China Metal Recycling (Holdings) Ltd (Provisional Liquidators Appointed) and Another v. Chun Chi Wai and Others

HCA 1412/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1412 OF 2013

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BETWEEN

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D E C I S I O N
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1.I have before me a summons taken out by the 1^st and 13^th defendants on 12 April 2016 (“the Direction Summons”) seeking a direction from the court on whether the order that I made on 8 April 2016 (“the Order”) dismissing their application for relief from sanction imposed by an unless order made on 17 November 2014 (“the Unless Order”) is one that is referred to in Order 59, rule 21(1)(a) of the Rules of the High Court, Cap 4 (ie an order determining in a summary way the substantive rights of a party to an action), and hence leave to appeal from it is not required.

2.On 12 October 2015, Deputy High Court Judge Anita Yip SC held that the 1^st and 13^th defendants had failed to comply with the Unless Order, and the sanction of strike out of the 1^st and 13^th defendants' defence automatically took effect by reason of that failure. 

3.The 1^st and 13^th defendants then applied for relief from sanction by a summons dated 5 November 2015 (“the Relief Summons”), under which the 1^st and 13^th defendants sought:-

(1) an extension of time to make the application for relief from sanction; and

(2) relief from sanction imposed in the Unless Order, whereby the amended defence of the 1^st and 13^th defendants shall be reinstated.

4.The reason why the 1^st and 13^th defendants needed an extension of time to make the application is because, under Order 2, rule 4 of the Rules of the High Court, any application for relief from sanction for failure to comply with a court order should be made within 14 days of the failure.  It was not in dispute that, if the 1^st and 13^th defendants had indeed failed to comply with the Unless Order (which was not accepted by them), the time for making the relief application had expired by the time that the 1^st and 13^th defendants took out the Relief Summons on 5 November 2015.

5.In paragraph 32 of the decision handed down on 8 April 2016 (“the Decision”), I explained why I dismissed the 1^st and 13^th defendants’ application for relief from sanction, as follows:-

“If, as found by the Judge, the 1^st and 13^th defendants failed to fully comply with paragraph 1(c) and (d) of the Unless Order, I would not exercise my discretion to grant any relief from the sanction imposed by the Unless Order, having regard to the following matters:-

(1) The application for an extension of time to comply with the Unless Order was made on 5 November 2015, which was more than 11 months after the deadline for complying with the Unless Order (1 December 2014).

(2) The 1^st and 13^th defendants’ obligation to make the relevant disclosure was first imposed by L Chan J on 9 April 2014, that being nearly 19 months before the date of the application.

(3) At paragraphs 51 to 56 of the Unless Order Decision, I explained why an unless order should be made in the present case. I also expressed the view, at paragraph 54(4) of that decision, that ‘it is well within [the 1^st and 13^th defendants’] ability to fully and properly comply with the Chan Order’.

(4) The history of this matter, as summarized in paragraphs 7 to 23 of the Unless Order Decision, clearly indicates that the 1^st and 13^th defendants are not willing to make full and proper disclosure of their assets as required by various orders that have been made by the court.”

6.Although I did not state in the above paragraph that the application for extension of time was refused, I made an order dismissing the Summons in its entirety (see paragraph 33 of the Decision).  It follows from the dismissal of the Summons that the application for extension of time to apply for relief from sanction was refused.

7.The question is whether, in such circumstances, leave to appeal from the Order is required.

8.I dealt with a somewhat similar question in Astro Nusantara International BV and Others v PT Ayunda Prima Mitra and Others [2016] 1 HKLRD 591.  In that case, I had given a judgment refusing an application by a debtor for an extension of time to apply to set aside certain orders granting leave to the creditors to enforce five foreign arbitration awards in Hong Kong, although I also indicated in my written judgment that even if I were minded to grant an extension of time, I would still have refused the debtor’s setting aside application on the merits. On the debtor’s application for a direction that leave to appeal from the judgment was not required either because it was a “final” judgment or order, or because, albeit interlocutory, it was one referred to in Order 59, rule 21(1)(a) of the Rules of the High Court, I held that the judgment could not be regarded as being a final judgment or order, applying the well known “application test”.  I also held that the judgment was not 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, because it only determined the “procedural”, as opposed to “substantive”, rights of the debtor to apply to set aside the orders granting leave to enforce the foreign arbitration awards.  Accordingly, leave to appeal from the judgment was required under section 14AA(1) of the High Court Ordinance.

9.For the same reason, I consider that the Order in the present case is “interlocutory” and not “final”, and it is not an order determining in a summary the substantive rights of the 1^st and 13^th defendants.

10.In any event, even if the Order is to be regarded as simply an order refusing to grant relief from sanction for the failure to comply with the Unless Order:-

(1) It is obvious that the Order would fail the “application test” as explained by Chan PJ in Shell Hong Kong Limited v Yeung Wai Man Kiu Yip Co Ltd [2003] 3 HKLRD 62.  I pause to observe that the Direction Summons taken out by the 1^st and 13^th defendants pre-supposes that the Order is an “interlocutory” and not “final” order.

(2) The Order did not determine in a summary way any “substantive rights” of the 1^st and 13^th defendants.  If any order did, it would be the Unless Order coupled with the 1^st and 13^th defendants’ failure to comply with it, as confirmed by Deputy High Court Judge Anita Yip SC’s decision given on 12 October 2015.

11.For the foregoing reasons, I dismiss the 1^st and 13^th defendants’ summons dated 12 April 2016 with costs to the plaintiffs.

Mr Chrisopher Dobby, of Hogan Lovells, for the plaintiffs

Mr Alexander Tang instructed by Anthony Siu & Co, for the 1^st and 13^th defendants