RE WIEMER, MARK

CACV 27/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 27 OF 2013

(ON APPEAL FROM HCB NO. 3533 OF 2012)

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J U D G M E N T

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Hon Yuen JA:

1.  This is an appeal from an order made by Barma JA on 12 September 2013 that the appellant Mark Wiemer pay security for costs in the sum of $70,000 for his intended appeal from a bankruptcy order made by To, J on 7 January 2013.

Principles

2.  The order was made by the learned judge in the exercise of his discretion.  It is well-established that an appellate court would not normally disturb an order made in the exercise of a judge’s discretion unless it is shown that the judge had applied the wrong principles of law or was under a misapprehension of essential facts, or had taken irrelevant matters into account or had failed to take relevant matters into account, or failing all these, that the decision was “plainly wrong”.

Mr Wiemer’s case

3.  Before the judge, Mr Wiemer had sought to resist security for costs on the basis that although he was impecunious, he had such a strong case on the merits that security should not be ordered.  The judge held that on “a preliminary assessment of the merits of his appeal and the prospects of its success, I consider the appeal has, at best, arguable prospects of success but no higher” (para. 22).  Mr Wiemer is now appealing on the basis that the judge had underestimated his chances of success.  I shall consider this below.                   

Facts

4.  In 2008 the Hang Seng Bank (“the Bank”) had obtained judgment against Mr Wiemer and his company in a sum of about $13m.  The Bank had a mortgage on a property belonging to the company, and from the middle of 2008 until August 2009, it was put up for sale at 7 auctions without success.

5.  On 26 August 2009 an offer was made by China Travel Service (HK) Ltd (“CTS”) to buy the property at $9m.  A provisional sale and purchase agreement was signed by CTS and a cheque for $450,000 was tendered as deposit.  It would appear from the documents before this court that the provisional sale and purchase agreement was signed by CTS and its agent only, not by the Bank.  Nor was receipt of the deposit tendered acknowledged by the Bank.

6.  On 7 September 2009, there was an internal memorandum of the Bank entitled “Submission of Offer for Approval” (emphasis added).  It stated as follows:

“Requested by Century 21 that sub-agency fee 1% since they managed to negotiate with the purchase to improve the subject offer from HK$9M to 10M”. (Emphasis added).

Discussion

7.  Mr Wiemer has argued that the Bank had acted “carelessly” in selling the property which he considers to have been worth more than the price at which it was sold ($10m).  In his Notice of Appeal, he says: 

“the fact that the Plaintiff, the Hang Seng Bank, had signed a Sale and Purchase Agreement with the buyer and then a short time later the buyer agreed to pay a higher price for the same property, even though a S&P Agreement had already been signed is unbelievable and unheard”. (Emphasis added).

8.  In his skeleton submissions to this court dated 14 November 2013, he says:

“There is still the unanswered question as to why Hang Seng Bank had signed a Sales & Purchase Agreement for Sale of the Property at a price (lower than that of the final sales price).  Yet as though a “Miracle” occurred they were able to increase the sales price and sign a new Sales & Purchase Agreement?  I do not believe I have ever heard of this Occurrence”.  (Emphasis added).

9.  It is clear from the above that Mr Wiemer was under the impression that the Bank had already signed an agreement to sell the property at $9m before it received a better offer (which it then accepted) to sell it at $10m.  He considers that it evidenced some “monkey business” going on.

10.  However the documents before us show that the provisional sale and purchase agreement was signed only by CTS, not the Bank.  Nor did the Bank sign acknowledgment of receipt of the deposit. The documents therefore do not support the basis of Mr Wiemer’s argument. 

11.  As the Bank had not signed the provisional sale and purchase agreement, nor acknowledged receipt of the deposit of $450,000, it was not bound to sell the property to CTS at $9m.  The CTS offer was open for the Bank’s acceptance or counter-offer to sell it at a higher price.  The latter is consistent with the internal memorandum that referred to CTS’ “offer” and the agent’s successful bid to improve the “offer” to $10m.  Accordingly the contemporaneous documents do not support Mr Wiemer’s suggestion that there was some “monkey business” evidenced by the increase of the sale price for the property.

12.  Mr Wiemer also argued that in any event, it was suspicious that the Bank was unable to sell the property for a year from mid-2008 to mid-2009, and yet was suddenly able to obtain an offer, and within weeks, an improved one as well.  This suspicion is a matter of speculation only.  Criminal offences committed by certain individual officers of the Bank in the decade before the events in this case and who have not been shown to have participated in the sale of the property in question do not provide any support for suggesting that there was “monkey business” in the present case.   

13.  As far as valuation is concerned, the differences in valuation from different valuers have already been thoroughly discussed in Barma J’s judgment dated 21 September 2011 dismissing Mr Wiemer’s application to set aside the statutory demand.  In any event the issue is not solely whether according to some valuers, the property may have been worth more at the time of sale.  What Mr Wiemer had to show was that the Bank had failed to take reasonable steps to obtain the best price reasonably obtainable at the time of sale (i.e. September 2009).  In this respect, in light of the Bank’s evidence as to the unsuccessful auctions and its reliance on valuation advice before accepting the $10m offer, and given the lack of concrete evidence to support Mr Wiemer’s case, I agree with Barma JA’s assessment that Mr Wiemer’s chances of succeeding on appeal are not that high that he can be exempted from paying security for costs. 

Order

14.  I would dismiss Mr Wiemer’s appeal from Barma JA’s order for security for costs.  Mr Wiemer has not sought an extension of time to comply with the order.  Therefore his appeal from the bankruptcy order stands dismissed.

15.  There is no good reason to deviate from the rule of practice that costs should follow the event.  I would therefore order that Mr Wiemer should pay the Bank’s costs.

Hon Kwan JA:

16.  I agree with the judgment of Yuen JA.