LAM KAM HUNG AND OTHERS v. HUI CHI WAI AND OTHERS

IN THE COURT OF APPEAL

No. 216/96

(Civil Appeal)

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J U D G M E N T

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Rogers, J. (giving the judgment of the Court):

1. This is an appeal in respect of the conditions imposed in a Decision of Mrs. Justice Le Pichon of the 20th September following her Decision on the 24th June last year giving the 2nd Defendant conditional leave to defend. In the Action the Plaintiff claims against 4 Defendants. The Appellant is the 2nd Defendant, Mr. Yick Kwok Man. He appears in person today although previously he had been represented. The claim against him in the action contained a number of prayers for relief. However, the one that concerns this Appeal is a claim for the sum of HK$1,595,448.49.

2. The Plaintiff applied for summary judgment under Ord.14 in respect of that claim, leaving the other claims against this Defendant for trial. The Master gave the Plaintiff judgment for that sum and the Appellant appealed to the judge in Chambers. The point at issue on that appeal was firstly whether the Defendant had been acting as a disclosed agent in the transaction which was the subject of the action and secondly, even if he had been acting as a disclosed agent, whether that absolved him from liability. The judge held that although the 2nd Defendant's allegation of disclosure of agency was unsupported by any corroborative evidence, there was just sufficient to permit the Defendant to be permitted to defend the action. In so holding, the learned judge held that the 2nd Defendant's case on the factual matters was shadowy. It is unnecessary to deal with the second part since, because the learned judge felt that the 2nd Defendant's case was shadowy, she considered it correct that the leave to defend should be made conditional.

3. In the Decision on 24th June, the learned judge said that the condition should be the payment of the full sum of HK$1,595,448.49 into Court, but gave leave to the 2nd Defendant to apply within 21 days to vary that amount.

4. It is, of course, trite law that a condition for granting leave to defend should not be made one which the Defendant is never able to meet because that in effect would be denying the Defendant leave to defend, and would be a wrongful exercise of discretion.

5. On the other hand it is very important where a Defendant seeks to show that he is not able to fulfil the condition which the judge has imposed that he makes a full and frank disclosure of his financial ability. We refer to the statement made by Brandon L. J. in the case of Yorke Motors (A firm) v. Edwards which was cited with approval by Lord Diplock in the decision reported at 1982 1 WLR, p.444, at p.449 where he said:

"Where a defendant seeks to avoid or limit a financial condition by reason of his own impecuniosity the onus is upon the defendant to put sufficient and proper evidence before the court. He should make full and frank disclosure."

6. The matter next came before the learned judge on the 5th September. The 2nd Defendant put before the judge evidence on affirmation. It became clear at that hearing that there were certain lucunae, to say the least, in the 2nd Defendant's disclosure. It appears, for example, that one company in which the 2nd Defendant had a substantial interest, had significant real estate holdings. It was also brought to the Court's attention that the 2nd Defendant had recently sold a property which he had had in Hong Kong. As a result, the learned judge gave the 2nd Defendant a further chance to make a full and frank disclosure.

7. The matter came back before the judge on the 20th September. On that occasion, the 2nd Defendant did make further disclosure but unfortunately a number of further matters came to light including interests in two companies, one of which had sold property to the company referred to above which owned the real estate.

8. In the light of the new matters which came before the judge on the 20th September, she was forced to conclude in these words:

"Having heard the argument of both sides, I am not satisfied that there has been total and full disclosure by the Defendant (the Appellant) as to his financial circumstances. However, there is evidence that his business ventures are not prospering. I am minded to vary the order by ordering that the conditional leave to defend, being an amount to be paid into court, should be varied to HK$750,000.00."

9. In our view, the learned judge below exercised her discretion correctly. Indeed we might go so far as to say this: that in view of the dissatisfaction which the learned judge expressed with regard to the disclosure which the 2nd Defendant had made, it is perhaps a matter for which the 2nd Defendant can be grateful that the sum required to be paid into court was reduced to the amount which the learned judge ordered.

10. We therefore dismiss this appeal.