XCHRX CHAN MIU CHEUNG v. PRAGUE ENTERPRISES LIMITED AND OTHERS

HCMP 4802/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 4802 OF 1999

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J U D G M E N T

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1. Stirling Drainage Services Ltd. ("the Company") was incorporated in 1982. The principal shareholder initially was John Gilbert. However, within a few years all the issued shares in the Company had been transferred to the 1st Defendant, Prague Enterprises Ltd. ("Prague"). Subsequently, Prague transferred a few of those shares to the 2nd and 3rd Defendants, Anthony Fahy and his wife Yeung Suk Tao. Mr Fahy and his wife were between them the majority shareholders in Prague.

2. Eventually, Mr Gilbert and Mr Fahy fell out, and Mr Gilbert commenced the proceedings to which the application now before me relates. In those proceedings, Mr Gilbert claimed that Mr Fahy had "stolen" the Company, whereas Mr Fahy's complaint was

".... that the kindness showed by the Defendants in helping the Plaintiff out of his business difficulties resulted in their acquisition of a company, the extent of whose debts and problems the Plaintiff had failed to disclose to them."

That is a quotation from the judgment of Barnett J in the action. That judgment was delivered on 13 March 1991 following a trial lasting 27 days. In his judgment, Barnett J concluded that the transfer of Mr Gilbert's shares in the company to Prague had been induced by undue influence on the part of Mr Fahy. On 16 May 1991, Barnett J ordered that the relief to be afforded to Mr Gilbert against the Defendants should be damages to be assessed. On the assessment of those damages, which Barnett J himself conducted, he decided that the assessment should reflect the valuation of the shares as at May 1984, the measure of damages being the price for which Mr Gilbert could reasonably have expected to sell his 51% shareholding in the Company at that time. On 9 October 1992, Barnett J assessed those damages at $176,225.00 and ordered interest on that amount at the rate of 10% from the date of the issue of the writ.

3. Over the years since then, Mr Gilbert, and subsequently his estate following his death, attempted to enforce the award for damages. Applications for charging orders in respect of various properties owned by Prague and Mr Fahy were made. Eventually, in November 1998, a master made charging orders absolute in respect of three properties. Prague and Mr Fahy appealed against the charging orders absolute. That appeal was heard by Yuen J and, by a judgment handed down on 25 March 1999, she dismissed the appeal. Her order was perfected on 28 April 1999.

4. On 2 August 1999, Mr Fahy filed in court a notice purporting to be a notice of intention to apply for leave to appeal out of time. That application was placed before me. It was unclear who was seeking leave to appeal, and in any event leave to appeal was not required. What was required was an extension of time for appealing. I requested Mr Fahy to clarify the position. After some correspondence, it emerged that both Prague and Mr Fahy were seeking an extension of time for appealing, and the orders which they wished to appeal were not merely the order made by Yuen J on 25 March 1999 but also the original orders of Barnett J of 13 March 1991 and 9 October 1992.

5. Mr. Fahy has been given permission to represent Prague. He told me today that the reason why he did not appeal against the orders of Barnett J was because he had obtained judgment against Mr Gilbert in 1987 for about $430,000.00, and his solicitors had advised him that there was no point in appealing against the orders of Barnett J because the $176,225.00 could be set off against the judgment debt of about $430,000.00. It was only when Mr. Gilbert's costs of the action were taxed at about $1.9m. that Mr Fahy realised that he had to appeal against Barnett J's original orders. Mr Fahy claims that his solicitors did not comply with his instructions to apply then for an extension of time for appealing against Barnett J's orders. In any event, in 1994 Mr Fahy had a stroke and was unable to follow the matter up. I am not in a position to determine whether what Mr Fahy has told me is correct but, upon the assumption that it is, it would not, I think, be right to re-open issues which were decided so long ago.

6. As for the order made by Yuen J, Mr Fahy decided to represent himself after the hearing before her, and that was the reason why he did not apply for leave to appeal (as he put it) until 2 August 1999. However, having read carefully the judgment of Yuen J, I have not discerned any basis on which it could be said that an appeal against her judgment is likely to succeed. For these reasons, the application for an extension of time for appealing against the orders of Barnett J and Yuen J is dismissed.