TRILLION STAR (ASIA) LTD v. GAIN FORTUNE CORPORATION LTD

DCCJ 4722/2023

[2025] HKDC 763

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4722 OF 2023

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DECISION

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1.  The defendant now seeks leave to appeal against my Decision dated 16 January 2025 ([2025] HKDC 65), by which I confirmed the decision of a Master in granting summary judgment in favour of the plaintiff for HK$998,000.00.

2.  It is trite that the defendant shall be granted leave to appeal against my Decision if its intended appeal is reasonably arguable; or there are some reasons to grant leave to appeal in the interest of justice. Reasonable prospect in an intended appeal means the merits are more than fanciful, but there is no need to show that it will probably succeed: SMSE v KL [2009] 4 HKLRD 125.

3.  This is my decision on the defendant’s application for leave, after considering the respective written submissions filed by the parties.

The defendant’s grounds of appeal

4.  As I understand it, the defendant’s case can be set out as follows:-

4.1.  The HK$1 million the plaintiff paid the defendant in exchange for the defendant’s undertaking was earnest money to induce the defendant to enter into the provisional agreement.

4.2.  After the defendant signing the undertaking on 16 February 2023, the parties entered into the provisional agreement. This was evidenced by the plaintiff showing the defendant that it also signed on the provisional agreement.

4.3.  The undertaking and the earnest money achieved their purpose. According to the terms of the provisional agreement, the HK$1 million was deemed to be part of the deposit the plaintiff had to pay the defendant.

4.4.  Hence, the plaintiff cannot ask for the return of the HK$998,000 (HK$1 million less HK$2,000 as compensation, as per the terms of the undertaking) based on the undertaking.

5.  The defendant reasons that, because I allegedly erred in holding that its case was not reasonably arguable, I erred in concluding that:-

5.1.  The undertaking was supported by good consideration (Decision §11.1);

5.2.  It was strictly irrelevant to consider the terms of the provisional agreement (Decision §11.2);

5.3.  In any event, even if one considered the terms of the provisional agreement, the undertaking would still be supported by good consideration (Decision §11.3);

5.4.  The undertaking did not lapse in its effect, even assuming the provisional agreement came into effect subsequently (Decision §§13-14);

5.5.  The HK$1 million earnest money did not subsume as part of the deposit under the provisional agreement (Decision §14.2); and

5.6.  Generally, the defendant has not raised any triable defence (Decision §16).

6.  The 6 alleged errors set out in §5 above are the 6 matters complained of in the draft Notice of Appeal to say that the Decision erred in fact and in law.

7.  In my decision, in order for the defendant to demonstrate that it has any reasonable prospect in its intended appeal, it must first show that its submissions on the validity of the undertaking (as summarized in §4 above) is reasonably arguable.

8.  Mr Kelvin Liu, counsel for the defendant, submits that the undertaking could not have been valid once the provisional agreement was signed by both parties.

9.  I did not accept such submissions in the Decision; nor do I find the defendant demonstrating any error in my reasoning:-

9.1.  Mr Liu has not submitted why I erred in holding that, on the face of the undertaking, it did not say it would lapse upon the signing of the provisional agreement;

9.2.  With respect, I do not agree with the premises underlining Mr Liu’s submissions that the undertaking and the provisional agreement could not have been valid contemporaneously. I have not been shown any legal authority to that effect. Insofar as the defendant argues that the terms of the provisional agreement showed that the undertaking would no longer be valid after the provisional agreement came into force, I already rejected such argument in §14 of the Decision. The defendant simply repeats the submissions I already considered at the hearing.

9.3.  Mr Liu submits that the undertaking was in conflict with the provisional agreement. I agree with Ms Pauline Leung, counsel for the plaintiff, that this all the more confirms that the provisional agreement and the undertaking could have been valid at the same time[1].

10.  Since it is my decision that the defendant cannot demonstrate that I erred in finding that the undertaking had a separate and independent existence from the provisional agreement, I similarly reject the rest of the defendant’s arguments as not reasonably arguable:-

10.1.  I reject the defendant’s submissions that the undertaking was at most supported by past consideration. Mr Liu seems to argue that, since the HK$1 million the plaintiff paid was deemed by Clause 2(a) of the provisional agreement as (partially) fulfilling the plaintiff’s obligation to pay deposit, it could not have acted as the consideration supporting the undertaking. With respect, I cannot see why the HK$1 million the plaintiff paid the defendant could not act as both earnest money and part deposit at the same time, in the absence of express wordings to the contrary. The parties were at liberty to dispense with the actual payment of deposit under the provisional agreement, on the basis that the plaintiff already paid HK$1 million as earnest money pursuant to a different legal obligation. But, without more, this could not mean that the original legal basis for the plaintiff’s HK$1 million was extinguished.

10.2.  Clause 12 or Clause 24 of the provisional agreement[2] provided for the situations under which the plaintiff could ask for the return of the HK$1 million under the agreement itself. In the absence of clear wordings to the contrary, they could not have eliminated the plaintiff’s right to ask for the return of the HK$998,000 as per the undertaking.

10.3.  Ultimately, the plaintiff’s claim rests on the undertaking alone. The defendant does not raise any counterclaim for breach of the provisional agreement. Hence, it does not concern this court as to whether the defendant did have any ground to retain or demand from the defendant HK$1 million, or any part of it, as per the terms of the provisional agreement.

10.4.  In passing, I note that the defendant takes issue with what I said in §11.3 of the Decision. That was said in the context of assuming the factual context in favour of the defendant. It cannot be taken out in isolation to suggest that the plaintiff’s case is contradictory with respect to the validity and/or status of the provisional agreement.

11.  Overall speaking, I do not see why leave to appeal ought to be granted in favour of the defendant.

Conclusion

12.  The defendant’s application for leave to appeal is dismissed with costs to the plaintiff, together with a certificate for counsel. The plaintiff has not submitted a statement of costs for summary assessment; in absence of such a statement, I summarily assess the plaintiff’s costs at HK$50,000.

13.  The above costs order is nisi. Any application for variation should be made by letter within 14 days of this Decision, and shall be dealt with on paper.

14.  I thank Ms Leung and Mr Liu for their helpful assistance.