LI NANFENG v. WONG CHUN HONG

HCA 3447/2016

[2018] HKCFI 1209

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3447 OF 2016

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DECISION

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Introduction

1.  This is an application of Wong Chun Hong (“Wong”) by summons dated 27 December 2017 (“the Leave Summons”) for leave to appeal against my decision dated 11 December 2017 (“the Decision”) whereby his summons dated 24 May 2017 (“the Summons”) for interpleader relief pursuant to Order 17, rules 1(1)(a), 3(1) and 7 of the Rules of High Court, Cap.4A was dismissed.

2.  In this decision, I shall adopt the abbreviations used in the Decision. I shall not repeat the background facts outlined there. Suffice it to say, after my analysis of the evidence available from §§20 to 33 of the Decision, this court reached the conclusion that Wong failed to bring his application within O. 17 for want of a real foundation for his alleged expectation to be sued by Chen and/or Yu in respect of the Sum.

3.  The threshold that Wong has to satisfy in this application is well-established. This court has to be convinced that his appeal has a reasonable prospect of success or there is some other reason in the interests of justice why his appeal should be heard before granting leave and leave to appeal is not lightly granted. Under the test in section 14AA(4), High Court Ordinance, Cap.4, reasonable prospects of success involves the notion that the prospects of succeeding must be “reasonable” and therefore more than “fanciful”, without having to be “probable”: SMSE v KL [2009] 4 HKLRD 125 at §17 per Le Pichon JA.

The proposed grounds of appeal

4.  In his skeleton submission, Mr Lee (with Ms Lo), for Wong, advances 6 proposed grounds of appeal. He also draws my attention to two letters issued by the High Court to MCWK dated 19 December 2017 after the last hearing. By the two letters, Wong was notified that the service of the Summons and other documents had not yet been served upon Chen on the Mainland whereas the service on Yu was effected at his Shenzhen residential address only after the hearing. Shortly afterwards, MCWK contacted Yu’s legal representatives on the Mainland and sought to ascertain his position. Yu has not, thus far, responded at all.

5.  In addition, the High Court, on 22 January 2018, further issued two letters to MCWK and informed them that the service on Chen and Yu at their common Shenzhen address was unsuccessful.

6.  As indicated in the Decision, this court was able to come to the conclusion without having waited for the successful service of the Summons on Chen and Yu at all.  It is clear that neither of them has any adverse claim in respect of the Sum. Thus, Wong is not entitled to any interpleader relief under O.17. Up till now, they have made no such claim at all. This can only reinforce my conclusion.

7.  I now turn to the 6 proposed grounds and I do not think I should deal with them one by one. Some of them are interrelated and similar in nature. I first deal with a mistake that I made in paragraph 5 of the Decision. At the end of that paragraph, by way of background, I said that the two transfers are evidenced by two Bought and Sold notes both dated 4 January 2008. In fact, they, though relating to the same amount of the shares, actually related to other immaterial transactions.

8.  I do not think that the mistake has any impact on my analysis of the evidence and the conclusion at all. It is indeed common ground that the two transfers were completed by Chen and Yu albeit in a complicated manner. I ask Mr Lee whether he agrees that this mistake is irrelevant and his reply is composed of three words only – “yes and no”. I do not think there is any merit in this ground.

9.  Mr Lee submits that I also erred in my suggestion that Wong accepts in the 2015 Defence that he had to pay Li the Purchase Price and he had indeed made partial payment to Madam Li. I do not agree that it was a mistake. Whatever Wong said in respect of such a payment in his supporting affirmation is another matter.

10.  Next, Mr Lee highlights that the draft consent order submitted to this court at the last hearing. He submits that the terms therein reflect the primary position of Li and he actually did not ask for the dismissal of the Summons.

11.  I cannot agree with Mr Lee. I recall that Li’s leading counsel expressly told this court at the outset of the last hearing that Li agreed to the draft consent order only on the basis that this court agreed to adjourn the hearing of the Summons. His primary position remained that Wong’s application did not fall within O.17, which this court accepted after examination of the evidence.

12.  In any event, this court was entitled to, and indeed should, examine the merits of the application of Wong in light of the established principles relating to interpleader relief irrespective of the parties’ position.

13.  I do not think that I have mistaken the law about interpleader proceedings though I did not refer to all the relevant authorities cited by the parties in the Decision.  I acknowledge that Wong has only to show a prima facie case only on the part of Chen and/or Yu against Wong to provide a real foundation for Wong’s expectation to be sued by them. I was not satisfied that Wong can do so in the end.

14.  Mr Lee submits that being the legal owners of the Sheng Feng Shares, Chen and/or Yu must have a claim against Wong for the Sum being the proceeds of sale of the 4.1 % Shareholding even without making any assertion of their beneficial interests in such shares themselves. As long as they had the legal titles to those shares, they should be entitled to sue Wong for the Sum. This is, in his submission, the obvious legal basis for Wong’s expectation to be sued by them.

15.  I do not think that it is appropriate to take such a simplistic approach. To determine whether there is a real foundation for the alleged expectation to be sued, this court has to take into account all the circumstances including the absence of any suggestion that Wong had in fact another agreement with Chen and/or Yu in respect of the Agreed Transfer. After my analysis of the evidence available, this court came to the conclusion that there is no such foundation. I am not satisfied that my conclusion is arguably wrong.

16.  I should mention that at the hearing, this court also gave directions in regard to Li’s summons for summary judgment against Wong after Mr Yung, for Li, confirmed that he did not press for its determination.

Conclusion and order

17.  For the reasons given above, I cannot see any merits in the proposed appeal. I am not satisfied that it has a reasonable prospect of success. Accordingly, I dismiss the Leave Summons.

18.  Costs should follow the event. I make an order nisi that Wong should forthwith pay Li his costs of and occasioned by the Leave Summons, to be taxed if not agreed.