Okachi (Hong Kong) Co Ltd v. Nominee (Holding) Ltd

CACV 347/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 347 OF 2005

(ON APPEAL FROM HCA NO. 4596 OF 2000)

______________________

BETWEEN

Before : Hon Cheung JA, Yuen JA and Yam J in Court

Date of Hearing : 20 September 2007

Date of Decision : 20 September 2007

Date of Reasons for Decision : 3 October 2007

_________________________

REASONS FOR DECISION

_________________________

Hon Cheung JA (giving reasons for decision of the Court) :

1.These are the reasons for our decision dismissing the defendant’s application for leave to appeal to the Court of Final Appeal against our judgment of 22 November 2006. 

2.The defendant claimed that it was entitled to appeal as of right and further applied for leave under the discretionary provision of section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, Cap. 484 (‘the Ordinance’).

‘As of right’?

3.In respect of its case on appeal as of right under section 22(1)(a) of the Ordinance the defendant said that the appeal ‘involves directly or indirectly some claims or questions to or respecting property…… amounting to $1,000,000 or more’. 

4.The arguments of the defendant are as follows : the proceedings are concerned with a contract for the sale and purchase of one share in the Hong Kong Futures Exchange Limited (Old Share); the Old Share was property; the Old Share was cancelled and there was a dispute as to whether the defendant was entitled to the New Shares which were given to the holder of the Old Share; the value of both the Old and New Shares are more than $1 million and the question whether the defendant is entitled to the New Shares is a question ‘to or respecting property’ be it the Old or New Shares. 

5.In our view whether a dispute is in respect of property must be considered in its context.  The subject matter of a contract may well be in respect of property whose value may exceed $1 million.  However, this by itself will not necessarily mean that the appeal involves an issue in respect of the property.  One has to identify the real nature of the dispute by reference to the relief sought by the parties, see, for example, the view of Wells J in R. v. District Council of Berri [1983] 32 SASR 111 at page 121.

6.In this case while the contract was in respect of the sale of the Old Share the plaintiff had terminated the contract by reason of the defendant’s repudiation.  The plaintiff sought, among other things, a declaration that it was entitled to rescind the contract by reason of the repudiatory breach of the defendant.  It also sought damages against the defendant for the breach.  The plaintiff’s claim was not in respect of ‘property’.

7.The defendant, on the other hand, claimed that the plaintiff was in repudiation of the contract and it had accepted the repudiation.  It sought an account and the proceeds received by the plaintiff.  It also sought damages against the plaintiff.  Although the defendant also claimed a lien on the Old Share, this was only claimed as security for the return of its money.

8.In our view the relief sought by the defendant in its counterclaim was clearly not in respect of property i.e. the Old Share or the New Shares.  Its claim was no more and no less than a claim for unliquidated damages for breach of contract.  The application does not fall within the ‘as of right’ ambit.

The Zuliani approach

9.In respect of the discretionary aspect, the defendant relied on the case of Zuliani v. Veira [1994] 1 WLR 1149.  The defendant argued that it is a virtual certainty that the amount that it may recover will be over $1,000,000. 

10.In our view the principle has been established by the Court of Final Appeal in Chao Keh Lung v. Don Xia (2004) 7 HKCFAR 260 where it held, per Ribeiro PJ, that section 22(1)(b) provides a discretion to grant leave which the appeal committee may exercise if it can be said as a matter of the utmost probability or even of virtual certainty that the damages ultimately awarded will be in excess of the threshold amount, subject always to the grant of leave being justified by the apparent merits of the appeal.  As discussed below, we see no merits in the appeal.

Great general or public importance

11.Mr. Chain further submitted that the case involves the following points of law of great general or public importance :

(1) whether absent the provision of a specific date and/or a formula enabling a date to be capable of exact definition, time can originally be of essence?

(2) whether the availability of specific performance is a pre-requisite for the Defendant who had paid the full purchase price to the Plaintiff’s solicitors (as stakeholder) to acquire interest in the converted share, and even if the answer is in the affirmative, what was the relevant time to consider whether specific performance was available?

(3) whether a purchaser who could not have specific performance through no fault of his (assuming the deadline was so short that the defendant even with due diligence could not have complied) must as a matter of law cease to have any interest in the subject matter of the purchase.

12.In our view before the defendant can even begin to argue these three issues it has to show that it was not in repudiation of the contract. 

13.This Court affirmed the decision of the Court of First Instance on the issue of repudiation.  There was a concurrent finding of fact against the defendant.  The defendant has not begun to show why such a finding was incorrect.  In the circumstances the formulation of these three questions is entirely academic. 

14.In any event the three questions are fact-sensitive and based on a specific agreement agreed between the parties.  We do not see how the great general or public importance issue is being engaged. 

15.Further in respect of the third question there was no issue in the Court of First Instance or in this Court that the defendant was given an unduly short time to comply with its obligations. 

‘Or otherwise’ limb

16.We further do not see the matter as coming within the ‘or otherwise’ limb.

Conclusion

17.In the circumstances we dismissed the application with costs to the plaintiff. 

Costs

18.We would like to record that Mr. Chain had argued that we should make a conditional order as to costs, namely the plaintiff would only be entitled to the costs of the application if the defendant fails in its final application to the Court of Final Appeal for leave to appeal.  Otherwise the costs for this application should only be in the cause of the final appeal. 

19.Mr Yu, SC, submitted that the Court of Final Appeal has jurisdiction to reverse the costs order made by this Court in the event that leave to appeal is granted.  Hence a conditional costs order is not necessary.  On that basis we ordered costs against the defendant in respect of this application. 

Mr. Benjamin Yu, SC and Ms Yvonne Cheng, instructed by Messrs J. Chan & Lai, for the Plaintiff

Mr. Benjamin Chain and Mr. Kenneth Wong, instructed by Messrs Yung, Yu, Yuen & Co., for the Defendant