Basab Inc and Another v. Superb Glory Holdings Ltd and Others

CACV 256/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 256 OF 2014

(ON APPEAL FROM HCA NO. 6 OF 2014)

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J U D G M E N T

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Hon Kwan JA (giving the judgment of the Court):

1.On 22 November 2016, this court dismissed the plaintiffs’ appeal at the conclusion of the hearing. We handed down the reasons for judgment on 2 December 2016 (“the Reasons for Judgment”).

2.The plaintiffs filed a notice of motion on 19 December 2016 seeking leave to appeal to the Court of Final Appeal.  These three questions were stated in the notice of motion as questions of law of great general public importance:

“a. Whether the no reflective loss principle is inapplicable to claims by a secured creditor for loss of the secured asset, for the reason that the secured creditor is the primary beneficiary of any damages that may be recovered by the Company?

b. If so, whether the no reflective loss principle is equally inapplicable to a claim brought by a shareholder who has an independent cause of action against inter alia the secured creditor for loss of the secured asset?

c. Whether an exception to the no reflective loss principle exists where:-

(i) The Plaintiff has an independent cause of action against the Defendants.

(ii) The Company is under the control of the wrongdoer and the alternative remedies by Lord Millett in Waddington are inapplicable.”

3.The plaintiffs are represented in this application by Mr Tony Ko.  He did not appear for them in the appeal or at first instance.

4.Questions (a) and (b) relate to §§22 to 32 of the Reasons for Judgment.  We would refuse to grant leave on these questions.

5.Question (a) does not arise on the facts of this case.  As pointed out in §30 of the Reasons for Judgment, the plaintiffs “are not secured creditors.  And they are not bringing their claims against the defendants as such.”

6.Question (b) is not reasonably arguable.  The 1^st plaintiff, as the 100% shareholder of Accufit, does not have an independent cause of action from Accufit.  As stated in §27 of the Reasons for Judgment, this is a classic situation in which loss was allegedly suffered by the claimants as the shareholders of a company.

7.Question (c) was said by Mr Ko to be the third ground of appeal canvassed in §§39 to 43 of the skeleton argument of the plaintiffs’ former counsel but was abandoned before the hearing of the appeal (see §16 of the Reasons for Judgment).  Mr Ko sought to argue that Lord Millett NPJ was wrong in Waddington Ltd v Chan Chun Hoo (2008) 11 HKCFAR 370 at §§81 to 88 in rejecting the exception described by the English Court of Appeal in Giles v Rhind [2003] Ch 618 at 643.  He said this argument, which was not open to his predecessor to run in the Court of Appeal, should be pursued in the Court of Final Appeal and he would invite that court to depart from its previous decision in Waddington to some extent.

8.We are not minded to grant leave on question (c).  One of the premises on which question (c) is founded is that “The Plaintiff has an independent cause of action against the Defendants”.  That cannot be the case here, as fully canvassed in the Reasons for Judgment.  It is unnecessary to deal with the other arguments of Mr Ko on this question.  In any event, in accordance with well established practice, the Court of Appeal will not grant leave to appeal for completely new points not argued on appeal and below, but leave it to the Appeal Committee of the Court of Final Appeal to determine if there are exceptional circumstances to warrant the granting of leave despite the hurdle of “not considered on intermediate appeal” (Flywin Co Ltd v Strong & Associates Ltd (2002) 5 HKCFAR 356 at §39; followed in: Kung Ming Tak Tong Co Ltd v Park Solid Enterprises Ltd & Anr, CACV 227/2005, 26 June 2007, at §4; Ageas Insurance Co (Asia) Ltd v Lam Hau Wah Inneo, CACV 65/2014, 19 May 2015, at §§7 to 9; The Law Society of Hong Kong v A Solicitor, CACV 78/2014, 10 July 2015, at §§4 to 7; Tadjudin Sunny v Bank of America, NA, CACV 12/2015, 28 September 2016, at §11).

9.For all the above reasons, we decline to exercise our discretion to grant leave to appeal.

10.There is no reason why costs should not follow the event.  We have considered the statement of costs for summary assessment submitted on behalf of the 1^st and 2^nd defendants.  We have also looked at the plaintiffs’ statement of costs.  We consider the costs claimed by the defendants in the sum of $133,170 reasonable and we allow this amount in full as costs payable by the 1^st and 2^nd plaintiffs to the 1^st and 2^nd defendants.

Written submissions by Mr Tony Ko, instructed by Ha & Ho, for the 1^st and 2^nd Plaintiffs (Applicants)

Written submissions by Mr Johnny Mok SC and Mr Alexander Tang, instructed by Anthony Siu & Co, for the 1^st and 2^nd Defendants (Respondents)