HANSOM FINANCE LTD v. CHEN JIARONG

HCA 858/2019

[2020] HKCFI 3167

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 858 OF 2019

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DECISION

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1.  These proceedings concern a debt allegedly owed by the defendant (“Chen”) to the plaintiff (“Hansom”) under two loan agreements. According to Hansom, Chen has failed to repay the loans to Hansom in accordance with the loan agreements between Hansom and Chen. Chen denies that he has any obligation to make any repayment to Hansom.

2.  On 21 May 2020, Hansom succeeded in obtaining a summary judgment against Chen (“the summary judgment”) before Master Cruden. On 2 June 2020, Chen lodged an appeal (“the appeal”) against the Master’s decision pursuant to Order 58.

3.  Originally, the appeal was scheduled to be heard on 28 December 2020.  On 8 December 2020, I directed that the appeal be determined on paper without an oral hearing.  On 14 December 2020, counsel for Chen provided his written submissions to this court.  Subsequently, the following events took place:

(1)     On 18 December 2020, Messrs Nixon Peabody CWL (“NPCWL”), solicitors for Hansom, wrote to the court and said that by a Deed of Assignment signed between Hansom and Emperor Jade Group Limited (“the Assignee”), Hansom has already assigned the relevant debt in these proceedings to the Assignee.  Hansom has liaised with the Assignee and its legal representative, Messrs Anthony Siu & Co (“ASC”), for the transfer of court documents in this respect.  It is NPCWL’s understanding that the Assignee would take the relevant steps to participate in these proceedings.  Given Hansom has already assigned its interest in the subject matter of these proceedings, NPCWL have no instruction to proceed further with the appeal hearing.

(2)     On the same date, after seeing the aforesaid letter, I directed that NPCWL and ASC should write to the court within 7 days to propose for directions for the disposal of the appeal lodged by Chen.

(3)     After issuing the said directions, I saw a letter from ASC dated 18 December 2020, in which ASC said that they did not have instructions to have any involvement in these proceedings at the moment.

(4)     On 21 December 2020, I issued the following directions:

“The plaintiff’s solicitors’ letter dated 18 December 2020 and the assignee’s solicitors’ letter dated 18 December 2020 refer.

Up to now, the plaintiff in these proceedings is Hansom Finance Limited (“Hansom”). The defendant has lodged an appeal by a notice of appeal dated 2 June 2020, and that appeal originally was scheduled to be heard on 28 December 2020. Although I have directed the appeal be determined on paper without an oral hearing, that does not change the fact that the defendant is entitled to have a determination on the appeal without undue delay. Whether Hansom or the assignee would take any part in the appeal is their own choice.

Unless I receive any written representation from the parties or from the assignee by noon on 23 December 2020, I would proceed to determine the appeal after considering the defendant’s written submissions dated 14 December 2020. No further written submissions would be considered without leave of the court.”

(5)     On 21 December 2020, Messrs Tung, Ng, Tse & Lam (“TNTL”), solicitors for Chen, wrote to the court and said the following:

(a)     The assignment as said by NPCWL in their letter dated 18 December 2020 (“the Assignment”) is new evidence.  Chen does not object that the court takes the Assignment into account in considering the appeal.

(b)     Unless and until Hansom and the Assignee have taken out formal application(s) in these proceedings, the plaintiff in these proceedings would remain to be Hansom.  However, both NPCWL and ASC have indicated that they have no instruction to proceed further in these proceedings.

(c)     In view of the Assignment, Hansom has no reasonable prospect of success against Chen in these proceedings, for Hansom no longer has any interest in the debt in question.  Hence, the summary judgment should be set aside and Chen should be given leave to defend in these proceedings.

(d)     Costs of the appeal and the costs of the hearing before the Master should be reserved.  NPCWL may apply to have the costs issue determined in the future if they have instructions to do so.

(6)     On 22 December 2020, TNTL wrote to the court again and said that in addition to the proposal made by them in their letter dated 21 December 2020, they further proposed that these proceedings be stayed with liberty to restore.

(7)     On the same date, ASC wrote to the court and said that the Assignee agreed that the current proceedings be stayed with liberty to restore.

(8)     On 23 December 2020, NPCWL wrote to the court and said that their position remained as having no instruction to proceed in these proceedings.

4.  An appeal hearing under Order 58 is a de novo hearing.  Subject to the restriction in Order 58 rule 1(5), the hearing before me is an actual rehearing as if the application came before me for the first time.  See Hong Kong Civil Procedure 2021, Volume 1, §58/1/2.

5.  Order 58, rule 1(5) 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.”

6.  The phrase “special grounds” in Order 58 rule 1(5) is the same expression as in 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.

7.  I am of the view that the Assignment is a new matter which I may take into account in considering the appeal.

(1)     The Assignment is a matter occurred after the date of the summary judgment. Accordingly, the Assignment is a matter within the exception provided in Order 58 rule 1(5), ie “other than evidence as to matters which have occurred after the date on which the judgment, order or decision was given or made”, and hence can be considered in the appeal hearing.

(2)     Further or alternatively, I am satisfied that the Ladd v Marshall conditions have been met and the Assignment can be taken into account in the appeal.

(a)     Condition 1 is fulfilled since the Assignment is a matter occurred after the hearing before the Master.

(b)     Condition 2 is fulfilled for the reason set out in [8] below.

(c)     Condition 3 is fulfilled since the Assignment is a matter volunteered by Hansom and not disputed by the Assignee.  In fact, the Assignment is an admission by Hansom.

8.  With the Assignment in mind, the submission made by TNTL in their letter dated 21 December 2020 is clearly correct.  Even if Hansom had a valid claim against Chen and in respect of which Chen did not have any arguable defence before the Assignment, Hansom can no longer maintain the claim against Chen after the Assignment.  After the Assignment, Hansom is no longer the owner of the debt and has no interest in the debt.  That being the case, Hansom cannot have a judgment against Chen in respect of the debt.

9.  Accordingly, approaching Hansom’s application for summary judgment afresh as if the matter came before me for the first time, with the Assignment being one of the matters before the court, it would not be possible for the court to grant any summary judgment to Hansom.  In the circumstances, I must allow the appeal and set aside the summary judgment.

10.  Based upon the materials now before the court (including the Assignment), I am of the view that Hansom cannot invoke Order 14 to seek a summary judgment against Chen in respect of the debt.  In my view, the correct order to be made in these circumstances is not an order granting Chen leave to defend, but is an order dismissing the Order 14 application.  I so order.

11.  I would adopt TNTL’s proposal and order that costs of the Order 14 application, including the costs of this appeal, be reserved.  I also make an order to stay the proceedings herein with liberty to restore.

12.  For avoidance of doubt, I have not made any ruling on the merit of Hansom’s claim against Chen before the Assignment.  If the Assignee intends to pick up these proceedings and applies for a summary judgment against Chen at a later time, the Assignee may do so.