company remains unrepresented in these proceedings.

D.  Disposition

24.  I agree with Mr Lam that the intended consequences of my Judgment were that the title deeds to the Property should be delivered up to the plaintiff’s solicitors for them to hold pending ultimate satisfaction of all outstanding matters owed to the plaintiff as a result of the judgment in the PI Action and the Judgment in this action (and any relevant subsequent costs orders made in favour of the plaintiff in relation to enforcement steps).

25.  Of course, originally the understanding was that the title deeds would be with the defendant, as the stated owner of the Property.  But my Judgment held the Assignment to her to have been a sham, necessitating the correction on the Land Register by its annulment.  Clearly, if the title deeds had not been delivered up to the plaintiff’s solicitors by the date of the correction to the Land Register, by which the Company would have ‘resumed’ ownership of the Property, I intended that the title deeds should nevertheless be delivered up by whoever might then hold them.  If the title deeds are now held by the Company, the clear effect of my Judgment is that they should be delivered up to the plaintiff’s solicitors by the Company.

26.  I have no hesitation in making the requested amendment to the sealed Judgment, under the slip rule.  Insofar as may be necessary, I would also make the amendment under the inherent jurisdiction to give effect to the plain intention of the Judgment.

27.  In circumstances where I do not think there can have been any genuine doubt as to the intention in my Judgment, I also order the costs of this application to be paid to the plaintiff by the Company, to be taxed if not agreed.