Astro Nusantara International B.V.and Others v. Pt Ayunda Prima Mitra and Others
Read the full judgment text of HCCT 45/2010 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 8 December 2015 before Hon Chow J.
Construction and Arbitration Law — Enforcement of foreign arbitration awards — Application for extension of time to set aside enforcement orders dismissed — Leave to appeal required as judgment procedural not substantive — Principles for stay of execution pending appeal explained — Issue-based approach to costs awarded with 80% costs payable by respondent — Court’s jurisdiction and approach to imposing payment into court as condition for leave or stay discussed and declined on facts — Allegations of collusion but exceptional nature of judgment justified unconditional leave and stay — Key issues include extension of time, good faith principle in enforcement, challenge to tribunal jurisdiction, and multi-tier dispute resolution compliance. Application dismissed on substantive grounds with costs orders varied accordingly.
Legal issues: Whether leave to appeal against the Judgment is required · Whether leave to appeal should be granted · Principles for stay of execution pending appeal · Whether leave to appeal and stay of execution should be conditioned on payment into court · Costs order—issue based approach
Outcome: Leave to appeal granted to First Media; Stay of execution granted to First Media and AAL; Payment condition for leave or stay refused; Costs order varied with First Media ordered to pay 80% of Astro’s costs
Cited by 12 cases · Cites 10 cases
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HCCT 45/2010 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTRUCTION AND ARBITRATION PROCEEDINGS NO. 45 OF 2010 _______________
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____________________ D E C I S I O N INTRODUCTION 1.On 17 February 2015, I handed down a judgment (“the Judgment”) dismissing the application of the 2nd defendant (“First Media”) by summons dated 18 January 2012 seeking, inter alia:
2.The basic facts of this case were set out in the Judgment. I shall not repeat them here. 3.I have now before me the following applications:-
The Leave Summons 4.Mr Mark Strachan SC (for First Media) submits that leave to appeal against the Judgment is not required either because it is a “final” judgement or order, or because, albeit interlocutory, it is one referred to in Order 59, rule 21(1)(a) of the Rules of the High Court (ie a judgment or order determining in a summary way the substantive rights of a party to an action). 5.As I understand it, First Media’s contention is based on the fact that in the Judgment, I not only declined to grant an extension of time to First Media to apply to set aside the Hong Kong Orders and Hong Kong Judgment, but also made it clear that even if I were minded to grant an extension of time, I would still have refused First Media’s setting aside application on the ground that First Media’s conduct was not consonant with the “good faith” principle such that it was precluded from relying on section 44(2) of the Arbitration Ordinance, Cap 341 (“the Ordinance”) to resist enforcement of the Awards. 6.For the present purpose, it seems to me to be important that once the extension of time sought was refused by the court, there was no question of the court granting any substantive order to set aside the Hong Kong Orders and Hong Kong Judgment. The substantive setting aside application would, strictly speaking, not arise for consideration. That was why, at paragraph 132 of the Judgment, I stated that “… I decline to exercise my discretion to extend the time for First Media to apply to set aside the Hong Kong Orders, with the consequence that First Media’s summons dated 18 January 2010 shall be dismissed in its entirety”. In my view, the decision refusing to grant an extension of time to First Media to apply to set aside the Hong Kong Orders and Hong Kong Judgment was determinative of the First Media’s setting aside application and, therefore, whether leave to appeal against the Judgment to the Court of Appeal is required should be tested by reference to that decision. 7.On this basis, it seems to me clear that the Judgment cannot be regarded as being a final judgment or order, applying the well known “application test”. See Hip Hing Timber Co Ltd v Tang Man Kit (2004) 7 HKCFAR 212, at paragraph 38, per Lord Millet NPJ –
8.The cause of matter in these proceedings is the enforcement of the Awards. It is plainly not correct to say that an order made on First Media’s application for an extension of time to apply to set aside the Hong Kong Orders and Hong Kong Judgment, whatever its outcome, would be finally determinative of whether the Awards ought to be permitted to be enforced in Hong Kong. Neither would such an order be finally determinative of any crucial or substantive issue in the enforcement of the Awards. 9.Further, and for the same reason, I do not consider the Judgment to be one determining in a summary way the “substantive rights” of a party to an action within the meaning of Order 59 rule 21(1)(a) of the Rules of the High Court. I agree with the submission of Mr Bernard Man SC (for Astro) that the Judgment determines the “procedural”, as opposed to “substantive”, rights of First Media to apply to set aside the Hong Kong Orders and Hong Kong Judgment. I therefore consider that leave to appeal against the Judgment is required under section 14AA(1) of the High Court Ordinance. 10.On the question of whether leave to appeal ought to be given, under section 14AA(4) of the High Court Ordinance, leave to appeal from an interlocutory judgment or order of the Court of First Instance shall not be granted unless the court hearing the application for leave to appeal is satisfied that:-
11.The expression “reasonable prospect of success” for the purpose of section 14AA(4)(a) has been interpreted to mean that the prospects of success of the appeal are more than “fanciful” but do not have to be shown to be “probable”: see SMSE v KL [2009] 4 HKLRD 125, at paragraph 17 per Le Pichon JA. This threshold is not a high one. 12.I refer to the discussion of the various issues raised by the parties in the Judgment and do not propose to repeat them here. Although I have reached certain conclusions on those issues, including in particular that time should not be extended to First Media to apply to set aside the Hong Kong Orders and Hong Kong Judgment, and also that, in any event, First Media should not be permitted to rely on section 44(2) of the Ordinance to resist enforcement of the Awards on the ground that it had acted in breach of the “good faith” principle, the contrary views are, in my view, reasonably arguable. 13.I consider that First Media’s proposed appeal has a “reasonable prospect of success” within the meaning of section 14AA(4)(a). Also, the proper scope of the “good faith” principle for the purpose of enforcement of a foreign arbitral award is, in my view, an issue of general or public importance. I would therefore grant leave to appeal on both limbs under section 14AA(4). 14.I shall deal with Astro’s argument that leave to appeal should only be granted on condition that First Media pays into court the amount of the granisheed debt and the costs incurred by Astro in these proceedings (“the Payment Condition”) later in this decision when I consider Astro’s further argument that, in the event of the court granting a stay of execution of the Garnishee Order Absolute under First Media’s Stay Summons and/or AAL’s Stay Summons, such stay should be subject to the same condition. First Media and AAL’s Stay Summonses 15.The principles governing an application for a stay of execution of a judgment pending appeal are well established.
For the above principles, see the judgment of Ma J (as he then was) in Stay Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84. 16.In the present case, I have already concluded that First Media’s appeal against the Judgment has a “reasonable prospect of success” for the purpose of leave to appeal. For the same reason, I consider that First Media also has “arguable grounds of appeal” for the purpose of stay of execution. I do not, however, consider that First Media has a strong appeal or a strong likelihood of success in its appeal. 17.If the Court of Appeal should ultimately find that the Hong Kong Orders and Hong Kong Judgment should be set aside, it would follow that the Granishee Order Nisi should not be made absolute. Accordingly, AAL also has “arguable grounds of appeal” against the decision of Deputy High Court Judge Mayo given on 31 October 2013 ordering that the Granishee Order Nisi be made absolute. 18.In passing, I should mention that AAL has advanced other grounds of appeal in its Supplementary (Amended) Notice of Appeal dated 3 March 2015 to challenge various findings and conclusions reached by the learned deputy judge, including (i) the situs of the debt (the subject matter of the garnishee order), (ii) anti-suit injunction, (iii) collusion, and (iv) double jeopardy. I do not propose to examine the validity of these grounds of appeal separately because (for reasons which I shall come to later) I consider it clear that a stay of execution of the Garnishee Order Absolute ought to be granted even if one were to focus only on the question of whether the Hong Kong Orders and Hong Kong Judgment ought to be set aside. 19.On the basis that both First Media and ALL have arguable grounds of appeal, it is still necessary for them to provide additional reasons as to why a stay is justified. 20.It seems to me clear that a stay of execution ought to be granted in the present case because, in the absence of a stay, the proposed appeal may be rendered nugatory, Astro being a company resident out of the jurisdiction and there being no suggestion that it has any assets within the jurisdiction from which First Media and AAL could seek to recover the moneys paid to Astro in the event of their appeals being successful. In this regard, I note that in Mr Man’s skeleton submissions for Astro dated 16 October 2015, he argues that First Media and AAL’s respective stay applications ought to be dismissed, not because there is no risk of the appeals being rendered nugatory in the absence of any stay, but because of the “utter lack of merit” in both appeals (a submission which I am unable to accept). Leave to appeal and stay of execution should not be subject to the payment condition 21.On behalf of Astro, Mr Man has sought to achieve the result of compelling First Media and AAL to pay into court the amount of the granisheed debt and the costs incurred by Astro in these proceedings by two separate routes, either as a condition of the court granting to First Media leave to appeal or as a condition of the court granting to First Media and AAL a stay of execution pending appeal. (i) Court has jurisdiction to grant leave to appeal conditional upon payment into court 22.In relation to the former route, Mr Strachan submits that the court has no jurisdiction to require a prospective appellant to pay the judgment sum (or any part thereof) into court as a condition of granting leave to appeal. 23.I am unable to accept Mr Strachan’s submission. In my view, the court’s jurisdiction to impose, as a condition of granting leave to appeal (where leave is required), a requirement on the appellant to pay the judgment sum (or any part thereof) into court can be found in:-
24.In this regard, it is important to appreciate that by virtue of Order 1B, rule 1(1) of the Rules of the High Court, the list of powers in that rule is in addition to and not in substitution for any powers given to the Court by any other rule or practice direction or by any other enactment or any powers it may otherwise have. (ii) Court’s approach regarding the exercise of its discretion to grant leave to appeal conditional upon payment into court 25.In so far as the court’s approach regarding the exercise of this jurisdiction is concerned, guidance can, in my view, be obtained from the way in which a similar jurisdiction is being exercised by the English courts. In particular, CPR rule 52.9(2) provides that the court will only exercise its powers under paragraph (1), which expressly include the power to impose conditions upon which an appeal may be brought, where there is a “compelling reason” for doing so. 26.The English jurisprudence suggests that:-
See Sebastian Holdings Inc v Deutsche Bank AG [2014] EWCA Civ 1100, at paragraphs 31 and 32 per Tomlinson LJ, citing the judgments of Clarke LJ in Dumford Trading AG v OAO Atlantrybflot [2004] EWCA Civ 1265, and of Moore-Bick LJ in Wittman (UK) Ltd v Willdav Engineering SA [2007] EWCA Civ 521. 27.Also, as made clear in the judgment of the Appeal Committee of the Court of Final Appeal in Wang Ruiyun v Gem Global Yield Fund Ltd (2013) 16 HKCFAR 785, at paragraphs 27 per Ribeiro PJ, an order requiring a prospective appellant to make payment into court as a condition of granting leave to appeal should not be made where there is convincing evidence that it would have the consequence of stifling the appeal. 28.Subject to the above general considerations, the Hong Kong rules do not prescribe any specific matters which the court ought to take into account when deciding whether to require payment of the judgment sum (or a part thereof) into court as a condition for granting leave to appeal. The issue will have to be dealt with on a general basis having regard to the particular facts and circumstances of the case. (iii) Court’s jurisdiction to grant a stay of execution conditional upon payment into court 29.It is not in dispute that the court does have power to order an appellant to pay into court the judgment sum (or any part thereof) as a condition of granting a stay of execution pending appeal. Whether to impose such a condition involves an exercise of judicial discretion depending on all relevant circumstances of the case: see Hong Kong Civil Procedure 2016, paragraph 59/13/5. (iv) Exercise of discretion in the present case 30.In Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2002] CP Rep 21, at paragraph 41, Clarke LJ, giving the judgment on behalf of the English Court of Appeal, held that requiring the appellant in that case to pay the judgment amount into court as a condition of permitting it to proceed with the appeal was justified in view of the following circumstances:-
31.Mr Man submits that most, if not all, of the circumstances identified in Hammond are satisfied in the present case. Mr Man says, in particular, that the Payment Condition should be imposed for the following reasons:-
32.Mr Man places particular emphasis on the first complaint, namely, the alleged collusion of First Media and AAL to present a false picture of the debt between the two entities so as to defeat the garnishee proceedings and frustrate Astro’s enforcement efforts. This complaint is supported by the findings made by Deputy High Court Judge Mayo in his written decision dated 31 October 2013 referred to in paragraph 50 of the Judgment, as well as various observations made by Deputy High Court Judge Lok (as he then was) in paragraphs 20 to 24, 49 to 52 and 58 of his written decision dated 7 March 2013 and in paragraphs 7 to 9 and 12 of his written decision dated 13 May 2013. In respect of the second complaint, Mr Man accepts that neither First Media nor AAL is in breach of any court order. The third and fourth complaints are “negative” points and could not, by themselves, justify the court imposing the Payment Condition. In any event, they are strongly disputed by Mr Strachan (for First Media) and Mr Barrie Barlow SC (for AAL). 33.As I see it, Astro main’s ground in support of the contention that the court should impose the Payment Condition lies in the allegation of collusive conduct by First Media and AAL. Madam Justice Mimmie Chan would have been aware of this allegation, but the learned Judge nevertheless granted the Stay Order, and the Court of Appeal refused Astro’s application for leave to appeal against the Stay Order. 34.Mr Man submits that the position is now different, because First Media’s setting aside application has been heard and dismissed. That is correct so far as it goes. For this reason, I do not accept AAL’s argument that Astro is barred by any “interlocutory issue estoppel” from seeking an order that, should the court be minded to grant to AAL a stay of execution pending appeal, such stay should be subject to the Payment Condition. 35.This having been said, I remind myself that Madam Justice Mimmie Chan expressed the view, at paragraph 8 of her written decision dated 24 January 2014 when granting an unconditional stay of execution of the Garnishee Order Absolute, that “[First Media] has good prospects of success in its application to set aside” (even though such view would obviously be a provisional one only) and, more significantly, the Court of Appeal stated, at paragraph 13 of its written decision dated 25 June 2014 (in HCMP 835/2014) when refusing Astro’s application for leave to appeal against the Stay Order, that “it will indeed be remarkable if, despite the Singapore Court of Appeal judgment on the invalidity of arbitration awards, Astro will still be able to enforce a judgment here based on the same arbitration awards that were made without jurisdiction.” 36.Although I ultimately reached a conclusion which the Court of Appeal considered to be “remarkable”, I must recognize and accept that my decision is indeed exceptional. I believe that First Media and AAL ought to be entitled to have the various legal issues considered in the Judgment fully ventilated before the Court of Appeal without being required to bring into court the amount of the granisheed debt and the costs incurred by Astro in these proceedings. For this reason, I would grant leave to appeal (to First Media) and a stay of execution pending appeal (to both First Media and AAL) without imposing the Payment Condition sought by Astro. The Costs Summons 37.The relevant principles governing the court’s exercise of discretion regarding costs are not in dispute. After the CJR, the general rule that costs should follow the event, while still of significance, is only the starting point: see Wong Kam Tong v Ting Shing Court, Yuen Long (IO) (No 2) [2012] 2 HKLRD 1128, at paragraph 13 per Cheung JA; Swiss Singapore Overseas Enterprises Pte Ltd v China Citic Bank Corporation Limited, Xiamen Branch, CACV 197/2013, at paragraph 9 per Kwan JA. See also Pong HK World v Vand Petro-Chemicals (BVI) Co Ltd, FACV 4/2013 (18 March 2014), at paragraph 4. 38.In Wong Kam Tong, Cheung JA stated (at paragraph 13) that the starting point is one from which the court “can depart”, and in Swiss Singapore Overseas Enterprises Pte Ltd, Kwan JA stated (at paragraph 9) that it is a starting point from which the court “can readily depart”. It is unlikely that Cheung JA and Kwan JA intended to say anything different because both referred to the judgment of Lord Woolf MR in AEI Rediffusion Music Ltd v Phonographic Performance Ltd [1999] 1 WLR 1507 in which the approach that the court “can readily depart” from the starting point was mentioned at page 1522 of the report. 39.In any event, I would fully endorse the position that the court can readily depart, and should be ready to depart, from the starting point of costs following the event and adopt an issue based approach when exercising its discretion on costs in order to promote the underlying objectives of the CJR: see Order 62, rule 5(1)(aa) of the Rules of the High Court. As is well known, the underlying objectives include, amongst other things, increasing the cost-effectiveness of any practice and procedure to be followed in relation to proceedings before the court, ensuring that a case is dealt with as expeditiously as is reasonably practicable, promoting a sense of reasonable proportion and procedural economy in the conduct of proceedings, ensuring fairness between the parties, and ensuring that the resources of the court are distributed fairly. Having regard to the increasing complexity of cases and, consequently, length of hearings in general and the spiralling of legal costs in Hong Kong, the court should not, in my view, hesitate about disallowing costs incurred by a winning party (overall) on discrete issues which he has failed or even, in appropriate cases, ordering him to pay the costs incurred by the opposite party on such issues. 40.Generally speaking, it is entirely a matter for a litigant to decide what issues to raise in legal proceedings. If he pursues an unsuccessful issue which lengthens the hearing or increases the costs to any extent which cannot be regarded as being insignificant, it would, prima facie, be unfair that the consequent increase in the costs should be borne by the opposite party. This having been said, there may be other relevant considerations in the overall exercise of the court’s discretion on costs, and it would not be appropriate to lay down or adopt any rigid rule. 41.In the present case, I dealt with a total of seven main issues raised by the parties in the Judgment, namely:-
42.I found in favour of Astro on issues (2), (3), (6) and (7) above, and in favour First Media on issues (1), (4) and (5) above. 43.The above issues are mostly discrete issues. On any view of the matter, the costs incurred by the parties on those issues would be substantial. I consider it fair and reasonable in all the circumstances of this case that Astro should not be awarded costs on issues which it has failed, but I would not, in this case, go so far as to order Astro to pay First Media’s costs in respect of them. 44.In relation to the time spent on those issues, based on the transcript (as analysed by Mr Strachan in paragraphs 120 to 121 of his reply submissions) and my recollection of the hearing, the issues which occupied most of the hearing time were issues (2) and (3) above, followed by issue (1). The other four issues took up relatively less time. 45.I bear in mind the fact that the costs incurred by the parties on any issue are not necessarily reflected by the length of time spent by counsel in oral submissions on that issue. I also take into account the costs involved in preparing the relevant documentary evidence. Some of the issues, for example, issues (1) and (7), could be, and were, dealt with mostly by way of legal submissions without the need to refer to much documentary evidence. 46.An assessment of the costs by adopting an issue based approach is not a scientific exercise. It can only be carried out on a broad brush basis. Taking everything into account, I consider that the fair course to take would be to order First Media to pay 80% of Astro’s costs. Disposition 47.In relation to the Leave Summons, I would answer the question posed in paragraph 1 thereof in the negative, and grant leave to appeal under paragraph 2 thereof. 48.In relation to First Media’s Stay Summons, I shall make an order in terms of paragraph 1 of that summons. 49.In relation to AAL’s Stay Summons, I shall likewise make an order in terms of paragraph 1 of that summons. 50.I order that the costs of each of the Leave Summons, First Media’s Stay Summons, and AAL’s Stay Summons be in the cause of the respective appeals, with certificate for two counsel (where applicable). 51.In relation to the Costs Summons, I vary the costs order nisi made on 17 February 2015 such that First Media shall pay 80% of Astro’s costs, with certificate for 3 counsel. 52.As regards the costs of the Costs Summons, First Media has succeeded in obtaining a variation of the costs order nisi to a significant extent, and shall have the costs of that application, with certificate for two counsel. 53.Finally, it remains for me to thank counsel for the helpful assistance that they have rendered to the court.
Mr Bernard Man, SC and Mr Justin Ho, instructed by Clifford Chance, for the applicants Mr Mark Strachan, SC, and Mr Jeffrey Chau, instructed by Stephenson Harwood, for the 2nd respondent Mr Barrie Barlow, SC, instructed by Reed Smith Richards Butler, for the garnishee |
Cases cited in this judgment
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Further hearings and rulings under HCCT 45/2010