LIP CHUNG SHEK v. LEE WAI KWAN EDMUND

DCCJ 4867/2023

[2025] HKDC 679

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4867 OF 2023

--------------------------------------

--------------------------------------

------------------------------

DECISION

------------------------------

A.  INTRODUCTION

1.  This is the Defendant’s application dated 25 March 2025 for leave to appeal (“Leave Application”) against my decision handed down on 23 January 2025 (“Decision”). In the Decision, I allowed the Plaintiff’s appeal against the decision of Master B Mak dated 6 June 2024 and granted conditional leave to the Defendant to defend upon payment of the sum claimed by the Plaintiff into Court (“Sum”)[1] within 28 days from the date of the Decision. It is not disputed that the Defendant has failed to pay the Sum into Court.

2.  In addition to the Leave Application, there are two other applications by the Defendant, namely the application dated 7 March 2025 for stay of execution (“Stay Application”) and the application dated 25 March 2025 to amend the draft Notice of Appeal (“Amendment Application”).[2]

3.  The parties agree that the Leave Application and the Stay Application will stand and fall together. The parties also agree that a formal order to amend the draft Notice of Appeal is not required and the hearing can be proceeded on the ground set out in the draft Amended Notice of Appeal (“Notice of Appeal”) attached to the Amendment Application.

B.  LEGAL PRINCIPLES

4.  The legal principles on the threshold for granting leave to appeal are not in dispute. The applicant, i.e. the Defendant in the present case, needs to show 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; District Court Ordinance (Cap 336), section 63A(2)(b). A “reasonable prospect of success” means an appeal with prospects that are more than “fanciful”, without having to be “probable”; SMSE v KL [2009] 4 HKLRD 125 at §17.

5.  Both parties refer to the following passage of Godfrey J in Unic Company v Centus Development Ltd [1988] HKC 643 at 647I and 648A:-

“15. Nevertheless, it is appropriate, in some cases, to give leave to defend only upon condition of making a payment into Court. A good example of this is the sort of case in which there is good ground for believing that the defence advanced is a sham defence, the sort of case (as it is sometimes said) in which the Master is prepared very nearly to give judgment for the plaintiff. Put another way, leave to defend, conditional on the full amount paid being paid into Court, may be ordered where there is little or no substance in the defence, or the case is almost one in which summary judgment should be ordered. And where the defence can be described as more than shadowy but less than probable conditional leave to defend may be given …

16. But if there is no sign of bad faith, or anything to show that the defence raised is a sham, nor anything suspicious about the defendant's case, leave to defend should not be made conditional. Further, leave to defend should not be made conditional where on the evidence as to the financial circumstances of the defendant, it is plain, or even probable, that to give the defendant leave to defend only upon condition that he pays the whole sum into Court would be tantamount to refusing him leave to defend at all …”

6.  Further, where conditional leave to defend is given, the Court of Appeal would not interfere with the discretion of the judge unless (a) there has been some error of principle; or (b) there has been misapprehension of facts; or (c) undue weight has been given to a particular aspect of facts; Hong Kong Civil Procedure 2025, §14/4/8.

C.  DISCUSSION

7.  In the Notice of Appeal, the Defendant only relies on the Calculation Point.[3]

8.  Mr. To, leading Mr. Ting[4], submits that I have failed to give due weight to the following:-

(a)  There is a serious dispute on the amount of the original loan (i.e. whether it was HK$7,200,000 alleged by the Plaintiff or HK$2,500,000 alleged by the Defendant);

(b)  Even taking the Plaintiff’s case to the highest, total indebtedness was HK$8,281,300 (the original loan of HK$7,200,000 and the interest of HK$1,081,300 up to 30 April 2016[5]);

(c)  The Defendant’s total repayment was HK$8,758,963 (including the repayment of HK$8,620,963[6] and HK$138,000[7]);

(d)  If the Court finds in the Defendant’s favour on overpayment, the Defendant’s alleged indebtedness would have been completely extinguished with an overpayment of $477,000 which is the subject matter of the Defendant’s counterclaim.

(e)  This clearly raises a triable issue. As there is no sign of bad faith, or anything to show that the defence raised is a sham, nor anything suspicious about the defendant's case, leave to defend should not be made conditional; Unic Company §16.

9.  With respect, I am unable to accept Mr. To’s submissions. Whilst there is a history of financial dealings between the Plaintiff and the Defendant dated back to at least February 2015, the Plaintiff’s claim is straightforward. It is premised on the 2022 Oral Agreement which is evidenced by (a) the 2022 Written Note in which the Defendant accepted the indebtedness of $1,618,700 and agreed to repay by 12 months’ instalments, (b) the Declaration executed by the Defendant in the Home Affairs Department confirming the truthfulness of the 2022 Written Note and (c) the part payments totaling $138,000 by the Defendant pursuant to the 2022 Oral Agreement.

10.  I have explained in the Decision why I consider that the defence of overpayment to be shadowy[8] and do not intend the repeat again. In short, I find it hard to believe that, if there were really overpayment of such a substantial sum to the Plaintiff as alleged, the Defendant could possibly have been misled by the Plaintiff to believe that he was still indebted to the Plaintiff and signed written confirmations or agreements, not once, not twice, but 4 times over 6 years (i.e. the 2016 Written Agreement, 2019 Written Note, 2022 Written Note and the Declaration).

11.  It is trite law that a person is held to the documents which he has chosen to sign unless there is shown to be a recognized legal basis for concluding that his apparent consent has in some way vitiated or that reliance on that document by some other person falls into some category of unconscionable conduct justifying relief in equity. The vitiating factors at common law include fraud, mistake, misrepresentation, non est factum, undue influence and lack of mental capacity. To disown a signed legal document, facts constituting the particulars of vitiating factor relied on must be pleaded and established by evidence; Ming Shiu Chung v Ming Shiu Sum (2006) 9 HKCFAR 334.

12.  In the present case, the Defendant has abandoned the Duress Point and only possible vitiating factor available to the Defendant to disown the 2022 Written Note and the Declaration is mistake. However, save for the bare assertion of being misled by the Plaintiff to mistakenly believe that he was still indebted to the Plaintiff in the amounts stated in the 2022 Written Note, the Defendant has failed to provide any particulars or adduce any evidence to support his assertion. There is no particulars on where, when and how the Plaintiff misled him and, more importantly, why he believed the Plaintiff when he had paid so much money to the Plaintiff which, according to him, far exceeded the amount he owed to the Plaintiff. There is also no explanation why he made part payments totaling HK$138,000 by instalments pursuant to the 2022 Oral Agreement[9]. These problems render the defence of overpayment shadowy (or a sham) and it is justified to impose condition for leave to defend.

13.  Mr. To refers to the Court of Appeal’s decision in Billion Silver Development Ltd v All Wide Investments Limited [2002] 2 HKC 262 and further submits that the Court should also examine the Plaintiff’s claim. Relying on my observation on the 2016 Written Agreement[10] and the lack of documents recording or summarizing the dealings between the parties, Mr. To submits that the Plaintiff’s claim is “questionable” and unconditional leave should be granted on this reason alone.

14.  I do not agree that the Plaintiff’s claim is questionable as submitted by Mr. To. Regardless of the reason why the alleged loan of HK$3,000,000 was not mentioned or covered in the 2016 Written Agreement, the fact remains that the Defendant signed the document and should be held to it unless he is able to establish the vitiating factor of mistake (which he has provided no particulars, let alone evidence in support). More importantly, as noted above, the Plaintiff’s claim is not premised on the 2016 Written Agreement (or 2019 Written Note). The Plaintiff’s claim is based on 2022 Oral Agreement which is evidenced by, inter alia, the 2022 Written Note and the Declaration which were both signed by the Defendant.

15.  Also, Mr. To refers to Shenzhen Baoming Ceramics Co Ltd v Companian-China Ltd [2000] 2 HKLRD 288 (CA) and argues that the Defendant’s counterclaim arises out of the exact same subject matter as the Defendant’s defence and is closely connected with the Defendant’s grounds of defence. It is contended by Mr. To that it falls squarely within the second class of cases[11] and unconditional leave should be granted.

16.  The problem of Mr To’s submissions is that the Defendant has failed to quantify the amount of his counterclaim in the pleadings or affirmations. I note that Mr. To refers to HK$477,000 as “the subject matter of D’s counterclaim”[12]. With respect, this amount is not the subject matter of the Defendant’s counterclaim. It is the result of Mr. To’s own calculation based on the Plaintiff’s case of the original loan being HK$7,200,000 which is denied by the Defendant. In my view, if the Defendant’s counterclaim is bona fide, there is simply no reason why the Defendant cannot say with certainty how much he has overpaid the Plaintiff. The Defendant’s failure to quantify the amount has seriously undermined the credibility of his counterclaim. I am not satisfied that the Defendant has set up a bona fide counterclaim.

17.  Lastly, Mr. To submits that the Court should take into account the financial circumstances of the Defendant. The Defendant is financially incapable of paying the Sum into Court and this would be tantamount to refusing him leave to defend at all.

18.  However, as fairly accepted by Mr. To, there was no evidence on the Defendant’s financial circumstances at the hearing on 23 December 2024. The basis of Mr. To’s submissions comes from the Defendant’s 2^nd and 3^rd Affirmations which were filed for Leave Application and Stay Application. There is also no explanation why evidence on the Defendant’s financial circumstances could not have been adduced at the hearing on 23 December 2024. I am of the view that the criteria for admitting new evidence on appeal laid down in Ladd v Marshall [1954] WLR 1489 are not satisfied and Mr. To cannot rely on this ground.

19.  Despite the admirable effort of Mr. To, I am not convinced that the Defendant’s appeal has reasonable prospect of success or there is some other reason in the interest of justice why the appeal should be heard.

D. CONCLUSION

20.  By reasons of the aforesaid, I dismiss the Leave Application and the Stay Application.

21.  Ms. Choy invites the Court to take into account, inter alia, the procedural history after the handing down of the Decision to consider granting costs on indemnity basis. Having considered Ms. Choy’s submissions, I do not consider that this is a case “in which there has been something improper or inappropriate or wholly unreasonable in … the conduct of the proceedings” that justifies an order for indemnity costs; Leung Chun Kwong v Secretary for the Civil Service [2019] HKCFA 34 §15.

22.  Thus, I would order that the Defendant do pay the Plaintiff’s costs of the Leave Application and Stay Application, with Certificate for Counsel, to be taxed on party and party basis if not agreed.

23.  As the Defendant has failed to satisfy the condition, I enter judgment against the Defendant in terms of §46 of the Decision.

24.  For completeness, I grant leave to the Defendant to withdraw the Amendment Application with no order as to costs.

25.  Lastly, it remains for me to thank Ms. Choy for the Plaintiff and Mr. To and Mr. Ting for the Defendant for their helpful assistance to the Court.