The Joint & Several Provisional Liquidators of China Medical Technologies, Inc v. Samson Tsang Tak Yung

CACV 46/2015

[2019] HKCA 1076

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 46 OF 2015

(ON APPEAL FROM HCCW 435 OF 2012)

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J U D G M E N T

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Hon Barma JA (giving the Judgment of the Court):

Introduction

1.By a judgment dated 3 May 2018 (“the judgment”), this court allowed the applicants liquidators’ appeal against the judgment of Harris J dated 6 February 2015, and ordered that a range of documents relating to the financial affairs of the respondent, Mr Samson Tsang, should be produced by Mr Tsang to the liquidators of China Medical Technologies, Inc. (of which Mr Tsang had been a director and Chief Financial Officer) pursuant to section 221(3) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32), on the basis that they related to the company, as they would be relevant to the value and recoverability of claims that might be available to the company, and to the company’s assets which were under the control of Mr Tsang, his wife or others.

2.The judge had held that while such information could be obtained from Mr Tsang through oral examination pursuant to section 221(2), it could not be obtained through the production of documents pursuant to section 221(3).  He did so on the basis that, having regard to the different wording of sections 221(2) and (3), the scope of the two sections was necessarily different, and that the phrase used in section 221(3) was materially narrower than the list of matters mentioned in section 221(1) which were referenced in section 221(2).

3.The background to the matter is set out in [2] to [9] of our judgment.  Our reasons for differing from the judge are set out in [13] to [43].

4.After the hearing, but before judgment was handed down, section 221 was repealed and replaced by section 286B, under which the scope of oral and documentary information provision is described in the same terms.  The question of whether there is any difference in the scope of section 221(2) as compared to section 221(3) is thus unlikely to arise in many future cases (although there is one further case involving this same liquidation).

5.Mr Tsang now seeks leave to appeal to the Court of Final Appeal, by his Notice of Motion dated 31 May 2018.  He also seeks a stay of our order pending the determination of the leave application by this court and the Court of Final Appeal.  Both parties have filed written submissions, which we have considered.

6.The Notice of Motion identifies five questions which are said to be questions of great general or public importance, as follows:

(1)     Whether the scope of s 221(3) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32) (CWUMPO) governing the production of documents in referring to books etc ‘relating to the company’ is: (a) materially narrower than the scope of s 221(2) of CWUMPO governing oral examination in referring to information ‘concerning the promotion, formation, trade, dealings, affairs or property of the company’, or (b) (at least) co-extensive with the said scope of s 221(2).

(2)     Whether a difference in wording of two expressions within a single section of legislation implies, or is at least a strong indication that, the legislature intended the different expressions to have different meanings, and in particular in the case of CWUMPO s 221.

(3)     Whether the fact that the legislature, in order to overcome a generally perceived limit in the scope of an expression in a section of legislation (in this case s 221), has amended or replaced the section with new legislation in different terms that removes the perceived limit in scope (in this case with CWUMPO s 286B) implies, or is at least a strong indicator that, the scope of the original expression was limited as so generally perceived.

(4)     Whether the court has jurisdiction under s 221 (or its successor CWUMPO s 286B) to make an Order for (a) oral examination, and/or (b) the production of documents, (solely) in relation to the financial means of any person against whom liquidators are considering pursuing a claim on behalf of the company for the purposes of assessing the value and recoverability of the said claim, and if so, whether there are any threshold requirements to be met by liquidators.

(5)     Whether, in exercising afresh a statutory discretion, the Court of Appeal is entitled to refuse to consider constitutionality considerations on the ground that the consideration was not raised in the court below.

7.The respondent also suggests that for the reasons set out in paragraphs 13 of his Notice of Motion, leave to appeal to the Court of Final Appeal should be granted on the “or otherwise” ground (the other basis for the grant of leave under section 22(1)(b) of the Ordinance).

8.In the light of the replacement of section 221 by section 286B, and the consequent very limited continuing significance of section 221, while we would accept that Question 1 would be arguable on appeal, we do not consider that it gives rise to a question of great general or public importance.  The controversy over the scope and proper interpretation of section 221 is now very largely a matter of historic academic interest.

9.As to Question 2, this identifies a well-established principle of statutory interpretation, which we acknowledged in [14] of our judgment.  However, for the reasons explained in our judgment, we considered that the principle that different words in the same section are generally intended to have different meanings was, in the context of section 221, displaced.  The question identified is therefore not particularly controversial, and is not one of great general or public importance.  The replacement of section 221 by section 286B is a further reason why this does not amount to a question of great general or public importance.

10.Similarly, Question 3 is not one of great general or public importance.  The potential relevance of subsequent amendment of a piece of legislation to the interpretation of the legislation is also not a matter of particular controversy.  In this case, no reliance could have been placed on the subsequent amendment at the time of the hearing, as the amendment had not yet been enacted.  Nor did we rely on it in our judgment.  In any event, having regard to the fact that Harris J invited the legislature to consider amending section 221 (see his judgment at [53]), in the light of his construction of it (which we held to be incorrect) it seems to us that this principle does not carry much weight in the present case. 

11.Question 4 is not, in our view, one of great general or public importance either.  It was not suggested by Mr Tsang in the appeal before us that orders for oral examination or document production going to the recoverability of potential claims were beyond the jurisdiction of the court under section 221 or were available only subject to some threshold requirement.  It is also, in the context of the proposed appeal, a fact specific question.

12.Finally, Question 5 also does not seem to us to raise a question of great general or pubic importance.  The Flywin principle has been applied in the context of constitutional arguments – see Noise Control Authority v Step In Ltd (2005) 8 HKCFAR 113.

13.As for the “or otherwise” ground, in accordance with the usual practice, this is a matter that should be left for the Court of Final Appeal to determine.

14.We therefore dismiss the application for leave to appeal to the Court of Final Appeal.  The delay in handing down this decision is regretted.

15.As for Mr Tsang’s application for a stay of the production orders, we see no reason to grant a stay (particularly in the light of Mr Tsang’s history of non-compliance) and dismiss that application also.

16.We also order that Mr Tsang is to pay the Liquidator’s costs of this application, which we assess on a gross sum basis in the amount of HK$75,000.

Mr Charles Manzoni SC, instructed by Lipman Karas, for the applicants

Mr Edward Alder and Mr Joseph Wong instructed by PC Woo & Co, for the respondent