WANG YUEXIAN v. XINYANG MAOJIAN GROUP LTD formerly known as CHINA ZENITH CHEMICAL GROUP LTD

HCA 231/2022

[2024] HKCFI 417

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 231 OF 2022

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BETWEEN

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DECISION

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INTRODUCTION

1.  On 13 April 2023, Master Elizabeth Cheung granted summary judgment in favour of the plaintiff for the sum of $5,500,000.

2.  The defendant then filed its Notice of Appeal to Judge in Chambers on 18 April 2023 (“the Order 14 Appeal”).

3.  The hearing of the appeal was then fixed to be heard on 17 November 2023.

4.  On 15 November 2023, the defendant filed a summons (“the Further Evidence Summons”) and asked for leave to file and serve the 4^th Affirmation of Ma Kin Ling in support of the defendant’s appeal. The Further Evidence Summons was dismissed at the hearing on 17 November 2023 (“the Further Evidence Decision”).

5.  The Order 14 Appeal was subsequently dismissed by a Decision dated 13 December 2023 (“the Order 14 Appeal Decision”).

6.  By summons filed on 27 December 2023 (“the Leave Summons”), the defendant applied for extension of time to appeal against this Court’s dismissal of the Further Evidence Summons. The sole draft ground of appeal is that this Court had:

“erred in failing to take a holistic view of the claim and the evidence and to give sufficient weight to the relevance and importance of the copy Bond exhibited at ‘MKL-7’ to the 4^th Affirmation of Ma Kin Ling to the entire case.”

THE APPLICABLE LEGAL PRINCIPLES ON LEAVE TO APPEAL

7.  The requirement for granting leave to appeal is set out in section 14AA(4) of the High Court Ordinance (Cap 4, Laws of Hong Kong). It is trite that leave to appeal shall not be granted unless the court is satisfied that the intended appeal has a reasonable prospect of success or there is some other reason in the interest of justice why the appeal should be heard.

8.  It is also well established that 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 129 at [17]).

9.  In considering whether to grant leave to appeal out of time, it is trite that the Court should consider the length of delay, reasons for delay, the chance of success of the intended appeal and the degree of prejudice to the potential respondent if the time to appeal is extended.

DISCUSSION

Length of delay

10.  The Further Evidence Decision was made on 17 November 2023. It is undisputed that the time for the application for leave to appeal against this decision has expired on 1 December 2023. As the present application was only made on 27 December 2023, there was a delay of nearly 4 weeks, which is not a short period of time.

Reasons for delay

11.  As far as the reasons for the delay is concerned, it appears that it was a deliberate decision on the part of the defendant not to make any leave to appeal application by 1 December 2023, for he stated that:

“The deadline for the Defendant to apply for leave to appeal the Summons Dismissal Order was on 1 December 2023 (i.e. 14 days from the date of the Order). The Defendant did not appeal against the Summons Dismissal Order as an appeal would not [be] necessary if the Defendant was successful in the Order 14 Appeal.”[1]

12.  I must say I am not impressed by such an approach at all. While it is understandable that the defendant might not want to incur any costs on the appeal in the event it succeeded in the Order 14 Appeal, there is nothing which stopped the defendant from lodging an application for leave to appeal first, and asked for a direction that the disposal of the application be withheld, pending the result of the Order 14 Appeal. In the normal course of event, I would have thought the receiving end of such an application would have no problem in consenting to such a direction.

13.  Practitioners are reminded that procedural rules are to be complied with and it is not up to them as to whether they should follow the rules according to their own likings.

Prejudice to the plaintiff

14.  Be that as it may, the plaintiff has not filed any affirmation or made any submission on the prejudice which it would suffer in the event any extension of time is granted. That being the case, I take the view that the most important factor which this Court should consider is the merits of the intended appeal.

Merits of the intended appeal

15.  The defendant has made the following submissions on the merits of the intended appeal:

(1) This Court’s observation that “it may well be going too far to say that the Ladd v Marshall conditions ‘will’ require some modification as if this modification is applicable to every case” (at [23] of the Order 14 Appeal Decision) may not sit well with some Court of Appeal authorities such as West Kowloon Cultural District Authority v AIG Insurance Hong Kong Ltd [2020] HKCA 778, at [14] – [18] and Yu Wing Cheong v Yu Wing Yin [2020] HKCA 629, at [10] – 13] (“the Threshold Argument”);

(2) Having regard to the nature of the application, and taking a holistic view of the nature of the evidence sought to be admitted, this Court ought to have found that the Ladd v. Marshall conditions were satisfied (“the Ladd v. Marshall Argument”).

The Threshold Argument

16.  This Court’s comment that “it may well be going too far to say that the Ladd v Marshall conditions ‘will’ require some modification as if this modification is applicable to every case” was made in relation to Commentary §58/1/3 (page 1234) of Hong Kong Civil Procedure 2024, Volume 1, in which it was stated that the Ladd v Marshall conditions will require some modification in the situation arising on an appeal from a summary judgment.

17.  It was submitted vaguely that the above comment may not sit well with some Court of Appeal authorities. This is not understood:

(1) In West Kowloon Cultural District Authority (supra), the Court of Appeal held that:

“Condition (1) requires that the new evidence could not have been obtained with reasonable diligence for use at the hearing below. The degree of reasonable diligence which the court expects a defendant to have exercised when resisting a summary judgment application must be assessed against the overall circumstances of the case. The court will take into account all relevant factors, such as the time available to the defendant to gather the evidence, the nature of the evidence, the difficulty encountered in obtaining the evidence, and the effort that the defendant had used in gathering the evidence (see Bank of New York Mellon v Sun Jiangrong [2016] 1 HKC 137 at §25)” (emphasis added) (at [20])

It can be seen that what Poon JA (as Poon CJHC then was) stated in Bank of New York Mellon (which this Court also cited in [24] of the Order 14 Appeal Decision) was also quoted. The emphasis was that the degree of reasonable diligence must be assessed against the overall circumstances of the case. I cannot see how what I stated at [23] of the Order 14 Appeal Decision can be said to be “not sitting well” with the Court of Appeal’s decision.

(2) In Yu Wing Cheong, although Lam VP (as Lam PJ then was) in that case did not expressly refer to the case of Bank of New York Mellon, his Lordship certainly did not say that the Ladd v Marshall conditions will require modification in the situation arising on an appeal from a summary judgment.

18.  Therefore, the Threshold Argument has no merits.

19.  Furthermore, even if the Threshold Argument is accepted, it can be seen below that it would not assist the defendant in the present case.

The Ladd v. Marshall Argument

20.  Before I deal with the defendant’s argument under this head, it is worthwhile to set out the relevant parts of Ma Kin Ling’s 4^th Affirmation in full. This Affirmation was filed in support of the Further Evidence Summons. Paragraphs 4 to 6 of the said 4^th Affirmation read:

“4. On 13 November 2023, during my review of the file for the purposes of the hearing of the Notice of Appeal, I discovered that the copy of the Bond exhibited by the Plaintiff at exhibit ‘WYX-3’ is different to the Bond that the Defendant has in its records. There is now produced and shown to me exhibit marked ‘MKL-7’, a copy of the Bond in the possession of the Defendant dated 6 December 2013.

5. Notably, the interest rate on the copy of the Bond in exhibit ‘WYX-3’ states that the interest payable on the Bond is 3% per annum on pages 1 and 3 of the Bond whereas the Bond in possession of the Defendant states that interest payable on the bond is 4% per annum. Furthermore, simplified Chinese text aooears on page 1 of the Bond in exhibit ‘WYX-3’ whereas the Defendant’s Bond at exhibit ‘MKL-7’ is solely in traditional Chinese text.

6. In conclusion, the copy of the Bond in exhibit ‘WYX-3’ is definitely not the Bond that the Defendant issued on 6 December 2013, as exhibited at exhibit ‘MKL-7’.”

21.  Mr Chan for the defendant accepted that, as far as condition (1) of the Ladd v Marshall conditions is concerned, what degree of diligence is required depends on all the circumstances of the case. In this regard, he submitted that:

(1) The defendant was under considerably more time pressure as compared to a trial situation;

(2) The differences between the copy of the Bond exhibited by the plaintiff and the copy in the defendant’s possession are minimal and certainly difficult to spot except on a very close reading and line-by-line comparison of the two documents.

22.  The problem faced by Mr Chan is that the defendant has adduced minimal evidence in support of its case that condition (1) of the Ladd v Marshall conditions is satisfied:

(1) The objective fact is that the defendant had had 3 months to prepare its affirmation in opposition. While that available time must be much less than that for the purpose of preparing a witness statement for a trial, there was simply no evidence from the defendant that 3 months for the preparation of its affirmation in opposition was not enough or that it was time-pressed to prepare such an affirmation;

(2) The emphasis on the very minute differences between the two copies of the Bond is a red-herring because my reading of the 4^th Affirmation of Ma Kin Ling is that he simply had failed to go through his file earlier, but left it until a few days before the Order 14 Appeal hearing. In other words, the reason why he could not adduce the new evidence earlier was not because of the alleged minute differences between the two copies of the Bond, but his failure to go through his file earlier;

(3) I should further add that, with greatest respect, Mr Chan’s submission that, given the very minute differences which were undoubtedly difficult to spot, the defendant could not have had knowledge of the differences at the time of the Order 14 hearing is contradictory to Mr Ma’s own evidence, which, as can be seen above, shows that he could spot the differences once he had reviewed his file.

23.  With the very limited evidence adduced by the defendant in support of the Further Evidence Summons, the defendant’s argument on condition (1) of the Ladd v Marshall conditions is actually a non-starter.

24.  The Ladd v Marshall Argument is therefore bound to fail.

The draft ground of appeal

25.  Before I leave the topic, I ought to say a few words on the draft ground of appeal (see [6] above).

26.  With respect, I do not quite understand what the complaint was. It was said that this Court did not take a holistic view of the claim and the evidence and to give sufficient weight to the relevance and importance of the copy Bond exhibited at ‘MKL-7’ to the entire case. However, it is not clear how that would affect the application of condition (1) of the Ladd v Marshall conditions, which was the crux of the matter.

27.  Mr Chan argued at the hearing that the degree of reasonable diligence required under the said condition (1) is lower if the further evidence sought to be adduced is very important to the case. He relied on what Poon JA said in [25] of the Bank of New York Mellon case (quoted in [17(1)] above) that the Court, in considering condition (1) of the Ladd v Marshall conditions, should take into account all relevant factors such as the nature of the evidence. With greatest respect, this is a bold submission. Apart from the fact that this assertion was not even mentioned in his skeleton argument, the “nature of the evidence” as referred to by Poon JA was taken out of context, because his Lordship was considering whether, taking into account the nature of the new evidence, it could have been obtained earlier with reasonable diligence. It has nothing to do with the importance of the evidence.

Interest of justice

28.  As a separate argument, it was submitted by Mr Chan that leave to appeal should be granted in the interest of justice.

29.  Reliance was placed on the case of Hong Kong Finance Company v Wah Fung Forest Resources Ltd [2023] HKCFI 2248, and it was said that since there is an appeal on foot as of right to the Court of Appeal against the substantive Order 14 Decision, and that the Ladd v Marshall application was dealt with in connection with the Order 14 Appeal Decision, this provides a good reason for granting leave to appeal so that the Court of Appeal has the full evidential picture before it.

30.  I am not persuaded by this submission.

31.  First of all, Anthony Chan J apparently was not laying down any general principle that leave to appeal should be granted in such circumstances.

32.  Secondly, the situation in Hong Kong Finance Company is apparently different. In that case[2], the 3^rd defendant appealed against a Master’s decision in granting default judgment by way of an order for possession. At the appeal, the 3^rd defendant made an application to adduce additional evidence. Anthony Chan J refused the application as his Lordship did not agree that such evidence might have an important influence on the outcome of the matter before him. Be that as it may, his Lordship had taken such additional evidence into account in his consideration of the appeal. It was under such circumstances that his Lordship held that:

“The substantive appeal, together with the fact that the additional evidence was dealt with as part of the Decision, provide a good reason for acceding to this [leave to appeal] application.”[3]

33.  By contrast, this Court did not consider the further evidence sought to be adduced in the consideration of the Order 14 Appeal at all.

34.  Last but not least, as explained above, in my view there is totally no merit in the defendant’s intended appeal against the Further Evidence Decision, because condition (1) of the Ladd v Marshall conditions is clearly not satisfied. It is thus a waste of judicial resources for the defendant to be allowed to bring the matter before the Court of Appeal.

ORDER

35.  For reasons of the aforesaid, the Leave Summons is dismissed.

COSTS

36.  Costs should follow the event. The defendant shall bear the plaintiff’s costs of the Leave Summons.

37.  The plaintiff asked for certificate for two counsel. Without disrespect, I do not consider it appropriate to grant such certificate in the present case, as the present application is straight forward. Further, it is noted that no such certificate had been granted in relation to the Order 14 Appeal.

38.  The plaintiff’s costs of the Leave Summons is summarily assessed pursuant to Order 62 rule 9A(1)(a) of the Rules of the High Court at $72,017, and shall be paid by the defendant on or before 16 February 2024.