China Shanshui Cement Group Ltd and Others v. Zhang Caikui and Another

HCMP 1574/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO1574 OF 2016

____________

____________

Before: Hon Au-Yeung J in Chambers

Date of Hearing: 24 March 2017

Date of Decision: 29 March 2017

_____________

D E C I S I O N

_____________

1.By a decision dated 6 January 2017 (“the Decision”), this court struck out a signed affirmation of one Li Xianguo and the opinion of a PRC lawyer, both exhibited to an affirmation of a trainee solicitor of Deacons. The Zhangs now seek leave to appeal against the striking out order; and to stay the extant contempt proceedings pending appeal. I shall adopt all the abbreviations in the Decision.

Leave to appeal

2.The principles for granting leave to appeal have been set out in Wong Kar Gee Mimi v Severn Villa Ltd [2012] 1 HKLRD 887 at 896-897; Kwan JA:

(i) Leave can be granted if the court is satisfied that (a) the appeal has a reasonable prospect of success; or (b) there is some other reason in the interests of justice why the appeal should be heard. Reasonable prospects of success involve the notion that the prospects of succeeding must be “reasonable” and therefore more than “fanciful”, without having to be “probable”. Merely showing that the appeal is “arguable” and “not fanciful” would not be sufficient. 

(ii) Case management decisions are only subject to appeal in rare circumstances.  The appellant faces a “very high hurdle” and must show that the judge has gone “clearly wrong and made orders which will clearly involve an injustice or an inability for the trial court to carry out its task”.

(iii) An appellate court will not interfere with a judge’s exercise of discretion unless the judge has misunderstood the law or the evidence or the exercise of his discretion was plainly wrong such that it was outside the generous ambit within which a reasonable disagreement is possible.

3.Grounds 1-9 concern Li’s draft affirmation.  I struck out Li’s draft affirmation on 3 broad grounds: that category (1) orders may be relevant but was hearsay and not in accordance with Order 41, rule 5(1); that category (2) orders were irrelevant; and that filing of the affirmation in respect of both categories would have been in breach of the unless order.

4.I have assumed in the Decision (§16) that I have erred on the first 2 grounds before proceeding to consider the unless order point.  I  also accept that all the legal propositions now in Mr Wou’s submission are correct, ie that the burden of proof in contempt proceedings is on the plaintiffs; that the Zhangs are entitled to remain silent and give oral evidence (Order 52, rule 6(4)); that hearsay evidence can be used; and that the Zhangs are at liberty to call their best witness to answer the plaintiffs’ evidence.  I also assume that contempt proceedings are interlocutory in nature.

5.Mr Wou suggests that the Zhangs are entitled to challenge jurisdiction notwithstanding that they are in contempt: Gordon v Gordon [1904] P 163.  This proposition is correct.  However, the only challenge to jurisdiction is under Order 12, rule 8.  The time for such challenge has long past. Moreover, the fact that the PRC court has jurisdiction does not mean that the Hong Kong court does not have concurrent jurisdiction.  I fail to see how this challenge can help the Zhangs.

6.Anyway, it is not Mr Wou’s case that Li’s draft affirmation need not be filed.  In that case, I do not see how Li’s draft affirmation (assuming it to be relevant) can meet the time laid down by the unless order.

7.Taking the unless order into account is part of the case management duty of the court.  The Zhangs cannot slip in a signed affirmation and rely on its own default in taking out a summons for relief against sanction.  It has not been shown that the exercise of discretion to exclude Li’s draft affirmation was outside the generous ambit within which reasonable disagreement was possible.  No reasonable prospect of success in the appeal has been shown for grounds 1-9.

8.Grounds 10-12 deal with Yao's report.  There could not be any quarrel that the Zhangs could deal with matters raised by the plaintiffs.  What this court criticized was that Yao (as an expert) was giving evidence as to facts and irrelevant opinion on PRC law.  There was no reversal of burden of proof. 

9.Ground 13 deals with alleged misapprehension of facts by this court on whether directors of Shangdong Shanshui were changed before or after the amendment to the articles of association were approved and whether it was Li or the Zhangs who had been given advice.  Given that Yao's report was irrelevant, I do not see how such misapprehension of facts could affect the outcome of the Decision.

10.In my view, none of the grounds have reasonable prospect of success. Leave to appeal is refused, with costs to be borne by the Zhangs.

Stay of proceedings pending appeal

11.In respect of stay of execution, an applicant has to show, as a minimum requirement, that there are arguable grounds of appeal. Beyond that, he has to show “additional reasons as to why a stay is justified”, one such reason being that the appeal would be rendered nugatory if a stay is refused. Ultimately the court embarks upon a balancing exercise and uses common sense, bearing in mind, at all times, the starting point that the successful party is not lightly to be deprived of the fruits of his success.  See Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84, at §9, Ma J (as he then was).

12.As leave to appeal is refused, it follows that no stay should be granted.  I dismiss the application and order the Zhangs to bear the costs of the plaintiffs.

13.On costs, the draft grounds of appeal are lengthy.  However, senior counsel has already been engaged, so I see no justification for 2 fee earners. Counsel’s fees for the variation summons should be excluded.  I summarily assess the costs of the plaintiffs at $130,000.

14.I thank counsel for their assistance.

Mr Barrie Barlow SC, instructed by Wilkinson & Grist, for the 1^st, 2^nd and 3^rd plaintiffs

Mr Jean-Paul Wou, instructed by Deacons, for the 1^st and 2^nd defendants