Grand Pacific Equity Ltd v. R.S.H. Sports (HK) Ltd and Others
Read the full judgment text of CACV 99/2006 on BabelCite. This Court of Appeal judgment was delivered on 1 November 2006.
1. This is the Plaintiff’s appeal from a decision of Yam J setting aside Master Kwan’s order extending the validity of a writ. The sole respondent to the appeal is the 3 rd Defendant whose application it was to set aside Master Kwan’s order.
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CACV 99/2006 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO.99 OF 2006 (ON APPEAL FROM HCA 4713 OF 2003 ) ______________________ BETWEEN:
Before : Hon. Yuen JA and Hon Sakhrani J in Court Date of hearing : 22 September 2006 Date of Judgment : 1 November 2006 -------------------------------- JUDGMENT -------------------------------- Hon. Yuen JA: 1.This is the Plaintiff’s appeal from a decision of Yam J setting aside Master Kwan’s order extending the validity of a writ. The sole respondent to the appeal is the 3rd Defendant whose application it was to set aside Master Kwan’s order. 2.The issue on appeal involves the principles to be applied when a court considers whether to make an order to extend the validity of a writ (commonly referred to as "renewing" a writ). In connection with that, the Plaintiff has challenged the binding effect of a decision of this court (Nazareth V-P, Bokhary and Liu JJA) in Chow Ching Man and others v Sun Wah Ornament Manufactory Ltd [1996] 2 HKLR 338. Background 3.The 1st Defendant is a Hong Kong limited company. According to the 3rd Defendant, it was a joint venture between an Indonesian Mrs I. S. Nursalim and himself, a Singaporean resident. 4.In 1997 the Plaintiff made a loan to the 1st Defendant of US$1m. Mrs Nursalim and her husband were at the time of the loan associated with both the Plaintiff and the 1st Defendant companies. Letters of guarantee for the loan were signed by the 2nd, 3rd and 4th Defendants. 5.In course of time, the Nursalims gradually dissociated themselves from the Plaintiff. 6.The Plaintiff demanded repayment of the loan from the 1st Defendant as borrower and from the other Defendants as guarantors. The judge found that the Plaintiff’s demand on the 3rd Defendant was made on 8 April 1999 (with the consequence that the limitation period expired on 8 April 2005), a finding against which a respondent’s notice was not filed. 7.No repayment was forthcoming. Mr Nursalim left the board of the Plaintiff in July 2003, and with that, the Plaintiff’s connections with the Nursalims were severed. On 27 December 2003, the writ in this action was issued. Proceedings 8.The course that the proceedings took culminating in the present appeal can be conveniently set out in the following way:
Renewal of writ: Order 6 rule 8(2) 9.Order 6 rule 8(2) Rules of the High Court provides:
Construction of Order 6 rule 8(2) in Chow Ching Man 10.Although on a natural construction, the words "the Court may by order extend the validity of the writ" appear to give the court an unfettered discretion, it was held by the court in Chow Ching Man that a 2-stage approach should be adopted.
Yam J’s decision 11.Yam J was of course bound by the judgment in Chow Ching Man. Applying that authority, he held in respect of the 1st stage that there was no ‘good reason’ for renewal because the Plaintiff was unable to account for the two periods of delay between the issue of the writ and the application for renewal:
In deciding that there was no ‘good reason’, the judge also held in his extemporary judgment (para. 14):
I understand from that passage that the judge considered it irrelevant that when the Plaintiff applied to Master Kwan for renewal, it could have issued a fresh writ. The judge apparently did not consider the fact that in December 2004 (after Master Kwan gave leave to renew the writ but before the writ expired and before the time-bar) the Plaintiff made 4 attempts to serve the 3rd Defendant, all of which were unsuccessful. The judge held:
12.Having said that, the judge did express his view that had the matter gone to the 2nd stage, he would have ruled in the Plaintiff’s favour. In this context the judge considered the issue of prejudice. He said (para.15):
He then held that if he were to exercise his discretion in the exercise of balancing hardship, he would have found against the 3rd Defendant (para. 15). But since he did not proceed beyond the 1st stage, he set aside Master Kwan’s order, with the result that the Plaintiff lost its right to sue the 3rd Defendant. The 3rd Defendant has filed a respondent’s notice against the judge’s decision on the issue of hardship. Appellant’s (Plaintiff’s) arguments 13.On appeal, it was argued on behalf of the Plaintiff by Mr Chan Chi Hung SC that Chow Ching Man was wrongly decided and that this court can decline to follow it as being per incuriam. 14.Alternatively, if this court were bound by it, the judge was nevertheless in error in his application of Chow Ching Man. The Rules in England and in Hong Kong 15.In respect of the first argument, the Plaintiff’s counsel first drew our attention to the difference between the rules of court governing renewal of writs in England and in Hong Kong before 1967.
Chow Ching Man per incuriam? 16.The court in Chow Ching Man (decided in 1996) expressly followed the decisions of the House of Lords in Kleinwort Benson and Waddon (decided in 1987 and 1988 respectively). In those English decisions, the House of Lords construed Order 6 rule 8(2) RSC (enacted in 1962) which, as noted above, is identical to our rule (enacted in 1967). - Kleinwort Benson 17.In Kleinwort Benson, Lord Brandon (giving the speech of the House) considered the history of the relevant rule and reviewed the decisions given since the new rule in England was made. In particular, a school of thought had developed that to justify the exercise of discretion to renew a writ, “exceptional circumstances” had to be shown, which was thought to be more stringent than a requirement that required only “good cause” or “good reason”. 18.The House of Lords in Kleinwort Benson held that the more stringent test was not the proper test. In rejecting that school of thought, Lord Brandon said, in a passage that the Plaintiff’s counsel has emphasized (p.622A-C):
- Waddon 19.In Waddon, Lord Brandon again giving the main speech of the House of Lords held as follows:
- Chow Ching Man 20.The decision in Chow Ching Man is well-summarized in those parts of the head notes which follow:
21.The Plaintiff’s counsel submits that the decision in Chow Ching Man was per incuriam because the old rule in England (which expressly required “good reason”) was one of the reasons why the House of Lords held, as a matter of construction, that a “good reason” was a condition to the exercise of discretion (which became formalized into a 2-stage approach in Lewis v Harewood) under the new rule in England. But, as we have seen, the old rule in Hong Kong never had any express requirement of “good reason”. The Plaintiff’s counsel therefore submits that the decision in Chow Ching Man was per incuriam. 22.This court is bound by its own decisions, the two exceptions being where its previous decision is in ignorance or forgetfulness of an inconsistent statutory provision or binding authority, or where there is a manifest slip or error. 23.The Plaintiff’s counsel first submits that in following the construction of Order 6 rule 8 in Kleinwort Benson which was based (in part) on the old rule in England, the court in Chow Ching Man must have been ignorant or was forgetful of the old rule in Hong Kong, which was different from the old rule in England, in that it did not contain any express condition of "good reason". 24.Whilst the Plaintiff’s counsel is correct that in Chow Ching Man the court did not refer to the old rule in Hong Kong in its judgments (and it is unknown whether it was drawn to their attention), I am not persuaded that that is enough to show that the decision was per incuriam. In my view, assuming that rules of court are statutory provisions, to fall within the first exception to the rule in Young v Bristol Aeroplane Co Ltd [1944] KB 718, it must be shown that the court ignored or forgot a current statutory provision, not an obsolete one. Discontinued statutory provisions do not bind the court. 25.The Plaintiff’s counsel then submits that there was a manifest slip or error when the court decided to follow Kleinwort Benson. With respect, I do not agree. In my view, a slip or error must be of the clearest kind before a decision can fall within this exception. I cannot see such a slip or error in any of the judgments in Chow Ching Man (except perhaps in the first and last sentences in the last paragraph of the judgment, when "defendants" were referred to when what was meant was "plaintiffs", but these are not material). 26.For the reasons discussed, I am not prepared to say that the decision in Chow Ching Man was per incuriam. That decision is therefore binding on this court. Unsuccessful attempts to serve within validity period of writ a "good reason" 27.I then come to the Plaintiff’s alternative ground of appeal, which is that even applying Chow Ching Man, the judge should not have set aside the renewal of the writ. 28.I agree with this alternative ground. In deciding that there were no "good reasons" in the 1st stage of his consideration, Yam J considered the two periods of delay before the application for renewal of the writ in November 2004. However what he failed to consider was the fact that in December 2004, within the original validity period of the writ as well as within the limitation period, the Plaintiff had made 4 attempts to serve the 3rd Defendant which were unsuccessful. Therefore the Plaintiff would have been perfectly entitled to apply ex parte to the court, within the original validity period of the writ as well as within the limitation period, for renewal of the writ, had it not already done so a month earlier. 29.Had the Plaintiff applied then, I have no doubt that it would have succeeded in obtaining leave to renew the writ. It matters not whether the inability to serve the 3rd Defendant was due to deliberate attempts on his part to evade service or not. The fact remains that the Plaintiff was unable to serve the 3rd Defendant despite reasonable efforts having been made, which is clearly a good reason for leave to renew a writ. It was not as a matter of "choice" that the Plaintiff did not serve the 3rd Defendant within the original validity period of the writ (see Chow Ching Man p.339J and p.344C-D). 30.Mr Alan Leong SC leading counsel for the 3rd Defendant submits that the Plaintiff might have thought at the time that the limitation period had expired in May 2004 (being 6 years after a statement of outstanding indebtedness was copied to the 3rd Defendant), which might have explained why a fresh writ was not issued. There was no evidence to support this conjecture, but with respect, I do not think it matters in any event what the Plaintiff or its legal advisers thought. The unsuccessful attempts at service were within the original validity period of the writ and that would have been a good reason for leave to renew the writ in December 2004, had it not been renewed the month before. 31.In my view, when considering whether the renewal should be set aside, the judge was entitled to and should have taken this fact into account, even though it occurred after Master Kwan’s order for renewal. It would be artificial for the court to shut its eyes to what in fact happened within the original validity period of the writ, which would have entitled the Plaintiff to leave to renew, had it not already obtained leave. Put in the language of another aspect of the law, the later unsuccessful attempts at service during the original validity period of the writ "fed" the earlier grant of leave to renew. If it were otherwise, procedural law would be reduced to pure gamesmanship. Exercise of discretion 32.Having found that there was a "good reason" for the 1st stage, I then come to the 2nd stage - the exercise of the court’s discretion. I have earlier referred to that part of Yam J’s decision where he held that had the matter gone to the 2nd stage, he would have ruled in the Plaintiff’s favour. 33.The 3rd Defendant’s counsel has addressed the court on matters set out in his Respondent’s Notice on matters of hardship. However it is well-established law that an appellate court should not interfere with the exercise of a judge’s discretion unless it is satisfied that the judge has erred in law or in principle, or if he has taken into account some matter which he should not have taken into account, or has left out of account some matter which he should have taken into account, or if the decision was so plainly wrong that it must have been reached by a faulty assessment of the weights of the different factors which have to be taken into account (cf Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394, applied in Lakhan v Wu Wing Tat [1987] 3 HKC 54). I do not see any such error in the judge’s decision as to how he would have exercised his discretion had he found in favour of the Plaintiff at the 1st stage. Order 34.For the reasons discussed, I would allow the appeal and make an order nisi that the costs of the appeal and below be paid to the Plaintiff by the 3rd Defendant. Hon. Sakhrani J: 35.I agree.
Mr Chan Chi Hung SC and Mr Jeremy SK Chan instructed by Preston Gates & Ellis for the Plaintiff (Appellant) Mr Alan Leong SC and Mr Hectar Pun instructed by Fairbairn Catley Low & Kong for the 3rd Defendant (Respondent) Appeal dismissed: see FAMV22/2007 date 8 June 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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