FUNG SHING CHUNG v. CHOI KING HUNG

HCA 2860/2018

[2024] HKCFI 1508

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2860 OF 2018

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BETWEEN

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D E C I S I O N

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Introduction

1.  On 8 April 2024, this Court handed down Judgment (“the Judgment”), ordering the Defendant to repay the balance of a loan of US$1,028,053 together with interest to the Plaintiff, and ruled on various interlocutory applications.

2.  The Defendant filed a Notice of Appeal on 30 April 2024.

3.  On 8 May 2024, the Plaintiff obtained 2 garnishee orders nisi and a charging order nisi relating to the judgment debt. All of those orders nisi are returnable on 4 June 2024 before a Master.

4.  This is the hearing of the Defendant’s summons filed on 17 May 2024 for (i) stay of execution pending appeal; and (ii) stay of the 2 garnishee orders pending appeal.

5.  The grounds put forth in the Defendant’s affirmation in support of his application are as follows:

(1) He has sufficient and weighty grounds of appeal.

(2) The Plaintiff does not ordinarily reside in Hong Kong. He uses different names in Mainland China and Hong Kong. Without stay of execution, the Plaintiff may transfer the judgment sum out of jurisdiction. That would render the appeal nugatory if the Defendant were to succeed in the appeal.

(3) The Defendant ordinarily resides and works in Hong Kong. He owns several properties worth over $70 million. He has no plan to leave Hong Kong for long periods and he has sufficient means to meet the judgment debt. There is no urgency in execution.

6.  On 24 May 2024, the Registrar of Civil Appeals (Master MK Liu) directed the Defendant to file and serve an amended Notice of Appeal to comply with PD 4.1 by 7 June 2024, setting out the grounds of appeal succinctly in place of the current prolix grounds. As of this hearing, the Defendant has not yet complied with Master MK Liu’s directions.

Legal principles for granting stay of execution

7.  An appeal does not operate as a stay of execution unless the Court otherwise directs: Order 59, rule 13(1)(a), Rules of the High Court.

8.  In considering whether a stay should be granted, the applicant should demonstrate that there are strong grounds in the proposed appeal. The hurdle is higher than showing reasonable prospect of success in seeking leave to appeal against an interlocutory order. The Court does not make a practice of depriving a successful litigant of the fruits of his litigation and locking up funds in which prima facie he is entitled pending an appeal. Ultimately, whether to grant a stay is in the discretion of the Court. An example of stay of execution occurs where the judgment is in favour of a person resident out of, or about to leave Hong Kong; or the applicant satisfies the court that if money is paid, there will be no reasonable prospect of his recovering them in the event of the appeal succeeding. Hong Kong Civil Procedure 2024, Vol 1, §59/13/1.

9.  An appeal is against points of law.

10.  A finding of fact may only be challenged as an error of law if:

(1) The decision was based on a finding of fact or inference from facts which was perverse or irrational;

(2) There was no evidence to support the finding;

(3) The decision was made by reference to irrelevant factors; and

(4) The decision was made without regard to relevant factors.

See: Kwong Mile Services Ltd v CIR (2004) 7 HKCFAR 275 , §§31-34, Bokhary PJ.

11.  The appellate court should not disturb the decision on fact-finding unless it regards that decision as contrary to the true and only reasonable one: Kwong Mile , §37, Bokhary PJ.

12.  An appeal against exercise of discretion will not be entertained unless it be shown that the court exercised his/her discretion under a mistake of law, or under a misapprehension as to the facts or that the Court took into account irrelevant matters or failed to exercise the discretion or the conclusion which the judge reached in the exercise of his/her discretion was outside the generous ambit within which a reasonable disagreement was possible: Hong Kong Civil Procedure 2024 Vol 1, §59/0/54.

13.  In respect of an appeal against case management decisions, the appellant faces a very high hurdle and has to show that the judge had gone clearly wrong and made orders which clearly involved an injustice or an inability of the trial court to carry out its task or had erred in principle or that his order was irrational: Hong Kong Civil Procedure 2024, Vol 1, §59/0/55.

Grounds of appeal

14.  The grounds of appeal can be summarized as follows;

(1) The trial judge erred in law in refusing to allow the Defendant to amend the defence and counterclaim (the 5^th version).

(2) The trial judge erred in law in failing to require the Plaintiff to prove that the loan was remitted to Hong Kong by a legal channel and wrongly found that the remittance was lawful in the absence of evidence.

(3) The trial judge erred on numerous occasions in rejecting important evidence of the Defendant on the ground of delay in application, jeopardising the Defendant’s opportunity of a fair trial and to defend himself.

(4) The judge was biased.

(5) The trial judge wrongly disregarded the Plaintiff’s lack of integrity, illegal conduct and inconsistent evidence.

(6) The trial judge wrongly refused to allow material witnesses (Feng and Mr Gortot) to give evidence.

(7) The trial judge wrongly understood or did not fully understand the facts.

(8) The trial judge’s judgment was contradictory.

(9) Lack of sufficient evidence and record.

(10) The Plaintiff was caught, whist still giving evidence, talking to Ms Jessie Chan about this case.

(11) The trial judge erred in accepting the evidence of the Defendant’s expert opinion.

(12) (according to the supporting affirmation of the Defendant) The trial judge failed to consider the Plaintiff’s evasion of foreign exchange control and used underground method to remit money to Hong Kong, in breach of s.25(1) Organized and Serious Crimes Ordinance, Cap 455 (“OSCO”).

Analyses

15.  Grounds (1), (2) and (12) are all related to the illegality or circumvention of exchange control. The legality of the remittance to Hong Kong was not material to the issue of existence of the Loan. Moreover, whilst the Plaintiff had requested Zhang to send the money to the Defendant, it was not the Plaintiff’s evidence that he had asked Zhang to circumvent exchange control. His evidence was that he left the arrangement to Zhang without knowing the details (§§41-42 of the Judgment).

16.  The application to amend the defence came only after trial. (The reference now to OSCO is yet another new averment.) The reasons for rejecting it (covering not only lateness but also procedural and substantive aspects) have been set out in §28-49 of the Judgment concerning the Amendment Summons. Even if Zhang had circumvented foreign exchange control, the Defendant had not pointed out how that would impact on the findings that the loan existed and that the Defendant had acknowledged its existence.

17.  When assessing the credibility of the Plaintiff’s case, this court was well aware of the deficiency in the chain of documentary evidence (§§60-66 & 74 of the Judgment) and the lack of Feng and Mr Gortot as witnesses (§§64 & 73).

18.  These are grounds of appeal against findings of fact to which the Defendant has not even asserted what the only true and reasonable conclusion was.

19.  Ground (3) concerns 3 limbs of evidence that have been excluded: (i) the legal opinion dated 14 January 2024 on PRC law that the Defendant sought to adduce; and (ii) a Report of dated 22 January 2024 of the Inspection Centre; and (iii) the Defendant’s 4^th supplemental witness statement in answer to Ms Jessie Chan’s 3^rd supplemental witness statement to rebut her evidence.

20.  The first 2 items were experts reports that the Defendant sought to adduce after trial. The third item was dealt with by a decision dated 13 October 2023, against which there was no appeal.

21.  Ground (3) is an appeal against the exercise of the Court’s discretion in case management. The decisions did not only rely on lateness in the applications. The Defendant has not shown that any exercise of discretion was so clearly wrong as to meet the tests in paragraphs 12 and 13 above.

22.  Ground 4 asserts that (i) this Court wrongly held the subjective view that the ability to restore electronic data was not a new technology and that she was not aware that only Mainland experts could have restored the data; (ii) this Court disregarded the Plaintiff’s inconsistent evidence over his access to his brother’s money; (iii) the Court wrongly found that the Plaintiff had not participated in the remittance and that the Defendant had received the Plaintiff’s loan in the absence of receipt of payment.

23.  Item (i) and Ground 7 concern the wechat messages and the Inspection Report. The Defendant confirmed at today’s hearing that he did lose the phone. It was the wechat messages inside that phone that he had sought to restore by the Inspection Centre. Despite information on the internet about possible restoration of (deleted) electronic data, the Defendant claimed to have learnt about it only in January 2024 (after trial). His evidence did not state whether this technology had only emerged after trial to meet the Ladd v Marshall test.

24.  The rest of Ground (4) and Ground (5) contains criticisms on the way this Court weighed the evidence but they do not meet the Kwong Mile tests.

25.  Ground (6) concerns the court’s refusal to allow the VCF Application regarding Mr Gortot and that the Plaintiff did not call Feng as a witness. The former is an appeal against a case management decision. The latter was a fact. Again, it has not been shown that any wrong exercise of discretion met the tests in paragraphs 12 and 13 above.

26.  In any case, this Court has borne in mind the Defendant’s assertion that he did not owe Mr Gortot money and had no reason to borrow from the Plaintiff (§73 of the Judgment) when weighing the parties’ versions.

27.  Grounds (8) and (9) concern findings of fact. Once again §§64 and 73 of the Judgment concerning Feng and Mr Gortot are repeated.

28.  Ground (10) affects credibility of witnesses but the Defendant has not explained what the impact on the case was.

29.  This allegation was shortly investigated at the trial but not pursued by counsel for the Defendant, whether by way of questioning the Plaintiff or Ms Jessie Chan or raised in closing submission.

30.  Ground (11) has not stated in what way this Court erred in rejecting the expert evidence of the Defendant.

31.  In summary, these grounds are appeals against findings of fact for which it has not been demonstrated that the Kwong Mile tests have been met; or appeals against exercise of discretion in interlocutory matters for which it has not been shown that this Court’s decisions were outside the generous ambit within which reasonable disagreement was possible; or appeals against issues that were raised only after trial. None of them are arguable, let alone being strong.

32.  There is simply no basis to deprive the Plaintiff of the fruits of his judgment.

33.  Even on the Defendant’s own case, he has assets to meet the Judgment debt. His concern that the Plaintiff does not ordinarily reside in Hong Kong is not backed up by evidence. The fact that a person lives in both Mainland China and Hong Kong is not something extraordinary these days. The evidence at the trial showed that the Plaintiff did come to Hong Kong at times. There is nothing to persuade the Court that the appeal would be rendered nugatory if execution is stayed.

Stay of garnishee orders pending appeal

34.  In respect of the 2 garnishee orders, one is against HSBC, the other against Henik Securities Ltd.

(1) HSBC has responded, stating that the Defendant’s account has a negative balance. The Plaintiff does not pursue the garnishee application, which I therefore dismiss, with no order as to costs. The hearing on 4 June 2024 for this garnishee order to show cause is vacated.

(2) Henik has not responded and its stance is unknown. In the interest of justice, the hearing of that garnishee order shall proceed on 4 June 2024 at 10 am. Be that as it may, as between the Plaintiff and the Defendant, I see no reason for staying the garnishee order.

35.  For completeness, there is also a hearing for a charging order to show cause. As the Defendant has not received the papers, I am unable to deal with it at this hearing. The hearing on 4 June 2024 before a Master shall proceed at 10am as well.

Order

36.  No strong grounds of appeal or other circumstances have been shown to justify a stay. I therefore order as follow:

(1) The Defendant’s summons for stay of execution of the Judgment is dismissed, with costs to the Plaintiff to be summarily assessed;

(2) The Plaintiff shall lodge and serve a costs statement by 4 pm on 3 June 2024; the Defendant shall lodge and serve grounds of objection by 10 June 2024. Summary assessment shall be disposed of on paper without a hearing.

(3) The Plaintiff’s application for a garnishee order against HSBC is discharged with no order as to costs;

(4) The Plaintiff’s application for a garnishee order against Henik Securities shall not be stayed but proceed to hearing before a Master on 4 June 2024 at 10 am.

37.  I thank Mr Yeung for his assistance.