Sanshin Trading Co. Ltd. v. Kwok Kwok Yu and Others

CACV000108/1992

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Coram: Hon Sir Derek Cons, V-P, Kempster and Nazareth, JJA

Date of Hearing: 20 October 1992

Date of Judgment: 20 October 1992

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J U D G M E N T

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Kempster, JA:

1. This is an appeal byK Kwok kwok yu, Sweet Field Ltd and Kwok Kar Industries Ltd, defendants in an action in the High Court of which the distinctive number is A 5086 of 1990, from an order made in chambers by Keith J on 17 June 1992 dismissing as an abuse of the process their application, which arose from a cross-undertaking, for an order directing an inquiry into the damages they have allegedly suffered by reason of an interlocutory mareva injunction granted by Barnett J on 28 July 1990 and Discharged by the Court of Appeal on 26 February 1991. The plaintiffs, Sanshin Trading Company Limited, by Respondent's Notice, advance grounds not relied upon by Keith J in support of his order.

2. In the action the plaintiffs claim against the defendants damages for fraud and conspiracy in and about the purchase and payment in Hong Kong for eel fry to be exported to Taiwan.

3. The terms of the injunction were varied by Barnes J on 10 August and 19 September 1990.

4. Albeit an order for an inquiry had been sought in the Notice of Appeal no reference was made, in argument or after judgment on 26 February 1991, to the cross-undertaking as to damages which the plaintiffs had given before Barnett J and the judgment and order of the Court of Appeal are silent on the matter.

5. No attempt was made to restore the appeal to make good the lacuna before the order was perfected. ^Instead a summons for an order for an inquiry was issued by the defendants on 11 March 1991 returnable before Deputy High Court Judge Evans. It may be that the defendants were at risk for costs in failing to apply timeously for all the relief they wanted as suggested in the judgment of Kennedy LJ in Re Hailstone (1910) 102 LT 877 at p 881; an authority helpfully brought to our attention this afternoon by Mr Tang QC for the plaintiffs.

6. If the application had been made to the Court of Appeal and assuming it had jurisdiction, a matter to which I shall turn in a moment, the court could have refused to entertain it as a matter of discretion. That would have necessitated a fresh application in the High Court, which could have been made forthwith as it followed the discharge of a mareva injunction or, perhaps, as is generally appropriate after the discharge of prohibitory injunctions, not earlier than the conclusion of the trial.

7. At the outset of the hearing before Keith J, before whom, without objection, this application came in some mysterious way, being already part-heard before Deputy Judge Evans, it was contended on behalf of the plaintiffs as a preliminary point that it constituted an abuse of the process of the court. The judge found that the application could and should have been made to the Court of Appeal and, in consequence, that the plaintiffs were correct in contending that it was an abuse to seek such relief subsequently and separately. He relied upon a passage from the speech of Lord Kilbrandon in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581 at p 590 which recites, with approval, some words from the well-known judgment of Wigram V-C in Henderson v Henderson (1843) 3 Hare 100 at p 115:

"The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."

Accepting that the passage just cited does not preclude an application otherwise than to the court discharging the injunction the judge went on to make the inconsistent finding that this "did not mean that the plaintiff should have more than one opportunity for making it".

8. Before us it has been contended by Mr Bernacchi QC, for the defendants, on the authority of Ocean Software Ltd v Kay & Ors [1992] 1 QB 583, not brought to the attention of Keith J, that the Court of Appeal would have had no 1 jurisdiction to entertain an application for an order for inquiry. Scott LJ, who was dealing with an application to the English Court of Appeal to discharge an ex parte order which that court had itself made, held that there was no jurisdiction to entertain it. He said, at pp 588 and 589:

"But, on the other hand, an application for relief which arises out of an order that the Court of Appeal has made but which is not strictly ancillary to the appellate function that the court was exercising in making the order and which cannot be described as either the amendment or the execution or the enforcement of the order ought not, in my opinion, to be made to the Court of Appeal. In such a case the Court of Appeal, as it seems to me, would not have jurisdiction to entertain the application."

He was relying upon the terms of s 53 of the Supreme Court Act 1981 which is almost entirely reflected in s 13(4) of the Supreme Court Ordinance (Cap 4). He went on:

"Where the line is to be drawn between applications which are ancillary to the exercise by the Court of Appeal of its appellate jurisdiction and, applications which are free-standing first instance applications may be difficult to draw. ... The Court of Appeal ... does not hear original applications save to the extent that these are ancillary to an appeal. Is the defendants' application to discharge the order made on 20 December ancillary to the appellate jurisdiction exercised by the court in making that order? For my part, I do not think that it is. But whether or not that is right I am of the clear opinion that, as a matter of practicality, it is not appropriate for the Court of Appeal to hear the application in the present case."

Insofar as the absence of jurisdiction was the ratio decidendi of the case it was based on a finding that an application to the Court of Appeal to discharge an order which that court has itself made is not ancillary to its appellate function. Here we have a different situation. When Barnett J granted the mareva injunction subsequently discharged by this court he did so upon the plaintiffs' cross-undertaking as to damages and, as Farwell LJ said in Re Hailstone at p 880:

"The power to enforce an undertaking is incidental to the power to grant the injunction ..."

In my opinion, by parity of reasoning, the power to enforce an undertaking, by directing an inquiry as to damages, is also incidental and ancillary to the power of the Court of Appeal to discharge an injunction granted by the High Court and not a "free-standing first instance application".

9. Keith J had considered the judgments in Smith v Day (1882) 21 Ch D 421. At p 425 Sir George Jessel MR said:

"... we are not entitled to say that the application for an inquiry must be made either when the injunction is dissolved or at the trial. One of these must be the most proper time."

Brett LJ, at p 427, did not think that:

"... we ought to lay down that it must be made at the time when the injunction is dissolved. I do not think that the applicant necessarily is to be allowed to postpone it till the trial, nor do I say that he never can successfully make the application after the trial. I think that he ought to make it within a reasonable time after the dissolution of the injunction ... "

Likewise Cotton LJ at p 430:

"As regards to the time of the application, there is no doubt that the failure to apply earlier does not deprive the Court of its jurisdiction founded on the undertaking. It is certainly desirable that the application should be made either at the time when the injunction is dissolved or at the hearing of the cause. No rule, however, has been laid down that it must be made at one or other of those times, and I do not say that the Court ought to lay down any express limit as to time ..."

It was not suggested in any of these judgments that if the Court of Appeal had itself discharged an injunction it would not have had jurisdiction to order an inquiry. Indeed, one such order, and it may only be an example, was made by the English Court of Appeal in Hubbard v Vosper (1972] 2 QB 84. To make the application to one court or at one time rather than to or at another cannot, in my opinion, constitute an abuse of the process. At the very least it is not plainly and obviously so.

10. Insofar as Keith J was exercising a discretion he failed, in my opinion, to take into account the absence of even a suggestion of prejudice to the plaintiffs.

11. Looking at the material facts from the point of view of a layman it seems wrong that compensation for any damage suffered by the defendants by reason of the erroneous grant of the mareva injunction should not be payable pursuant to the plaintiffs' cross-undertaking. For the reasons given I believe that the law is on all fours with the layman's perception.

12. I would allow this appeal, set aside the order of Keith J, and order that the defendants' summons dated 11 March 1991 be re-listed for hearing before another judge.

Sir Derek Cons, V-P:

13. I agree with my Lord that the appeal should be allowed and with the order that he proposes.

14. For my part, as at present advised, I am inclined to the view that the appeal should also succeed on the ground that this court when last seized of this matter, had no jurisdiction to deal with the question of whether an inquiry as to damages should be ordered or not, albeit it was requested in the notice of appeal.

15. Clearly this court had no direct jurisdiction because there had been no decision as to that below to question: WEA Records Ltd v Visions Channel 4 Ltd [1983] 1 WLR 721. Jurisdiction would depend then, having regard to s 13(4) of the Supreme Court Ordinance, whether the decision was necessary "for the purposes of or incidental to the hearing and determination of the appeal" to set aside the injunction, a test which Scott LJ in the Ocean Software generalised by the word "ancillary". I accept that the grant of power to enforce the undertaking is ancillary to the grant of the injunction: My Lord has quoted from Farwell LJ in the Hailstone case. It does not necessarily follow in my view that it is equally ancillary to the setting aside of the injunction.

16. As I have said, as at present advised my view is that it is not, but I need express no firm view because I agree entirely with my Lord that it was not an abuse of process to bring the application before the court below. With respect to the learned judge, I find it impossible to accept that if the application did not have to be made to this court, - I emphasise the word "have" as he did below, it could nevertheless be an abuse of the process not to do so.

Nazareth, JA:

17. For the reasons given by my Lord the Vice-President, I agree that the appeal should be allowed and I would also make the order proposed by my Lord ' Kempster JA.

Representation:

Brook Bernacchi, QC and Wilson Chan (M/s H.H. Lau & Cc) for Appellants/Defendants

R. Tang, QC and K.L. Liu (M/s Denton Hall Burgin & Warrens) for Respondents/Plaintiffs