HONG KONG TV INTERNATIONAL MEDIA GROUP LTD v. ALL LEADERS PUBLICATION GROUP LTD AND OTHERS

HCMP 3239/2015

MISCELLANEOUS PROCEEDINGS NO. 3239 OF 2015

(ON AN INTENDED APPEAL FROM HCA NO. 2108 OF 2014)

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REASONS FOR JUDGMENT
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Hon Lam VP (giving the Reasons for Judgment of the Court):

1.  This is an application by the 2^nd defendant for extension of time to appeal against the order of M Chan J on 19 August 2015.  By that order, the judge dismissed the appeal against the summary judgment granted by Master M Wong on 6 July 2015.  The application was made on 7 December 2015.  The delay is substantial (82 days) and in the meantime, steps had been taken by the plaintiff to enforce the judgment, including obtaining charging order absolute in respect of a joint property of the 2^nd and 3^rd defendants.

2.  An unusual feature in the present case is that Mr Deng, counsel for the 2^nd defendant, accepted that the original defence as run before the master and the judge is not arguable.  The 2^nd defendant now seeks to run new defences which were not raised below.  To facilitate the running of such defences, the 2^nd defendant applied for leave to admit fresh evidence and to amend the defence.

3.  There is no appeal against the judgment by the 1^st and 3^rd defendant.  The claim is a claim for repayment of a loan by the plaintiff to the 1^st defendant.  The 2^nd and 3^rd defendants were guarantors.

4.  The new defences which the 2^nd defendant intended to advance are: (1) discharge of his guarantee due to the variation of the loan agreement without his consent; (2) undue influence.

5.  There was an attempt to adduce new evidence (in the form of an affirmed document dated 18 August 2015) when the defendants appealed to the judge.  However, the proposed new evidence was different from the new evidence which is placed before us.  These new defences were not raised in the document of 18 August 2015 at the court below.  In that document, apart from outlining their case on the making of the loan agreement, the 2^nd and 3^rd defendants recited difficulties in procuring legal representation and sought an adjournment of the hearing.  The judge refused to admit that document as evidence.

6.  The 2^nd defendant also relied on the refusal to admit fresh evidence as a ground of appeal.

7.  The approach of the court in the consideration of an application for extension of time to appeal can be found in the judgment of Le Pichon JA in Secretary for Justice v Yaumati Ferry Co Ltd [2001] 1 HKC 126.  We shall examine the relevant matters below.

8.  The 2^nd defendant sought toaccount for the substantial delay by referring to the difficulties in procuring and funding legal representation.  He also alleged that his former solicitors and counsel failed to explain to him the possibilities of the new defences on which he now relied.

9.  We do not find the explanation credible.  There is no other evidence apart from the 2^nd defendant’s bare allegation that his former lawyers had not properly advised him.  At the same time, there is some evidence (adverted to by Mr Tam at the hearing before the judge) that the 2^nd defendant had been aware of the variations for quite some time.  Also his allegation that he was not involved at all in the business of the 1^st defendant is inconsistent with the fact that he attended themeeting with the plaintiff’s chairman and signed documents forthe loan together with the 3^rd defendant.  He also signed the Repayment Proposal of 4 November 2013.  As submitted by Mr Tam, the 2^nd and 3^rd defendants must have gone through the history of the transaction with their former lawyers in detail and if the 2^nd defendant had separate defences on the discharge of his guarantee and undue influence, they should have been picked up by the former lawyers. 

10.  Further, the 2^nd and 3^rd defendants had acted in person before the master and the judge.  The lack of legal representation did not serve as a hurdle for them in appealing against the judgment of the master.  We do not see how it would become a hurdle to the 2^nd defendant in appealing against the judgment of the judge.

11.  Turning to the merits, as Mr Deng accepted that the original defence is unarguable, he needs to persuade us to give him leave to admit the fresh evidence before he could argue the new defences.  Also, due to the substantial inexcusable delay, there must be real prospect of success in the intended defence before the court will grant extension of time to appeal.

12.  In this connection, we can quickly dispose of his ground of appeal directed against the judge’s refusal to admit the affirmed document of 18 August 2015.  Since the civil justice reform, the court is more stringent on admission of fresh evidence in an appeal from a master to a judge, see Hong Kong Civil Procedure 2016 §58/1/3.  In essence, the requirements of Ladd v Marshall [1954] 1 WLR 1489 have to be satisfied.

13.  Further, the requirements are applicable in the context of an Order 14 appeal, see Johnson Electric International Ltd v Bel Global Resources Holdings Ltd [2014] 5 HKC 504.  The only modifications are those referred to by Lord Bridge in Langdale v Danby [1982] 1 WLR 1123 at 1133 cited at §13 of Johnson Electric.    

14.  Applying the modified Ladd v Marshall test, we do not see any arguable ground for challenging the judge’s rejection of the affirmed document of 18 August 2015.  The difficulties in procuring legal representation cannot relax the requirement that a defendant must exercise reasonable diligence in putting forward his evidence to resist an Order 14 application.  Further, in respect of the application before the judge, one should examine the reasonable diligence in the preparation of evidence before the master and the defence was prepared by the former lawyers.

15.  Even without legal representation, there was no reason why the 2^nd defendant should be excused from setting out his own defences in the evidence adduced at the court below.

16.  The real complaint of the 2^nd defendant is that he was misled by the former lawyers in that they did not properly advise him of the defences of discharge of the guarantee by the variations and undue influence.  In this respect, for reasons given above, we do not find his evidence as carrying sufficient conviction to establish a case with real prospect of success.

17.  Thus, we are not satisfied that the criteria under the modified Ladd v Marshall test are met.  We do not accept that the 2^nd defendant had exercised reasonable diligence in the preparation of his case to oppose the summary judgment application.  Nor do we accept that his evidence in his latest affirmation as sufficiently cogent to resist summary judgment.  On its face the Repayment Proposal had explicitly referred to postponed repayment by the 1^st defendant (the principal debtor) and the letter before action prior to the proposal referred to the change in the interest rate, which are the relevant variations.  He did not explain why he appended his signature to the Repayment Proposal if he did not agree to the variations.  The fact that he trusted the business acumen of the 3^rd defendant in the transaction did not establish any undue influence.  After all, he had an indirect interest in the affairs of the 1^st defendant through his shareholding in Chung Chit Holdings Ltd.

18.  We therefore refused to admit the latest affirmation of the 2^nd defendant as evidence.

19.  Without the evidence and in light of our views on the merit of the intended new defence, we do not think the 2^nd defendant has a real prospect of success in the appeal.

20.  For these reasons, we refused to grant an extension of time to the 2^nd defendant to appeal against the decision of the judge.  In light of this, we also dismissed the application for leave to amend the defence and the application for stay of execution.

21.  We also ordered the 2^nd defendant to pay the costs of the plaintiff in these applications. Having considered the statement of costs prepared by solicitors for the plaintiff and submissions on costs, we fixed such costs at $110,000.