MAIN PROFIT INTERNATIONAL LTD v. HFREITAS HK LTD

DCCJ 2768/2019

[2022] HKDC 905

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2768 OF 2019

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DECISION

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1.  On 11 July 2022, the defendant (“D”) lodged an appeal (“D’s appeal”) against the decision made by Master Bryan Lung (“the master”) on 27 June 2022, by which the master ordered that D do pay the plaintiff (“P”) HK$68,000 together with interest and costs (“the master’s decision”). The matter before me today is D’s appeal.

The background facts

2.  On 30 May 2019, P commenced these proceedings against D for HK$147,900. P’s case is that D issued a cheque dated 23 May 2019 to P for HK$147,900, but that cheque was dishonoured.  D denied liability and counterclaimed against P for HK$40,000.  For ease of reference, the dispute between the parties as defined in the pleadings is called “the original dispute” in this decision.

3.  In the case settlement conference held on 13 July 2021, the parties reached a settlement agreement.  Based upon the settlement agreement, the court made a consent order (“the Consent Order”), the terms of which are as follows:

“BY CONSENT, IT IS ORDERED that:-

1. All further proceedings in this action be stayed except for the purpose of carrying out the orders hereof and the said terms into effect and for this purpose the parties are at liberty to apply;

2. Without admission of any liability, the Defendant shall pay to the Plaintiff the agreed sum of HK$78,000 (inclusive of interest and costs) in full and final settlement of this action (“Settlement Sum”) by 6 monthly instalments to be deposited in the Plaintiff’s bank account no. …… with Bank of China as follows:-

i) 1^st to 3^rd instalments in the sum of HK$10,000 each, payable on or before the 30^th day of August, September and October 2021; and

ii) 4^th to 6^th instalments in the sum of HK$16,000 each, payable on or before the 30^th day of November and December 2021 and January 2022.

3. Within 14 days upon receiving the Settlement Sum in full by the Plaintiff, the Plaintiff and the Defendant do wholly discontinue its claim or counterclaim in this action against the other party by filing notice of discontinuance with the Court;

4. Subject to full compliance of Clause 1 to 3 by both parties, the Pre-Trial Review hearing scheduled for 27 April 2022 and the trial commencing at 9:30 am on 7 June 2022 with 3 days reserved be vacated;

5. There be no order as to costs of this action including costs of this application and each party shall bear its own costs in this action; and

6. Liberty to apply.”

4.  Subsequently, D paid HK$10,000 to P pursuant to the Consent Order. However, D has failed to pay the remaining balance, i.e. HK$68,000, to P.

5.  On 27 April 2022, the pre-trial review took place before HHJ KC Chan (“the judge”).  Only P attended the hearing.  The judge took the view that the original dispute has been settled between the parties, and pursuant to the Consent Order, all further proceedings in this case should be stayed save and except for the purpose of carrying out the terms of the Consent Order.   The judge is of the view that in order to recover the remaining balance of the settlement sum from D, what P should do is to take out an application for an order compelling D to pay the remaining balance to P.  P should not and could not request for a trial of the original dispute because of D’s failure to pay P the remaining balance.  The learned judge ordered that despite [4] of the Consent Order, the pre-trial review and the trial be vacated.  There is no application to set aside the ruling made by the judge, and there is no appeal against that ruling.  Accordingly, what the judge has decided must be binding upon the parties.

6.  By a summons filed on 29 April 2022, P applied for an order compelling D to pay the remaining balance of the settlement sum, i.e. HK$68,000 (“P’s application”).  P’s application was heard by the master on 27 June 2022.  The master allowed the P’s application.

7.  On 11 July 2022, D lodged D’s appeal.  D’s director, Mr. Freitas de Souza Helton, filed an affirmation (“the supporting affirmation”) on the same date in support of D’s appeal.

The principles

8.  An appeal hearing under the Rules of the District Court, Order 58, is a de novo hearing.  Subject to the restriction in Order 58 rule 1(4), the hearing before me is an actual rehearing as if the application came before me for the first time.  See Hong Kong Civil Procedure 2022, Volume 1, §58/1/2.

9.  Rules of the District Court, Order 58, rule 1(4) provides:

“No further evidence (other than evidence as to matters which have occurred after the date on which the judgment, order or decision was given or made) may be received on the hearing of an appeal under this rule except on special grounds.”

10.  The phrase “special grounds” in Order 58 rule 1(4) is the same expression as in the Rules of the High Court, Order 59 rule 10(2).  Accordingly, in order to satisfy the “special grounds” requirement, the conditions in Ladd v Marshall [1954] 1 WLR 1489 have to be fulfilled. Under the Ladd v Marshall requirement, further evidence is admissible on an appeal only where such evidence: -

(1)  could not have been obtained at the trial or at the hearing with reasonable diligence;

(2)  would or might, if believed, have a very important effect on the mind of the court; and

(3)  is of a sort which inherently is not improbable.

Discussion

11.  I treat the appeal hearing as a de novo hearing of P’s application, as if the application came before me for the first time.  I do not see any special ground upon which the supporting affirmation can be received as evidence in the appeal hearing.  At most, the contents of the supporting affirmation can only be matters which may be relevant to the original dispute. However, as said in the above, the original dispute has been settled.  The parties have reached a settlement agreement, and that settlement agreement has been given effect by the Consent Order.  P is asking an order to enforce the Consent Order.  The supporting affirmation would not affect the consideration of the court in any way in the appeal hearing.  I refuse to admit the supporting affirmation as evidence in the appeal.

12.  With respect, the points made by D in the appeal hearing are points relating to the original dispute.  Since the original dispute has been settled, evidence and arguments concerning the original dispute are no longer relevant. There is no ground upon which the settlement agreement can be set aside.  The Consent Order must be given effect.  D should pay the agreed sum as stipulated in the Consent Order to P.

13.  D has only paid a small portion of the settlement sum, i.e. HK$10,000, to P.  In my judgment, D must also pay the remaining balance of HK$68,000, to P.

14.  There is no merit in D’s appeal.  I would dismiss D’s appeal and affirm the master’s decision.

Disposition

15.  D’s appeal be dismissed.  Costs should follow the event.  I order that costs of D’s appeal be paid by D to P forthwith, and the amount be summarily assessed at HK$400.