GREAT PACIFIC INVESTMENTS LTD v. 张华荣

HCA 13/2022

[2023] HKCFI 2405

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 13 OF 2022

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BETWEEN

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D E C I S I O N

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1.  On 5 June 2023, I dismissed Ds’ Appeal against the Master’s Order and allowed P’s Summons for summary judgment against D (“the June Decision”). Reasons for Decision were handed down on 9 June 2023 (“the Reasons for Decision”).[1] By a notice of appeal dated 3 July 2023 (“the Notice of Appeal”), D lodged an appeal against my decision dated 5 June 2023. By a summons dated 15 August 2023 (“the Stay Summons”), D seeks a stay of execution pending the determination of the appeal.

2.  I have directed that the Stay Summons be determined on paper without an oral hearing. This is my decision on the Stay Summons. For ease of reference, the abbreviations used in the Reasons for Decision are adopted herein.

Discussion

3.  The existence of an arguable appeal (that is, one with reasonable prospects of success) is the minimum requirement before a court would even consider granting a stay. If there is no arguable appeal, no stay would be granted, however exceptional the circumstances may be otherwise justifying a stay of execution.^[2]

4.  The grounds of appeal are contained in [6], [7] and [8] of the Notice of Appeal, which are as follows:

“6. Having failed to consider or give sufficient weight to the following:-

(1) By reason of the Plaintiff serving on the Defendant blank Form nos. 16 and 16B together with the Plaintiff’s Writ of Summons, the Defendant was led to make a part admission in the Form 16 despite it not being applicable to the Plaintiff’s claim, which included both a monetary claim and a claim for specific performance;

(2) After the Plaintiff amended its Statement of Claim, the Defendant had filed an acknowledgment of service of the Amended Writ of Summons, in which he clearly stated that he intends to contest the present proceedings;

(3) In his Defence, the Defendant made no admission to the plea of RMB55,000,000 as claimed in paragraph 18 of the Amended Statement of Claim; and

(4) The Defendant had stated (in his 2nd Affirmation) that he had a clear and meritorious defence to the Plaintiff’s claim of, inter alia, RMB162,200,000, which included its claim for the amount of RMB55,000,000;

the learned Judge erred in upholding (at §48) the Partial Final Judgment Order based upon the admissions made by the Defendant.

7. The learned Judge erred in ruling (at §§25-30) that the estoppel defence is unarguable:-

(1) In holding (at §27(2)) that the Defendant had failed to adduce sufficient evidence to show that arguably, Yang had made any clear and unequivocal representations on behalf of the Plaintiff to the Defendant, the learned Judge failed to take into consideration or give sufficient weight to the evidence that Yang had unequivocally told the Defendant that he would cause the present proceedings to be withdrawn or stayed.

(2) In holding (at §27(3)-(4)) that it is unbelievable that the Defendant would genuinely believe that Yang had the authority to act on behalf of the Defendant to postpone or extinguish the Plaintiff’s claim, the learned Judge failed to take into consideration or give sufficient weight to the commercial reality and in particular the evidence that Yang, being Vice-President of the Public Affair Department of Pou Chen which is a majority shareholder of the Plaintiff’s immediate parent company, had repeatedly represented to the Defendant that he would cause the present proceedings to be withdrawn or stayed.

(3) There is no basis for the learned Judge to find (at §28) that by virtue of the Defendant being a majority shareholder of the Target Company, he would have given financial support in support thereof, irrespective of the representations by Yang. The learned Judge failed to take into consideration or give sufficient weight to the pleading that the Defendant had, in reliance of the representations by Yang, continued to abide by the common understanding between the parties to keep the Target Company in a healthy financial status.

(4) Further, the learned Judge wrongly focused (at §29) on the need for a written agreement between the parties in order to vary the Defendant’s repayment obligations when the Defendant is raising an equitable defence of estoppel.

8. The learned Judge erred in ruling (at §§31-45) that the force majeure defence is unarguable:-

(1) The learned Judge wrongly held (at §§35-37) that the Pandemic and the Civil War cannot constitute force majeure events, as he had failed to consider or give sufficient weight to Clause 5.3.5 of the Main Agreement, which states, inter alia, that the Plaintiff’s representatives should cooperate with the Defendant in order to obtain sufficient funding to satisfy the consideration.

(2) Contrary to the learned Judge’s statement (at §38), it was never the Defendant’s evidence that he has sufficient assets to perform the payment obligations, but due to the Pandemic, it would be difficult for him to liquidate his assets – instead, the Defendant’s evidence is that the Target Company had recorded substantial losses, such that the Defendant was unable to obtain sufficient funding to make payments.

(3) The learned Judge wrongly held (at §§39-40) that the Defendant is not entitled to rely upon Clause 14 of the Main Agreement by reason of Clause 14.2 when the Defendant’s undisputed evidence is that he had informed the Plaintiff of the details of the force majeure events pursuant to Clause 14.2 of the Main Agreement and continued to update the latest status of such force majeure events to the Plaintiff. Such evidence has not been challenged by the Plaintiff.

(4) The learned Judge erred in holding (at §§41-42) that the Defendant is not entitled to rely upon the force majeure defence because the parties had taken the Pandemic and Civil War into account when they entered into the 3rd Supplemental Agreement. The 3rd Supplemental Agreement is silent on force majeure events such that the terms of the Main Agreement (including Clause 14 thereof) applies, and the Pandemic and Civil War were unforeseeable, unavoidable and beyond the parties’ control when the Main Agreement was entered into.

(5) The learned Judge erred in holding (at §43) that the Defendant cannot rely upon the force majeure events as they have already ceased. The force majeure events had not ceased at the time of commencement of the present proceedings and pursuant to Clause 14.4 of the Main Agreement, the parties were under an obligation to resolve the matter by way of negotiations.”

5.  With respect, in those grounds of appeal, D is merely regurgitating the submissions made in the hearing on 5 June 2023 which have already been rejected by this court. Repeating those arguments in the Notice of Appeal cannot be a valid ground of appeal. The Court of Appeal will not entertain an appeal simply because an applicant wishes to regurgitate arguments already considered below with the hope that the Court of Appeal may come to a different assessment of the situation.[3]

6.  I am of the view that D does not have a reasonable prospect of success in his appeal by relying upon the grounds as set out in [6] to [8] of the Notice of Appeal.

(1) An appeal is against a court order, not its reasons.[4] In the hearing on 5 June 2023, I ruled against D on (a) D’s estoppel defence[5], and (b) D’s force majeure defence[6]. Unless D can show that I might have erred in these rulings, D does not have a reasonable chance of success in having an order to set aside the June Decision.

(2) There is nothing in [6] of the Notice of Appeal touches upon the estoppel defence and the force majeure defence.

(3) As to [7] of the Notice of Appeal,

(a) There is nothing in [7] of the Notice of Appeal dealing with the deficiency of the Defence as set out in [26] of the Reasons for Decision.

(b) Regarding the criticisms against [27] and [28] of the Reasons for Decision, D is merely regurgitating the arguments made in the hearing before me. In my view, D has not identified any palpable error in my judgment, which may need to be corrected by an appeal.

(c) As to [29] of the Reasons for Decision, D has not explained why I erred in my ruling as set out in that paragraph.

(d) There is nothing in the Notice of Appeal dealing with the ruling made in [30] of the Reasons for Decision. Counsel for D has tried to address that ruling in his written submissions.[7] However, in my view, D has not advanced any argument showing that I might have erred in my ruling that “D must state his case with supporting materials as to what would have been reasonable notice”[8]

(4) As to [8] of the Notice of Appeal, D is merely repeating the arguments which have been rejected by this court. In my view, the arguments set out in [8] of the Notice of Appeal are not reasonably arguable.

7.  In my judgment, D has failed to show a reasonable prospect of success in overturning my ruling on the estoppel defence and the force majeure defence. Accordingly, D has not shown an arguable appeal with a reasonable prospect of success. As said in the above, the existence of such an arguable appeal is the minimum requirement before a court would even consider granting a stay. Since D is unable to satisfy this minimum requirement, the Stay Summons must be dismissed.

Disposition

8.  I dismiss the Stay Summons.

9.  Costs should follow the event. I order that costs of the Stay Summons be paid by D to P forthwith, and those costs be summarily assessed at HK$80,000.

10.  I thank counsel for the assistance provided to the court.