KI PING KI PAUL v. WONG ON YEE AND ANOTHER

DCCJ 5787/2017

[2018] HKDC 419

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5787 OF 2017

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DECISION

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BACKGROUND

1.  The plaintiff issued the Writ of Summons in this action on 28 December 2017, with a Statement of Claim (“SOC”).  The plaintiff pleaded the making of a distribution agreement (“Agreement”), before the passing away of his brother Ki Ping Fai (“KPF”) in 2012, among the five siblings of his family in respect of a property located at 1901 Sun Tung House, Yu Tung Court, Tung Chung (“Property”).  It was alleged in the SOC that the 1^st defendant, wife of KPF, denied the Agreement and is claiming total ownership of the Property which had been under the care of the plaintiff for 19 years.  There was also a specific claim that the 1^st defendant had changed the lock of the Property without court order and was trying to evict the plaintiff.

2.  By way of an ex parte application also filed on 28 December 2017, the plaintiff sought and was granted an injunction to restrain the 1^st and 2^nd defendants from disposing the personal properties of the plaintiff inside the Property until 5 January 2018.  On 5 January 2018, after hearing the parties, I discharged the injunction granted on 28 December 2017 on ground of (1) the plaintiff had not made full and frank disclosure, and (2) the claim of the plaintiff, being based on the Agreement, is one in respect of the sale proceeds of the Property rather than one in respect of the ownership of the Property. 

3.  On 5 February 2018, the plaintiff took out an inter partes summons to seek leave to appeal against my decision, on the basis that the order I made to discharge the injunction order granted based on the ground of material non-disclosure is not correct.  Since the ground of appeal is limited to the point on material non-disclosure, I need only to deal with that issue.  In the summary of the evidence from the parties below, I will also focus on those matters that relate to the material non-disclosure concern only.   

Plaintiff’s first affirmation

4.  In the affirmation in support of his ex parte application, the plaintiff deposed to the demand of the defendants to evict him from the Property and the changing of the locks of the Property by the defendants with no court order.

5.  There is one exhibit to this affirmation, a notice dated 28 December 2017 that was issued by the owners of the Property.  By the notice, the plaintiff and occupiers of the Property were asked to remove all items inside the Property on 28 December 2017 because the owners had to comply with the mandatory windows inspection scheme, failing which the items would be removed to the landfill at the cost of the plaintiff.

Plaintiff’s affirmation of service

6.  On 2 January 2018, the plaintiff made an affirmation deposing to the service of the Writ of Summons, the injunction order and the inter partes summons for continuation of the injunction on the two defendants.  A number of documents were attached to this affirmation.  At the hearing on 13 April 2018, the plaintiff specifically asked me to take into account two emails from the 1^st defendant, one sent to Ki Ping Wah (“KPW”), brother of the plaintiff on 10 March 2013 and the other sent to the plaintiff and KPW on 14 March 2013.

7.  In the 10 March 2013 email, the 1^st defendant referred to KPF having told her that the Tung Chung property and a 基隆街 property were left by the parents to the three brothers.  She suggested using the interest of KPF in the 基隆街Property to exchange for the 2/3 interest of the plaintiff and KPW in the Tung Chung property. In the 14 March 2013 email, the 1^st defendant talked about the market value of the Tung Chung property and the amount of money each of the three brothers would get from a sale.

Defendants’ first affirmations

8.  The defendants filed affirmations on 4 January 2018 (“D Affirmations”) to oppose the injunction and to seek an injunction that the plaintiff do provide reasonable access to the defendants to the Property for the purpose of carrying out all appropriate and necessary works in compliance with the mandatory window inspection scheme of the Government.  The defendants also denied all the allegations of the plaintiff in the SOC.

9.  According to the D Affirmations, the defendants are the registered owners of the Property and the plaintiff has been using the Property as a storage facility for the last ten years.  Photos exhibited show the Property to be uninhabitable, it being almost fully stuffed with cartons and no one can get inside without first taking out some of the cartons.

10.  Another matter deposed to is the previous discussions between the parties, including the letters exchanged between the solicitors of the parties in July and August 2017 (“Letters”).  Quite a number of matters were raised in the Letters and I would only draw on those parts that are relevant to the decision I am to make in the summary below.

11.  The devolution of the legal ownership from the parents of the plaintiff to the defendants has been set out in the Letters.  It was in 1997 when the parents purchased the Property as joint tenants.  The father died in 1998 and the mother became the sole legal owner.  The mother died intestate in 2006 and letters of administration of her estate was granted to KPF.  Pursuant to a Deed of Family Arrangement and an Assent both dated 4 February 2008, KPF became the registered owner of the Property.  In January 2013, the defendants were granted letters of administration of the estate of KPF.

12.  According to the defendants, before his death, KPF allowed the plaintiff to occupy the Property under a licence revocable at will, it being a term that the plaintiff was to pay the mortgage repayments and management fees.  Since his death, despite the repeated requests of the defendants, the plaintiff has refused to move out of the Property.  As for the Agreement, the defendants alleged that it was signed by KPF under duress exerted upon him by the other siblings.

13.  On the plaintiff’s side, it was alleged in the Letters that the Deed of Family Arrangement and Assent were prepared as part of the new mortgage loan transaction when default in payment occurred under the then legal charge in favour of Dah Sing Bank Limited.  It is the plaintiff’s case that he undertook to pay all mortgage loan instalments under the new mortgage loan, and that he had paid for all rates, government rent, management fees, as well as all the expenses in obtaining the various legal charges in respect of the Property (three in total).

14.  In the Letters, the plaintiff also referred to the Agreement as setting out the trust arrangements in respect of the Property.  That the siblings agreed to the equal division of the proceeds after the sale of the Property and the reimbursement of the payment of mortgage loans, government rates and rent, as well as management fees by the plaintiff is also a matter referred to on behalf of the plaintiff.

15.  Apart from the Letters, the D Affirmations put forward the communications they made themselves by emails in November and December 2017.  These emails record the proposal of the plaintiff to buy the Property from the defendants, with the defendants getting a net sum of HK$1.6 million.  The plaintiff indicated his intention to surrender the public housing in his name and to use the green form to acquire the Property under the Home Ownership Scheme (“HOS”) secondary market.  The need for the certificate of availability for sale from the Housing Authority, required because the Property is under the HOS, the exchange of details of lawyers to act for the parties in the proposed transaction, and the proposed completion before 19 February 2018 were already mentioned in the emails.    

16.  The 1^st defendant averred to her changing the locks of the Property on 11 December 2017, but said she did open the door to allow the plaintiff to remove items at his request, like the occasion on 28 December 2017.  The 1^st defendant stressed that the plaintiff made a false allegation to the court about his being evicted from the Property as he was all along living in a public housing unit.  A notice dated 11 December 2017, given by the defendants to the plaintiff about the change of the locks to the Property, was exhibited to the D Affirmations. The notice also informed the plaintiff that the items inside the Property would be dumped if he failed to produce the green form for acquiring the Property under HOS secondary market and to sign a provisional sale and purchase agreement in respect of the Property before 31 December 2017.

Plaintiff’s second affirmation

17.  The plaintiff also filed an affirmation on 4 January 2018.  In it, he claimed to be the major owner of the Property, having 2/5 interest in it, with the defendants, KPW and Teresa Ki each holding 1/5 interest.  The plaintiff also complained of the change of ownership in the Property by the defendants to themselves and the changing of the locks, asking for the locks to be changed back and for the retrieval of his personal properties.

18.  A message from someone of the name “Wah” is shown as exhibit.  The message shows this person also claiming 1/5 of the ownership of the Property and asking for a return of 1/5 of the net sale proceeds upon sale or upon settlement of the dispute between the plaintiff and the 1^st defendant.

Plaintiff’s third affirmation

19.  In an affirmation filed on 5 February 2018 by the plaintiff in support of his application for leave to appeal, he stated that he had disclosed most of the materials to show that he is the owner of the Property and that he has most of the receipts showing he paid for the mortgages, government tax and rates and management fees for the last 20 years since 1997.  He also deposed to his living at the Property with his parents since 1997 until they passed away, and after that, he has been taking care of the Property. 

Defendants’ second affirmations

20.  The defendants filed affirmations to oppose the plaintiff’s application for leave to appeal on 26 February 2018.  On the allegation of the plaintiff that he lived in the Property with his parents since 1997 until they passed away, the defendants said it was incorrect.  It was averred that the plaintiff has been living in his own public housing unit at Room 3403, Mei Yat House, Yat Tung Estate, Tung Chung since in or around 2007, whereas the parents lived at 6^th Floor, No.373 Ki Lung Street before the father died in 1998, and the mother was living in an elderly home in Shamshuipo before her death in 2006.

21.  The defendants reiterated the uninhabitable status of the Property because of the storage of the goods there by the plaintiff.  In respect of the removal of the goods from the Property, the defendants referred to the same being carried out by the plaintiff in a piecemeal fashion and that he had not complied with the repeated deadlines for such removal that had been set by the defendants.

Plaintiff’s fourth affirmation

22.  Another affirmation was filed by the plaintiff on 27 February 2018.  In it, he repeated that he had paid all the mortgages and expenses and tax in respect of the Property since it was acquired by his parents.  The plaintiff also stated that KPF had not paid anything for the Property since 1997, and that the mortgage payments were made by him until it was paid off.  Instead of laying claim to only 2/5 of the Property, the plaintiff said in this affirmation that he is the equity owner. The plaintiff also said he has been the occupant since 1997 and the defendants have no right to refuse the retrieval of his personal properties.

23.  The plaintiff explained in this affirmation that he was late in the appeal application because the court had not sent him the judgment.

Further developments

24.  Since then, the parties have both filed their own timetabling questionnaire.  They had also attended a case management hearing on 29 March 2018.  In view of the then impending case management hearing, the plaintiff wrote to the court on 20 March 2018 asking for the hearing of his application for leave to appeal to be postponed after the trial proceedings.

Time limit for seeking leave

25.  Order 58 rule 2(4) of the District Court Rules sets out the time limit applicable for seeking leave to appeal.  The relevant part of the rule is reproduced below –

(4)   An application for leave to appeal must be made to a judge, or to a master in the case of an appeal under paragraph (2), within—

(a)   in the case of an appeal from a judgment, order or decision of a master under paragraph (2), 28 days from the date of the judgment, order or decision;

(b)   in the case of an appeal from a judgment, order or decision (other than an interlocutory judgment, order or decision) of a judge, 28 days from the date of the judgment, order or decision;

(c)   in the case of an appeal from an interlocutory judgment, order or decision of a judge, 14 days from the date of the interlocutory judgment, order or decision.

26.  In paragraph 4 of their skeleton submissions, the defendants regard Order 58, rule 2(4)(b) as being applicable.  The decision I made on 5 January 2018 is an interlocutory judgment and so Order 58, rule 2(4)(c) should apply instead.  An application for leave to appeal has to be made on or before 19 January 2018.  The application of the plaintiff was filed on 5 February 2018 and I will therefore treat it as an application for extension of time for seeking leave to appeal.

Legal principles

27.  I agree with the defendants that the applicable principles on whether to grant an extension of time for applying for leave to appeal are those set out in the case of Chan Cho Fai v Hon Ying Muk DCCJ 2935 of 2012, 13 May 2014, namely –

“…In deciding how to exercise its discretion, the court would normally consider:

(1) The length of the delay;

(2) Reason for the delay;

(3) Merits of the appeal: is there a reasonable prospect of success of the proposed appeal?

(4) Prejudice to the other party if leave is granted.”

Length of the delay

28.  The delay is slightly over two weeks.  In absolute terms, it may not seem to be a substantial delay. However, noting that the original time period for applying for leave is 14 days, the plaintiff has taken more than double the period permitted under the rules.

Reason for the delay

29.  According to the plaintiff’s fourth affirmation, he was late because the judgment was not sent to him.  The decision I made on 5 January 2018 was delivered orally.  The plaintiff was present at the hearing and so he should be aware of the grounds upon which the injunction was discharged.  Although not entirely convinced because the plaintiff could have asked for a written record of the reasons of my decision then or subsequently, but he did not do so, noting that the plaintiff is not legally represented, I am prepared to accept the reason he proffered.  

Merits of the appeal

30.  Section 63A(2) of the District Court Ordinance provides for the situations where leave to appeal can be granted.  It reads –

(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.

31.  Judicial explanation of what is meant by “a reasonable prospect of success” can be found in the case of SMSE v KL [2009] 4 HKLRD 125, at paragraph 17, where Le Pichon JA said:

“Reasonable prospects of success involves the notion that the prospects of succeeding must be ‘reasonable’ and therefore more than ‘fanciful’, without having to be ‘probable’.”

32.  The defendants have referred me to the following discussions in the case of Cheung Kam Wah v Cheung Hon WahCACV 53/2004, 11 January 2005 on the consequences of material non-disclosure:

“43. It is well settled that upon being satisfied that there was material non-disclosure at the ex parte stage, the ex parte order so obtained should, without more ado, be discharged. See Manor Electronics Ltd v Dickson and Others [1988] RPC 618, at 623 lines 40 to 45, page 624, lines 3-8; Standard Chartered Securities Ltd v Lai Arthur [1993] 1 HKC 375, at 389B; Bank Mellat v Nikpour [1985] FSSR 87, at p 91.

44. The rationale behind can be found in Balcombe LJ’s judgment in Brink’s Mat Ltd v Elcombe [1988] 1 WLR 1350 at 1358, where he said:

“The rule that an ex parte injunction will be discharged if it was obtained without full disclosure has a two-fold purpose. It will deprive the wrongdoer of an advantage improperly obtained: see Rex v Kensington Income Tax Commissioners, Ex parte Princess Edmond de Polignac [1917] 1 K.B., 486, 509. But it also serves as a deterrent to ensure that persons who make ex parte applications realize that they have this duty of disclosure and of the consequences (which may include a liability in costs) if they fail in that duty.””

33.  The ex parte application for injunction was made by the plaintiff under Order 29 rule 1 of the Rules of the District Court (“RDC”), which is the same as Order 29 rule 1 of the Rules of the High Court (“RHC”).  The discussions in Volume 1 of the Hong Kong Civil Procedure 2018 (“HKCP”) on Order 29 rule 1 of the RHC are therefore equally applicable.  As noted in paragraph 29/1/51 of HKCP, 

“…The material facts to be disclosed are all matters which are material for the judge to know and which are necessary to enable him to exercise his discretion properly. The plaintiff should give particulars of his claims against the defendant, stating the grounds of his claims and the amount thereof and, in addition, should fairly state the points made against him by the defendant…The plaintiff should also bring to the court’s attention any points that could have been made by the defendant, even if not yet made, at the time of the ex parte application provided that (a) the point is one that the defendant would reasonably be expected to raise in due course; and (b) the point is not one that can be dismissed as without substance or importance…

Materiality is to be decided by the court and not by the assessment of applicants or their advisers…Material facts include not only facts known to the applicant but also any additional facts which would have been known if proper inquiries had been made…

An applicant has a duty to inform the court as soon as he becomes aware that the court has been misinformed or given incomplete information at the time of the ex parte application…

Ultimately, the court has a discretion whether to discharge an injunction for material non-disclosure, the court will consider factors including: whether the non-disclosure was innocent or deliberate; the excuse or reason for the material non-disclosure; and the importance of the omitted fact to the issues which were to be decided by the judge, in particular whether the non-disclosure would have resulted in the original order not being made in the first place…”

34.  The principles set out in paragraph 29/1/51 of HKCP seem to require the court to look at certain factors before discharging an injunction for material non-disclosure, while the case law relied on by the defendants suggest that discharge should automatically follow once material non-disclosure is found.  To err on the side of caution, I am prepared to go through the factors referred to in the HKCP. 

35.  Before doing so, I should first deal with the two emails referred to in paragraph 7 above.  The plaintiff wishes to rely on those emails to show that the 1^st defendant knew back then in 2013 that the Property was not wholly owned by the defendants, and so they cannot now claim full ownership, change the locks or evict the plaintiff.  The reliance of the plaintiff on those emails is misplaced as the merits that we are concerned with here are not the substantive merits of the action as pleaded in the SOC, but the merits of the plaintiff’s case that he had made full and frank disclosure when he made his ex parte application for injunction and even if he had not done so, the injunction should not be discharged for material non-disclosure.   

36.  The previous discussions of the parties relating to the Property which eventually led to the proposal from the plaintiff to purchase the Property from the defendants are unquestionably material to the court for it to understand the context against which the rights of the parties under the Agreement are to be assessed, and then to consider the nature of the claim the plaintiff has over the Property.  To give the court a complete picture, the devolution of the legal ownership of the Property and the circumstances leading to the siblings entering into the Agreement are equally important.  All these material facts had not been disclosed by the plaintiff when he made the ex parte application.

37.  That the Property has only been used for storage by the plaintiff is another material concern cannot be disputed since the urgency of the plaintiff being evicted would have a different level of severity if he is living there when compared with the case of him not living there.  It would be more difficult to persuade the court to grant the injunction in the first place if there was only the risk of possible wrongful removal of personal items, since monetary compensation might have been considered adequate.

38.  That the notice exhibited to the affirmation of the plaintiff in support of his ex parte application is at least the second warning notice from the defendants about removal of the items inside the Property was also not disclosed.  The likelihood of the defendants acting out the threat of removing the items is apparently a factor that would be material for the consideration of the judge as well.

39.  The failure to disclose was certainly a deliberate act on the part of the plaintiff.  He was discussing with the defendants about the sale of the Property to him at the time of his ex parte application and he knew the points that the defendants would reasonably be expected to make.  The plaintiff did not inform the court of any of such points.

40.  All the omitted information is important for the judge to come to his decision.  The plaintiff has not given any reason for the non-disclosure, insisting instead that he has provided most of the receipts showing he made the payments for the outgoings in respect of the Property.  Had all the above matters been disclosed to the judge hearing the ex parte application, he would have concluded that there was no emergency to justify the grant of the interlocutory injunction. 

41.  Having considered all relevant circumstances, I am not satisfied that the appeal has any reasonable prospect of success.  The plaintiff has not sought to rely on section 63A(2)(b) of the District Court Ordinance, nor do I see any other reason in the interests of justice why the appeal should be heard.

Prejudice to the defendants

42.  The defendants referred to their allowing the plaintiff to remove his goods from the Property on various occasions in January 2018.  Despite having had the opportunity to retrieve all his personal items, the plaintiff chose not to do so.   

43.  The plaintiff has also himself asked for the hearing of his application for leave to appeal to be postponed to after the trial proceedings.  Furthermore, when making submissions at the hearing on 13 April 2018, the plaintiff stressed that he was still intent upon going through with his proposal to purchase the Property from the defendants at HK$1.6 million.  He therefore expressed his view that it would be a waste of time to carry on with the action when there is actually an understanding between the parties on the sale of the Property. 

44.  As observed by the defendants, the above matters clearly show that there is no longer any need to restrain the defendants from disposing the personal belongings of the plaintiff stored inside the Property.  With the underlying objective of the injunction order no longer existing, there is no reason for the plaintiff to apply for leave to appeal at all.   To allow the extension of time for the plaintiff to seek leave out of time will cause prejudice to the defendants, they being required then to put in further time and costs to deal with the application for leave. 

45.  Having considered the length of the delay, the reason for the delay, the merits of the appeal and the prejudice to the defendants, I refuse to allow an extension of time for the plaintiff to apply for leave to appeal against my decision of 5 January 2018.

Costs

46.  The plaintiff submitted that costs should be in the cause while the defendant submitted that costs should be borne by the plaintiff if his application is dismissed.  Costs normally follow the event and I do not see any reason to depart from this general principle in the present case.  I order the plaintiff to pay costs of this application, including all costs reserved, to the defendants, to be summarily assessed if not agreed. 

47.  If parties cannot agree on the quantum of costs, the defendants shall have leave to file and serve their statement of costs within 14 days from the date hereof and the plaintiff shall have leave to file his list of objections within 14 days thereafter.  Summary assessment will be by way of paper disposal.