WONG YUK FUNG v. WOO CHOR WAH AND ANOTHER

HCA 7091/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 7091 OF 2000

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D E C I S I O N

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Introduction

1.  This is the Plaintiff’s application for leave to appeal out of time against the order of Registrar C Chan dated 15 October 2001 allowing Lehin Securities Ltd (“Lehin”) to be joined as the 2^nd Defendant in this action.  On 31 March 2004, I dismissed the Plaintiff’s application and ordered him to pay Lehin’s costs to be taxed on an indemnity basis.  The reasons for my decision are as follows.

Background

2.  The Plaintiff cohabited with the 1^st Defendant (“Ms Woo”) since 1982.  Two children were born out of that cohabitation.  On 12 June 1986, Ms Woo became the sole registered owner of a property in Beacon Hill (the “Property”) in which the family lived.  The Plaintiff’s case is that the Property was jointly purchased by him and Ms Woo at a price of $912,900.  The cohabitation broke down in 1987.  Three years later, the Plaintiff was evicted from the Property while Ms Woo and the two children continued to reside there.

3.  In 1997, Ms Woo and a Mr Chan opened three securities trading accounts with Lehin.  In course of time, Ms Woo and Mr Chan suffered heavy losses in their securities trading.  Lehin took recovery actions under High Court Action Nos HCA 12480 of 1997 and HCA 12481 of 1997 and obtained judgment against Ms Woo on 22 October 1999.  Chung J ordered Ms Woo to pay two sums of $205,316.98 and $729,937.67.  On 9 December 1999, Lehin obtained two charging orders absolute in respect of the Property.  On 17 December 1999, Lehin started Miscellaneous Proceedings No HCMP 7779 of 1999 under Order 88 and Order 50 to apply for sale and possession of the Property.  Upon being informed by Ms Woo that she held 25% of the interest of the Property on trust for her two children under a separation agreement between the Plaintiff and Ms Woo, the originating summons of HCMP 7779 of 1999 was amended on 16 March 2000 by joining the two children as the 2^nd Defendants.

4.  At that stage, the Plaintiff reappeared in the scene.  On 14 March 2000, he applied to join as a defendant in HCMP 7779 of 1999 claiming that he had at least 35% of the beneficial interest in the Property.  On 15 July 2000, he started the present action against Ms Woo claiming a 50% interest in the Property for having contributed to its purchase price.  That claim was disputed by Ms Woo up until 10 January 2003 (see paragraph 7 below).

5.  On 31 August 2000, the Plaintiff applied for consolidation of HCMP 7779 of 1999 and HCA 7091 of 2000 as he saw his claim in both sets of proceedings were on the same facts.  However, on 23 November 2000, he took out another summons to withdraw his consolidation application.  On 29 November 2000, leave was granted for him to withdraw his application for consolidation.  When the proceedings in HCMP 7779 of 1999 came before Master CB Chan on 26 March 2001, Master CB Chan adjourned the hearing to be heard at the conclusion of the trial in HCA 7091 of 2000.

6.  On 18 June 2001, Lehin applied to be joined as a party in HCA 7091 of 2000.  The Plaintiff opposed to Lehin’s application.  At the hearing on 15 October 2001, the Plaintiff appeared in person while Ms Woo was absent.  Registrar C Chan granted leave for Lehin to join as the 2^nd Defendant in HCA 7091 of 2000.  The Plaintiff did not appeal against the order of Registrar C Chan at that stage and proceeded and submitted to trial.

7.  Shortly before trial of the action in HCA 7091 of 2000, Ms Woo changed her position.  She took out a consent summons on 10 January 2003,  acknowledging that she holds 50% of the beneficial interest of the Property on trust for the Plaintiff.  That effectively reduced the value of Ms Woo’s interest in the Property available to Lehin under HCMP 7779 of 1999 and to the prejudice of Lehin.  The consent summons was listed for hearing before Pang J on the first day of the trial of HCA 7091 of 2000.  The trial took place on 17 February 2003.  Ms Woo was absent.  The Plaintiff appeared in person.  Pang J refused to approve the consent summons.  On 26 February 2003, Pang J delivered judgment dismissing the Plaintiff’s claim in HCA 7091 of 2000.  On 11 March 2003, the Plaintiff lodged an appeal against the judgment of Pang J.  Half a year later on 13 September 2003, he made the present application seeking leave to appeal out of time against the order of Registrar C Chan joining Lehin as a party to HCA 7091 of 2000.

The legal principles

8.  The court has unfettered discretion under Order 3 rule 5(1) to extend the time for appealing an order of a master to a judge in chambers.  As with the exercise of any discretion, the court must be guided by legal principles.  The legal principles relevant to the exercise of such discretion have been usefully summarised by Keith J (as he then was) after reviewing a number of authorities referred to him in Chiu Sin-chung v Yu Yan-yan, Angela and Another [1993] 1 HKLR 225 at 227.  These principles are as follows:

(i)    The rules of court must prima facie be obeyed, and in order to justify a court in extending the time during which some step in procedure requires to be taken there must be some material upon which the court can exercise its discretion.

(ii)   Accordingly, the prerequisite of an application to extend time is a clear statement as to the reasons for the time limits not having been observed and for any delay in then applying for an extension.

(iii)    Once the time for appealing has elapsed, the would-be respondent who was successful in the court below is entitled to regard the judgment in his favour as being final.  If he is to be deprived of this entitlement, it can only be on the basis of a discretionary balancing exercise, however blameless the would-be appellant may be for the delay.

(iv)    The factors which are normally to be taken into account in that balancing exercise are (a) the length of the delay, (b) the reasons for the delay, (c) the chances of the appeal succeeding if an extension of time for appealing is granted, and (d) the degree of prejudice to the would-be respondent if the application for an extension is granted.  These factors were also adopted by the Court of Appeal in A Solicitor v Law Society of Hong Kong [1998] 2 HKC 88.

(v)   The fact that the omission to appeal in due time was due to a mistake on the part of the legal adviser, may be a sufficient cause to justify the court in exercising its discretion.

(vi)    Although the existence of prejudice to a would-be respondent is a ground for refusing an extension of time, the absence of prejudice to a would-be respondent is not a ground for extending the time.

(vii)  As for the merits, they will play little part in the balancing exercise if the delay is short and is wholly excusable, but where the delay is substantial and is not wholly excusable, much more merit is required to overcome it.

9.  I agree with these principles but would add the following gloss.  Firstly, since the grant of leave is an indulgence, the court shall not exercise that discretion in vain.  The court shall not grant leave if it would serve no purpose or no useful purpose.  Thus, if the intending appeal has no prospect of success, leave should be refused.  Similarly, in the case of an intending appeal against an interlocutory order, if the applicant is doomed to fail in the main action, even if he may succeed on the appeal based on a technicality, leave should also be refused.  Secondly, in considering the degree of prejudice to the would-be respondent if leave is granted, it is also open to the court to balance that against the lack of prejudice to the would-be appellant if leave is refused.  If the would-be appellant would suffer little or no prejudice, this is a factor to be taken against the grant of leave.  If alternative remedies are open to the would-be appellant, he should be left to pursue those remedies. 

10.  Having set out these relevant principles, I now turn to their application to the facts of the present case.

Length of the delay

11.  The delay in this case was very substantial.  Registrar C Chan granted leave to Lehin to be joined as a party on 15 October 2001.  It was not until two years later that the Plaintiff sought to appeal against that order.  Apart from the inordinate delay, the delay itself raises another problem for the Plaintiff.  Mr Wu submits that the delay in the circumstances is such that the Plaintiff is estopped from raising the issue of Lehin’s joinder.  According to the doctrine of estoppel by convention, when the parties to a transaction proceed on the basis of an underlying assumption (either of fact or of law, and whether due to misrepresentation or mistake, makes no difference), on which they have conducted the dealings between them, neither of them will be allowed to go back on that assumption when it would be unfair or unjust to allow him to do so: per Lord Denning MR in Amalgamated Investment & Property Co Ltd (in liquidation) v Taxas Commerce International Bank Ltd [1981] 3 All ER 577 at 584.

12.  Not only that the Plaintiff did not appeal the order of Registrar C Chan, he proceeded and submitted to trial on 17 February 2003, sixteen months afterwards.  At the trial before Pang J, he did not raise the question of the legality of the joinder.  His action was dismissed and he promptly appealed.  But in his notice of appeal, he raised no complaint about the joinder.  It was not until 13 September 2003 that the Plaintiff back-tracked and sought leave to appeal Registrar C Chan’s interlocutory order, two years after the order was made and when the action has been concluded.  The effect of granting leave and of a successful appeal is that the judgment of Pang J would have to be set aside and a re-trial would follow.  Obviously, the parties conducted the litigation on the basis of the assumption that the order joining Lehin was properly made.  The case was set down for trial and counsel was instructed.  The trial was concluded.  It was only when the outcome of the trial turned against him, that the Plaintiff raised the issue of the legality of the joinder. 

13.  Mr Yau submits that no estoppel could be raised as Lehin suffered no detriment.  I do not agree.  Under this doctrine, no detriment needs to be proved.  The party raising the estoppel is only required to show that it would be unfair or unjust to allow the other party to go back on the assumption.  Since December 1999, Lehin has incurred time and costs in seeking to enforce a money judgment by enforcing it against the Property.  It took all necessary and appropriate steps in enforcing the judgment.  For sixteen months since the joinder was ordered, the Plaintiff sought no legal advice and took no step to appeal the order.  Lehin was entitled to assume Registrar C Chan’s order was final and to incur further time and costs in proceeding with its enforcement action, which it did.  This resulted in the dismissal of the Plaintiff’s action in HCA 7091 of 2000.  That action has hitherto obstructed Lehin from proceeding further in HCMP 7779 of 1999.  The conclusion of HCA 7091 of 2000 has the effect of affirming the extent of Ms Woo’s interest in the Property available to Lehin for satisfying the two judgments against Ms Woo.  For the Plaintiff now to turn round and seek to challenge an interlocutory order after Lehin had gone all the way down the road of litigation and obtained a final judgment in HCA 7091 of 2000 is clearly a grave prejudice to Lehin. If leave is granted, Lehin’s enforcement action will be further delayed and all its costs in connection with HCA 7091 of 2000 wasted.  In the circumstances, it would be unfair and unjust to allow the Plaintiff to go back on the assumption.  If detriment is needed, this is a sufficient detriment.

The explanation for the delay

14.  The Plaintiff’s explanation for not having observed the time limit is that he is a layman and had been under the wrong impression that Registrar C Chan would not have erred in law in granting the joinder.  As for the delay in applying for extension of time, he attributed it to his solicitors.  Mr Yau explained the delay in his part was that not until the decision in Sanders Lead Co Inc v Entores Metal Brokers Ltd [1984] 1 ALL ER 857were the solicitors aware of the existence of a cause of action based on resulting trust.  That of course was not a valid reason as Sanders Lead Co Inc v Entores Metal Brokers Ltd was not a recent decision, but one which was decided in 1984.  However, accepting as the authorities have shown that omission to appeal in due time as a result of neglect of the solicitor may be a sufficient cause to justify the court in exercising its discretion: see Gatti v Shoosmith [1939] 3 All ER 916 at 919G, I would on the same analogy give the Plaintiff the benefit that his ignorance of the law has the same effect.  But the length of the delay, his failure to challenge the joinder at trial and in his notice of appeal against the decision of Pang J must weigh heavily against the genuineness of his explanation.

Prejudice to Lehin

15.  I have already referred to the prejudice which would be suffered by Lehin in terms of time and costs if leave to appeal out of time is granted.  More specifically in the present connection, Lehin has taken four years since commencing enforcement action in HCMP 7779 of 1999.  Today, it is still being kept out of the fruits of its litigation.  Of the four years, two years were attributable to the obstructive action caused by the Plaintiff in instituting HCA 7091 of 2000.  There is no reason why Lehin should suffer further delay by allowing the Plaintiff to appeal on a point which he should have taken at the latest when the matter came before Pang J in February 2003.  It is also an affront to justice to allow a party leave to appeal an interlocutory order after conclusion of the trial which turned against him.  This amounts to an abuse of process and should be stopped instead of being encouraged: see Berthier Godown Ltd v E Wah Realty Ltd [1986] HKC 8 at 13C-15A.

16.  On the other hand, the Plaintiff would suffer little or no prejudice even if leave is refused.  Indeed, even if leave were granted, it would be of no consequence to the Plaintiff.  The reason is simple.  As can be seen from the judgment of Pang J when he dismissed the Plaintiff’s action in HCA 7091 of 2000, the Plaintiff was unable to prove his case.  There were two defendants in that action, Ms Woo and Lehin.  Ms Woo consented to judgment and was absent at the trial.  Lehin, not being a party to the purchase of the Property, had no input by way of evidence.  The Plaintiff’s action was dismissed because Pang J was not satisfied that the Plaintiff had any interest in the Property.  His evidence was disbelieved by the judge.  Pang J was even wary that the Plaintiff might have colluded with Ms Woo to defeat Lehin’s interest in the two charging orders: see paragraph 17 of the judgment of Pang J.  Even if Lehin had not been a party to that action, the result would have been the same: the Plaintiff was disbelieved and was unable to prove his case.  Thus, even if leave to appeal out of time were granted and the Plaintiff were successful in the appeal resulting in the joinder being set aside, he would lose the action just the same.  To that extent, the Plaintiff’s application for leave to appeal out of time is frivolous, vexatious and otherwise an abuse of process of the court.  To allow the application would only delay justice to Lehin and adds to its costs.

The Plaintiff’s grounds of appeal

17.  The Plaintiff raises three grounds of appeal.  Firstly, the court has no jurisdiction to order the joinder.  Secondly, Lehin has no interest in the Property.  Thirdly, the order was a wrongful exercise of jurisdiction.  Mr Yau submits on behalf of the Plaintiff that the issue between Lehin and Ms Woo in HCMP 7779 of 1999 is a creditors’ commercial or financial interest which is contingent upon the outcome of the action between the Plaintiff and Ms Woo in this action, while the issue between the Plaintiff and Ms Woo in this action is the beneficial interest in the Property which arose as a result of the Plaintiff’s contribution to the purchase price of the Property.  He submits the two issues or interests are unrelated and there was no cause of action between Lehin and the Plaintiff and no counterclaim by Lehin against the Plaintiff.  Hence, he submits the Court has no jurisdiction to grant the joinder and it was a wrongful exercise of jurisdiction to do so.

18.  With respect, I find the Plaintiff’s argument semantic and based on a misunderstanding of Order 15 rule 6(2)(b) of the Rules of the High Court under which Lehin made the joinder application.  The rule provides that the Court can allow a joinder of party when

“(ii)    any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court if would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter.”

Under this rule, the jurisdiction may be exercised if two conditions are satisfied.  Firstly, there must be a question or issue between the party applying to be joined and one of the parties to the existing cause or matter arising out of or relating to or connected with any relief or remedy claimed in that cause or matter.  There is no requirement that the question or issue between the applicant and one of the parties to be identical with any of the issues between the parties to that action.  That question or issue need not be one in which the parties to the cause or matter are in dispute.  The parties may be interested in that question or issue because it arises out of or is related to or connected with any relief or remedy claimed in the cause or matter which the parties themselves are interested.  The rule does not require that there be a cause of action between the applicant and the other party to the cause or matter.  The second condition is that in the opinion of the Court it would be just and convenient to have that question or issue determined as between the applicant and one of the party as well as between both parties to the cause or matter.

19.  The question or issue between Lehin and Ms Woo is the extent of Ms Woo’s interest in the Property, i.e. whether it was subject to any trust in favour of the Plaintiff in addition to the trust as to 25% in favour of the two children.  That Property is the very subject matter of the HCA 7091 of 2000 which the Plaintiff seeks to claim from Ms Woo.  It is semantic to argue that the interest Lehin has was merely a creditor’s commercial or financial interest contingent upon the outcome of HCA 7091 of 2000.  Thus, this question or issue between Lehin and Ms Woo clearly is related or connected with the relief claimed in the cause or matter between the Plaintiff and Ms Woo in HCA 7091 of 2000.  The Court clearly has jurisdiction to grant the joinder.

20.  As for the exercise of the jurisdiction, the Court has wide discretion.  The discretion may be exercised if the Court is of the opinion that it would be just and convenient to have that question or issue determined once and for all as between Lehin and Ms Woo as well as between the Plaintiff and Ms Woo.  In my opinion, it is certainly just and convenient to do so.  The order for joinder was properly made.  There is little prospect of success in the intended appeal.

Conclusion

21.  So, putting every consideration in the weighing scale, the inordinate delay of two years, the very flimsy reason offered by the Plaintiff for the delay, the lack of prospect of the appeal succeeding if an extension of time for appeal is granted and the degree of prejudice to Lehin, the balance tilts heavily against granting leave to appeal out of time.  As already pointed out, even if leave were granted and the Plaintiff were successful in the appeal, it would be of no consequence to the Plaintiff.  Thus because even with Ms Woo consenting to the judgment and with no evidential input from Lehin, the Plaintiff was disbelieved and failed to proof his case before Pang J.  His evidence is inconsistent by itself and inconsistent with the contemporaneous documents.  His case is inherently incredible.  In short, he is doomed to fail in any re-trial.  Granting him leave to appeal out of time would serve no purpose at all and would only add to the costs and delay to Lehin.  His application for leave to appeal out of time, in the circumstances, is frivolous, vexatious and otherwise an abuse of process of the Court.  The Plaintiff’s application for leave to appeal out of time must be dismissed with costs.

22.  Mr Wu asks for the costs to be taxed on an indemnity basis.  I agree.  The joinder ordered was well within the ambit of Order 15 rule 6.  There is no legal basis for the Plaintiff to seek leave to appeal out of time after such an inordinate delay.  The Plaintiff’s application is also frivolous, vexatious and otherwise an abuse of process of the Court. 

23.  Accordingly, I dismiss the Plaintiff’s application for leave to appeal out of time with costs to be taxed on an indemnity basis.