CHEN JINHUI v. WONG KAM SAN (黃錦新), by his guardian ad litem, HUANG YUEXIA (黃月霞) AND OTHERS

CACV 178/2021

[2023] HKCA 146

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 178 OF 2021

(ON APPEAL FROM HCA NO 1524 OF 2012)

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JUDGMENT

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Hon Chow JA (giving the Judgment of the Court):

1.  On 4 November 2022, this Court gave its judgment (“the Judgment”) granting leave to the 4^th to 6^th Defendants to adduce one item of proposed new evidence (referred to as Item 23) for the purpose of their appeal against the judgment of Deputy High Court Judge Leung dated 19 March 2021, but not the remaining items of proposed new evidence (referred to as Items 1 to 22) (“the Excluded New Evidence”) ([2022] HKCA 1522).

2.  On 2 December 2022, the 4^th to 6^th Defendants issued a Notice of Motion seeking leave to appeal against the Judgment.  In the Notice of Motion, the 4^th to 6^th Defendants identified the following question as being a question of great general or public importance which ought to be submitted to the Court of Final Appeal for determination:

“In a Ladd v Marshall application, in order for the ‘reasonable diligence’ requirement to be relaxed on the basis of a reasonable prospect of success that the judgment below was obtained by fraud, (i) does the fraud have to be that of the respondent or at least suborned by or knowingly relied upon by the respondent, or (ii) is it sufficient that the judgment was procured by fraud, without the additional requirement that the fraud should be that of, or known by, the respondent?”

3.  On 16 December 2022, the 4^th to 6^th Defendants issued a summons (“the Summons”) seeking a stay of the leave application until the determination of their Notice of Appeal filed on 19 April 2021 (ie the substantive appeal of the 4^th to 6^th Defendants).

4.  On 20 December 2022, the Court gave directions for the filing of written submissions in support of/opposition to the Summons, and for the Summons to be determined on paper.  The Court has since received and considered the respective written submissions of the 4^th to 6^th Defendants and of the Plaintiff.  This is the Court’s decision on the Summons.

5.  The rationale of the 4^th to 6^th Defendants’ stay application has succinctly been summarised in §7 of their written submissions dated 3 January 2023, as follows:

“(1)  If D4-6 succeed in the substantive appeal, the leave application will be rendered purely academic (because, at risk of repetition, D4-6 were able to succeed without reliance on or reference to the items of evidence that had been excluded by the [Judgment]). It will not be necessary for D4-6 to proceed with the leave application, and considerable time and costs will be saved (including P’s, given P’s position and the Court’s direction that he need not file any responsive skeleton for the leave application yet).

(2)  Conversely, if D4-6 fail in the substantive appeal, it would be expedient to deal with the leave application together with any application for leave to appeal against the judgment dismissing the substantive appeal by D4-6.  There would be savings in the court’s (both this Court and the Appeal Committee) time and resources since both courts would only have to read into the papers once; as well as savings in costs for all parties concerned.”

6.  The Plaintiff opposes the 4^th to 6^th Defendants’ stay application as being unprincipled, illogical, unfair and not cost-efficient.  Amongst other things, the Plaintiff submits that:

(1)  The 4^th to 6^th Defendants’ position must be examined from their own perspective: they say that new evidence should be considered by this Court in their substantive appeal but they want to wait and see what happens in the substantive appeal, and will only proceed to obtain leave to appeal to the CFA should they lose in the appeal. It is well established that a litigant should ensure that all relevant matters are placed before the court for it to finally determine the disputes between the parties.  No court should determine the disputes on the basis of what one party claims to be incomplete materials.  Their argument can potentially be run by all losing litigants whenever their attempt to introduce new evidence fails.

(2)  If D4-6 have the conviction that the excluded new evidence is relevant and believe that their application for leave to appeal to the CFA has merits, principles and logic would dictate that they must now proceed on that basis.  This is entirely consistent with the recent directions given by the Registrar of Civil Appeals that the substantive appeal will not be dealt with until the determination of the respective leave to appeal application.

(3)  Obvious unfairness will result if the stay is granted.  The effect of a stay is to enable the 4^th to 6^th Defendants to contend in their substantive appeal before the Court of Appeal that the CFI judgment is wrong on the basis of what they claim to be incomplete materials, and (should they lose the appeal) have a second chance to argue again that the CFI judgment is wrong on the basis of the excluded new evidence.  In addition to being unprincipled and illogical, the stay sought will cause obvious unfairness to the Plaintiff.

See §§3 and 5(1) of the Plaintiff’s Skeleton Submissions dated 17 January 2023.

7.  It is common ground that it is a matter of case management for the Court to decide whether to grant the stay sought by the 4^th to 6^th Defendants.  The Court has to consider the balance of convenience and fairness as between the parties, as well as issues of costs and overall administration of justice.

8.  As a general rule, all interlocutory applications concerning admission of evidence pending before the relevant court ought to be disposed of prior to the substantive trial or appeal (as the case may be), although exceptionally it may be just and convenient on the particular facts or circumstances of a case to depart from this general rule.

9.  In the present case, the 4^th to 6^th Defendants’ substantive appeal raises both issues of fact and of law (see §27 of the Judgment).  According to the 4^th to 6^th Defendants, the Excluded New Evidence is relevant to their appeal against the Judge’s findings of fact, including those referred to in §§1-3 of the 4^th to 6^th Defendants’ Notice of Appeal dated 16 April 2021 (see §27(1) and (2) of the Judgment).  The question of whether the Excluded New Evidence should form part of the Court’s consideration when examining the Judge’s findings of fact ought, in our view, to be determined prior to the actual examination of the Judge’s findings.  We can see no sufficient reason or justification on the facts of the present case why the 4^th to 6^th Defendants’ appeal against the Judge’s findings of facts should be determined on the basis of what may turn out to be only part of the relevant and properly admissible evidence (should the 4^th to 6^th Defendants ultimately succeed in their intended appeal against the Judgment).

10.  We have no difficulty with the 4^th to 6^th Defendants’ first proposition mentioned in §5(1) above, ie if the 4^th to 6^th Defendants should succeed in the substantive appeal without the need to rely on the proposed new evidence, the time and costs which will have to be incurred in relation to the intended appeal will be saved (provided that if the Plaintiff should seek to appeal against the Court of Appeal’s judgment allowing the 4^th to 6^th Defendants’ substantive appeal, the 4^th to 6^th Defendants would not then seek to proceed with the leave application in order to rely on the Excluded New Evidence to resist the Plaintiff’s appeal in the Court of Final Appeal).  We do not, however, accept the second proposition mentioned in §5(2) above, ie if the 4^th to 6^th Defendants should fail in the substantive appeal, it would be expedient to deal with the leave application together with any application for leave to appeal against the judgment dismissing the substantive appeal.  There are a number of different possible scenarios depending on the outcomes of (i) the substantive appeal and (ii) the application(s) for leave to appeal against the Judgment (and any further appeal therefrom should leave be granted).  For example, should the 4^th to 6^th Defendants lose the substantive appeal and any further appeal against the Court of Appeal’s judgment dismissing the substantive appeal but ultimately succeed in the appeal against the Judgment, it is not entirely certain whether the Court of Final Appeal will then proceed to examine the impact of the Excluded New Evidence on the Judge’s findings of fact and come to a final determination (in the absence of any relevant decision by the Court of Appeal), or remit the matter to the Court of Appeal for fresh consideration taking into account the Excluded New Evidence.  In the latter scenario, the Court of Appeal’s further judgment could potentially generate another round of application(s) for leave to appeal and further appeal to the Court of Final Appeal.  Thus, the 4^th to 6^th Defendants’ proposed course of action could potentially lead to multiple further hearings and additional costs being incurred. 

11.  In our view, it is also relevant that there has already been very substantial delay in the resolution of the Plaintiff’s claim against the Defendants.  The relevant agreement between the 1^st Defendant and the Plaintiff for the transfer of 80% of the shares in Hawkins was (according to the Plaintiff) entered into in January 2003, and the present action was brought in 2012.  It is unnecessary to consider which part(ies) was/were responsible for the delay.  It is clear that there ought to be a final resolution of the claim as early as possible.

12.  Overall, we are of the view that the 4^th to 6^th Defendants’ Notice of Motion should first be disposed of before consideration of their substantive appeal. 

13.  The Summons is accordingly dismissed with costs to the Plaintiff, with certificate for 2 counsel.  We summarily assess the Plaintiff’s costs in the amount of HK$150,000.  This order as to costs is an order nisi, which will become absolute unless an application is made to vary the same within 14 days from the date of this judgment.

14.  Lastly, we give the following further directions to the parties regarding the 4^th to 6^th Defendants’ Notice of Motion dated 2 December 2022:

(1)  The 4^th to 6^th Defendants shall have leave to file and serve 2 sets of written submissions in support of the Notice of Motion (limited to 5 pages) within 14 days from the date of this order.

(2)  The Plaintiff shall have leave to file and serve 2 sets of written submissions in opposition to the Notice of Motion (limited to 5 pages) within 14 days thereafter.

(3)  The 4^th to 6^th Defendants shall have leave to file and serve 2 sets of written submissions in reply (limited to 3 pages) within 14 days thereafter.

(4)  No further document may be filed without leave of the court.

(5)  The Notice of Motion shall be determined on paper without an oral hearing.