EMPEROR FUTURES LTD AND ANOTHER v. LA BELLE FASHIONS LTD AND ANOTHER

CACV 1476/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 1476 OF 2001

(ON APPEAL FROM HCA NOS. 12310 & 12312 OF 1997)

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REASONS FOR DECISION

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Hon Rogers VP:

1. On the 2nd plaintiff's application for leave to appeal to the Court of Final Appeal, the 2nd plaintiff made two further applications namely:-

(a) that the time within which it may apply to the Court of First Instance for leave to amend the statement of claim in HCA 12310 of 1997 be extended to a period of 28 days from the date of judgment of the Court of Final Appeal; and

(b) that execution of the orders of the Court of Appeal be suspended pending conclusion of the intended appeal to the Court of Final Appeal.

2. Upon the 2nd defendant's undertaking, given through her counsel, that she would within 14 days make and file an affidavit, serving a copy on the 2nd plaintiff, setting out all her residential addresses both within Hong Kong and outside Hong Kong, this court granted leave to appeal to the Court of Final Appeal under section 22(1)(a) of the Court of Final Appeal Ordinance and ordered that security for costs be provided in the sum of $400,000. It was further ordered that the period of 28 days, given to the 2nd plaintiff to make application to amend the statement of claim in High Court Action 12310 of 1997 failing which the action should stand dismissed without any further order, be extended to 14 days from the date of the hearing, namely up to 23 April 2003. Finally this court refused the application for suspension of execution of the orders of the Court of Appeal. This court said that it would give its reasons in writing which we now do.

Leave to appeal

3. There was no dispute between the parties that the sums involved in the two actions, namely HCA 12310 and 12312 of 1997 satisfied the monetary requirement of section 22(1)(a) and hence leave to appeal was as of right. Likewise, the 2nd plaintiff did not resist the application for security for costs in the amount sought. Although the time within which security should be provided was not mentioned, that would be the normal period namely 28 days.

Extension of time for application for amendment of the statement of claim in HCA 12310 of 1997

4. As set out in the judgment handed down on 10 December 2002, unless the 2nd plaintiff rectifies the default in failing to comply with the provisions of Order 83A of the Rules of the High Court, HCA 12310 of 1997 would fall to be dismissed, in addition to its claim in HCA 12312 of 1997. Furthermore, in the judgment of this court, the relevant agreements relied upon by the 2nd plaintiff are unenforceable by reason of non-compliance with the requirements of section 18 and, in particular, section 18(2)(d) and (i) as well as section 22(1)(c) of the Money Lenders Ordinance, Cap. 163 ("the Ordinance").

5. It would be possible to overcome these difficulties if leave to amend the 2nd plaintiff's pleadings were granted and the court were to exercise its discretion under section 18(3) and 22(2) of the Ordinance. Indeed, this was appreciated a long time ago. At the resumed hearing of the appeal on 25 October 2002 the plaintiffs applied for leave to make amendments in both actions which would rectify the omission in respect of Order 83A and sought the exercise of the court's discretion under section 18(3). Those applications were refused because, in any event, the amendments were not in order and, furthermore, they involved issues which would have to be considered by the Court of First Instance. There was likely to be considerable argument as to the exercise of the court's powers and discretion and it would be highly likely that evidence would be given.

6. On the present application, it was now submitted that it would be a waste of costs for amendments to be made because new arguments would be put forward in the Court of Final Appeal that there had been no breach of subsections 18(1) and (2) and hence the exercise of discretion under subsection 18(3) would not arise. This court was given an outline of the new arguments that would be presented. It suffices to say that, for my part, I was unimpressed.

7. In the present circumstances, it appears to me that it would be highly unsatisfactory for these actions to be argued in the Court of Final Appeal in their present condition. The plaintiff could not obtain judgment because there had been a default in compliance of the Rules. On the best assessment which I can give at present on the basis of the arguments which have been presented, it would be necessary for the 2nd plaintiff to seek the exercise of the court's discretion, in particular, in relation to the matters under section 18 of the Ordinance. No doubt both the amendment to comply with Order 83A and any amendment to seek the exercise of the court's discretion under the Ordinance would be heavily contested by the defendants. It would appear that it would be by no means a foregone conclusion that the court would allow the amendments or that its discretion would be exercised in the 2nd plaintiff's favour. As already stated, these are clearly matters which may well require evidence and, thus, they would be appropriately remitted to the Court of First Instance.

8. Any difficulties in which the 2nd plaintiff now finds itself would seem to me to be of its own making. There was no pleading as to the 2nd plaintiff being a money lender. That it was a money lender was clearly known, not merely to the 2nd plaintiff itself, but also to its legal advisers. As was referred to by counsel before us, there is only one passing reference in counsel's opening at the trial to the fact that the 2nd plaintiff was a registered money lender. What is also relevant is that the 2nd plaintiff joined with the 1st plaintiff in bringing the action. A careful reading of the statements of claim shows that the 1st plaintiff had no claim. Nevertheless, any proper analysis of the pleading must have been avoided because the judge below was induced to give judgment in the 1st plaintiff's favour in both actions. There was no suggestion that the 1st plaintiff was a money lender and hence, on the basis that the 1st plaintiff had the same claim as the 2nd plaintiff, any defences under the Money Lenders Ordinance would have been to no avail. When the matter was raised on 25 October 2002, the plaintiffs' counsel conceded without demur or argument that the 1st plaintiff had no claim in either action. Hence the relevance of (a) the 2nd plaintiff being a money lender and (b) the unexplained and unjustified presence of the 1st plaintiff as a party to the actions.

9. In those circumstances, it appears to me that it would only serve to compound the difficulties which have arisen if the appeal in the Court of Final Appeal were to be argued upon a basis where it would not be known whether, if the 2nd plaintiff were successful on that appeal, it would be successful in HCA 12312 of 1997 nor whether it could recover anything in HCA 12310 of 1997. Rather than defer the question as to whether amendments would be allowable and as to whether the court's discretion should be exercised in the 2nd plaintiff's favour, it appears to me that it might even be appropriate, that the appeal to the Court of Final Appeal be delayed pending resolution of those matters.

Stay of execution of the judgment

10. The relief sought in this respect is directed to the 2nd plaintiff being able to withhold payment of the monetary sum awarded to Hubbard Company Limited ("Hubbard") in HCA 12312 of 1997. The basis upon which the application is put is that Hubbard had ceased its business and disposed of its remaining stock and had also sold four premises in September 1999. The 2nd defendant, Miss Amy Ng Siu My, was said to have emigrated to Canada and gave evidence at the trial that she had no fixed address. The 2nd plaintiff put its case on the basis that there were exceptional circumstances which dictated that there should be a stay of execution. In doing so reliance was placed on the judgment of the majority of this court in Whale View Investment Ltd v Kensland Realty Ltd & Ors [2001] 3 HKC 15 see especially 21E-22F.

11. I would note in the first place that there is no allegation that any of the defendants is impecunious. As to the sale of property in September 1999, there has been no evidence as to whether those sales were at an appropriate value. It might be observed, however, that in view of the apparent trend in property prices over the last few years, the sale of property in Hong Kong in September 1999 probably raised considerably more than it would today.

12. The matter which concerned this court was as to the 2nd defendant's address. A point was raised on behalf of the defendants that the 2nd plaintiff's solicitor's affidavit filed on 13 January 2003 had not been served upon them. Upon inquiry, this court was informed by the 2nd plaintiff's counsel that there was no note or record on the solicitors' files of that affidavit having been served. This court was informed by counsel for the 2nd defendant that the 2nd defendant had a residential address in Hong Kong. In the circumstances, the 2nd defendant was requested to give an undertaking, which was given on her behalf, to provide the affidavit which is referred to above. In the circumstances, this court does not consider it is necessary to make any further order relating to security.

Hon Le Pichon JA:

13. I agree.

Hon Yuen JA:

14. I agree.