MA YUN KOO v. HO CHUN WING

HCA 408/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 408 OF 2012

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BETWEEN

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D E C I S I O N

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1.  The plaintiff issued proceedings for recovery of the sum of $1,100,000 (“Loan”), as the alleged balance of a loan extended to the defendant for the construction of a small house in the New Territories. A Defence and Counterclaim was filed on 20 April 2012.

2.  On 5 June 2012, the plaintiff applied for summary judgment to be entered.  At the first hearing of the plaintiff’s application for summary judgment on 25 June 2012, the defendant did not appear in court, and judgment was accordingly entered against him.  The judgment order was sealed and served on the defendant on 7 July 2012. 

3.  On 28 August 2012, the defendant filed notice of his appeal against the judgment entered.  He also sought extension of time for the late appeal.

4.  On 16 September 2012, the defendant applied by summons for leave to produce his affirmation to oppose the application for summary judgment, as new evidence for the hearing of the appeal.  He also sought leave to amend the notice of appeal to include an application to vacate from the Land Registry the plaintiff’s registration of the charging order to show cause against his property, which order was obtained after summary judgment was entered.

5.  In relation to the defendant’s application to appeal out of time, I have considered the length of the delay, which is approximately 7 weeks.  The defendant’s reasons for the delay as given in his affirmation are essentially that he only received the Order 14 summons and the affirmation in support on 9 June 2012, with only 7 working days to prepare and file his affirmation in opposition by 19 June 2012 for the hearing on 25 June 2012.  He claimed that he did not have sufficient time to seek legal advice and that he had commitments for another engagement in the morning of 25 June 2012.

6.  In relation to the defendant’s chances of the appeal succeeding, which is one of the factors to be considered in deciding whether or not to grant leave to appeal out of time, I have considered the Defence and Counterclaim filed before the Order 14 summons.  The defendant also seeks leave to refer to the new evidence in the form of his affirmation which explains his absence at the hearing and the delay for the appeal, and sets out further matters in relation to his defence and opposition to summary judgment.

7.  In relation to the new evidence, the defendant has to establish that the evidence could not have been obtained with reasonable diligence for use at the first hearing, that the new evidence would probably have an important influence on the result of the case, and that such new evidence is believable.

8.  Bearing in mind that the defendant acts in person, I am prepared to accept his explanation that he could not with reasonable diligence have filed his affirmation before the hearing on 25 June 2012.  I am, however, not very sympathetic in relation to the other reasons that he has given for his absence in court.

9.  The matters referred to in his affirmation do have an important influence on the appeal by way of rehearing.  I am prepared to allow the new evidence sought to be relied upon.

10.  The defence raised to the plaintiff’s claim on the Loan is that firstly, the agreement dated 2 December 2005 and relied upon by the plaintiff in his Statement of Claim is illegal and unenforceable, being in breach of the Special Conditions of the New Grant of the property (“the Illegality Defence”).  It is further claimed that there was a verbal agreement made between the plaintiff and the defendant to defer repayment of the Loan, and/or to deduct the balance of the Loan from the proceeds of the parties’ joint development of property in the New Territories (“the Deferred Payment Defence”), which development is still in progress.

11.  Even without the so-called new evidence relied upon by the defendant in the form of his affirmation, the plaintiff’s own affirmation filed in support of the application for summary judgment can be said to lend some support to the Deferred Payment Defence.  In his affirmation, the plaintiff referred to the parties’ agreement to jointly develop Lot 781 in DD209 and to the deduction of $400,000 from the sale proceeds of this property in January 2009, as repayment of the Loan.

12.  Having considered all the relevant factors, including the defendant’s chances of success on the late appeal, and balancing the prejudice against the plaintiff in granting leave to the defendant to appeal out of time, I am prepared to grant such leave and to deal with the appeal out of time.

13.  The plaintiff has only dealt with the Illegality Defence in substance in argument.  There are clearly triable issues raised in the Defence as to whether there was an oral agreement made between the parties for deferment of the repayment of the Loan and for repayment to be made by deductions from the parties’ joint development, as the defendant claims.  No doubt the plaintiff would be seeking further and better particulars from the defendant in relation to such defence, and no doubt there would be cross-examination of witnesses at trial, but these are issues which can only be properly determined at a full trial after cross‑examination of the relevant witnesses.  Whether the defendant can succeed in his defence is a matter for determination by the trial judge.

14.  I will accordingly set aside the judgment entered by the Master on 25 June 2012 and grant the defendant unconditional leave to defend.  I will also make an order that the plaintiff’s registration of the charging order be vacated.

15.  The costs of the appeal are to be paid by the plaintiff to the defendant.