WONG CHOW HOI SZE ELSIE v. CROWN WINE CELLARS LTD

HCA 43/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 43 OF 2014

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D E C I S I O N

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1.  This is an application for leave to appeal against my decision of 20 July 2015, allowing the defendant’s appeal against the order of Master Chow granting summary judgment dated 10 June 2015.

The Law

2.  Under section 14AA of the High Court Ordinance, Cap 4, leave shall not be granted unless the court is satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal shall be heard.  If the court is not convinced that there is a reasonable prospect of success, no leave should be granted.

3.  The converse, however, is not true, as stated by Cheung J (as he then was) in Ho Yuen Ki Winnie v Ho Hung Sun Stanley, HCA 391/2006, unreported, 25 May 2009, and affirmed by the Court of Appeal in HCMP 1009/2009 [2009] HKEC 1798, for even if the court is satisfied there is a reasonable prospect of success, it still retains a discretion as to whether to grant leave although the exercise of that discretion would be heavily influenced by the fact that the court considered there was a reasonable prospect of success in the first place.

The plaintiff’s grounds of application for leave

4.  The plaintiff has identified three grounds of appeal.

5.  The plaintiff maintains, under Ground 1, that I was wrong to find that it was open to a trial judge to conclude that the plaintiff was not the legal owner of the goods.  Mr Yuen submits that there is no lis as between the parties as to the ownership of the goods.  I do not accept that.  Under §2 of the defence, the defendant was unable to either admit or deny ownership by the plaintiff and as such the plaintiff was put to proof of the same.  The fact that the bankrupt purported to transfer his wine account to the plaintiff and she purported to own the same and was thereby, prima facie, a bailor of the goods, does not alter the fact that the evidence indicated that the contrary was highly likely.  There is a clear and obvious dispute upon the pleadings and evidence that the defendant does not accept the plaintiff is the true owner of the goods.  That dispute goes to the heart of the issue before the trial court.

6.  Whether the defendant is entitled to deny that ownership because, as the plaintiff suggests, it may only challenge the title of the plaintiff “upon the right and title and by the authority of the true owner” under one of the five exceptions to the rule against the plea of jus tertii (Palmer on Bailment, 3^rd Edn, §4‑035), is an issue for trial.  The evidence before me indicated that there was “clear evidence of authority from the rival claimant, empowering him to resist the bailor’s claim on his behalf” or at least require that claim to be put to proof and I took the view that such evidence should be tested in trial.

7.  Under Ground 2, the plaintiff argues that I was wrong to find that the lien had been triggered and that the defendant was entitled to payment at least up until October 2006.  Mr Yuen submits that the lien over the goods was not triggered in November 2006, even though the master found the same to be the case, and relies upon the failure by the defendant to charge the credit card of the plaintiff for the sums due.  That being the case, the plaintiff maintains that the defendant may not benefit from his own wrong.  As the defendant now submits and I agree, whether the plaintiff ever provided an original, signed direct debit authorization acceptable to her bankers; whether it remained extant at the material time and whether her offer to pay (without reference to any direct debit authorisation) was unconditional, are issues for trial as are the issues raised by the plaintiff as to whether the lien was lost because the defendant claimed for a wrong cause or amount.

8.  As to Ground 3, the plaintiff submits that I was wrong to find that there was a substantial factual and legal dispute as to who bore the responsibility for the delay after November 2006.  Mr Yuen submits there is no factual dispute as to who bears responsibility for the delay between November 2006 and late 2013 when the wine was finally sold and that, as a matter of law, the issue of delay does not give rise to any defence to the action.

9.  A period of 12 years passed during which time the defendant stored the goods.  Whether the defendant should have offered up the goods in November 2006 to the plaintiff as bailor and the rightful owner or was lawfully allowed to retain them after that period is a matter in dispute as the plaintiff maintains that she has no obligation to pay the post November 2006 storage charges at all.  Even if she was entitled to the goods in November 2006, whether she was entitled to them without payment for all outstanding sums, is also in dispute and, having refused to pay such, whether the defendant as entitled to fail to deliver up is yet another area of dispute.  All of this is canvassed in the pleadings.

10.  Lastly, Mr Yuen refers to the costs order made and submits that the usual order should be costs in the cause.  That might have been the case in the normal course of events but here the underlying claim has been based upon what can only be described as a fraudulent evasion of liability to the trustees in bankruptcy to account for this asset.  The order made was therefore indicative of the view I took as to the premature nature of the summary judgment application.

Conclusion

11.  Much of what was canvassed before me was a rehearsal of what had been submitted previously.  I do not accept that the jus tertii rule precludes any attack upon the underlying circumstances in which the bailor/bailee relationship came to exist come what may, as submitted by the plaintiff.  Even if I am wrong about that, this action is premised upon an illegal act.  The court will not lend itself to upholding such a claim based upon what may be found to be a fraud: Snell v Unity Finance Co Ltd [1964] 2 QB 203.

12.  Accordingly, even if I were to give leave to appeal on the first limb of ‘real prospect of success”, I am of the view that the Court of Appeal would be unlikely to re‑instate the summary judgment in the circumstances of this case and therefore I would exercise my discretion not to allow this leave application.

13.  Leave to appeal is not allowed.  Costs of this application be in the cause.