Lau Chun Ming v. Deloitte Touche Tohmatsu (A Firm)

CACV 22/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 22 OF 2015

(ON APPEAL FROM HCCL NO. 24 OF 2013)

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D E C I S I O N

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Hon Cheung JA (giving Decision of the Court) :

1.The plaintiff seeks leave to appeal to the Court of Final Appeal against our judgment of 12 October 2015. He relies on the ground that the questions involved in the appeal are ones which, by reason of their great general or public importance, or otherwise, ought to be submitted to the Court of Final Appeal for decision :

1)  Whether the mechanism and effect of a release order under section 94(3) of the Bankruptcy Ordinance, Cap 6 (‘the Release Order’) - which has the effect of releasing liability of a trustee in bankruptcy (‘the Trustee’) and therefore removing the bankrupt’s creditors’ right to judicial remedies against the Trustee - is inconsistent with Article 35 of the Basic Law when in United Kingdom, under section 299 of the Insolvency Act 1986 a different mechanism on release of the trustee was adopted so that despite there being a release order, the trustee still remains subject to a potential liability to be proceeded against him under section 304(1) of the Insolvency Act in relation to any loss to the bankrupt’s estate on grounds of misconduct or breach of fiduciary duty;

2)  Without prejudice to Question 1 above, whether the effect of the Release Order extends to a sole owner of the firm or partner(s) of the firm or employee(s) of the firm even if the Trustee is a person from the firm which entered into a separate agreement with the creditor to put himself in as trustee (‘the Agreement’);

3)  Without prejudice to Question 1 above, whether the effect of the Release Order has the effect of expunging the duty of care owed by the firm to the creditor arising from the Agreement when the creditor was separately charged by the firm for the services rendered by the firm.

2.In respect of the first question, it is said that this Court has ignored the pleaded case of the plaintiff that the Release Order under section 94(3) of the Bankruptcy Ordinance (Cap 6) is inconsistent with Article 35 of the Basic Law.  While this was pleaded in the plaintiff’s Reply, it was not relied upon by the plaintiff in the appeal.  The Basic Law was not referred to in any of the grounds of appeal.  Neither is it apparent from the judgment below that the constitutional challenge was raised before Ng J.  This Court is not prepared to grant leave to the plaintiff on an argument that had not been advanced at the hearing of two levels of Courts and is now only raised for the first time in the written submission in support of this leave application.

3.As to Questions 2 and 3, we do not consider the questions to be reasonably arguable.  The plaintiff is repeating in these two questions the same arguments that we had addressed in our judgment at paragraphs 4.12 and 4.11 respectively.  The issue here is simply the application of the well-established principle on the effect of release of liability of one partner on the rest of the partnership.  We do not see the engagement of the great general or public importance ground.  Nor is the “or otherwise” ground applicable.

4.Accordingly, the application is refused with costs to the defendant.  We will grant certificate for two counsel.

Mr Russell Coleman SC and Ms Queenie WS Ng, instructed by K.H. Lam & Co., for the plaintiff

Mr Denis Brock (Solicitor Advocate), Ms Amanda Beattie and Mr Alvin Sin, instructed by O’Melveny & Myers, for the defendant