CHAN SIU HAN v. TONG YUK LAN

DCCJ3432/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3432 OF 2008

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D E C I S I O N

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1.  The plaintiff applies for leave to appeal against my decision to grant leave to the defendant to defend on 9 December 2008 on a summary judgment application under Order 86 rule 1 of the Rules of District Court.

2.  The footnotes under Order 86 of the Hong Kong Civil Procedure 2009 page 1228 (86/4/1), states that the legal principles applicable to an application for summary judgment under both Orders 14 and 86 are the same, referring to the case of Super Town Investment Limited v Ives Developments Limited and Others, HCA86/2006 [2007] HKEC 933.  “While the scope of application of Order 86 and Order 14 are different, the legal principles applicable to an application for summary judgment under both orders are the same.”

3.  Order 86 rule 4(2) says: “the court may give a defendant against whom such an application is made leave to defend the action either unconditionally or on such terms as the giving security or time for mode of trial or otherwise as it deems fit.”  Rule 1 states “a defendant may show cause against an application under rule 1 by affidavit or otherwise to the satisfaction of the court.”

4.  In opposition to the application by the plaintiff for Order 86 summary judgment, the defence raised by the vendor was that under clause 3 of the Sale and Purchase Agreement the Law Society circular undertaking has been specifically incorporated into the agreement.  Counsel for the defendant vendor, Mr Cheung, argued that there was no need for the vendor’s solicitor to specifically adopt the Law Society circular undertaking or make reference to it by the letter dated 15 July 2008, save to inform the purchaser that the originals of the three missing documents would be made available to the purchaser within seven days of their receipt from the vendor’s former solicitor.

5.  The vendor’s solicitor had further informed the purchaser’s solicitor in a letter dated 14 July 2008 that the three original documents had been lodged with the Land Office for registration purposes and they were not yet available, and, in fact they were not really missing documents.  At the same time, under that letter, they sent by fax a copy of the three documents to the purchaser’s solicitor on the same day.

6.  Mr Cheung argued that by the vendor’s solicitor’s letter of 15 July 2008 the vendor had imposed a further restriction on the date of production of the originals of the so-called three missing documents, i.e., the restriction was within seven days of receipt from the vendor’s former solicitors and this was on top of the original undertaking under paragraph 3 of the Sale and Purchase Agreement by adopting the undertaking of the Law Society circular.  Needless to say, this circular specified that the vendor can undertake to supply the original to prove documents of titles within 21 days of the receipt of the consideration money.

7.  Mr Au Yeung, counsel for the plaintiff, argued that the so-called undertaking by itself is not a further restriction on the time of production of the three missing documents.  It was merely an unsatisfactory reply to the plaintiff’s demand and requisition for the production of the three original documents.

8.  Mr Au Yeung argued that because the Law Society circular undertaking required the undertaking to be production within 21 days of completion, not an uncertain date, and because the vendor’s solicitor had failed to give an undertaking in the form specified by the Law Society circular it seems that it is not a valid undertaking under the Law Society’s circular.

9.  From the arguments I recited above, clearly, there are disputes as to the facts as shown by the two parties’ different interpretations of the letter of 15 July 2008 and the application of the Law Society circular undertaking. 

10.  The construction of the undertaking given by the letter against the Law Society’s circular undertaking has to be decided by the trial judge, to examine the extent of the Law Society undertaking, the form it should take and whether the letter of 15 July 2008 was a valid undertaking or an invalid one due to the failure of full compliance in its form.

11.  In the Hong Kong Civil Procedure 2009, page 218, Order 14/4/44 provides the following: 

“If the court below holds there is a triable issue on the questions of fact the Court of Appeal will not interfere unless satisfied that there is no fair or reasonable probability of the defendant having a real and bona fide defence, for example, because the evidence on which the defendant relies is inherently incredible, or because it is inconsistent with contemporary documents or other compelling evidence.  In its evaluation, the court must look at the overall situation and the evidence as a whole, and not merely confine its attention to the conflicting affidavits…… for this Court to disturb…… unconditional leave to defence is only permissible in the exceptional circumstances  laid down by the authorities……”

12.  The following paragraph of the notes further said: 

“Where the Court  of Appeal determines, as a matter of law, that there is no issue or question in dispute which ought to be tried and that there is no other reason for which there ought to be a trial of the action or any part of it , it will substitute its own view for that of the judge who gave the defendants unconditional leave to appeal and will give judgment for the plaintiffs, though it would be most unlikely to interfere where the judge has decided that there is a triable issue on the question of  fact…….”

13.  The penultimate paragraph on page 208 at line 9 further states:

“In particular, it should be realised that this court will only very rarely be prepared to reverse a decision by a judge that a defendant ought to have unconditional leave to defend the action,” per Godfrey JA in Skink Limited (in liquidation) v Comtowell Limited and Another [1994] 2 HKC 286 at 292, C.A.  Where unconditional leave to defend is refused, the case is entirely different as a rule for summary judgment is a hard one”,

14.  The test applicable in an appeal against the granting of leave to defend clearly is a different one from an appeal for summary judgment to be granted.  As referred to above, the rule for summary judgment is a hard one.  It is in this light that I look at the plaintiff’s application for leave to appeal against my decision granting leave to defend. 

15.  The plaintiff will be asking the Court of Appeal in the appeal to grant summary judgment, hoping to persuade the Court of Appeal that the defence has no arguable case in its defence.  It is a different test of a different rule from what the court has to consider in Ma Bik Yung, where the defence was seeking after trial for leave to appeal against the judgment after trial against him, or in the Unifruit Limited v Capital Years case, DCCJ5798/2002, where my learned brother, Judge Muttrie, gave leave to the defendant to appeal against a summary judgment granted against the defence. 

16.  For obvious reasons that I have referred to above, the rule for leave to defend is clearly different from the rule for summary judgment.  For the aforesaid reason, I found the defendant has an arguable case on both facts and on law in the application of the Law Society circular undertaking and the construction of the undertaking given by the defendant on 15 July 2008. 

17.  I do not think the plaintiff has a realistic prospect of success in the usual sense interpreted by the Court of Appeal in Ma Bik Yung.  Therefore, leave to appeal is refused.  Costs of application and hearing be to Defendant to be taxed if not agreed with certificate for counsel.