LO CHUN CHEONG v. AU WAI MING

CACV167/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 167 OF 2015

(ON APPEAL FROM HCB NO 7306 OF 2014)

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JUDGMENT

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Hon Cheung JA:

1.  I agree with the judgment of Yuen JA.

Hon Yuen JA:

2.  This is an appeal by Au Wai Ming (“the appellant”) from a Bankruptcy Order made against him by Ng J on 10 July 2015. 

Background  

3.  A year earlier, on 7 July 2014 a judgment in default of defence in DCCJ2050/2014 (“the District Court judgment”) was obtained by Lo Chun Cheong (“the respondent”) against the appellant.  The judgment was for $461,291 with interest at 8% from date of writ to date of judgment, and $6,500 fixed costs (“the judgment debt”). 

4.1.   Pursuant to the judgment debt, a Statutory Demand was served on the appellant personally on 27 August 2014.  He did not apply to set it aside.

4.2.   On 26 September 2014, a bankruptcy petition was presented.  It was served personally on the appellant on 14 October 2014. 

4.3.   On 5 January 2015, the appellant filed an affirmation opposing the petition.  He disputed the debt.  In his affirmation he said:

-   he had known the respondent since 2005 through the renting of a flat;

-   he had only introduced the respondent to the manager of a restaurant which he (the appellant) had owned before 2004;

-   he later learnt that a large number of wines were sent to the restaurant on consignment terms;

-   he did not hear anything about the wines and it was only later that the respondent told him that 20% of the wines had been sold and “he had to retreat all wines which I believe still in the restaurant”;

-   he had nothing to do with the wines sold.

The appellant should have put forward this/these alleged defence(s) in the District Court action, but he had not done so.

4.4. The respondent filed an affirmation in reply answering the appellant’s affirmation.

5.1.   As the bankruptcy petition was based on the judgment debt, the hearing of the petition was adjourned to enable the appellant to apply to set aside the District Court judgment.

5.2.   On 9 February 2015, the appellant attended the District Court in person, filing a summons for an order to set aside the judgment.  He made an affirmation before a commissioner of oaths in the court building.

5.3.   On 13 February 2015, the respondent filed an affirmation in opposition to the appellant’s summons.

5.4.   The hearing of the appellant’s summons to set aside the District Court judgment took place on 16 February 2015.  However the appellant did not appear.  Accordingly Master SP Yip dismissed his summons with costs.

6.1.   On 2 March 2015, the bankruptcy petition was restored for hearing before Ng J.  It was set down for hearing at 9:30 a.m.  The appellant did not appear when the case was called.  According to the transcriber’s record, the judge commenced the hearing at 9:44 a.m. and made a bankruptcy order against the appellant at the conclusion of the proceedings at 9:54 a.m.

6.2.   On the same day, the appellant wrote to the judge’s clerk alleging that he had arrived in court at 9:45 a.m. but had been told the hearing had finished. 

6.3.   That allegation does not appear to be consistent with the transcript, but be that as it may, the judge restored the hearing of the bankruptcy petition, which then took place on 9 July 2015.

Ng J’s Judgment

7.1.   The learned judge set out the relevant legal principles governing petitions for bankruptcy based on judgment debts in paras. 5-6 of his Judgment which I will not repeat here.  The judge emphasized that passage in Re Tam Mei Kam unrep. CACV87/2012, 8 May 2013 (para. 27) which deals with a situation where the judgment debtor has failed in an application to set aside a judgment.  In that situation, it would be most unlikely that the judgment debtor could nevertheless rebut the prima facie presumption of indebtedness, unless he could satisfy the court that he could impugn the judgment of the court deciding the setting aside.  

7.2.   The judge noted that the statutory demand had not been set aside.  He further considered the appellant’s affirmations and was not satisfied that the appellant had shown a bona fide dispute on substantial grounds.  The judge also found that the appellant had failed to show fraud, collusion or miscarriage of justice in the obtaining of the District Court judgment or in the decision dismissing the application to set it aside.  

7.3.   Accordingly the judge granted the usual bankruptcy order with costs.

Appeal

8.  The appellant appealed.  The only ground stated in the notice of appeal was “not the truth”.

Attempt to adduce fresh evidence

9.1.   Before the hearing of the appeal, the appellant lodged with the court a “new evidence bundle”.  This was improper as he had not filed a summons for leave to adduce fresh evidence on appeal.

9.2.   In any event, even assuming that a summons had been filed, it is clear from well-established case law (Ladd v Marshall[1954] 1 WLR 1489) that where there has been a hearing on the merits (the hearing before Ng J), fresh evidence will generally not be admitted on appeal unless all three of the following conditions are satisfied:

(1)   it must be shown that the evidence could not have been obtained with reasonable diligence for use at the hearing;

(2)   the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; and

(3)   the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible though it need not be incontrovertible.

9.3.   The “new evidence bundle” consisted of:

(1)   a document entitled “affidavit”, although it appears to be an exhibit marked “A” in an affirmation (not before this court) of the appellant affirmed before a commissioner of oaths on 14 July 2015;

(2)   a name card of the managing director of the restaurant group referred to in the appellant’s affirmation opposing the petition¹;

(3)   two medical certificates of a hospital dated 10 April 2014 and 12 April 2014 respectively, certifying that the appellant was hospitalized from 29 March 2014 to 12 April 2014, and was recommended sick leave from 29 March 2014 to 29 April 2014.

Discussion

10.  I shall deal with the “new evidence bundle” first.

11.1.   As for (1), the document entitled “affidavit” repeated the matters set out in the appellant’s affirmation opposing the petition, with the exception that in the earlier affirmation, he said he had known the respondent since 2005 through the renting of a flat, but in this document, he said the respondent “was a complete stranger to me”.  Be that as it may, this evidence could have been adduced before the judge at the hearing of the petition.  Accordingly Condition 1 of Ladd v Marshall is not satisfied.   

11.2.   As for (2), there was no explanation in the affirmation as to why the appellant could not have obtained the name card for use before the judge.  In any event, the name card by itself is of no importance.  Accordingly Conditions 1 and 2 of Ladd v Marshall are not satisfied.

11.3.   As for (3), the appellant submitted that the medical certificates were to show why he did not attend the hearing of the setting aside summons in the District Court on 16 February 2015.  Again there was no explanation on affirmation as to why he could not have obtained them for use before the judge since these certificates had been in existence since April 2014, about 15 months before the hearing in July 2015.  In any event, they are of no importance as they do not justify or explain his failure to attend the District Court hearing to set aside the default judgment in February 2015, some 10 months after the expiration of the sick leave period certified in the certificates.  The appellant was clearly mobile by February 2015, as he had attended the District Court in person to file his summons and affirmation the week before the hearing on 16 February 2015.   Accordingly Conditions 1 and 2 of Ladd v Marshall are also not satisfied.

11.4.   For all these reasons, I would have refused leave to adduce the “new evidence” even assuming the appellant had filed a summons.

12.  I shall now come to the appeal proper.  It is well-established that the making of a bankruptcy order is within the exercise of the judge’s discretion, and that an appellate court would not lightly interfere with the exercise of discretion unless the judge had erred in law, or was under a misapprehension of material facts, or had failed to take relevant matters into account, or had taken irrelevant matters into account, or that the decision was “plainly wrong”.

13.  I do not see any of those circumstances in the present case.  The judge applied the principles set out in Tam Mei Kam. Whilst it is true that the summons to set aside the default judgment was not dismissed on the merits, but was dismissed because the appellant failed to attend, it is clear that the appellant had chosen not to attend for there was no medical or other evidence before us deposing to his inability to attend the hearing on 16 February 2015.  Whatever the reason for his not putting forward a defence in the first place before the default judgment was obtained in 2014, he had the opportunityto put forward his defence in his application to set aside the District Court judgment in 2015, but he chose not to do so.  It is clear that he was simply trying to delay the hearing of the bankruptcy petition.

Order

14.  I would dismiss the appeal with costs.

Hon Kwan JA:

15.  I agree with the judgment of Yuen JA.