Huaxin (Hong Kong) Co Ltd v. Cheerful Corporation and Others

cacv 343/2003

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 343 of 2003

(on appeal from HCA NO. 621 of 2003)

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BETWEEN

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Before: Hon Rogers VP, Le Pichon JA and Waung J in Court

Dates of Hearing: 8 September 2004 & 3 December 2004

Date of Handing Down Judgment: 1 March 2005

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J U D G M E N T

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Hon Rogers VP:

Interim decision

1.This is an appeal from a judgment of Deputy High Court Judge Muttrie given on 26 September 2003.  The judge below heard an appeal from the master in respect of a decision that the plaintiff’s application to discontinue the action against the 2^nd and 3^rd defendants be dismissed.  The master had ordered that there be judgment in favour of the 2^nd and 3^rd defendants under Order 14A of the Rules of the High Court.  The judge below dismissed the appeal.

2.This matter has become slightly more complicated because following the conclusion of the initial hearing of this appeal, after which judgment had been reserved, when re-examining the documents filed in the case it came to the court’s attention that that there were additional matters that required consideration.  In particular the fact that by amendments allowed by the master subsequent to his decision referred to above, the claims against the 2^nd and 3^rd defendants had been removed by deletion from the statement of claim and the 2^nd and 3^rd defendants’ names had been deleted from the writ.  In those circumstances the question was raised with the parties as to whether this appeal was competent.  In order to explain the position in which this action is now it is necessary to outline the history of the matter.

3.The writ was issued on 17 February 2003.  The claim is by a moneylender and is said to be in respect of 2 loans made to the 1^st defendant.  The 2^nd and 3^rd defendants were pursued in respect of guarantees said to cover the loans.

4.By a defence filed on 17 March 2003 the 1^st defendant raised defences under sections 18 and 22 of the Money Lenders Ordinance (“the Ordinance”).  In addition the 2^nd and 3^rd defendants raised defences under section 20 of the Ordinance on the basis that the required memorandum had not been served within 7 days after the making of the loan agreements and that a statement in writing signed on behalf of the plaintiff containing the information set out in section 20(1)(c) of the Ordinance had not been provided.

5.On 28 April 2003 the plaintiff caused a summons to be issued seeking leave to discontinue the action against the 2^nd and 3^rd defendants.

6.On 26 May 2003 an affirmation of Orasa Livasiri was filed.  Paragraph 6 of that affirmation refers to the defences under section 20 of the Ordinance.  After reciting section 20(4) of the Ordinance, paragraph 7 of the affirmation continues:

“Counsel has advised that it is arguable that Section 20(4) merely imposes a postponement of the enforcement of the security while a failure to comply with Section 20(1) continues, which postponement will be lifted after the default has ceased.  It was on the basis of such advice that the decision was taken by the Plaintiff to discontinue the action against the 2^nd and 3^rd Defendant so as to enable it to remedy the default as advised by Counsel.  The Plaintiff intends to sue on the guarantees signed by the 2^nd and 3^rd Defendants in fresh proceedings once the default under Section 20(1) is remedied and to consolidate such proceedings with this action in due course.”

7.This was followed by a further summons which was caused to be issued by the plaintiff seeking leave to amend the writ and statement of claim by deleting all reference to the 2^nd and 3^rd defendants and by deleting the allegations against them.  This summons was fixed to be heard at the same time as the summons issued on 28 April 2003. 

8.The matter became before the master on 13 June 2003.  The master heard what appears to have been an oral application for dismissal of the action under Order 14A of the Rules of the High Court and he granted judgment thereunder and dismissed the plaintiff’s summons which sought leave to discontinue the action against the 2^nd and 3^rd defendants.  The summons in respect of the amendment of the pleadings was adjourned and heard before the master on 16 September 2003.  The order giving leave to amend the statement of claim endorsed on the writ and the naming of the parties was filed on 9 October 2003 but, in the intervening time the appeal from the master’s order of 13 June 2003 was heard before the judge below on 19 September 2003.  It should also be mentioned that in addition to giving leave to amend the writ the master gave leave to the defendants to amend the defence and counterclaim.

9.Following the hearing on 16 September 2003, when the master gave leave to make the amendments, the plaintiff indeed filed an amended writ with the statement of claim endorsed thereon including amendments which were contained in the order of 16 September, which were in addition to the amendments contained in the draft amendments originally exhibited to Ms Livisari’s affirmation.  Following that, the defendants served a re-amended defence which was filed by consent out of time on 25 October 2003.  That re-amended defence was a defence of the defendant Cheerful Corporation only, all reference to the 2^nd and 3^rd defendants was deleted including their defences and the counterclaim was a counterclaim of the defendant Cheerful Corporation only and the 2^nd and 3^rd defendants’ counterclaim was deleted.

10.When, by letter dated 13 September 2004, the question was raised with the parties as to whether it was competent to commence an appeal against a person who was not a party to the action.  The reaction from the plaintiff’s legal advisers was that the order of 16 September 2003 was a nullity.  It was said that in view of the fact that the master had refused leave to discontinue in June, no order could have been made permitting the amendments which were incorporated in the order of 16 September.  Despite the fact that those submissions were made in written submissions dated 14 September 2004, even by the date of the resumed hearing of this appeal on 3 December 2004, the plaintiff’s legal advisers had taken no steps to attempt to rectify the matter.  As has been demonstrated, the former 2^nd and 3^rd defendants have changed their position as a consequence of the amendments made to the writ and statement of claim. 

11.In the course of argument on the resumed hearing it was suggested that the obtaining of the order permitting the amendments on 16 September 2003 had been an oversight and had been by mistake and unintended.  It was further even suggested that it was not open to the 2^nd and 3^rd defendants to take any point on the matter because there would be estoppel by convention.

12.In my view it is simply not possible to say that the order obtained on 16 September 2003 was made unintentionally.  As already noted, the affirmation of Ms Livisari made it very clear that the plaintiff had taken the decision to discontinue the present action against the 2^nd and 3^rd defendants and to bring fresh proceedings.  If there were any doubt about the matter, on the basis that the plaintiff may have received further or different advice after the hearing in June 2003, that is dispelled by the stance taken on behalf of the plaintiff at the hearing on 16 September 2003.  At that hearing the plaintiff was represented by counsel of considerable seniority.  5 days before the hearing the written submissions signed by counsel were filed.  The material part read as follows:

“	4.	On the existing pleading, the Plaintiff claims against the 1st Defendant for recovery of money lent (and interest), the repayment of which was guaranteed by the other Defendants.
	5.	The Plaintiff accepts that Part III of the Money Lenders Ordinance Cap. 163 applies to the loans and guarantees, and that it is not (yet) open to the Plaintiff to claim against the 2nd and 3rd defendants, because of the failure to comply with section 20(1).
	6.	The Plaintiff intends to remedy its default under section 20(1) and to issue fresh proceedings against the 2nd and 3rd defendants (to be consolidated with these proceedings).
	7.	The amendments in part reflect this.  They also reflect the pleading of material facts and matters on which the Plaintiff intends to rely for the purposes of its claim to the relief identified.”

13.In these circumstances, it appears to me to be impossible for the plaintiff to contend that the striking out of the 2^nd and 3^rd defendants as parties to this action was otherwise than as a result of a deliberate decision by the plaintiff made on advice.  As to the suggestion that there might be estoppel by convention against the 2^nd and 3^rd defendants, that appears to me to be simply a non-starter once it is appreciated that the 2^nd and 3^rd defendants have themselves discontinued their counterclaims.  Whilst leave is required to discontinue a claim after the lapse of 14 days from the service of a defence, if that is, in effect, accomplished by an order of the court and no objection is taken by the opposing party at that stage and is acted upon by that party the matter, in my view, becomes simply an irregularity and does not nullify the proceedings or any steps taken in the proceedings nor does it nullify any judgment or order thereon. 

14.In my view, therefore, the court is in the position that this appeal has been brought against persons, both corporate and individual, who are not parties to the action.  In those circumstances it would appear to me that this appeal would be incompetent.  Miss Lisa Wong who appeared for the plaintiff requested an opportunity to be able to rectify the order of 16 September 2003 by either applying to the master or appealing therefrom.  At the moment, for the reasons indicated, I have considerable doubt as to whether any such application could be made successfully.  Furthermore, this matter was drawn to the parties’ attention in early September this year and the plaintiff has seen fit not to take any steps which are now belatedly suggested.  However, in view of the plaintiff’s request for an opportunity to rectify the situation, I would be prepared to defer the giving of judgment in this matter if, within 14 days of the handing down of this interim judgment, the plaintiff makes such application, as it may be advised, to set aside the order of 16 September 2003 and then files an affidavit in this court within 3 days giving full details of that application.  The plaintiff would further have to give the following undertakings through its solicitors:

1.	That it will pursue such application with all due dispatch.
2.	That it will pay the costs of the hearing of 3 December 2004 before this court to the 2nd and 3rd defendants on a full indemnity basis.
3.	That it will keep this court fully informed of the progress of the application referred to in the affidavit filed.

Should the plaintiff not make any such application or not file any affidavit or not be prepared to give such undertakings then this appeal should, in my view, stand dismissed with costs.

Hon Le Pichon JA:

15.I have had the benefit of reading in draft the judgments of Rogers VP and Waung J. I agree with the judgment of the Vice President and would add the following observations. 

16.I am of the view that before one can proceed to a determination of the merits of this appeal, there is a real procedural difficulty which must first be overcome.  The merits of the appeal (as to which I express no views) should not be allowed to dictate how the court should deal with the real procedural difficulty that has arisen, still less to brush it aside as a mere ‘technicality’.

17.To recapitulate the key events, on 13 June 2003, there were two summonses before the master.  The first was the plaintiff’s summons dated 28 April 2003 to discontinue the action against the 2^nd and 3^rd defendants (“the discontinuance summons”) and the second was the plaintiff’s summons dated 6 June 2003 for leave, inter alia, to amend the writ and statement of claim so as to delete all references to the 2^nd and 3^rd defendants (“the amendment summons”).  At the hearing on 13 June, Master Woolley granted the 2^nd and 3^rd defendants judgment under Order 14A on the plaintiff’s claim against them, dismissed the plaintiff’s discontinuance summons and adjourned its amendment summons (“the June order”). 

18.On 26 June 2003, the plaintiff filed its notice of appeal against the June order.  That appeal was heard by Deputy High Court Judge Muttrie on 19 September 2003 who reserved his judgment.  Three days earlier, at the adjourned hearing of the amendment summons on 16 September 2003, Master Woolley had granted the plaintiff leave to amend within 7 days from the date of the order in the manner shown in the draft amended statement of claim annexed to the summons of 6 June 2003 save and accept for minor amendments as particularised in the order and the defendants were granted leave to amend the defence and counterclaim.  Pursuant to that order, the plaintiff filed the amended writ and statement of claim on 23 September 2003 and, with the consent of the plaintiff given on 24 October 2003, Cheerful Corporation who, following the amendment made by the plaintiff on 23 September, was the only defendant left in the proceedings, filed its defence out of time on 25 October 2003.

19.Based on that chronology, at the time the appeal from the June order was heard by Deputy High Court Judge Muttrie on 19 September, whilst the amendment order had been made three days before, it had not yet been implemented.  The amended writ and statement of claim was only filed on 23 September 2003.  Therefore the 2^nd and 3^rd defendants were properly parties to the action when the appeal to the June order was heard.  As noted above, the judge reserved his judgment.  It was in the interim, between his hearing the appeal from the June order and delivering judgment that the 2^nd and 3^rd defendants ceased to be parties.

20.The notice of appeal to this court was filed on 12 November 2003 when, plainly, the 2^nd and 3^rd defendants were no longer parties to the action. 

21.As the amendment order has been implemented by the filing of amended pleadings not only by the plaintiff but also Cheerful Corporation, the only defendant left in the action, unless and until the amendment order is set aside and further amendments made to the pleadings to reinstate the 2^nd and 3^rd defendants as defendants to the action, the 2^nd and 3^rd defendants cannot be and are not parties to the action.  I agree with the Vice President that in those circumstances this appeal would be incompetent.

22.In order to rectify matters, whether by applying to the master or appealing his order, an application will have to be made by the plaintiff and evidence filed in support.  It will be incumbent on the plaintiff to provide an explanation as to why it saw fit to pursue the discontinuance summons after the June order had been made.  In that regard, it should be noted that only one supporting affirmation has ever been filed on behalf of the plaintiff, namely, an affirmation of Orasa Livasiri dated 26 May 2003.  Although the amendment summons post-dated that affirmation, the plaintiff filed no further affirmation as is made plain from the recitals to both the June order and the amendment order which refer to the 26 May affirmation.  It will be seen from paragraph 8 of that affirmation that that is because discontinuance and amendment were intended by the plaintiff to go in tandem, one consequential upon the other, rather than as alternative routes to achieve the same objective.  The taking out of the amendment summons after the filing of the supporting affirmation was therefore consistent with the plaintiff’s stance as set out in that affirmation.  In those circumstances, it behoves the plaintiff to explain the reasons for departing from that stance when, to be consistent with it, it should have abandoned or sought leave to withdraw the adjourned amendment summons.

23.Quite what evidence will be filed by the plaintiff is not known and, at this stage, that can only be a matter of speculation.  Whether that evidence will result in the setting aside of the order is again an unknown.  What is clear is that one cannot say with certainty what the outcome of the application would be.  Even if some valid explanation were proffered, it may or may not result in the setting aside of the amendment order, for example, because some other remedy is available to the plaintiff.  That must be a matter for the master or judge hearing the application to determine in light of the evidence before him.  It would be wrong for this court to proceed as if the result of any such application were a foregone conclusion.

Hon Waung J:

24.This appeal has taken a most unusual course.  I therefore propose to consider firstly, the merits of the appeal proper prior to the further hearing on the 3^rd of December 2004 and secondly, the question of the incompetency to hear the appeal proper which was the subject matter of the hearing on the 3^rd December 2004.

Merits of the appeal proper

25.Two substantial issues were argued before the Court of Appeal on the hearing of the appeal proper on the 8^th of September 2004, namely:-

(A)	the correctness of the Order 14A Judgment of Master Woolley dated 13th June 2003 against the Plaintiff and in favour of the 2nd and 3rd Defendants and its consequential Order made at the same time dismissing the Plaintiff’s application for leave to discontinue the Action against 2nd and 3rd Defendants (hereinafter referred to collectively as “the “Woolley June Order”);
(B)	whether the Woolley June Order is a final judgment or interlocutory judgment for the question as whether leave to appeal out of time is required.

Issue (A) - Section 20 Point

26.Issue (A) is in substance what I might call the Section 20 Point, Section 20 being Section 20 of the Money Lenders Ordinance.  In essence the argument on 13^th June 2003 before Master Woolley by the 2^nd and 3^rd Defendants (“the Guarantors”) was that there was breach of Section 20(1) of the Ordinance which was fatal to Plaintiff’s claim against the Guarantors.  That argument was accepted and it was on that basis that Master Woolley entered Order 14A Judgment against the Plaintiff and made the consequential order that the Summons to discontinue be dismissed.  The Master arrived at that conclusion (also the Deputy Judge Muttrie in his September 2003 Order) under the then existing law based on the Judgment of the Court of Appeal, given in December 2002 in Emperor Futures Ltd. v La Belle Fashions [2003] 1 HKLRD 424 (“2002 CA Emperor Judgment”) with an interpretation of sections 18 and 20 of the Ordinance by the Court of Appeal in favour of the guarantors and against the lender.

27.Section 18 and 20 of the Ordinance are in the following terms:-

“18(1)  No agreement for the repayment of money lent by a money lender or for the payment of interest on money so lent, and no security given to any money lender in respect of such agreement or loan, shall be enforceable unless
(a)	within 7 days after the making of the agreement, a note or memorandum in writing of the agreement is made in accordance with subsection (2) and signed personally by the borrower, and a copy of such note or memorandum is given to the borrower at the time of signing; and
(b)	there is included in or attached to such copy a summary, in such form as may be prescribed, of such provisions of this Part and Part IV as may be prescribed,
and no such agreement or security shall be enforceable if it is proved that the note or memorandum was not signed by the borrower before the money was lent or the security was given.
(2)	The note or memorandum shall contain all the terms of the agreement and in particular shall set out—
(a)	…
…
(3)	Notwithstanding subsection (1), if the court before which the enforceability of any agreement or security comes in question is satisfied that in all circumstances it would be inequitable that any such agreement or security which does not comply with this section should be held not to be enforceable, the court may order that such agreement or security is enforceable to such extent, and subject to such modifications or exceptions, as the court considers equitable.”
“20(1)  A money lender who makes any agreement for the loan of money in relation to which security is provided shall within 7 days after the making of the agreement give to the surety (if a different person from the borrower)
(a)	a copy of the note or memorandum in writing made under section 18(1);
(b)	a copy of the security instrument, if any; and
(c)	a statement in writing signed by or on behalf of the money lender showing—
	(i)	the total sum payable under the agreement by the borrower;
	(ii)	the various amounts comprised in that total sum with the date, or the mode of determining the date, when each becomes due.”
…
(4)	If a money lender fails to comply with subsection (1) or a request to which subsection (2) applies he shall not be entitled, while the default continues, to enforce the security so far as provided in relation to the agreement.”

28.In December 2002, the Court of Appeal in the 2002 CA Emperor Judgment held that breach of section 20(1) was fatal to the recoverability against the surety.  In June 2003, the Master was bound by that 2002 CA Emperor Judgment.  So was the Deputy Judge Muttrie in September 2003.  Both followed the 2002 CA Emperor Judgment (see paragraphs 8 and 13 of Muttrie’s Judgment).

29.The Court of Final Appeal in November 2003, in the appeal from the 2002 CA Emperor Judgment held in Emperor Finance v La Belle Fashions [2003] 6 HKCFAR 402 (“2003 CFA Emperor Judgment”) that breach of Section 20(1) was not always fatal and was capable of being cured by the lender.

30.In a more recent Judgment in Celestial Finance Ltd. v Yu Man Hon (unreported Judgment dated 18^th October 2004 in FACV No. 2 of 2004), on the same point, the Court of Final Appeal affirmed the point which it held obiter in the 2003 CFA Emperor Judgment.  At paragraph 22, Ribeiro PJ said:-

“It follows that the fact that the appellant was in breach of section 20(1)(c) does not mean that it has been permanently deprived of its security.  Such a default is curable and if, as a matter of fact, it was cured by the eventual delivery of a section 20(1)(c) statement …., suspension of the appellant’s entitlement to enforce its security will have come to an end.”

31.We in the Court of Appeal are bound by the Celestial Finance Judgment of the Court of Final Appeal and therefore it is clear beyond argument that the Woolley June Order and the September Muttrie Order were both wrong in law.  

Issue (B) – Final or Interlocutory

32.Mr. Chua tried to save the appeal by resorting to argue that this appeal was brought out of time because it is an interlocutory appeal.  The Woolley June Order and the Muttrie September Order was each Order 14A Judgment made in favour of the Guarantors and against the Plaintiff with the dismissal of the Plaintiff’s Action against the Guarantors, by each Court applying the 2002 CA Emperor Judgment.  These are final orders not interlocutory.

33.There are at least two good reasons why I say they are final.  Firstly, the very word of Order 14A gives the answer.  Order 14A provides that:-

“	(1)	The Court may upon the application of a party or of its own motion determine any question of law … where it appears to the Court that ---
	(a)	such question is suitable for determination without a full trial of the action; and
	(b)	such determination will finally determine …. the entire cause or matter or any claim or issue therein.
	(2)	Upon such determination the Court may dismiss the cause or matter or make such order or judgment as it thinks just.”
	(underlining supplied)

A Master has only jurisdiction to make an Order 14A determination if the requirement of (1)(b) is satisfied which provides that such determination will finally determine the claim or issue therein.  By definition, Order 14A determination must be final.  

34.Secondly, the Court of Final Appeal in Shell Hong Kong v Yeung Wai Man Kiu Hyip Co Ltd. [2003] 6 HKCFAR 222 held that even if the determination does not dispose of the whole action but was finally determinative of a crucial or substantial issue in the action then the determination should nevertheless be regarded as final (see paragraph 31 and 33 per Chan PJ).  The Order 14A determination by Master Woolley and on appeal by Deputy Judge Muttrie was not only finally determinative of a crucial issue but it was that crucial issue’s final determination which directly led to the dismissal of the Action.  I have no doubt the Woolley June Order and the Muttrie September Order are final and not interlocutory.  It follows therefore that the present appeal is not out of time and there is no merit to its resistance on that ground.

35.On the merits of the proper appeal there is therefore no question that the appeal ought to be allowed.  In my judgment, the Order dismissing the Action and dismissing the Discontinue Summons should be set aside and there should be an order that the Plaintiff be given leave to discontinue the Action against the Guarantors with costs to the Guarantors as prayed in the Summons dated 28^th April 2003.

Incompetency to hear this appeal

36.Should the natural result of this appeal indicated earlier, be altered because of the appeal incompetency point.  A second hearing of the appeal took place after the parties made submission, following the letter dated 13^th September 2004 from the Vice President’s clerk to the Solicitors for the Appellant/Plaintiff (“the Incompetency Letter”).

37.Until the writing of the Incompetency Letter, there was no question that the present appeal was not competent or that the Court of Appeal has no jurisdiction to hear the appeal.  The chronology of the procedural steps taken are as follows:-

38.It is to be noted that the “questioned” step on the 16^th of September 2003 of the Master making the amendment order deleting the 2^nd and 3^rd Defendant was made before the hearing of the appeal by the Deputy Judge Muttrie on the 19^th September 2003.  No point was taken that the appeal so brought before Muttrie against Woolley June Order was incompetent.  The Notice of Appeal from the Muttrie September Order was lodged on 12^th of November 2003 and no point was taken that it was incompetent to bring such appeal or that there was no jurisdiction of the Court of Appeal to hear the appeal from Muttrie September Order.  Even at the hearing of the appeal proper on the 8^th September 2004, no point was taken by the Respondent Guarantors or by the Court of Appeal on incompetency or that there was no jurisdiction to hear the appeal.

39.In my view, the incompetency point should not distract this Court from exercising its proper function and duty of allowing the appeal.  I say this for the following reasons:-

(a)	procedural steps taken subsequent to the lodging of an appeal (which gives rise to accrued rights on appeal) does not usually deprive the appellant from its right of appeal;
(b)	the present appeal of the Plaintiff is in any event not inconsistent with the overall position of the Plaintiff including the Order of 16th September 2003;
(c)	there is nothing in the written law or case law which provided that in the circumstances such as these, the Court of Appeal has no jurisdiction or it is incompetent for this appeal to be heard and decided in favour of the Plaintiff;
(d)	The Respondent should in any event be estopped from relying on the 16th September 2003 Order to contend that the appeal is incompetent or that there is no jurisdiction for the Court of Appeal to entertain the appeal or to allow the appeal.

40.The two Summons of the Plaintiff, one for Discontinuance against the Guarantors and the other for Amendment by deletion of the Guarantors (both returnable to the same Master at the same time) must be viewed historically as alternative route by the Plaintiff to what was all along the stand taken by the Plaintiff as set out in paragraph 6 of this Judgment, namely to enable the Plaintiff to start a new action against the Guarantors after the defect of section 20(1) has been cured.  What had gone wrong procedurally is that the Master instead of dealing with both Summons together, decided on 13^th June 2003 to split and adjourn the Amendment Summons and went on not only to deal with the Discontinue Summons but to make an Order 14A determination which resulted in the dismissal of the Action against the Guarantors on the 13^th June 2003.  With the Action having been dismissed against the Guarantors on the merits (because of the Order 14A Determination), there was simply no hope that the Plaintiff could start a new action against these same Guarantors.  The Order of Dismissal of the Action must be appealed and it was.  The real question on incompetency of this appeal is whether this appeal against Dismissal of the Action and its consequential order refusing discontinuance can sit together with the 16^th September Order of Master Woolley deleting the Guarantors as parties.  There is certainly no way that the Plaintiff might be said to have abandoned its right of appeal by the making of the 16^th September Amendment Order deleting the Guarantors. 

41.The starting point for consideration of this subject is the jurisdiction of the Court of Appeal to hear appeals.  The jurisdiction is statutory and there can be no suggestion that when this Court of Appeal sat on the 8^th of September 2004 that there was no jurisdiction to hear the appeal in the sense that it was in breach of jurisdiction as provided by statute.

42.If the Court of Appeal has jurisdiction to hear the appeal, then in what way can an appeal, which the Court of Appeal has the power and the duty to hear, become incompetent.  In the Hong Kong White Book 2004, at page 825 under the heading “Other cases where appeal does not lie”, there was sub-section 5 dealing with loss of right of appeal by reason of the appellant’s conduct since judgment which reads:-

“The receipt of a remedy” under the judgment appealed from may in some circumstances preclude an appeal-as, for example, where the appellant’s conduct since the judgment is such as to render impossible or inequitable the restitution claimed (per Lord Atkin in Lissenden v CAV Bosch Ltd. [1940] AC 412 at 429, 430) and the same result may follow where “he is by his conduct estopped from appealing, or has in equity or at law released his right of appeal” (per Lord Maugham, ibid. at 420)”

In the Lissenden case, the workman appealed from an award of Workmen Compensation as being too low and the fact that he accepted the weekly sum under that Award was held by the House of Lords not to preclude him from appealing against the low quantum awarded.  Lord Maugham in his speech explained the doctrine of approbate and reprobate and its associated principle of election.  That exposition shows the real sense that incompetency of appeal can be brought about by subsequent steps taken by the Appellant: to take the benefit of an order and making it inequitable for the same appellant having taken the benefit to take an inconsistent step of attacking the order by an appeal.

43.Our situation is very different.  There was no benefit of Woolley June Order to be taken by the Plaintiff.  The Plaintiff was given a crucial defeat debarring any second action.  The Plaintiff therefore appealed against the Woolley June Order, which dismissed the Action and refused the discontinuance.  The Woolley September Order, granting amendment and thereby deleting the Guarantors from the Action, does not in any way conflict with the Plaintiff’s appeal: they both aim at the same objective, to disengage the Plaintiff from claiming in this Action against the Guarantors and to enable the Plaintiff to sue the Guarantors in the second action.  In some ways, it might be said that the September Amendment Order has achieved what the Woolley June Order dismissing the discontinuance application failed to achieve, namely the withdrawal of the claim in this Action against the Guarantors (thereby allowing the Plaintiff to save its gun-power dry, so to speak, for the second action against the Guarantors).  But the substance of the complaint against the Woolley June Order is what is important, namely that the Order 14A Judgment and the Dismissal of the Action (on the merits) were wrong and that Dismissal of Action order should be reversed in order that the Plaintiff could pursue the 2^nd Action.  I do not see any inconsistency between the present appeal and the Woolley September Order.

44.The matter can be tested this way.  On this appeal, if we allow the appeal will that result be inconsistent with the Woolley September Order.  I do not see that.  If we allow the appeal (as I have said we should) and hold that the Action should not be dismissed against the Guarantors under the Order 14A, then that will be affirmative and consistent with the Plaintiff being allowed now (or having been allowed previously) to withdraw the claim against the Guarantors in the present Action.  Of course the Plaintiff by its alternative route on 16^th September 2003 has obtained what it wanted, namely the withdrawal of the Action against the Guarantors without the imposition of any condition but that is not inconsistent with what we can order on the successful allowing of the appeal, namely the setting aside of the Dismissal of the Action against the Guarantors and the setting aside of the Order dismissing the Discontinue Summons and to order that the Plaintiff may discontinue the Action against the Guarantors without condition.  The Order of this Court allowing the appeal can sit perfectly happily with the Woolley September Order deleting the Guarantors from the Action.  This is therefore not a situation where this Court can describe an appeal being incompetent by reason of subsequent step taking by the Appellant.

45.The question was raised in the Incompetency Letter under Question (a) whether it was open to the Plaintiff to name the Guarantors as respondents to the appeal after they have ceased to be parties to the action on the plaintiff’s own application.  Miss Wong for the Plaintiff submits that the Woolley September Order was a nullity having regard the conflict with his earlier June Order.  There may be something in that point.  But even assuming that it was not a void order, it must be at the least an irregular order in the circumstances.  What is however important is that the appeal against the Woolley June Order was lodged before the making of the Woolley September Order and that there was a vested right of appeal against an existing party which will not be lost by reason of subsequent disjoinder of the party.  Take for example an order of contempt (with costs) made in favour of a defendant against say a plaintiff.  The plaintiff lodges an appeal against that contempt/costs order and then after that was launched discontinues the action against the defendant.  The fact that the defendant is no longer a party to the action does not render the appeal either unnecessary or incompetent.  One cannot automatically equate parties to an appeal to parties to an action.  One also must take note of different time of lodging of appeal and later disjoinder.

46.The complaint of blowing hot and cold in fact ought to be made against the Guarantors rather than against the Plaintiff.  The Guarantors are relying on their being parties to the Action and having the benefit of the Order 14A Judgment dismissing the Action.  On that basis, they are resisting the appeal and yet at the same time they are saying that they are not parties to the Action having been deleted as parties under the September Amendment Order.  They cannot take the benefit under both Orders and yet not be the subject of a competent appeal. 

47.In my judgment, it is the duty of this Court to pronounce that the Order 14A Judgment made against the Plaintiff was wrong in law and that the Order of Dismissal of Action as well as the Order dismissing the Discontinue Summons were wrong in law and that such Orders should be set aside.  It is plain that the Plaintiff should be allowed to withdraw its claim against the Guarantors in the present Action, on terms that it can commence a new action against the Guarantors after the Plaintiff has cured its Section 20(1) defect.  This is plainly what is envisaged in the Ordinance.  I see no conflict between the September Amendment Order and our allowing this appeal including the setting aside of the Order dismissing the Discontinue Summons.  I see no necessity for the Plaintiff to be put through those steps proposed in paragraph 14 of this Judgment.  I will therefore allow the appeal with costs to the Appellant.

Hon Rogers VP:

48.There will therefore be an order in the following terms: This appeal do stand adjourned for 14 days from the date of the handing down of this interim judgment.  If within that time the plaintiff

1.	makes such application, as it may be advised, to set aside the order of 16 September 2003;
2.	files an affidavit in this court giving full details of that application; and
3.	through its solicitors gives the following undertakings:
	A.	that it will pursue such application with all due dispatch
	B.	that it will pay the costs of the hearing of 3 December 2004 before this court to the 2nd and 3rd defendants on a full indemnity basis
	C.	that it will keep this court fully informed of the progress of the application referred to in the affidavit filed

this appeal do remain adjourned until the conclusion of the application to set aside the order of 16 September 2003.

49.In default of the plaintiff complying with the foregoing, this appeal be dismissed and there be an order nisi of costs in favour of the 2^nd and 3^rd defendants without further order.

Ms Lisa K Y Wong, instructed by Messrs Ng, Lie, Lai & Chan, for the Plaintiff/Appellant

Mr Chua Guan-Hock, SC, instructed by Messrs Fred Kan & Co., for the 2^nd & 3^rd Defendants/Respondents