Re Hin-pro International Logistics Ltd

CACV 54/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 54 OF 2016

(ON APPEAL FROM HCCW NO. 226 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 30 September 2016, the Court of Appeal handed down its judgment ([2016] 5 HKLRD 282) in an interlocutory appeal dismissing the appeal of Hin-Pro International Logistics Limited (“the Company”) from the decision of Ng J on 28 January 2016 ([2016] 1 HKLRD 1367), in which the judge granted leave to amend a creditor’s petition to wind up the Company to include debts which have accrued after the presentation of the petition.

2.The Company filed a notice of motion on 25 October 2016 seeking leave to appeal to the Court of Final Appeal pursuant to section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, Cap 484 on the grounds that the questions involved in the intended appeal are of great general and public importance or otherwise ought to be submitted to the Court of Final Appeal for decision.  These five questions are set out in the notice of motion:

“1.  Is there (i) a difference concerning amendments of post-writ cause of action between a writ action, a shareholder dispute under s 168A petition (Cap 32) and creditor’s compulsory winding-up petition (paragraphs 28-30 of the Judgment); and (ii) if there is such a distinction, how such line should be drawn.

2.  Whether the “Eshelby” rule[1] operates in Hong Kong as an absolute bar to the “relation back” theory in the context of creditor’s compulsory company winding-up. (paragraphs 32-33 of the Judgment)

3.  Should the Hong Kong Courts follow the changes of England under the Richbell decision[2] which was delivered after 1 July 1997. (paragraph 41 of the Judgment)

4.  Under what circumstances the rule of stare decisis would cease to operate, pursuant to the Court of Final Appeal’s decision in Solicitor (24/07) v Law Society of Hong Kong[3]. (paragraph 30 of the Judgment)

5.  For all purposes, should the Court allow post-petition debts to be added by way of amendment under the circumstances, and render this an application fit for leave under the “or otherwise” ground of section 22(2)(b) of the HKCFAO.”

3.This being an interlocutory appeal, leave to appeal to the Court of Final Appeal will generally be refused unless it can be clearly seen that:

(1)  the proposed appeal genuinely raised a question of law of great general or public importance (“GPI”);

(2)  the result of the appeal would indeed turn on how that question is answered; and

(3)  such result is likely to make a significant contribution to the just disposal of the litigation.

(CSAV Group v Jamshed Safdar (2007) 10 HKCFAR 626, §1)

4.We agree with the petitioner that none of the five questions raised by the Company would satisfy the test above.

5.Question 1 is academic.  The appeal court has concluded in §28 that the Eshelby rule does not apply to the present situation (a creditor’s winding-up petition on insolvency) for the justification in §14.  It is therefore unnecessary to rule on its applicability to writ actions, section 168A petitions and shareholder’s winding-up petitions on the just and equitable ground.  The Company has no or no proper basis to contend that there should be no difference between a creditor’s winding-up petition for insolvency and other situations.

6.Question 2 would seem to be based on a misunderstanding of the judgment of the Court of Appeal.  It referred to the Eshelby rule operating as “an absolute bar to the “relation back” theory”.  In mentioning the relation back theory as a rationale in support of the Eshelby rule, the court has explained in §33 that the relation back theory is “not an absolute rule applicable to all situations” and is “no longer generally applicable beyond the scope of its statutory embodiment in section 35 of the Limitation Ordinance, Cap 347”.  We do not think this is a GPI question.

7.There is no substance in question 3.  Article 84 of the Basic Law expressly provides that the courts in Hong Kong may refer to precedents of other common law jurisdictions (Solicitor (24/07) v Law Society of Hong Kong, §16).  The Company has not advanced any arguable ground why the approach in Re Richbell Strategic Holdings Ltd should not be followed in Hong Kong.

8.Question 4 is not a GPI question.  The Court of Appeal has not departed from the principles of stare decisis in declining to rule obiter on the question whether the Eshelby rule should continue to apply to other situations, being writ actions, section 168A petitions and shareholder’s winding-up petitions on the just and equitable ground.

9.As for question 5, it is well established that the grant of leave on the “or otherwise” ground is exceptional (Chao Keh Lung v Don Xia (2004) 7 HKCFAR 260 at §9).  We are not persuaded that exceptional circumstances are made out in this instance.

10.We dismiss the application for leave to appeal.  There is no dispute that costs should follow the event.  We order the Company to pay the petitioner the costs of this application.

11.The petitioner has submitted a statement of costs for gross sum assessment claiming $166,747 on the basis of the fees incurred for engaging senior and junior counsel in the total sum of $150,000.  The Company contended that it is unwarranted to engage senior and junior counsel and proposed that only $70,000 should be allowed overall.  We agree with the Company as both senior counsel and an experienced junior counsel had been engaged in the hearing before Ng J and on appeal, it would not be necessary for both to be involved in this application on paper and that counsel’s fees are excessive.  We assess the costs of the petitioner on a gross sum basis at $106,747.

Written submissions by Mr John Scott SC and Ms Frances Lok, instructed by Stephenson Harwood, for the Petitioner (Respondent)

Written submissions by Mr George Chu, instructed by Damien Shea & Co, for the Company (Appellant)