RE HO EDWARD

English Translation - 英譯本

CACV166 /2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL No. 166 of 2003

(ON APPEAL FROM HCB 11186 of 2002)

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JUDGMENT

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Hon. Yuen JA:

1.  On 7 July 2004, Yeung JA sitting as a single judge of the Court of  Appeal refused to extend time for the Debtor in HCCB 11186/2002 Edward Ho ("Mr Ho") to lodge an appeal from an order of Deputy Judge Poon made on 19 February 2003.

2.  Mr Ho lodged an appeal against Yeung JA’s order.  Under Order 59 rule 12, such an appeal should be brought by way of fresh application made within 10 days of Yeung JA’s order.  Mr Ho’s application was made on 21 July 2004.  He was therefore out of time, but no objection has been taken to the short delay.

Background

3.  The present matter arises from a bankruptcy petition issued by The Prudential Assurance Co Ltd ("the Petitioner") against Mr Ho in June 2002 on the basis of a Statutory Demand. 

4.  The petition was amended in December 2002.  In the amended petition, the Petitioner alleged that Mr Ho was indebted to it in the total sum of $400,482.87.  This was made up of 3 items:

(1)	Financing debts	$217,430.90;
(2)	Goodwill payment	$159,100;
(3)	SUA (Special Unit Accounts) negative balance	$23,951.97 (20% of the pre-amendment figure of $119,759.85).

5.  A number of affirmations were filed on behalf of the Petitioner and by Mr Ho.

Deputy Judge Poon’s order

6.  The petition was heard by Deputy Judge Poon on 19 February 2003.  For reasons which will be set out in a later part of this judgment, the judge ordered that Mr Ho pay into court the sum of $23,951.97 by 8 March 2003 and that the hearing of the petition be adjourned to 10 March 2003.

7.  Mr Ho duly paid the sum of $23,951.97 into court on 8 March 2003.

8.  At the adjourned hearing before Deputy Judge Poon on 10 March 2003, Mr Ho informed the judge that he did not object to payment out of the sum to the Petitioner, but did object to the Petitioner’s application for costs. 

9.  After hearing submissions from both sides, Deputy Judge Poon ordered that the sum of $23,951.97 paid into court on 8 March 2003 by Mr Ho to the Petitioner in satisfaction of the indebtedness owing to the Petitioner in respect of which it was paid in, be paid out of court to the Petitioner forthwith, whereupon the Petition shall be dismissed.  Deputy Judge Poon also ordered, amongst other things, that Mr Ho pay the Petitioner one-fifth of its costs.

Reasons for Deputy Judge Poon’s order

10.  On 14 March 2003, Deputy Judge Poon handed down written reasons for his judgment of 19 February 2003.  In §2, he referred to the amended petition and recorded that the amendment was due to the Petitioner’s agreement that under the item of SUA, Mr Ho was liable only to pay 20% of the original sum claimed, i.e. $23,951.97.

11.  Deputy Judge Poon discussed the 3 items in the alleged debt and the defences that Mr Ho had raised. 

12.  First, in relation to the Goodwill payment, the Petitioner had relied on contractual documents stipulating that this was a one-off, interest-free loan to Mr Ho, repayable to the Petitioner "upon termination by either party for whatever reason of this service agreement".  The contractual documents also contained the Petitioner’s undertaking that it would waive its right to recover the loan upon the expiry of 24 months from commencing services,  provided that Mr Ho performed to the satisfaction of the Petitioner throughout that period.  Mr Ho’s services were terminated by the Petitioner in September 2001, after only 1 year of commencing services.

13.  Mr Ho’s defence was that in June 2000, he had been told by Marco Chan the Petitioner’s branch manager that he (Mr Ho) would have to repay the Goodwill payment only if he resigned from the Petitioner within 24 months of commencing services. 

14.  Mr Ho’s allegation was denied by Mr Chan in an affirmation.  However, Deputy Judge Poon held (§6) that the court would not be able to rule on the alleged misrepresentation without hearing oral evidence and considering other submissions made on behalf of the Petitioner.  He therefore held that Mr Ho had raised an arguable defence to this item of the alleged debt.

19.  Deputy Judge Poon held that clause 12 did not support Mr Ho’s argument.  Accordingly, he held that Mr Ho was indebted to the Petitioner in the sum of $23,951.97, but since this was a relatively small sum, he gave Mr Ho time to pay.  If the sum was paid, no bankruptcy order would be necessary, but if it was not paid, then a bankruptcy order would be made.

20.  As set out above, Mr Ho did make payment of the sum, which was later paid out to the Petitioner without objection from Mr Ho, and the Petition was dismissed.            

Intended appeal from Deputy Judge Poon’s order dated 19/2/2003

21.  On 26 June 2003, Mr Ho sought to file a Notice of Appeal from Deputy Judge Poon’s order of 19 February 2003. 

Application before Yeung JA for extending time to appeal

22.  Mr Ho’s Notice of Appeal was out of time.  He therefore had to make an application for an extension of time, which was heard by Yeung JA on 7 July 2004. 

23.  It is well-established that in any application for extension of time to appeal, the court would have to take into account not only the length of delay and the reasons for delay, but also the applicant’s chances of success on the proposed appeal (Hong Kong Civil Procedure 2004, Vol. 1, §59/4/14). 

24.  Yeung JA refused an extension on the ground that Mr Ho did not have an arguable appeal.  It was this refusal that is the subject of Mr Ho’s appeal before this court.

Amendment of notice of appeal

25.  At the hearing before this court on 10 December 2004, Mr Ho advanced submissions on a new ground which had not appeared in his Notice of Appeal.  This new ground was that he would only be liable for outstanding debts of "resigned agents" and Mr Yeung had not resigned but had been asked by the Petitioner to leave.  In this regard, he derived support from clause G1.8(ii) of the Agency Terms and Conditions.

26.  Counsel for the Petitioner objected to this new point being taken, as obviously he had not come to court to meet this point. 

27.  Taking into account the fact that Mr Ho was not legally represented, we gave leave to Mr Ho to amend his Notice of Appeal to include this new ground, on condition that he pay the Petitioner’s costs in the gross sum of $55,000 within 14 days. 

28.  At the same time, we gave leave to the Petitioner to exhibit full versions of the contractual documents that had previously been exhibited only in parts in the documents before this court.  

29.  Mr Ho duly paid the costs and an Amended Notice of Appeal was filed.  

Grounds of appeal

30.  The grounds of appeal first state that the sum of $119,759.81 “referred to Financing debts and Goodwill payment owed by Mr Yeung to the Petitioner”  Pausing there, it should be noted that there was actually no evidence that the debt owed by Mr Yeung to the Petitioner consisted of Financing debts and Goodwill payment.  [是說及Mr. Yeung Kei Cheung欠下Prudential的Financial Debts同Goodwill Payment。]

-	The Petitioner did not need to prove the composition of the debt, because under clause 12, Mr Ho as leader was liable to pay 20% of all “outstanding sums” owed by his downline agents to the Petitioner.  The Petitioner did not say what the composition of the debt was in any of the affirmations made on its behalf.
-	Nor did Mr Ho depose in any of his affidavits or affirmations that those were the components of Mr Yeung’s debt.  Indeed in the amended notice of appeal, it was alleged that the main cause for negative SUA  was (a) borrowings from the Petitioner; (b) obtaining monetary benefits from the Petitioner and resigning before the end of the contract with the Petitioner. [SUA 之所以是負數主要是:（a）向公司借了錢。（b）與公司合約未完而辭職，又在合約期間取得金錢利益。]
-	The statement of account produced by the Petitioner and annexed as Exhibit 19 to Mr Ho’s affidavit sworn on 25 October 2003 simply showed the sum of $119,759.81 as “debt”.

31.  Coming back to the grounds of appeal, Mr Ho’s first point was that there was no evidence to show that there was any debt in the SUA before 26 September 2001 when he left the Petitioner.  [最主要的就是沒有證據顯示在2001年9月26日之前在SUA有欠款。]

32.  I do not consider this point to be arguable.  Whilst it is correct that the statement of account exhibited as Exhibit 19 bore the print-out date of 5 October 2001, the statement (as stated in the title) was of "Special Unit Account (SUA) Statement (Individual Unit Level) for the SUA period from 01/01/2001 to 31/12/2001 as at September 2001".  It was common ground that Mr Yeung and Mr Ho left the Petitioner on the same day 26 September 2001.  Unless Mr Yeung incurred any debt to the Petitioner in the few remaining days of September 2001 (of which there was no evidence and for which there was no ground), the statement supports the Petitioner’s evidence that at the date of his departure, Mr Yeung was indebted to it in the sum of $119,759.81, for which Mr Ho has to be liable in the proportion of 20%.  The question posed in the ground of appeal whether Mr Ho should or should not be liable for the debts of agents whom he had brought into the Petitioner incurred after his departure from the Petitioner did not arise.

33.  The second point in the grounds of appeal was that in the SUA, the Petitioner stated that Mr Yeung was indebted to it for Financing debts and Goodwill payments, so if Mr Ho could successfully show an arguable defence for these 2 parts of his (Mr Ho’s) alleged indebtedness, then similarly the Petitioner has not shown that Mr Yeung was indebted to it.

34.  I do not consider this point to be arguable.  As discussed in §30 above, there was no evidence that Mr Yeung’s debt comprised Financing debts and Goodwill payment, and the statement of the SUA did not say so. 

35.  It was also alleged in the amended notice of appeal that the document exhibited as Mr Ho’s Exhibit 1 “proved” that Marco Chan had told him that the money was a gift for which there was no financial obligation.  [筆錢是送的，沒有任何財務責任。可在本人的証物，文件1可証明。]

36.  If this allegation is that this was an out-and-out gift, then this was a new allegation that had never been raised by Mr Ho before. 

37.  If however this allegation is another reference to Mr Ho’s previous allegation that the money would only be repayable if they  resigned within 24 months, still that is not in fact supported by the document Exhibit 1, as paragraph G.3 stipulates repayment upon leaving their posts, which is not restricted to resignation.

[	為對保誠公平起見，營業員最少服務一年半，經理最少服務兩年，否則離職時需全歸還]
(“	to be fair to Prudential, agents have to serve for at least 1.5 years, managers have to serve at least 2 years, otherwise the entire sums have to be repaid upon leaving the posts”).  Consequently, this point is not arguable either.

38.  Finally, Mr Ho referred in the amended notice of appeal to Section II of the Agency Terms and Conditions which he said confirmed what he alleged Marco Chan and Vivian Choi told him - that repayment would only be required upon resignation within 24 months.  Section II was the section containing clause G1.8(ii) referred to in §25 above.

39.  However, counsel for the Petitioner has drawn our attention to other parts of Section II which show that the term “resigned agents” in clause G1.8(ii) was used interchangeably with “terminated agents”.  Under the General section in Section II, clause G1.1(i) provided that “this procedure will apply to all the individual life assurance and DIB policies of all resigned/terminated agents”.  Further, under “Debt Responsibility of Manager”,  clause G2.11 provided that “obligations and liabilities over the outstanding financing debt incurred by his/her terminated agent refers to the orphan policy procedure and SUA policy issued by the Company from time to time”.  Mr Ho could not advance any submissions to the contrary. 

40.  Incidentally, even in Mr Ho’s own version of what he had been told by Vivian Choi, his liability for 20% of the SUA was not restricted to a situation where his downline agent resigned, but applied whenever he left his post.  In Mr Ho’s affidavit made on 25 October 2002, he alleged that Miss Choi had said:

[	12.	如果你直系旗下有人離職而欠錢的話，又追討不到，就會把欠款的20% 撥入你的 SUA A/C，代到年尾對數。]
(“	12.	If anyone directly under you leaves his post owing money, and cannot be recovered, then 20% of the sum owed would be put into your SUA account, to be set-off at the end of the year”).

Order

41.  Having considered the matters discussed above, I agree with Yeung JA on his view of the lack of chances of success in Mr Ho’s proposed appeal and I do not consider that the new point raised by Mr Ho is arguable either. 

42.  I would dismiss the appeal and give an order nisi that Mr Ho bear the Petitioner’s costs of the appeal.

Hon Yam J:

43. I agree.