Qiyang Ltd and Others v. Mei Li New Energy Ltd and Others

CACV 146/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 146 OF 2016

(ON APPEAL FROM HCA NO 420 OF 2011)

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Before: Hon Lam VP and Barma JA in Court

Dates of Written Submissions: 31 August 2017, 18 September 2017, 3 and 17 October 2017

Date of Judgment: 22 November 2017

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

1.On 24 August 2017, this appeal was struck out and dismissed by reason of the non-compliance of Huang Bin (who had been substituted as the appellant by the order made on 11 May 2017) with the unless order of 18 August 2017.

2.The outstanding issue is costs.  The 3^rd Plaintiff and the Trustees of bankruptcy asked for costs in the appeal.  Huang Bin did not file any submissions in this regard notwithstanding she has been given the opportunity to do so.  Her solicitors remained on record up to 25 August 2017 when a proper notice to act in person was lodged.

3.Having read and considered all the submissions of the parties, including those lodged pursuant to the directions of 4 September 2017, we make the following order in respect of the costs of this appeal:

(a) Huang Bin shall bear the costs of the 3^rd Plaintiff in the appeal, such costs are to be taxed on indemnity basis;

(b) Huang Bin shall bear the costs of the Trustees in the appeal, such costs are to be taxed on indemnity basis.

4.There is no basis for ordering costs against Mei Li.  As held by this Court in the judgment of 11 April 2017, Mei Li was not and should not have been named as a party to this appeal.

5.Messrs CL Chow & Macksion Chan had along acted on instructions from Huang Bin and Huang Bin should have been named as the appellant.  The order of substitution has the effect of making Huang Bin the effective appellant from the commencement of the appeal, as it was indeed the case.

6.We have also considered if the solicitors should be liable for breach of warranty of authority based on the principles discussed in Grand Field Group Holdings Ltd v Tsang Wai Lun Wayland [2010] 5 HKC 441 at [12] to [15].  However, since the appeal is about the authority to represent Mei Li, there was no warranty of authority by Messrs CL Chow & Macksion Chan that it had authority to represent Mei Li in the appeal.  It was clear from the judgment of To J at the court below that authority to represent Mei Li was the issue in dispute.

7.There is nothing to suggest that Messrs CL Chow & Macksion Chan acted in breach of warranty of authority to act on behalf of Huang Bin.  The judgment in Grand Field Group Holdings Ltd v Tsang Wai Lun Wayland [2010] 5 HKC 441 has to be read in light of Zoya Ltd v Sheikh Nasir Ahmed (No 2) [2016] 4 WLR 174 at [28] to [41] and In re Sherlock Holmes International Society Ltd [2016] 4 WLR 173 at [20] to [26].  These later authorities set out clearly the limits to the liability of solicitors in respect of warranty of authority in acting for a party named in legal proceedings. 

8.As held by Buxton LJ in SEB Trygg Liv Holding AB v Manches [2006] 1 WLR 2276 at [66] and [67]:

“ 66. It is important to bear in mind that generally a solicitor conducting proceedings does not warrant what he says or does on behalf of his client. Thus he does not warrant that his client, the named party to the proceedings, has title to sue, is solvent, has a good cause of action or defence or has any other attribute asserted on his behalf.

67. The warranty which a solicitor gives is that he has a client who has instructed him to assert or deny the claims made in the proceedings against the opposing party.  We do not think he warrants that the client has the name by which he appears in the proceedings.”

9.In Nelson v Nelson [1997] 1 WLR 233 at p.241 Waller LJ said:

“ … it is of such importance that solicitors do not commence proceedings without authority leaving the opposing party without even a person or entity against whom an order for costs can be obtained, that it is difficult to contemplate circumstances where, if the lack of authority leads to that result, the discretion would be exercised in favour of the solicitors. The warranty by analogy, however, is not a warranty of solvency or that the costs will be recovered; it is that the plaintiff exists and has authorized the proceedings and no more.”

10.Here, notwithstanding the wrong naming of Mei Li as appellant initially, the solicitors were acting on instructions from Huang Bin and Huang Bin is a person against whom this Court can order costs to be paid.  Hence, even for pre-substitution costs, the party who should be liable is Huang Bin, not the solicitors.

11.We deem it appropriate to order costs on indemnity basis because of the blatant abuse of process on her part.  She instructed the solicitors to bring the appeal and indicated to the Court her willingness to take up the same at the hearing of 11 May 2017 in light of this Court’s judgment of 11 April 2017.  She herself sought leave to amend the Notice of Appeal in her summons of 19 April 2017.  At that stage, it must be within her contemplation that the other parties would ask for security for costs as such possibility was alluded to at [19] of the earlier judgment.  She did not explain why she did not file the amended Notice of Appeal.  After the Trustees and the 3^rd Plaintiff issued applications for security for costs, she filed a defective Notice to Act in Person on 5 June 2017.  This Court had to make an unless order on 18 August 2017 before she instructed her solicitors to inform the solicitors for the 3^rd Plaintiff and the Trustees that she would not pursue the appeal anymore.

12.Up to now there is no explanation by Huang Bin, whether by herself or through solicitors, as to her volte-face in the whole exercise causing substantial costs to have been incurred by other parties in the appeal.  Viewed in that light, her conducts in the appeal demonstrated that she did not pursue the appeal in good faith and it is an affront to the administration of justice.  Thus, we order costs on indemnity basis against her.

Written submissions of Stephenson Harwood, Solicitors for the 3^rd plaintiff

Written submissions of KB Chau & Co, Solicitors for the Joint and Several Trustee of the property of the 2^nd defendant

Written submissions of CL Chow & Macksion Chan