NG YAT CHI AND ANOTHER v. CHINA RESOURCES (HOLDINGS) CO LTD AND OTHERS

HCA 424/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 424 OF 2005

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J U D G M E N T

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1.  By judgment of 12 August 2005 Cheung J struck out the 2^nd plaintiff’s statement of claim and dismissed his claim as being an abuse of the process of court, and ordered costs against him taxed on an indemnity basis.

2.  The costs of the 1^st to 3^rd defendants have been taxed at the sum of $266,072 by allocatur certified on 24 May 2006.  To recover those costs the 1^st to 3^rd defendants obtained on 2 June 2006 a charging order nisi over the 2^nd plaintiff’s registered interest in a property situated at 178-180, Queens Road Central, Hong Kong.

3.  The 1^st to 3^rd defendants applied to have the charging order made absolute and the matter came before the Registrar, High Court.  By order of 29 August 2006 he granted the application with costs to be assessed. 

4.  This is the 2^nd plaintiff’s appeal by rehearing against that order.

Background

5.  As submitted by the 2^nd plaintiff, whom I shall call from now on Mr Choy, acting in person, the issue is a narrow one; thus this summary may be brief.

6.  In an action litigated through the courts to the Court of Final Appeal the CFA by order of 3 March 2005 made a restricted proceedings order (RPO) against Ng Yat Chi (the 1^st plaintiff in this action) which prohibits him from bringing proceedings before the courts of Hong Kong touching upon matters already litigated, without leave from one or other of designated judges Cheung and Lam JJ.

7.  This action was begun by writ of 10 March 2005, barely one week later.  No leave had been sought.  The matter came before Cheung J.  Amongst the issues to be resolved was the defendants’ submission that the proceedings were caught by the RPO and should not be permitted to be continued by the 1^st plaintiff.  They also sought an RPO in terms similar against Mr Choy. 

8.  Cheung J stated at paragraph 6 of his judgment:

“6. Although their summonses do not specifically say so, it is implicit in the Defendants’ identical applications that they also apply for the dismissal or stay of Mr Choy’s claim against them in this action, which as a matter of logical sequence, should precede a restricted proceedings order against Mr Choy — which really looks to the future.  That was also apparent from the evidence and written submissions filed by them before the hearing. During the oral hearing, those representing the Defendants expressly and specifically invited this Court to exercise its power and discretion to strike out Mr Choy’s pleading and dismiss his claim.  I specifically explained the position to Mr Choy before he made his submission and invited him to address me on the question of strike-out and dismissal.  In his oral submission (as well as his affirmations and the correspondence preceding the hearing before me), he dealt with the supposed merits of his claim and the objections that had been raised against it.”

9.  In a detailed analysis of the issues and the law which followed, Cheung J found the claim by the 1^st plaintiff to be wholly unmeritorious, unsustainable, bad and an abuse of process.  He refused leave to him to proceed.

10.  As far as Mr Choy was concerned; he was not caught by the RPO, but the judge found his claim equally unmeritorious and bad; on his own motion he struck out and dismissed his claim.  And finding Mr Choy to be the main instigator behind this and as well the previous litigation, with the 1^st plaintiff a bare trustee having no beneficial interest in the outcome, he made an RPO against Mr Choy as well.

11.  There followed then the costs order to which I have already referred.

12.  I should mention here that the 1^st to 3^rd defendants were at the trial separately represented from the 4^th defendant; that separateness has continued to date.

13.  Aggrieved by the outcome at first instance, Mr Choy filed notice of appeal.  This prompted the defendants, first the 4^th defendant and then, separately, the 1^st to 3^rd defendants to seek securities for costs.  By order of 9 November 2005 Yeung JA required Mr Choy to pay $230,000 into court within 21 days as security for the 4^th defendant’s costs of the appeal; failure to do so in time would result in the appeal being dismissed.  He made a similar order in favour of the 1^st to 3^rd defendants on 22 December 2005, save that the amount to be paid in was fixed at $200,000. 

14.  Mr Choy complied with the earlier order; the appeal remains alive.  He did not do so in respect of the second; thus the appeal against the orders made in favour of the 1^st to 3^rd defendants has been dismissed.

15.  And so it is that the 1^st to 3^rd defendants now seek to enforce the costs order in their favour made last year by Cheung J.

The Grounds to Oppose

16.  Mr Choy advanced the proposition that a prerequisite to the right to a charging order was that first the judgment had to be a final one, and he supported that with an excerpt at the White Book 50/9A/19, which reads:

“Right to charging order: general considerations(rr.1-9A) — The conditions prerequisite to the right to a charging order are (a) there must be a final judgment or order (b) under which the debtor is required to pay a sum of money (c) to another person, i.e. the creditor; and of course the charging order can only be imposed on the property and assets of the debtor specified in s.20A(2) of the High Court Ordinance, namely land, certain specified securities and funds in court (see para.50/9A/24).”

17.  He submitted that the judgment in this case being a striking out of the pleadings and dismissal of the claim having not gone to the merits of the case, the judgment had to be regarded as not a final one but interlocutory.  Conceding that the appeal against the 1^st to 3^rd defendants had been dismissed, he submitted that the issues remaining alive in the appeal against the 4^th defendant, should that succeed it would inevitably affect the validity of the judgment entered in favour of the 1^st to 3^rd defendants as well.  So, until the live appeal is resolved it would be premature to treat the judgment in favour of the 1^st to 3^rd defendants as final and enforceable.

18.  As to the grounds upon which the appeal has been or is to be founded, Mr Choy told me somewhat startlingly that the judgment was born out of fraud.

19.  It contained he said material that was not argued at the hearing at which he was present, and the transcript was a fabrication and did not thus represent an accurate account of what was said by the litigants and the judge during the course of the hearing.

20.  To this end he has called for the tape but that has been denied him; that is where the matter rests.  Until he has the tape he cannot advance his cause; until the appeal is argued it would be premature to allow any of the defendants their right to enforce a judgment based on an injustice.

This Application

21.  Should the charging order be discharged, or at least deferred?  The power for a court to grant leave for the issue of a charging order nisi derives from O. 50 r. 1 RHC.  By its terms it requires that there be a judgment debt unpaid with particulars in affidavit form of the property intended to be charged.  The next step being the application to make it absolute, under rule 3, the court may then on further consideration grant the application or discharge the charging order.  There is a third option which is to try the issue of ownership of the marked property by the judgment debtor.  That is not a relevant option in this application.

22.  There is no rule which requires that the judgment be a final one in the usual sense of the word, that is that it finally disposes of the controversy between the parties; see First Pacific Bank Limited v Robert H P Fung [1990] 1 HKLR 527.

23.  In that regard it seems to me that the expression at 50/9A/19 in the White Book is meant by the editors to mean final in the sense that it is an order having permanent effect for a sum certain.

24.  But in any event, in the circumstances of this case, the judgment of Cheung J in favour of the 1^st to 3^rd defendants is a final one.

25.  The claim has been dismissed.  There is no live appeal.  Whatever the outcome of the appeal against the 4^th defendant, the judgment won by the 1^st to 3^rd defendants will not go away.  That the merits have not been argued does not affect things.  The judge found that the claim as pleaded was fundamentally bad and dismissed it, with costs; that is the order that stands, as a final order.

The Result

26.  The appeal is dismissed.  The order of the Registrar including costs remains undisturbed.

27.  Costs, nisi, of the appeal are to the 1^st to 3^rd defendants, taxed if not agreed.