WU SHENG LONG v. C-CORP PRECIOUS METALS LTD

HCMP 888 /2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 888 OF 2011

(ON AN INTENDED APPEAL FROM HCA NO. 1912 OF 2008)

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BETWEEN

WU SHENG LONG(吳聲龍) Plaintiff
and
C-CORP PRECIOUS METALS LTD.
金世界貴金屬有限公司
Defendant

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Before: Hon Fok JA in Chambers

Date of Hearing: 1 June 2011

Date of Judgment: 1 June 2011

Date of Handing Down Reasons for Judgment: 3 June 2011

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REASONS FOR JUDGMENT

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1. This was an application for leave to appeal out of time. At the conclusion of the hearing, I dismissed the application indicatingthat I would hand down my reasons later. These are my reasons.

2. The Judgment sought to be appealed from was handed down on 22 March 2011. The 28-day time limit for the service of a notice ofappeal expired on 19 April 2011.

3. On 6 May 2011 that the plaintiff’s solicitors notified the defendant’s solicitors of the plaintiff’s intention to appeal againstthe judgment. By that time, the plaintiff was already 17 days out of time. An application by summons for leave to appeal out oftime was taken out on 17 May 2011. By that time, the plaintiff was 28 days out of time.

4. The delay is not lengthy but I am not satisfied that there is a good excuse for it.

5. The plaintiff acknowledges that his solicitors had informed him of the 28-day time limit for appeal and that he knew of this timelimit before its expiry on 19 April 2011. He says that he had decided to appeal against the judgment on 17 April 2011, the day beforehe was due to depart from the Mainland, where he lives, to travel to the United States to attend a course of lectures at the SanJose State University. He flew to the United States on 18 April 2011 and did not return until 30 April 2011.

6. The plaintiff says that, when on 17 April 2011 he decided to appeal, the contents of paragraph 80 of the judgment led him to understandthat his solicitors’ advice regarding the 28-day time limit for appeal meant that the time limit would not start to run until thestay of execution mentioned in that paragraph of the judgment ceased to have effect.

7. I do not consider the plaintiff’s explanation for the delay to be excusable. The plaintiff had the benefit of legal advice fromhis solicitors on the question of the time limit for appeal. He had already been given correct advice as to the length of the timelimit. There is no indication that the plaintiff sought confirmation from his solicitors as to the correctness of his understandingof paragraph 80 of the judgment. Had he asked his solicitors, there is no doubt he would have been informed that his understandingwas incorrect. There is no excuse, in my view, for the plaintiff not to have asked this simple question of his solicitors. Thefact that his solicitors had advised him the time limit was 28 days without qualification should have put him on inquiry as to whetherhis understanding of paragraph 80 of the judgment was correct. So far as it may be suggested that he was distracted by his forthcomingtrip to the United States, I do not think that explanation is sufficient to justify his neglecting to ascertain the true positionregarding the time limit for an appeal. Many litigants have busy lives and are required to travel abroad. There is no apparentreason why, having already apparently decided to appeal on 17 April 2011, the plaintiff could not have intimated this to his solicitorsin Hong Kong who could have initiated the appeal process within time.

8. Where a delay is inexcusable although insubstantial (which is the situation in the present case), a party seeking an extension oftime must show a real prospect of success on the merits: see Secretary for Justice v Hong Kong & Yaumatei Ferry Co Ltd [2001] 1 HKC 125 at 129I applying Chiu Sin Chung v Yu Yan Yan Angela [1993] 1 HKLR 225 at p. 229 line 45.

9. It is therefore necessary to summarise the Judgment below and to consider the proposed grounds of appeal against it.

10. The proposed appeal is from a judgment of Mr Recorder Ambrose Ho SC after trial. The plaintiff was a customer of the defendant,a trader in precious metals. The Recorder concluded that the defendant acted as principal in dealing with the plaintiff in relationto London gold. The learned Recorder held that the defendant was entitled to liquidate a margin account on which the plaintiff tradedin London gold. This resulted in the plaintiff being indebted to the defendant for a substantial sum.

11. As to the amount of the defendant’s loss on the liquidation of the margin trading account, the Recorder found this to be US$1,614,383.52.

12. In order to meet the plaintiff’s losses on the liquidation of its margin trading account, the defendant had sold a quantity ofphysical silver which the plaintiff was holding in another account. The Recorder rejected the defendant’s case that there wasan oral agreement that the silver could be used as a pledge or security for the plaintiff’s margin trading. He therefore heldthat the defendant had converted the silver. Rejecting the defendant’s argument that it had a lien over the silver, the Recorderheld the defendant liable to the plaintiff for converting it and found that the conversion took place on 16 October 2008.

13. As to the damages for the conversion, the Recorder held that the plaintiff was entitled to damages to be assessed based on the marketvalue of the silver as at 16 October 2008.

14. The Recorder held that the defence of equitable set-off was not available to the defendant and, in the result, entered judgmentin favour of the plaintiff for damages for conversion to be assessed with interest. He also entered judgment for the defendant onthe basis of the established liability of US$1,614,383.52 for the losses on the margin trading account with interest. Executionof both judgments was stayed pending the completion of the assessment of the plaintiff’s damages, with execution to be levied onlyby the party who is found to be in credit after the mutual set-off of the judgment sums.

15. As noted above, the relevant question on this application is whether the plaintiff has a real prospect of success on appeal. Theplaintiff asserts that he does. It is therefore necessary to reach a view as to whether the plaintiff meets this threshold.

16. The proposed grounds of appeal seek to challenge first the Recorder’s rejection of the duties alleged to have been breached bythe defendant in liquidating the plaintiff’s margin trading account.

17. The Recorder rejected the plaintiff’s contention that, in so liquidating the account, the defendant had breached contractual andcommon law duties. He also rejected the plaintiff’s case that such duties should be implied into the contract between the parties. The Recorder’s finding that the parties contracted with each other on a principal to principal basis in respect of the margintrading account is based on findings of primary fact and I am not satisfied that the plaintiff is able to show these have no properbasis. On the basis of those findings and the conclusion that the parties dealt with each other as principals, I do not think thereis a real prospect of success in the challenge to the Recorder’s conclusions at paragraphs 37 to 39 of the Judgment rejecting theplaintiff’s construction of the contract between the parties and the alleged implied terms of that contract. It cannot be saidthat the terms sought to be implied were necessary terms.

18. Next, grounds of appeal are advanced challenging the amount of the defendant’s loss on the liquidation of the plaintiff’s margintrading account.

19. As to these, the Recorder accepted the evidence of the defendant’s managing director as to the prevailing market price at thetime of the decision to liquidate the plaintiff’s open positions, giving a loss of US$1,614,383.52. He noted that the amount ofloss so calculated coincided with what the plaintiff alleged was his loss arising from the liquidation of that account. The Recorderrejected an argument that the defendant’s hedging transactions were relevant to the loss arising from the liquidation of the plaintiff’saccount, holding that the hedging transactions were separate and independent.

20. I do not think there is a real prospect of success in the proposed challenge to the Recorder’s findings of fact and conclusionsin this regard. The amount of loss was clearly supported and the fact that the defendant independently entered into a hedging transactionwith a third party does not affect the plaintiff’s liability to the defendant.

21. Finally, the notice of appeal seeks to advance grounds challenging the Recorder’s holding that the plaintiff’s remedy for conversionwas damages assessed as the market value at 16 October 2008.

22. Mr Kenneth Chan, counsel for the plaintiff, referred to the Recorder’s statement that he was prepared to accept the plaintiff’sevidence that he told the defendant that he had sub-sold the silver and therefore the defendant ought to have known that the disposalof the silver would expose the plaintiff to claims from his clients. He submits that the Recorder erred in therefore not orderingthat the defendant indemnify the plaintiff from claims by the plaintiff’s own clients on a full indemnity basis.

23. In this regard, however, the plaintiff’s case that he suffered loss from the conversion of his silver on the basis of a sub-salewould appear to have been no more than a bare assertion unsupported by any documentary evidence at all and to be weakened by inconsistenciesin the plaintiff’s oral evidence. The Recorder said in paragraph 68 of the Judgment that he was not satisfied that the plaintiffhad established a sufficient case that he was entitled to consequential loss arising from the sub-sale of the silver. He noted therewas hardly any detail of this loss in the plaintiff’s pleaded case, no documentary evidence to substantiate the sub-sale and theplaintiff had been inconsistent in his evidence about the price at which the silver had been sold and the position regarding thesub-sale contract.

24. In the light of this, I do not consider there is a real prospect of success of an appeal against the Recorder’s conclusion thatthe evidence did not satisfy him the plaintiff had established a sufficient case for consequential loss. The indemnity would havebeen part and parcel of that consequential loss. That being the case, there can be no question of an entitlement to an indemnityas claimed.

25. I would add that the argument concerning the indemnity was the only substantive ground separately addressed in the plaintiff’sskeleton submissions in support of the application.

26. I do not consider that this is a case like Tridant Engineering Co Ltd v Mansion Holdings Ltd [2001] 1 HKLRD 783, namely that the assessment of the prospects of success of the intended appeal can only be made at a full hearing so that the overallinterests would require time to be extended without any further consideration of the merits.

27. Finally, the plaintiff contended that there would be no prejudice to the defendant if time for the appeal were to be extended. Asis well-established, although the existence of prejudice to the would-be respondent is a ground for refusing an extension of time,the absence of prejudice to a would-be respondent is not a ground for extending time.

28. For these reasons, therefore, I dismissed the plaintiff’s application for an extension of time to file the notice of appeal withcosts of the application to the defendant, to be taxed if not agreed.

(Joseph Fok)
Justice of Appeal

Mr Kenneth C L Chan & Mr Billy N P Ma, instructed by Messrs Paul Kwong & Co., for the Plaintiff/Applicant

Mr Walker Sham, instructed by Messrs Philip K.H. Wong, Kennedy Y.H. Wong & Co., for the Defendant/Respondent