北京橙天嘉禾影視製作有限公司 v. 張承勷

HCA 2481/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2481 OF 2013

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D E C I S I O N

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Introduction

1.  This court handed down a decision on 16 June 2016 ordering that the Final Judgment entered into against the defendant (D) (“Default Judgment”) be set aside on condition that he paid the Judgment Sum of RMB 4,165,676.66 or its HKD equivalent into court within 28 days (“Setting Aside Decision”). In present decision, I shall adopt the same abbreviations in the Setting Aside Decision, unless otherwise indicated.

2.  D now seeks leave to appeal against the Setting Aside Decision in relation to the imposition of the condition, and for a stay of execution of the order pending the final determination of the appeal.

Draft Grounds of Appeal

3.  There are 4 grounds of appeal (“Grounds”), briefly as follows:

(1)  That this court erred in finding that D was evasive and/or that D did not wish P to ascertain his actual address, to avoid service and/or enforcement (“Inference of Evasiveness”);

(2)  Further or alternatively, this court erred in holding that P had probably no means of verifying whether or not D was or was not in Hong Kong at the service of the Writ;

(3)  Further or alternatively, this Court erred in failing to have proper regard to the underlying reason as to why an imposition of a condition of full payment into court would be justified and thus giving undue and excessive weight on the issue of delay when considering whether to impose condition or not;

(4)  Further or alternatively, this court erred in failing to consider that D is currently facing bankruptcy proceedings in HCB 6679/2015 (“Bankruptcy Proceedings”).

Discussion

4.  It is not disputed that this court has a discretion whether to impose a condition upon setting aside an irregular judgment.  The issue is whether this court was plainly wrong in imposing the condition.

5.  Ground 1 is D’s main ground of appeal, namely in relation to the court’s Inference of Evasiveness in considering the risk of empty enforcement.

6.  Mr Chan had submitted on behalf of D that there was an important distinction between the following two scenarios :

(A)  D being evasive and P could not locate him;

(B)  D being evasive only because he had no money to pay.

7.  Mr Chan argued that the authorities showed that the condition of a full payment into court was ordered to guard against Scenario A and not B, and that the present case was not a Scenario A situation.

8.  I do not think the authorities are meant to be limited to only Scenario A situations.

9.  It was submitted by Mr Chan that P could not point out one occasion when P could not contact D and there was no evidence that D had refused to provide his updated information, and that P had never tried to locate D, and that P was able to contact D even after P had obtained the PRC Judgment.  Further, there was no evidence to show that D was hiding, and it was D who went to the Chaoyang Court to pick up the notice of execution.

10.  In the Setting Aside Decision, I have accepted that the service of the Writ at the Mongkok Address went wrong mainly because D had satisfied this court that he did not appear to be physically in Hong Kong at the relevant time of service. 

11.  However, as I have pointed out in my Setting Aside Decision, it was stated in the PRC Judgment that the service of the PRC Proceedings was by way of public notice, and D’s whereabouts were unknown.  Although D was contactable by email and/or by mobile phone even after the PRC Judgment, his whereabouts were unknown.

12.  Mr Chan argued that there was no reason why D would have a positive duty to inform P as to his whereabouts, especially when he had no idea that P had commenced legal proceedings against him in Hong Kong, as there was no evidence that D had notice of the Writ at the time of the service by P.

13.  It was further submitted that D had never provided P with a wrong or misleading address and that D had always been reachable by P and responsive to P, and that the Inference of Evasiveness was clearly wrong.

14.  I have set out in paragraphs 88-94 of the Decision as to why I came to the view that D’s conduct indicated that he had been evasive as to his actual address or his physical whereabouts within Mainland China.  In any event, it was D who took out the Setting Aside Application.  He should have been aware that the setting aside order made by the court could be made subject to a condition, including the condition of full payment into court, and that one of the matters the court might consider whether to impose a condition would be whether there was a real risk of empty enforcement.  Yet, as I have said in the Setting Aside Decision, among other things, D was vague as to whether he was still contactable by email after December 2014 at his Gmail addresses, and also why the Chaoyang Court said his whereabouts were unknown at the hearing when the PRC Judgment was granted.

15.  Having considered Mr Chan’s submissions, I am not convinced that the Inference of Evasiveness was plainly wrong.

16.  In the Setting Aside Decision, although I was satisfied that D did not appear to be physically in Hong Kong at the time of the service of the Writ at the Mongkok Address, I have however also accepted that P probably had no means of verifying this at the time, apart from what said  by D in his emails.

17.  Under Ground 2, D’s complaint was, among other things, that this court’s above finding was not consistent with the finding that D’s mobile telephone number had not changed since 2004 and there had been email exchanges between P and D, and also P knew that D was facing the Travel Restriction Order, and that P took no steps to verify whether D was or was not in Hong Kong and/or his whereabouts at the time of service of the Writ.

18.  As submitted by Ms Yu, the PRC address in the Loan Agreement upon which the PRC Judgment was bared was no longer valid, and the Mongkok Address given by D to the Companies Registry in Hong Kong in April 2012 was D’s last known address, and that P could not have known, prior to the Default Judgment, that the lease for the Mongkok Address would have lapsed by end of 2012 or that it was no longer a valid address for D. 

19.  In my view, notwithstanding what was said by D in his emails, P had no means of verifying D’s whereabouts at the time of the service of the Writ or whether the Mongkok Address was valid.  Anyway, as pointed out by Ms Yu, it was not P’s obligation to contact D through email to ask for his valid address prior to service of the Writ, when P believed that it had D’s last known address.

20.  As for Ground 3 in relation to the substantial delay and prejudice to P, D is not really challenging this court’s finding that D was guilty of substantial delay or that P suffered prejudice as a result of D’s substantial delay.  Mr Chan relied mainly on the legal argument that substantial delay alone does not constitute sufficient basis for imposition of condition.  However, as seen in paragraph 45 of the Setting Aside Decision, this was the same argument that he had made before me at the hearing in April 2016.  Further, as pointed out by Ms Yu, Mr Chan is now relying on the same authorities cited by this court.  Having considered his submissions, I am not satisfied that there was any error in law on the part of this court.  In any event, this was not the only factor this court had considered in imposing the condition.

21.  Under Ground 4, D complained that this court failed to consider the Bankruptcy Proceedings when imposing the condition, and that the imposition of the condition was tantamount to depriving D of an opportunity to defend himself in the present action.

22.  Mr Chan had referred to the approach of the court in Morigood Development Ltd v Sunny Trading Co (a firm) [1999] 2 HKC 710 where the court, in balancing the injustice to the defendant (if the judgment was not set aside) of being denied an opportunity to defend her case against the prejudice to the plaintiff (if the judgment was set aside) in having incurred costs in the bankruptcy proceedings, imposed a condition that the defendant paid to the plaintiff the costs of the bankruptcy proceedings.

23.  As pointed out by Ms Yu, this court had considered the Bankruptcy Proceedings in relation to the prejudice to P.  This court was not really provided with any evidence of impecuniosity by D at the hearing of the Setting Aside Application.

24.  After the Setting Aside Decision, and in support of D’s application for leave to appeal, D’s solicitor, Mr Liu, has now filed two affirmations on D’s behalf, namely his 4^th and 5^th respectively on 30 June 2016 and 11 July 2016, exhibiting D’s 3^rd and 4^th affirmations in “draft but approved form”. 

25.  Mr Liu had said in his affirmations that D was in Beijing and was not able to affirm his affirmations and that he undertook to file the affirmations as soon as they had been affirmed by D. 

26.  Ms Yu objected to these draft affirmations, and submitted that the Ladd and Marshall rule applies and further D’s draft affirmations had not been affirmed nor notarized, and that P was prejudiced in particular by the late filing of Mr Liu’s 5^th affirmation exhibiting D’s draft 4^th affirmation.

27.  There was no reason given by D as to why the information in his draft affirmations could not have been given at the time of the hearing of his Setting Aside Application.  Further, D’s draft 3^rd affirmation was prepared over 2 months ago, and yet it still had not been affirmed nor notarised.  D had tried to explain in his 4^th affirmation that he needed to have a Chinese translation of the 3^rd affirmation before the notary officers would agree to notarise.  Even if what he said was true, there was no explanation as to why there was no Chinese translation prepared for over 2 months, and further why his draft 4^th affirmation was again prepared in English.

28.  In any event, D has not made a proper application for leave to adduce further evidence and the draft affirmations do not comply with the Ladd v Marshall conditions.

29.  Ms Yu submitted that the Morigood case could be distinguished as in that case, the court found that the defendant had a real prospect of success.

30.  Mr Chan argued that in the present case D has a highly arguable defence, namely that the PRC Judgment was not final and conclusive, and even if D had adopted a different attitude towards the PRC Judgment does not mean that he could not adopt a different defence in the present action.

31.  The issue of merits was not dealt with in the Setting Aside Decision due to P’s concession to the Default Judgment being set aside for irregularity.  However, as pointed out by Ms Yu, this court had found that D had no real intention to challenge P’s case against D.  D has not until to date made any application to appeal or apply for review or retrial or to set aside the PRC Judgment, which is by now almost 5 years old.  As set out in paragraphs 100 and 101 of the Setting Aside Judgment, there has been no expert evidence produced by D that any appeal, or review, or retrial is still possible under PRC Law and/or whether the PRC Judgment is final and conclusive.

Conclusion

32.  Having considered all the above, I have come to the view that D does not have any reasonable prospect of success in relation to his intended appeal.  There is no other reason in the interests of justice why the appeal should be heard.  I therefore decline to grant leave.

33.  I have granted an interim stay at the leaving pending this decision.  In light of my above view that D does not have any reasonable prospect of success with his intended appeal, I see no other reasons as to why I should grant a stay.  The interim stay is hereby lifted.

34.  D shall pay P the costs of D’s leave and stay applications.