STANDARD CHARTERED BANK (HONG KONG) LTD v. WONGGENOS ENTERPRISES COMPANY LTD AND OTHERS

DCMP 878/2018

[2020] HKDC 108

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 878 OF 2018

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DECISION

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1.  On 28 October 2019, I delivered judgment in this action, ordering, among other things, the 1^st and 2^nd defendants to pay the sums outstanding under a mortgage made with the plaintiff, and delivering vacant possession of the property concerned to the plaintiff.

2.  By summons dated 20 November 2019, the 1^st and 2^nd defendants apply for leave to appeal against the judgment.  In the supporting affirmation made by the 2^nd defendant, the 1^st and 2^nd defendants also ask for stay of execution of the order to deliver vacant possession pending the appeal. 

3.  Following the guidance laid down by the Court of Appeal in Tsang Wing Kwai v Tsang Wing Fai [2018] 5 HKLRD 350, [2018] HKCA 759 at para 24, I gave directions for the lodging of written submissions.  Having read the submissions, I am satisfied that an oral hearing is not necessary and the summons is suitable for disposal on paper only.

4.  I shall adopt below the defined terms in the judgment.

5.  In their skeleton submissions, the 1^st and 2^nd defendants set out their proposed grounds of appeal in paras 3(i) to (x) and 4 to 6.

Legal principles

6.  The principles governing the threshold for granting leave to appeal are well-established. The applicant needs to show that the appeal has a “reasonable prospect of success” or there is some other reason in the interests of justice why the appeal should be heard: section 63A(2) of the District Court Ordinance, Cap 336.

7.  An applicant is required to show more than just an arguable case.  What is needed is an appeal that has merits and ought to be heard, although the applicant does not have to demonstrate that the appeal will probably succeed: Wynn Resorts (Macau) SA v Mong Henry [2009] 5 HKC 515 at para 19, per Chu J.  A “reasonable prospect of success” means an appeal with prospects that are more than “fanciful”, without having to be “probable”: SMSE v KL [2009] 4 HKLRD 125 at para 17, per Le Pichon JA.

Proposed grounds of appeal

8.  In essence, under the proposed grounds of appeal, the 1^st and 2^nd defendants seek to establish that they have all along been the 100% beneficial owner of the Property and the 3^rd defendant has never had any equitable interest in it.  In other words, it is another attempt by the 1^st and 2^nd defendants to overturn the Judgment in the High Court action numbered HCA 899/2012.  See, eg, paras 3(ii) and (iii) of the submissions:

“(ii) D1 and D2 have a 100% interest in Unit 25C.

(iii)  D3’s equitable interest in Unit 25C is zero.”

9.  In support of this position, the 1^st and 2^nd defendants refer to some of the factual allegations and disputes which arose in the High Court action.  For example, see the references to the shortfall of the loan owed to Den Norske Bank (para 3(v)), the 35% downpayment for Unit 24A (para 3(vi)), the real property transaction in 1997 (paras 3(vii), (viii) and (ix), 5 and 6).

10.  It is unnecessary to spell out these grounds in more detail.  It is plain what the 1^st and 2^nd defendants wish to achieve by pursuing the proposed appeal.  They want the Court of Appeal to revisit the findings made in the High Court action.  Or, at least, with regard to the beneficial ownership of the Property, they want the Court of Appeal to take into account the mortgage payments made by them since the Property was acquired in 2007 and up until December 2017, which they say the trial judge ought to have done but had failed to do.

11.  The 1^st and 2^nd defendants’ present submissions are in effect a re-run of their argument raised at the trial in the present action.  They were raised in support of their position that this case should be set aside or transferred to the High Court – see para 23 of my judgment.

12.  I have already ruled that the issue of beneficial ownership of the Property has been disposed of in the High Court action and the Judgment is binding on me.  Furthermore, there does not appear to be any room for it to be set aside either at the first instance level or at the Court of Appeal – see paras 27 to 29 of my judgment.  Accordingly, both in substance and in form, an appeal from my judgment in the present case is a wrong avenue for the 1^st and 2^nd defendants to achieve what they want.

13.  Their proposed appeal therefore has no reasonable prospect of success. 

14.  There being no other reason why the appeal should be heard, I refuse to grant leave to appeal to the 1^st and 2^nd defendants.

15.  I should add that in any event, as pointed out in paras 32 to 34 of my judgment, irrespective of whether the High Court Judgment can be overturned, the mortgage and the guarantee are binding on the 1^st and 2^nd defendants respectively.  They are in default.  The plaintiff is therefore entitled to the reliefs sought, which are in accordance with the terms of the contractual documents.  This remains to be the case whether or not the 1^st defendant is the beneficial owner of the Property.

Stay application

16.  I have concluded that the proposed grounds of appeal have no reasonable prospect of success.  The minimum requirement for a stay application is not even met.  Applying Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84, para 9(6), per Ma J, I refuse the stay application.

Conclusion

17.  I dismiss the 1^st and 2^nd defendants’ summons.

18.  Costs should follow the event.  The plaintiff and the 3^rd defendant do have costs of the summons.  I grant a certificate for counsel.  The plaintiff’s costs be summarily assessed in the sum of $48,000, payable by the 1^st and 2^nd defendants within 21 days of the handing down of this decision.  The 3^rd defendant’s costs of the summons be taxed if not agreed, and his own costs be taxed in accordance with the Legal Aid Regulations.