RAINGATE LTD v. YETONCE LTD

DCCJ 3540/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3540 OF 2015

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DECISION

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1. This is the 1^st defendant’s application for leave to appeal against my decision dated 1 February 2016 (“the Decision”). I had granted interlocutory judgment against the 1^st defendant in favour of the plaintiff. I had also granted the 2^nd defendant unconditional leave to defend.

The Principles

2. Section 63A (2) of the District Court Ordinance states:-

“(2) Leave to appeal shall not be granted unless the judge, the master or the Court of Appeal hearing the application for leave is satisfied that –

(a) the appeal has a reasonable prospect of success; or

(b) there is some other reason in the interests of justice why the appeal should be heard.”

3. In Ho Yuen Ki Winnie v Ho Hung Sun Stanley, HCMP 1009/2009, unrep, Le Pichon JA stated (para 16):-

“For leave to be granted, this court must be satisfied that the appeal has ‘reasonable prospects of success’. Merely showing that the appeal is ‘arguable’ and ‘not fanciful’ would not be sufficient. In my view, ‘reasonable prospects’ requires something more and, in that regard, some assistance may be derived from the test applied when setting aside a default judgment.”

4. In KNM v HTF, HCMP 288/2011, unrep, the Court of Appeal further stated (at para 9):-

“The relevant test of whether an appeal has a reasonable prospect of success under s 63A, is whether the applicant for leave can show that he has an arguable case with reasonable chances of success on appeal. A reasonable prospect of success therefore means an appeal with prospects that are more than ‘fanciful’ but which do not need to be shown to be ‘probable”.

5. The test corresponds with the relevant leave test in section 14AA(4) of the High Court Ordinance, Cap 4 for the grant of leave from a decision of the Court of First Instance to the Court of Appeal in interlocutory matters: see SMSE v KL[2009] 4 HKLRD 125.

6. Even if the court finds there to be reasonable prospects of success, it still retains discretion as to whether to grant leave: see Hong Kong Civil Procedure 2016, Vol. 1 at Note 59/2A/4.

The Decision

7. The application originally before me was an application by the plaintiff for summary judgment against the 1^st and 2^nd defendants.  I do not repeat the facts and background to that application here.

8. My reasons for granting judgment against the 1^st defendant are set out at paras 37 to 46 of the Decision:-

37. I agree with Mr Ho that the 1^st defendant’s purported defences do not sufficiently challenge the plaintiff’s case.

38. The 1^st defendant’s main argument is that “(no) consent has been given by the 1^st defendant to the 2^nd defendant to use the Outer Walls, whether expressly or impliedly.”

39. It is clear that the 2^nd defendant has alleged that Mr Telly Lam gave the permission whilst acting on behalf of the 1^st defendant. In response, however, Miss Lee simply submits that he has failed to file any evidence in support of the bare assertion.  Nothing is said further on this point. Crucially, the 1^st defendant’s evidence does not dispute Mr Telly Lam’s apparent role.

40. The 1^st defendant also does not address the 2^nd defendant’s allegation that “the alleged metal support or affixation had already been installed and existed and had been used by the previous tenant of the same Shop …… for its own air conditioning equipment well before the commencement of the 2^nd defendant’s tenancy.”  Again, it is not clear why the 1^st defendant does not condescend to this allegation given that again there is no apparent dispute (by the 1^st defendant’s evidence) that this state of affairs existed.

41. Miss Lee suggests that if the court sides with the 2^nd defendant’s allegations in relation to, inter alia, Mr Telly Lam and the previous tenant, then it is “embarking on a mini trial of affidavits to draw a conclusion that D1 is not credible.” This is not the case. Had there been evidence to directly contradict the 2^nd defendant’s pleaded case and/or evidence and the court then reached a conclusion in this application by deciding between contradictory versions, this might be considered incorrect in light of the principles. However, this situation has not arisen. The 1^st defendant’s allegations have not been pleaded nor do they appear in its affirmation evidence – they are simply submissions. There is a gap in the 1^st defendant’s explanation.

42. In addition to the evidence put forward and a party’s pleaded case, a court is also entitled to consider the inherent probability of a defence raised.

43. It is not disputed that the relationship between the 1^st defendant and 2^nd defendant was governed by the tenancy agreement dated 12 October 2012.  Clause 16 thereof required permission to be sought by the landlord (the 1^st defendant) before any air conditioning equipment could be installed. Indeed, this is how the 2^nd defendant says permission was granted to it.  The 1^st defendant simply denies that it granted any permission.

44. It is unrealistic to argue, in my view, that the air conditioning equipment having been installed in October 2012 would have been allowed to remain for a period of three years, in violation of the tenancy agreement, without the 1^st defendant having permitted it to be there. No credible explanation is offered by the 1^st defendant as to why it could not have done anything to address earlier the apparent trespass.  

45. Without dealing with the issues raised in this application, particularly those facts that are raised in the 2^nd defendant’s evidence, which is incumbent upon it to do, there leaves a gap in the 1^st defendant’s explanation as stated above.

46. The test, as cited by the plaintiff, states that is “it is incumbent upon the defendant to condescend upon particulars.”  Failure to do so must be viewed with circumspection – I have made my observations above.  In my view it has failed to raise any bona fide defence to the plaintiff’s claim nor provided any other reason for trial.”

Leave to appeal

9. Miss Lee, counsel for the 1^st defendant, raises four grounds of appeal:-

(a) the court imposed an unnecessary burden on the 1^st defendant;

(b) the court failed to take into account relevant evidence;

(c) the court took into account irrelevant evidence/ conducted a fact finding exercise;

(d) there were inherent inconsistencies.

10. The 1^st defendant’s case is essentially one of putting the plaintiff to strict proof.  Its defence, save for some admissions, mainly consists of simple denials or non admissions.

11. The dispute between the parties concerned air conditioning equipment that had been affixed by the 2^nd defendant on the Outer Walls of the building, which are owned by the plaintiff.  The 2^nd defendant had explained, by evidence, that the 1^st defendant, through an estate agent, had permitted it to affix the air conditioning equipment on the Outer Walls at the time of entering into the tenancy agreement.  The 1^st defendant did not file any evidence to put forward its own version of events or seek to otherwise challenge the 2^nd defendant’s assertion (against it).

12. Clearly such information is relevant for the court’s consideration.  As can be seen from my reasons (above), this amounted to the 1^st defendant failing to condescend upon the particulars and left a gap in the evidence which the 1^st defendant chose not to explain.

13. Miss Lee argues, first, that it did not have an opportunity to file any evidence to deal with the 2^nd defendant’s evidence.  With respect, this point cannot get off the ground.  It was clear from the Order of Deputy District Judge Winnie Tsui dated 26 November 2015 that “no further affirmation evidence was to be filed without leave of the court”.  As Mr Ho, counsel for the plaintiff, rightly points out the 1^st defendant could have sought leave to file evidence to “counter” the points raised by the 2^nd defendant.  However, this was never done nor was any attempt made to do so.

14. Miss Lee then argues that the 2^nd defendant’s version (by affirmation) as to how the air conditioning equipment came to be affixed on the Outer Walls is not something that the 1^st defendant needs to deal with.  She states that the fact that there has been a complete denial by the 1^st defendant that it ever “caused or permitted” the air conditioning equipment to be affixed is enough to defend the plaintiff’s claim.  As such it was not required to condescend to particulars (which I had noted that the 1^st defendant had failed to do at all).

15. This argument cannot be correct.  Clearly, without needing to elaborate further, a bare denial cannot be enough to found a bona fide defence, specifically when particulars have been raised such that some explanation is called for.

16. As Mr Ho submitted, the court is entitled to consider all the circumstances, including the evidence put forward by co-defendants, in assessing the credibility of the 1^st defendant’s defence: Rightop Corp Ltd v Yau Wing Yan Joyce, HCMP 1209/2015 (unrep, 5.1.2016) at para 78. Miss Lee did not dispute that this proposition was correct.

17. Miss Lee then seemed to suggest that the court has failed to conduct properly the weighing exercise between conflicting evidence filed by the 1^st defendant and 2^nd defendant respectively.

18. With respect, this argument is misconceived.  As pointed out at the hearing, I was presented with a factual scenario by the 2^nd defendant which the 1^st defendant neither challenged, with evidence or amendment, nor dealt with at all.  There was no question of conducting a weighing exercise in relation to ‘evidence’ since there was no evidence to weigh on the part of the 1^st defendant.

Conclusion

19. The 1^st defendant has failed to satisfy me that a reasonable prospect of success arises such that I should grant leave to appeal.

20. The application for leave to appeal is accordingly dismissed.  Costs are to be paid by the 1^st defendant to the plaintiff, to be taxed if not agreed, with certificate for counsel.

21. I thank counsel for their assistance to the court.