LUI KWONG WAH v. KWAN PO PING AND ANOTHER

HCMP1365/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO.1365 of 2010

(On an intended appeal from HCA No.302 of 2008)

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BETWEEN:

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REASONS FOR JUDGMENT

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Hon. Yuen JA:

1.  This was an application by the Defendant for an extension of time to appeal against a judgment of Deputy Judge L. Chan given on 4 June 2010.  At the conclusion of the hearing on 12 August 2010, I dismissed the application with costs to be taxed if not agreed.  These are the reasons for judgment.

Background

2.  The Defendant was originally from Vietnam but settled in Hong Kong around 1960 when he was in his late teens. He established a business in Hong Kong called Mandarin Company.  He married the 1^st Plaintiff, who came from a well-to-do Chinese family in the Philippines, and they lived in Hong Kong with their two sons the 2^nd and 3^rd Plaintiffs.

3.  The 1^st Plaintiff and the Defendant divorced in 1986, and the Defendant has since remarried, but they remained on good terms after the divorce (Judgment, para. 4).

4.  In 1992 the Defendant acting through Mandarin Company entered into a joint venture with a Vietnamese company to build and operate a food centre in Ho Chi Minh City.  The project was called Saigon Food Centre of which Mandarin Company had 80%. 

5.  The project required capital and running costs.  The 1^st Plaintiff says she provided the Defendant with financial assistance, including provision of funds, payment of third party bills, etc. as shown in various documentary records.  The sons, who had gone to university in Canada, also went to Ho Chi Minh City to work in the business.

2001 Declaration

6.  On 6 September 2001, the Defendant signed a Chinese document entitled “Declaration”.  Referring to the investment in the JV company in Mandarin Company’s name of US$3.6m, he stated the following:

-        after negotiations between himself and the three Plaintiffs, they had arrived at a common understanding;

-        he solemnly declared that of the investment in the JV company, he owned 30%, the 1^st Plaintiff owned 30% and each of the 2^nd and 3^rd Plaintiffs owned 20%;

-        he respected the rights of the Plaintiffs in the JV company;

-        the Plaintiffs could transfer their shares wholly or in part;

-        he undertook to inform the co-venturer in the JV company of the above;

-        if he contravened the contents of the declaration, he would undertake all legal responsibilities.

The declaration was notarized at the PRC Consulate in Ho Chi Minh City.  The Declaration did not state the law by which it was to be governed.

2005 Declaration

7.  On 15 December 2005 however, the Defendant signed another Chinese document also entitled “Declaration”.  In this document, the Defendant stated the following:

-        he declared the 2001 Declaration was of no effect;

-        in respect of the 2001 Declaration, he made it as he was elderly and not in good health, and at the time he was willing to transfer part of the shares to his family members, and in the event he died there would be someone to succeed to his estate;

-        he gave reasons for declaring the contents of the 2001 Declaration to be of no effect, such as the 1^st and 3^rd Plaintiffs using Mandarin Company’s seal without authority on documents stating that they owned 70% of the JV company, and not respecting his wishes at a board of directors meeting of the JV company.

Again, the declaration was notarized at the PRC Consulate in Ho Chi Minh City.  This Declaration also did not state the law by which it was to be governed.

HCA302/2008

8.  In 2008 the Plaintiffs issued proceedings in Hong Kong against the Defendant. 

Statement of Claim

9.  In the statement of claim, the 2001 Declaration was pleaded and the Plaintiffs averred:

“by the Statement of Declaration, the Defendant has created an irrevocable trust (“the Trust”) in which he, since the date of  Statement of Declaration, has been holding the shares of the Saigon Food Centre as trustee for the benefit of the Plaintiffs and the Defendant himself in a proportion as stated ...”.

The primary relief claimed was:

“A declaration that the Defendant is holding the shares/interest in the Saigon Food Centre in the proportion as pleaded ... on trust for and on behalf of the Plaintiffs”.

Defence

10.  The Defendant was represented by solicitors who filed a Defence on 4 July 2008, subsequently amended on 14 January 2009.  It would be noted that no application was made to dispute the jurisdiction of the Hong Kong court under Order 12 rule 8 Rules of the High Court, and no application was made to stay proceedings in favour of another jurisdiction by reason of forum non conveniens.

11.  In the Amended Defence, after admitting that the Defendant had signed the 2001 Declaration, it was pleaded in para. 10(2):

“It is averred that:

(a) in May 2001, the Defendant turned 59 and his health was deteriorating;

(b) in the circumstances, the Defendant made the 2001 Declaration expressing his wishes regarding his interests in the Joint Venture;

(c) the 2001 Declaration was not intended to take immediate effect; and

(d) there was never any intention on the part of the Defendant that a trust should be created by the 2001 Declaration”.

It was also pleaded in para. 12(2) of the Amended Defence that the Defendant made the 2005 Declaration “revoking” the 2001 Declaration and that the 2001 Declaration “thereby ceased to have any effect”.

12.  It would be noted that there was no pleading that the Declaration should be governed by the law of a place other than Hong Kong, nor what that law was. Foreign law (whether Vietnamese law or PRC law) is regarded as factual matter, and must be pleaded if the Defendant’s case was that the Declaration was governed by a law other than Hong Kong law.

Witness statement

13.  On 25 May 2009 the Defendant signed a Witness Statement prepared by his solicitors to the same effect as his pleaded defence. 

Brief Facts

14.  In the Defendant’s Brief Facts signed by the Defendant’s solicitors and attached to the Listing Questionnaire filed in Court on 6 July 2009, the issues identified were:

“1) Whether the 2001 Declaration constituted a trust? If yes, whether it is a revocable or irrevocable trust?

2) If not, what, if any, legal effects would the 2001 Declaration carry and whether it is revocable?”

It would be noted that there was no indication that any point on foreign law would be taken.

Trial

15.  The trial took place in June 2010.  By then the Defendant was acting in person, as he had lodged a notice to act in person on 14 September 2009.

16.  In para. 37 of the Judgment, the judge recorded that during the Defendant’s testimony, the Defendant sought to apply Vietnamese law to say that the document had not taken effect yet, and also sought to apply PRC law to say that he had the right to revoke the document.  In para. 38, the judge held that since the Defendant had not called expert witnesses on the laws of these countries, he would not hear the Defendant’s personal views of these laws, and would assume that the laws of these countries were identical to those of Hong Kong.  The judge referred to para. J1/59/1 Hong Kong Civil Procedure 2010, which cites numerous authorities for that well-established proposition of law.

Judgment

17.  For reasons set out in detail in his judgment which I shall not repeat here, the judge held that the Declaration constituted a declaration of trust and was not a will.  He made a declaratory judgment in favour of the Plaintiffs, ordered the Defendant to serve the Order on the co-venturer within 14 days and ordered the Defendant to pay the costs of the proceedings to the Plaintiffs. 

Application for extension of time to appeal

18.  On 21 July 2010, the Defendant issued a summons for an extension of time to appeal against the judgment. 

Principles governing extension of time to appeal

19.  It is well-established that in the exercise of its discretion whether to extend time to lodge a notice of appeal, the court would normally take into account: (1) the length of the delay; (2) the reasons for the delay; (3) the chances of the appeal succeeding; and (4) the prejudice to the other party to the appeal (Chiu Sin Chung v Yu Yan Yan, Angela [1993] 1 HKLR 225). 

20.  As for the balancing of these factors, it is well-established that where the delay is short and there is an acceptable excuse for it, an extension of time will not be refused on the basis of the merits of the intended appeal, unless the appeal is hopeless. 

21.  However, even though the delay is unsubstantial, if the delay was inexcusable, the intended appellant must show a real prospect of success on the merits (Secretary for Justice v Hong Kong and Yaumatei Ferry Co [2001] 1 HKC 125). 

22.  As for prejudice to the other party, the mere fact that it would suffer no prejudice if time is extended is not by itself a ground for extending time.

Length of Delay

23.  The Defendant sought to appeal 19 days after the 28-day time limit set by the rules had expired.  In my view this cannot be said to be a “minimal” or “short” delay at all. 

Reasons for delay

24.  The reasons given by the Defendant for the delay are unacceptable.  He said that after the judgment, he did consult solicitors but after he was asked for costs on account around 19 June 2010 (within the appeal period), he was undecided whether to proceed with the appeal.  He said the lawyers did not tell him what the time limit for appealing was, but any reasonable person would have realized that there could not be an open-ended appeal period.  Even if the Defendant did not wish to go back to the lawyers after he was asked for costs on account, he could have asked about the appeal period from other sources such as the Unrepresented Litigants Resource Centre.

25.  The Defendant said in early July 2010 he consulted a friend who was a businessman who encouraged him to appeal and on 12 July 2010 he instructed his present solicitors.  But by then, of course, the appeal period had expired.

26.  So the upshot of the Defendant’s reasons for delay is that during the appeal period, he did not take action simply because he was undecided whether to proceed.  It is obvious that that cannot be an acceptable reason to support an application for an extension of time.

Merits of intended appeal

27.  In any event, in my view the Defendant’s intended grounds of appeal do not disclose a reasonable prospect of success.  Essentially the Defendant is saying that when he sought to apply Vietnamese and/or PRC law during the trial, the judge should have taken it upon himself to advise the Defendant to ask for an adjournment of the trial (and presumably grant it) so as to amend his pleadings to plead the foreign laws and instruct expert witnesses on the foreign laws.

28.  In my view, that is not a valid ground of appeal.  There is no question regarding the jurisdiction of the court.  If there had been one, then the judge would of course have had to consider it even if neither party had raised it.  But that is not the case.  It seems the Defendant is now seeking to rely on a defence of “gift contract” under PRC law.  However the Defendant had the benefit of legal representation, from the time the writ was served, up until the Case Management Conference on 15 September 2009.  There was ample time for him and his legal advisers to consider any defences based on foreign laws, whether Vietnamese, or PRC, or both as seems to be now suggested in the draft Notice of Appeal. 

29.  The Civil Justice Reforms emphasize the need to identify issues at an early stage and the making of prompt decisions as to which issues need full investigation and trial (Order 1A r. 4).  What the Defendant says in the ground of appeal that the judge should have done at trial - advise the Defendant to ask for an adjournment of the trial, and presumably grant it so that there could be amendment of pleadings on foreign laws, instructions given for expert witnesses on foreign laws, etc - would have been directly contradictory to the philosophy of the CJR.

30.  It is not material that the Defendant was not legally represented at the trial itself.  An unrepresented litigant should not have an advantage over a legally represented one by having the judge as his counsel.  If the Defendant had a substantive defence based on the valid application of foreign law(s) (as to which I do not express a view, and in any event cannot do so on the present materials), the Defendant will have his recourse elsewhere.  If there is no substance to it, then it is only right that the loss lies where it falls.

31.  Accordingly I do not see a reasonable prospect of success on the intended appeal.

Prejudice

32.  There is an affirmation from the 1^st Plaintiff referring to certain decisions that have to be made regarding the JV company’s business, and the detriment that would be suffered if an appeal is lodged.  In my view, this would add only a little weight to the clear conclusion that the application for extension should be dismissed.

Order

33.  For the reasons set out above, I dismissed the application with costs to the Plaintiffs.  Regrettably those representing the Plaintiffs did not take advantage of the new Order 62 rule 9A added under the CJR to ask for a summary assessment of costs.  The present application was eminently suitable for it. However as they had not prepared for a summary assessment, I had to order costs to be taxed if not agreed.