CHEN JINHUI v. WONG KAM SAN (黃錦新), by his guardian ad litem, HUANG YUEXIA (黃月霞) AND OTHERS

CACV 173/2021, [2025] HKCA 1025

On Appeal From [2021] HKCFI 710

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 173 OF 2021

(ON APPEAL FROM HCA NO 1524 OF 2012)

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J U D G M E N T

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Hon Chow JA (giving the Judgment of the Court):

INTRODUCTION

1.  This is the 1^st to 3^rd Defendants’ application by summons dated 17 September 2025 (“the Summons”) seeking an order for the dismissal of their appeal in CACV 173/2021 (“D1-D3’s Appeal”). There is no dispute between the Plaintiff and the 1^st to 3^rd Defendants that the appeal ought to be dismissed. The parties differ, however, on the terms on which the appeal should be dismissed, and on the issue of the costs of the appeal as well as those of the application.

BRIEF BACKGROUND

2.  The basic facts of this case have been summarised in a previous judgment of this Court given on 4 November 2022[1] (“the CA Judgment”), and will not be repeated.

3.  The subject matter of the action below concerned a block of shares (comprising 80% of the issued share capital) in the 5^th Defendant (“the Shares”) which the Plaintiff alleged the late Wong Kam San (“Wong”)[2] had agreed, subject to certain undertaking given by him, to sell and transfer to him in satisfaction of debts of more than RMB 21 million due from Wong and/or his companies to him. By the judgment of Deputy High Court Judge Leung (as he then was) dated 19 March 2021 (“the CFI Judgment”)[3], the Judge found in favour of the Plaintiff against the 1^st to 3^rd Defendants and the 4^th to 6^th Defendants in respect of his entitlement to the Shares, and granted declaratory and other relief to the Plaintiff. Both the 1^st to 3^rd Defendants and the 4^th to 6^th Defendants have lodged appeals against the CFI Judgment.

4.  As mentioned at §25 of the CA Judgment, in the 1^st to 3^rd Defendants’ Notice of Appeal dated 16 April 2021, they raised 2 principal grounds of appeal, namely, (i) the Judge erred in holding that the agreement relied on by the Plaintiff did not fail for lack of valid consideration, and (ii) there was no or insufficient evidence upon which the Judge could find that the market value of the Shares was RMB 115 million for the purpose of assessment of damages.

5.  On 15 July 2022, the 1^st to 3^rd Defendants applied for leave to adduce new evidence in support of their appeal. The proposed new evidence included a purported declaration dated 3 February 2022 (“the 2022 Chen Declaration”) alleged to have been made by the Plaintiff in the Mainland which, according to the 1^st to 3^rd Defendants, showed that the CFI Judgment was obtained by the Plaintiff by fraud. A similar application was made on behalf of the 4^th to 6^th Defendants. By the CA Judgment, the Court of Appeal granted leave to the 1^st to 3^rd Defendants and the 4^th to 6^th Defendants to adduce, inter alia, the 2022 Chen Declaration as new evidence, and reserved the question of what weight (if any) ought to be accorded to the new evidence for consideration at the substantive hearing of the appeals.

6.  Notwithstanding the leave granted by the Court, the 1^st to 3^rd Defendants did not apply to amend their Notice of Appeal or file any Supplementary Notice of Appeal to raise the issue of fraud as a ground of appeal against the CFI Judgment. Instead, on 3 December 2024, the 1^st and 2^nd Defendants (but not the 3^rd Defendant) commenced a new action in the High Court, HCA 2396/2024 (“the New Action”), seeking to set aside the CFI Judgment on ground that it was obtained by the Plaintiff by fraud.

7.  In the meantime, the 1^st to 3^rd Defendants continued to prosecute their appeal until 17 September 2025 when they issued the Summons seeking a dismissal of their appeal subject to the condition that such dismissal was “without prejudice to HCA 2396/2024” (“D1-D3’s Condition”). The 1^st to 3^rd Defendants argue that this condition is justified for the following reasons:

(1)  A “without prejudice dismissal” is a standard/common legal phrase readily understood to mean that the dismissal is procedural only, and usually signifies that no substantive ruling has been made.

(2)  The present application is in substance the 1^st to 3^rd Defendants’ application to “withdraw” the appeal. This conforms with the Court of Appeal’s usual practice to insist that appeals are either heard or disposed of by means of a dismissal by consent, instead of being withdrawn.

(3)  As such, the wording “without prejudice to the [New Action]” is necessary to ensure that the prejudicial effect of a dismissal of an appeal (namely, the appellant not being allowed to serve a fresh notice of appeal) would not “carry over” to the New Action, which in any event has already been commenced.

(4)  It is difficult to imagine that any reader of the court order would interpret the words “without prejudice to the [New Action]” in the manner as suggested by the Plaintiff (namely, an endorsement of the New Action by the Court). Rather, the reader would readily understand those words in the sense as submitted above.

See paragraph 2 of the “Reply Skeleton Submissions of D1-D3” dated 7 November 2025.

8.  On the other hand, the Plaintiff submits that D1-D3’s Appeal should be dismissed subject to the condition that such dismissal is “without prejudice to any argument(s) or step(s) or application(s) Mr. Chen may make, or any evidence he may adduce in the New Action, including but not limited to the argument that D1-D3 are estopped and/or precluded from proceeding with the New Action, and/or are estopped and/or precluded from alleging that Mr. Chen has obtained [the CFI Judgment] by fraud, and/or the merits of the fraud allegations against Mr. Chen” (“P’s Condition”).

9.  The Plaintiff argues that P’s Condition ought to be included “to preserve P’s rights in the New Action”, there being no reason why the Plaintiff is not allowed to take any of the points or steps referred to therein. Without such condition, says the Plaintiff, his consent to the dismissal of the appeal “may be misinterpreted as an agreement by P that the New Action is the proper and appropriate [course] to take in the circumstances of this dispute given the history so far” (see paragraphs 7 and 12 of the Plaintiff’s Submissions dated 3 November 2025).

10.  On the issue of costs, the 1^st to 3^rd Defendants argue that the costs of D1-D3’s Appeal should be reserved pending the determination of the 4^th to 6^th Defendants’ appeal in CACV 178/2021 (“D4-D6’s Appeal”), because (i) the apportionment of the Plaintiff’s costs in the 2 appeals is not a straightforward exercise and there may be significant costs incurred by the Plaintiff attributable to both appeals, (ii) insofar as common costs are concerned, there is no justification for a “rough and ready” or equal apportionment in the present case, and (iii) the court should take into account the overall justice and fairness, including the conduct of both the 1^st to 3^rd Defendants and the 4^th to 6^th Defendants, and the outcome of D4-D6’s Appeal.

DISCUSSION

11.  In our view, neither D1-D3’s Condition nor P’s Condition is necessary or appropriate. This Court is currently concerned only with an application for the dismissal of D1-D3’s Appeal. It is not seized of the New Action, and is not asked to determine any issue in the New Action. An order which simply dismisses D1-D3’s Appeal cannot sensibly be read to mean that the 1^st to 3^rd Defendants are prohibited from commencing the New Action which, in any event, has already been commenced (as pointed out by the 1^st to 3^rd Defendants). Neither could it sensibly be understood to mean that the Plaintiff is not entitled to take any of the points or steps referred to P’s Condition. An order of the Court dismissing D1-D3’s Appeal without more means just that. D1-D3’s Condition and P’s Condition are, we consider, mere surplusage.

12.  Insofar as the costs of D1-D3’s Appeal are concerned, we can see no good reason why the 1^st to 3^rd Defendants, who have decided not to pursue their existing appeal, should not have to pay the Plaintiff for the costs which he has incurred to resist the appeal. Those costs have been wasted and should properly be paid by the 1^st to 3^rd Defendants. We do not see that the outcome of D4-D6’s Appeal would have any impact on the Plaintiff’s entitlement to the costs of D1-D3’s Appeal. On the other hand, the Plaintiff would plainly suffer prejudice if the resolution of the issue of his entitlement to the costs of D1-D3’s Appeal is delayed until after the conclusion of D4-D6’s Appeal, particularly having regard to the fact that the original hearing dates of that appeal in November 2025 have been vacated by reason of a recent application by the 4^th to 6^th Defendants to adduce yet further new evidence in support of their appeal and, we understand, new hearing dates have not yet been fixed. To the extent that there may be difficulties in apportioning the Plaintiff’s costs as between D1-D3’s Appeal and D4-D6’s Appeal, that would be an argument to support the contention that the Plaintiff’s costs ought not to be assessed summarily, but should instead be assessed by a taxing master in a formal taxation. The existence of such difficulties (if any) in the assessment of the Plaintiff’s costs is not in itself a good reason to defer the consideration of whether the Plaintiff ought to be entitled to the costs of D1-D3’s Appeal. Overall, we are not satisfied that the Plaintiff’s costs should be reserved pending the outcome of D4-D6’s Appeal.

DISPOSITION

13.  The 1^st to 3^rd Defendants’ appeal by Notice of Appeal dated 16 April 2021 is dismissed with costs to the Plaintiff. We consider that the 1^st to 3^rd Defendants should be given an opportunity to challenge the apportionment of costs as between D1-D3’s Appeal and D4-D6’s Appeal in a formal taxation, instead of in a summary assessment. Accordingly, the Plaintiff’s costs shall be taxed if not agreed, with certificate for 2 counsel. For the avoidance of doubt, the Plaintiff shall be entitled to tax his costs forthwith.

14.  Insofar as the costs of the Summons are concerned, the 1^st to 3^rd Defendants have failed on both issues, namely, whether the dismissal of their appeal should be subject to D1-D3’s Condition, and whether the issue of the costs of their appeal should be reserved until after the conclusion of D4-D6’s Appeal, while the Plaintiff has failed in relation to the issue of whether the dismissal of the 1^st to 3^rd Defendants’ appeal should be subject to P’s Condition. Overall, we consider it fair that the Plaintiff should have 70% of the costs of the Summons, to be assessed summarily. The 1^st to 3^rd Defendants shall have leave to file a statement of objections (limited to 2 pages) to Part I of the Plaintiff’s Statement of Costs dated 3 November 2025 relating to the costs of the Summons within 14 days from the date of this judgment. In view of the simple nature of the application, we would allow the fees of the Plaintiff’s junior counsel only.