Sanyuan Group Ltd v. The Stock Exchange of Hong Kong Ltd

CACV 191/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 191 OF 2008

(ON APPEAL FROM HCAL NO. 25 OF 2007)

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BETWEEN

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

Date of Hearing: 18 September 2009

Date of Judgment: 18 September 2009

Date of Handing Down Reasons for Judgment: 28 September 2009

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1.This was an application for leave to appeal to the Court of Final Appeal in respect of the judgment given on 9 July 2009. The reasons for that judgment were handed down on the 21 July 2009. At the conclusion of the hearing of this application, the application was refused with reasons to be given in writing.

2.The facts relating to this matter can be gleaned from the reasons for judgment given by this court and from the judgment in the court below. The application for leave to appeal was put primarily under section 22(1)(a) of the Hong Kong Court of Final Appeal Ordinance, Cap. 484 (“the Ordinance”). Argument was also raised under section 22(1)(b) of the Ordinance.

3.It is important to bear in mind that this action is an application for judicial review seeking to quash the decision made by the Listing Appeals Committee of the Stock Exchange of Home Kong Ltd. The order sought and granted in the court below was that the question of the re-listing of the applicant should be remitted to a differently constituted Listing Appeals Committee.

4.On this application, Sir John Swaine SC argued that the matter fell within the second part of section 22(1)(a) because the appeal involved

“… directly or indirectly, some claim or question to or respecting property or some civil right amounting to or of the value of $1,000,000 or more….”

5.The Court of Final Appeal has recently given particular consideration to that provision of the Ordinance. In the case of China Field Ltd v Appeal Tribunal (Buildings) & another [2009] 2 HKC 182 reference was first of all made to the strict construction of the first part of the subsection. That had been the subject of previous decisions. In paragraph 19 of the judgment the court turned to the particular part of the subsection. The Court went on in paragraph 21 to say:

“….The Court does not address questions in the abstract so that an appeal involving a question respecting property or some civil right is one where that question forms an integral part of someone’s substantive claim in respect of that property or right.  It may well be that the provision mentions both a “claim” and a “question” to ensure that it covers relief, whether expressed in terms of claims typically contained in a writ or in declaratory terms arising out of questions posed in originating summonses.

22.  Having identified the claim or question involved in the appeal, the section requires the court to ask whether it is a claim to property or a civil right amounting to or of the value of $1,000,000 or more, or what amounts to the same thing, whether it is a question respecting such property or right.

23.  In our view, the language of the section undoubtedly focuses on the value of the claim which is the subject-matter of the appeal and not on any property or right which has some connection with that claim.[21]  We respectfully decline to adopt the approach of Lord Tucker in Meghji.  Thus, in a proposed appeal concerning a landlord and tenant dispute, whether looked at from the perspective of the landlord or of the tenant, the appeal must be viewed as involving the value of the tenancy in dispute and not the capital value of the land owned by the landlord. Indeed, one of the unsatisfactory aspects of adopting the capital value of the land as the criterion for leave is the result (from which Lord Tucker in Meghji did not shrink) that an appeal brought by a landlord claiming possession is – but an appeal brought by a tenant against whom possession is claimed is not – as of right where the value of the tenancy in dispute falls below the statutory threshold.

24.  Consistently with the strict approach adopted in relation to the first limb of section 22(1)(a), it is only proper to ascribe a value which qualifies for leave as of right to the candidate claim or question if (i) on the evidence, such value is clearly quantifiable as a value of $1 million or more; and (ii) the court is satisfied that the Court’s order made upon disposing of the proposed appeal would take effect by immediately conferring or imposing on the relevant parties a financial benefit or detriment in the quantified amount.  It is not enough that one is able plausibly to say that such a financial impact is a likely eventual result of the appeal.”

6.Applying that to the facts of this case, the matter is clear. Any decision on the judicial review application, whether it be by the Court of Final Appeal or any other court, would not fulfil the criteria explained in the passage which I have quoted. It was argued that the listing status was worth very much more than $1 million. Quite apart from the fact that that alone would not fulfil the criteria, because any order of the court would, at best, grant judicial review and not an order relisting the company on the Stock Exchange, the first question which arises is as to the identity of the party that would so benefit from the listing status.

7.In the not too distant past, it had been possible for shareholders of dormant listed companies to sell their shares and, in effect, transfer of the company’s ownership, on the basis that a listing status was valuable. As matters stand at present transactions of that nature would not be permitted. Similarly liquidators of companies that had been listed were likewise, in some cases, able to obtain some benefit by reason of being able, effectively, to sell the listing status. Again, that appears to be a matter in the past. But even if it could be said that the listing status had value, that value would accrue first of all to the creditors of the company and any surplus over and above what was due to the creditors would, on liquidation, go to the benefit of the shareholders. Since this application for judicial review was made by the company itself it is by no means clear how it can be said that the company would stand to gain or lose a financial benefit.

8.The argument that was put under section 22(1)(b) was essentially the same argument as was raised in this court and has been considered in the reasons for judgment. No doubt, the question as to whether the company can challenge the decision of the Listing Appeals Committee is of importance to the Company but that, in itself, is clearly not of great general or public importance and the arguments raised do not appear to me to have sufficient merit for this court to grant leave.

Hon Le Pichon JA:

9.I agree.

Hon Stone J:

10.I agree.

Sir John Swaine SC, instructed by Messrs P.C. Woo & Co., for the Applicant

Mr John Hui, instructed by Messrs Clifford Chance, for the Respondent