WANG YUEXIAN v. XINYANG MAOJIAN GROUP LTD (formerly known as CHINA ZENITH CHEMICAL GROUP LTD)

CAMP 32/2024, [2024] HKCA 660

On Appeal From [2023] HKCFI 3236

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 32 OF 2024

(ON AN INTENDED APPEAL FROM ACTION NO. 231 OF 2022)

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JUDGMENT

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Hon Anthony Chan J (giving the judgment of the Court) :

INTRODUCTION

1.  This is the Defendant’s Summons filed on 16 February 2024 (“Summons”) seeking to renew its application for leave to appeal against the dismissal of its Further Evidence Summons filed on 15 November 2023 by DHCJ Au-Yeung (as he then was) (“Judge”). 

2.  The Further Evidence Summons was filed in support of the Defendant’s appeal (“Appeal”) against a partial judgment (in the sum of HK$5.5 million with interest) entered against it pursuant to O 14, r 3 of the Rules of the High Court (“RHC”) by Master Elizabeth Cheung dated 13 April 2023.  Both the Further Evidence Summons and the Appeal were heard by the Judge on 17 November 2023.  The former was dismissed with costs at the hearing.  By a Decision dated 13 December 2023 (“Decision (1)”), the Appeal was also dismissed with costs to the Plaintiff.   The reasons for the dismissal of the Further Evidence Summons were set out in Decision (1), [19]-[28].

3.  By a Summons filed on 27 December 2023 with a draft notice of appeal, the Defendant applied to the Judge for leave to appeal out of time against the dismissal of the Further Evidence Summons.  By a Notice of Appeal filed on 10 January 2024, the Defendant seeks to appeal to this Court against the dismissal of the Appeal by the Judge (“Substantive Appeal”).  The hearing of the Substantive Appeal has not yet been fixed.

4.  The leave application was heard by the Judge on 2 February 2024 and was dismissed for the reasons set out in a Decision of the same date (“Decision (2)”).

5.  The background facts of this case, the parties’ respective case and the procedural history were set out in Decision (1), [2]-[17]. They will not be repeated here.

6.  Having consider the papers before the Court, we believe that it is appropriate to deal with the present application on the basis of written submissions only pursuant to O 59, r 2A(5)(a) of the RHC.

DISCUSSON

7.  The test for granting leave to appeal against an interlocutory order of the Court of First Instance is trite.  Under s 14AA(4) of the High Court Ordinance, Cap 4 (“Ordinance”), leave to appeal shall not be granted unless the court is satisfied that the appeal has a reasonable prospect of success, or there is some other reason in the interest of justice why the appeal should be heard.  Reasonable prospects of success means that the prospects of success must be reasonable, ie, more than fanciful, without having to be probable. 

8.  In respect of an appeal against an exercise of discretion by a judge at first instance, this Court will not lightly interfere with a discretionary decision unless it is based on some error of principle, or reliance on irrelevant considerations, or disregard of relevant considerations, or the decision is plainly wrong.

9.  There are 4 grounds of appeal advanced by the Defendant.  The first ground concerns the Judge’s approach to the Ladd v Marshall requirements.  The second ground challenges the Judge’s conclusion that the first condition of Ladd v Marshall was not satisfied.  The third and fourth grounds contend respectively that the Judge ought to have concluded that the second and third conditions were satisfied.  For completeness, the fifth ground is simply a wrap-up contention that the Judge ought to have granted the Further Evidence application.  It requires no separate treatment. 

GROUND 1

10.  It is contended that the Judge’s approach to the Ladd v Marshall requirements was wrong in the context of a summary judgment appeal.  In Decision (1), [22]-[23], the Judge referred to Hong Kong Civil Procedure 2024, vol 1, [58/1/3] and expressed his reservation that: “It may well be going too far to say that the Ladd v Marshall conditions ‘will’ require some modification as if this modification is applicable to every case [of summary judgment appeal].”  This is the focus of this ground.

11.  The Judge went on in [24] to cite extensively the dicta of Poon JA (as he then was) in Bank of New York Mellon v Sun Jiangrong [2016] 1 HKC 137, [25] and [26].  There is no issue that such dicta represent the correct principle, namely, the degree of reasonable diligence which the court expects the applicant to have exercised in his effort to obtain the evidence in question (the first requirement of Ladd v Marshall) must be assessed against the overall circumstances of the case.  It is clear that the Judge had applied the correct principle (see also Decision (2), [16]-[17]).

12.  It is also contended by the Defendant that there should be a less stringent application of the reasonable diligence requirement if the further evidence was “of very significant importance”.  This is based on Bank of New York Mellon, [25], where the Court identified some relevant factors for consideration under the first requirement of Ladd v Marshall, “such as the time available to the defendant to gather the evidence, the nature of the evidence, the difficulty encountered in obtaining the evidence, the effort that the defendant had used in gathering the evidence” [emphasis added].

13.  We are in agreement with the Judge that the reference to “nature of the evidence” is taken out of context (Decision (2), [27]).  The proposition derived from the dicta, is whether in light of, inter alia, the nature of the further evidence, it could not have been obtained with reasonable diligence for use at the hearing of the summary judgment application.  It does not concern the importance or the quality of the evidence, which is a matter for consideration under requirements 2 and 3.   

14.  In the premises, we do not believe that this ground is reasonably arguable. 

GROUND 2

15.  Paragraph 8 of the Defendant’s Written Statement made, in truth, 4 points.  First, it is said that the time available to a defendant in preparing his case in opposition to a summary judgment application is much less than for preparing a trial.  Whilst the statement is generally true, the time factor must be case specific.  A defendant may have little to say or adduce in terms of documentary evidence in opposition to the summary judgment application, and the time he has for filing his affidavit may be plentiful.

16.  In this case, it is important to note that the summary judgment application against the Defendant (“Application”) was based on the admission in its Defence that it was only required to pay HK$5.5 million under the Bond as part of the principal sum (Decision (1), [4(1)]). 

17.  In terms of the chronology, the Application was taken out on 30 November 2022.  The affirmation in support of the Application was filed on the same day with the Plaintiff’s copy of the Bond exhibited as “WYX-3”.  The time for filing of the Defendant’s evidence was extended on a number of occasions, and its affirmation was eventually filed on 6 March 2023 (Decision (1), [6], [25]-[26]).

18.  Further, the Defence was filed way back on 19 May 2022.  The Defendant must have investigated the Plaintiff’s case, obtained advice from its lawyers and given them instructions to prepare the Defence. The Application, based on the Defendant’s admission, would not have surprised the Defendant. 

19.  In the circumstances, we are unable to accept that the Defendant was under any time constraint in dealing with the Application.

20.  Secondly, the Defendant says that the differences between WYX-3 and the Defendant’s copy of the Bond (“Bond (D)”) were “not easy to spot”.  There are two differences between the documents: (i) the interest rate stated in WYX-3 was 3% per annum, whereas that stated in Bond (D) was 4% per annum; and (ii) it appears that the name and address of the Defendant on page 1 of Bond (D) were printed in traditional Chinese text, whereas those on page 1 of WYX-3 were in simplified Chinese text. 

21.  However, in Bond (D), clause 8.2 and Annex 3 (the Bond Certificate), the name of the Defendant was printed in simplified Chinese Text.  Moreover, both WYX-3 and Bond (D) were signed by the same Chairlady and director of the Defendant. 

22.  In respect of the difference on page 1 of WYX-3 and Bond (D), it is unclear why that is material.  Apparently, instead of using identical copies of the Bond document, the Defendant was using copies with minor and immaterial difference.

23.  The difference in interest rate is, on its face, material.  On the other hand, it is the Defendant’s own pleaded case that the applicable interest rate was 4%.  Possibly, it was based on Bond (D) with the confirmation of the Chairlady and director who signed it.  In any event, (a) the partial judgment does not involve any interest payment; and (b) it cannot be said that the difference on the stated interest rate was not easy to spot. 

24.  We also agree with the Judge that the reason advanced by the Defendant to support the Further Evidence Summons was not that Mr Ma had previously looked at WYX-3 and was unable to spot the difference with Bond (D) because the differences were “minute” (Decision (2), [22(2)-(3)]). 

25.  Thirdly, the Defendant says that the Judge had misunderstood the evidence of Mr Ma because he did not state that he never reviewed the file previously, but that the discrepancies in the documents were discovered upon his review of the file on 13 November 2023 for the purposes of the hearing of the Appeal. 

26.  With respect, this contention is unhelpful.  To begin with, the inference that Mr Ma had failed to review the file earlier was not an unreasonable one.  More importantly, it was incumbent on the Defendant to fully explain why the further evidence could not have been adduced at the hearing before the learned Master.  The Defendant cannot take advantage of the insufficiency of its own evidence.

27.  Finally, it is said that the Bond is the most important document in this case and the first requirement should not be applied too stringently.  As observed above, the partial judgment was based on the Defendant’s admission and no interest element was involved.  We fail to see the force in this point.

28.  In the premises, this ground is not reasonably arguably.

GROUNDS 3 AND 4

29.  The Judge did not deal with the second and third requirements of Ladd v Marshall due to the failure of the Defendant at the first hurdle.  Given our view on the merits of grounds 1 and 2, it is likewise unnecessary to deal with grounds 3 and 4.

30.  In any case, given that the partial judgment was based on the Defendant’s admission and that no interest element was involved, we are unable to see any merits in ground 3 (that the further evidence would or might have an important influence on the outcome of the Appeal).  We accept that Bond (D) is a credible document, and thus the third Ladd v Marshall requirement, if relevant, would have been satisfied.

INTEREST OF JUSTICE

31.  The Defendant seeks to rely on the second limb of s 14AA(4) of the Ordinance (see para 7 above), ie, there is some other reason in the interest of justice why the appeal should be heard.  This does not feature in the grounds of appeal.  However, it was advanced before and dealt with by Judge.

32.  The Defendant argues that by reason of the Substantive Appeal, which was brought as of right, this appeal should be allowed to proceed so that it can be considered in conjunction with the Substantive Appeal.  The Defendant relies on Hong Kong Finance Co Ltd v Wah Fung Forest Resources Ltd [2023] HKCFI 2248, [3]-[6]. 

33.  We agree with the Judge that Hong Kong Finance Co Ltd did not establish any general principle to the effect that if there is an appeal on foot brought as of right, then leave should be given for another appeal which may be relevant to be considered in conjunction with the one on foot.  We also agree with the Judge that Hong Kong Finance is distinguishable with the present case.  In Hong Kong Finance, the additional evidence was considered by the court in the 3^rd defendant’s appeal against a default judgment in terms of whether the 3^rd defendant had an arguable defence (see the first Decision in that case, [2023] HKCFI 1548, [48]-[53]).  In this case, the further evidence was rejected for failing to meet the Ladd v Marshall test.

34.  Ultimately, it is matter of judicial discretion whether this appeal should be allowed to proceed in light of the Substantive Appeal.  Given our view, which agrees with that of the Judge, that this appeal lacks merit, there is no sufficient reason to disturb the exercise of discretion by the Judge. 

35.  In the premises, there is no sufficient reason to grant leave to appeal under the second limb.

DISPOSITION

36.  The Summons is dismissed with costs to the Plaintiff.  We decline to grant a certificate for 2 counsel because this is a relatively simple matter which had already been considered by the Judge.  By way of summary assessment, the Plaintiff’s costs are assessed at HK$65,000.

37.  Lastly, as the intended appeal is totally without merit, we make an order that no party may request the present determination to be reconsidered at an oral hearing inter parte pursuant to O 59, r 2A(8) of the RHC.