ALIDEX PORTFOLIO, SA v. KWOK SIU MING SIMON

HCMP 2425/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 2425 of 1999

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J U D G M E N T

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Chan, CJHC (giving the judgment of the court) :

1. In its amended Summons, the applicant (which was the 4th defendant in the proceedings) applies for extension of time to appeal against the order of Rogers JA made on 27 May 1999 dismissing the applicant's application for extension of time to appeal against Stone J's judgment made on 18 November 1998. The amended Summons also asks for extension of time to appeal against Stone J's judgment.

2. The bases for the amended Summons are Order 59 rule 14(12) and Order 3 rule 5 of the Rules of the High Court and the inherent jurisdiction of the court. Counsel for the respondent (who was the plaintiff in the proceedings) queries whether this is the correct procedure. It is submitted that the order of Rogers JA was in effect a determination on an application for leave to appeal and hence Order 59 rule 14(12) does not apply.

3. Order 59 rule 14(12) provides :

"An appeal shall lie to the Court of Appeal from any determination by a single judge, not being the determination of an application for leave to appeal, and shall be brought by way of fresh application made within 10 days of the determination appealed against : (then follows a proviso which is not relevant to this appeal)" (emphasis added)

4. In its application before Rogers JA, the applicant asked for extension of time to appeal against Stone J's judgment and for various directions in relation thereto. It was not an application for leave to appeal since no leave is required to appeal against Stone J's judgment and Rogers JA's order was not a determination of an application for leave to appeal. Order 59 rule 14(2), which provides that an application to the Court of Appeal for leave to appeal shall include, where necessary, any application to extend time for appealing, does not apply. It deals only with the situation where leave to appeal is necessary but a party is out of time and seeks extension of time to do so. The present application, in our view, falls within Order 59 rule 14(12).

5. It is not disputed that the factors to be taken into account in an application for extension of time to appeal are : the length of the delay, the reasons for the delay, the merits of the appeal and any prejudice to the respondent. Counsel for the plaintiff submits that judging from the history of these proceedings, the applicant has been guilty of delay and is abusing the process of the court.

6. The history of the proceedings leading to the present application is this. The plaintiff issued the writ on 29 July 1997. In his Points of Claim, he alleged that his former secretary, the 3rd defendant, together with her friend, the 2nd defendant, had defrauded him by transferring US$3.2 million from his account into an account in the name of the applicant with Rothschild Bank, a Swiss Bank. The joint defence of the 2nd and 3rd defendants and the applicant was that there was a joint venture agreement and that the money was transferred for that purpose.

7. The trial of the action was fixed for 16 November 1998. A week before the trial, the 2nd and 3rd defendants (who were apparently also giving instructions on behalf of the applicant) sent a fax to the court asking for an adjournment on the ground inter alia that they had difficulty in coming to Hong Kong. This request was refused. The trial proceeded in the absence of the 2nd and 3rd defendants and the applicant. On 18 November 1998, the judge gave judgment in favour of the plaintiff.

8. According to the applicant, it received a copy of the judgment on 28 November 1998 and a sealed copy of the order on 7 December 1998. But it was not until 26 April 1999 that the applicant filed an ex parte application for extension of time to appeal against Stone J's judgment. Rogers JA directed that it should be done by way ofinter partes hearing. Another summons was then issued and the application was heard before Rogers JA on 27 May 1999. At the hearing, the applicant was represented by counsel and solicitors. Counsel applied to the judge for an adjournment on the ground that the applicant intended to instruct senior counsel. This request for adjournment was refused. Counsel then indicated to the judge that the applicant would not proceed with the application. Thereupon, the judge dismissed the application for an extension of time, struck out the appeal and awarded costs against the applicant. (Strictly speaking, there was no appeal to be struck out.)

9. On 25 June 1999, the applicant filed another ex parte application to the Court of Appeal asking to renew the application for extension of time to appeal and for time to make the renewed application. A hearing date was fixed for 20 July 1999. However, on 14 July 1999, the applicant's present solicitors (who were instructed on 13 July to replace the former solicitors) applied to the court in writing to withdraw the application. Apparently that was because it was thought that the wrong procedure was adopted. Leave to withdraw was granted by Nazareth VP on 15 July 1999. However, the present application was only filed on 5 August 1999.

10. There was clearly an attempt by the 2nd and 3rd defendants and the applicant to postpone the trial. When that failed, they did not even turn up at the trial. Although the applicant had received a copy of the judgment on 28 November 1998, it had taken almost 5 months to make an application for extension of time to appeal against that judgment. The evidence filed on behalf of the applicant tries to explain why it had taken so long to take this step. It is a long explanation. The gist of it is that the applicant had difficulty in getting a firm of solicitors and counsel to advise and represent it, although it also admitted that it was aware of the urgency of the matter. This explanation defies commonsense. The judgment was for a huge sum of money - US$3.2 million. There was also a worldwide injunction granted by the trial judge restraining the applicant from disposing of its assets including the money in the Swiss account. This would have created sufficient concern to any company to have started to do something immediately upon learning of the judgment and the reasons for it in November 1998. However, it would seem that the first step to appeal against the judgment was not taken until after the applicant had failed to challenge the attachment of the money in the account in Switzerland. It is incredible even to suggest that a foreign company had to take five months to instruct lawyers in Hong Kong to take steps to appeal against the judgment. Further, having taken so long to take the first step, one would expect that the applicant would be serious about its application. However, the behaviour of the applicant's lawyers who must have been acting under instructions at the hearing on 27 May 1999 was quite amazing. The reasons offered for such behaviour in Mr Davis' affidavit are that the previous solicitors had relied on the wrong grounds and that he did not know why the application was not proceeded with on 27 May 1999. That is hardly a satisfactory explanation. What is more telling against the applicant is that there is no reason given as to why after the dismissal by Rogers JA of the first application, a fresh application was only made on 25 June, almost a month later. There is also no reason given as to why that application was withdrawn. If it was taken out under the wrong rule, there was nothing to stop the applicant's new solicitors from applying to amend the summons and relying on the correct rules. They were instructed on 13 July and the hearing date was fixed on 20 July. It is also significant to note that the present application was only made on 5 August which was almost three weeks after they had withdrawn that application. It would seem, according to the applicant, that the whole proceedings had been riddled with delays and mistakes by its previous lawyers. No satisfactory explanation has been given in respect of any of these delays. Those explanations which had been offered were not acceptable at all.

11. As to the merits of the intended appeal, Mr Davis of the applicant says in his affidavit that four grounds are to be relied on. First, it is alleged that the judge was wrong to hold that the money standing in the account with Rothschild Bank in Zurich in the name of the applicant was held by the applicant as constructive trustee for the plaintiff. It is said that the judge had failed to take into account that since the bank account was held in Switzerland, the law of Switzerland should apply and that there was no constructive trust concept under that law. Second, it is alleged that the judge was wrong in failing to consider that the legal owner of the money in the account was the bank in Switzerland. Third, the judge was wrong in subjecting the applicant to a potential double liability. Fourth, the judge was wrong to conclude that the applicant was the instrument of the 2nd defendant and a party to the alleged fraud on the plaintiff without a specific finding that the applicant was the instrument of the 2nd defendant.

12. It is significant to note that none of these four grounds of appeal attacks the judgment against the 2nd and 3rd defendants and the applicant for the payment of US$3.2 million or the worldwide injunction. The applicant only challenges the judge's declaration. The declaration is aimed at enabling the plaintiff to lay his hands on the specific funds in a specific account. Between the plaintiff and the applicant, the applicant is indeed a trustee for the money for the plaintiff. As far as the applicant is concerned, it has not disputed that the money came from the plaintiff. Once the judge held that there was no joint venture agreement as alleged in the defence, the applicant cannot deny that it is holding the money for the plaintiff. Further, whatever the nature of the funds in Switzerland as between the applicant and Rothschild Bank, the money came from the plaintiff. As between the applicant and the bank, it was a banker and customer relationship. The bank was indebted to the applicant for the money. But as between the applicant and the plaintiff, the plaintiff was and still is owed the money. The judge's declaration that the plaintiff was the beneficial owner of the money was not inconsistent with the bank being the legal owner of the money in the account. There is also no question for any double liability because the judge granted one relief in rem (in relation to the money standing in the bank account) and another relief in personum (in relation to the debt). As far as the fourth ground of appeal is concerned, the judge had clearly made a finding on the facts that the 2nd and 3rd defendants had defrauded the plaintiff by transferring the money into a bank account of the applicant. If the judge had rejected the defence of a joint venture, it would follow that the applicant must have been used as an instrument to receive the money. That was what the judge had held. The applicant was therefore accountable to return the money or repay to the plaintiff.

13. If the applicant is not challenging the judgment in personum against the applicant for US$3.2 million and the injunction restraining it to dispose of its assets including the money in the Swiss account, the purpose in challenging the declaration of constructive trust can only be to frustrate the judgment. The applicant is a foreign company and the money is in a foreign account. There would be little or no hope of a successful execution on the monetary judgment without the declaration and injunction. The appeal is nothing but an attempt to obstruct the execution of the judgment in favour of the plaintiff. The application for extension of time which had been delayed and further delayed is nothing but an abuse of the process of the court. There is no real chance of success in the appeal.

14. For these reasons, the application for extension of time to renew an application to the Court of Appeal and the application to renew the application if time is extended are refused. There would be an order for costs to be paid by the applicant to the plaintiff.