Wingames Investments Ltd and Others v. Mascot Land Ltd and Others

HCMP 1968/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 1968 OF 2012

(ON AN INTENDED APPEAL FROM HCA NO. 907 OF 2011)

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BETWEEN

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Before: Hon Kwan and Fok JJA

Date of Judgment: 30 October 2012

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J U D G M E N T

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Hon Fok JA (giving the Judgment of the Court):

1.By his Decision dated 17 July 2012, Deputy Judge Pow SC ordered the plaintiffs to provide further security for the defendants’ costs of the underlying action in the sum of HK$2,400,000.

2.The plaintiffs applied by summons dated 30 July 2012 for leave to appeal against that decision.  The Deputy Judge refused that application by his further Decision dated 10 September 2012.

3.By summons dated 13 September 2012, to which a draft Notice of Appeal is attached, the plaintiffs further apply to this Court for leave to appeal.  The plaintiffs have submitted a statement in support of the application and, for their part, the defendants have submitted a statement in opposition.

4.Before dealing with the substantive leave to appeal application, it is convenient to dispose of a peripheral point raised in the plaintiffs’ summons, which also seeks leave to appeal against the Deputy Judge’s order refusing leave and his gross sum assessment of costs of that application.  Such leave is unnecessary since the rules provide that, where the judge to whom an application for leave to appeal has refused such leave, a further application for leave to appeal may be made to this Court within 14 days of the date of refusal: see RHC O.59 r.2B(3).  Thus, it would have been sufficient for the plaintiffs’ summons (and draft notice of appeal) to identify the substantive Decision dated 17 July 2012 as the order in respect of which leave to appeal is sought.  In the event leave were granted by the Court of Appeal, such grant would in the normal course of events be on terms that the costs of the leave application be in the appeal, and any costs order made below would be varied accordingly.

5.A further peripheral point arises from a submission made in the plaintiffs’ statement in support of the application for leave, namely that the Deputy Judge was wrong to require the plaintiffs to issue a summons to seek leave to appeal from him.  The plaintiffs’ solicitors had, on receipt of the Decision dated 17 July 2012, written a letter to the Deputy Judge’s Clerk asking for leave to appeal.  That letter, it should be noted, was not copied to the defendants’ solicitors and so was an ex parte request to the Deputy Judge.  This was not the proper procedure since O.59 r.2B(5) expressly requires that an application under that rule must be made inter partes if the proceedings to which the order relates are inter partes (as these proceedings were).  The Deputy Judge rightly required the plaintiffs to issue such a summons, which they did on 30 July 2012.  The plaintiffs’ criticism of the Deputy Judge’s direction to this effect as being in disregard of the underlying objectives of the Civil Justice Reform is unjustified since it is plain that a summons was required by the rules.

6.Turning to the substantive application for leave to appeal, it is for the plaintiffs to show that the proposed appeal enjoys a reasonable prospect of success or that there is some other reason in the interests of justice why the appeal should be heard.  In respect of appeals from orders for security for costs, Yuen JA held in So Yee Mui & Ors v Lam Pui Chi, unrep., CACV 283/2010, 28.6.11 (an appeal against an order made by a single Justice of Appeal):

“… it is well-established law that an order for security for costs is made in the exercise of the court’s discretion and generally an appellate court will not interfere unless it has been shown that there has been an error of law, or a misapprehension of material facts, or errors in matters taken or not taken into account, or the exercise of discretion was plainly wrong.”

7.The first ground in the draft notice of appeal relates to the Deputy Judge’s refusal to admit evidence before him.  Insofar as such evidence was the 7^th affimation of Li Zhong Yuan, that had been the subject of a summons issued two days before the substantive hearing below.  We are satisfied that there is no basis for disturbing the Deputy Judge’s exercise of discretion, carefully explained in paragraphs 20 to 23 of the Decision, in declining to admit this into evidence.  Insofar as the plaintiffs sought to rely on further e-mail exchanges, we are likewise satisfied that the Deputy Judge’s treatment of them (in paragraphs 24 and 25 of the Decision) was an exercise of discretion with which this Court should not interfere.  The 8^th affirmation of Li Zhong Yuan, which the plaintiffs sought to adduce shortly before the application to the Deputy Judge for leave to appeal, plainly does not satisfy the Ladd v Marshall conditions for new evidence on an appeal.

8.The second to fourth grounds in the draft notice of appeal attack the Deputy Judge’s approach to the exercise of discretion under O.23 following his finding that the 2^nd plaintiff was ordinarily resident abroad (and there being no dispute that the 1^st and 3^rd plaintiffs were ordinarily resident abroad).  However, we are satisfied that the Deputy Judge properly directed himself that, notwithstanding this finding, he had “a real discretion whether or not to order security for costs” and that he duly considered the arguments that were raised by the plaintiffs (see Decision §17), namely as to (i) oppression and stifling, and (ii) the security constituted by the sum of HK$44 million said to be the plaintiffs’ monies held by the defendants.

9.The submissions in the plaintiffs’ statement in support of the application advance contentions that security for costs was not appropriate because (a) the defendants are seeking protection for costs that they will incur in any event in prosecuting their counterclaim, and (b) there is no present risk that the defendants will be unable to recover their costs of the proceedings. However, these submissions were not made to the Deputy Judge below and we do not think the plaintiffs should be allowed to raise them as new points on appeal.  In any event, we are not satisfied that these arguments give rise to an appeal with a reasonable prospect of success.

10.The submission in the plaintiffs’ statement in support of the application also contends that the Deputy Judge erroneously took into account the prior provision of security by the plaintiffs but we are satisfied that the premise of this complaint is not made out, in particular by reference to paragraph 9 of the Decision.

11.We are therefore not satisfied that the proposed grounds of appeal give rise to an appeal with a reasonable prospect of success.

12.So far as the application is made on the alternative basis that there is some other reason in the interests of justice why the appeal should be heard (the fifth ground in the draft notice of appeal), we are not satisfied that the premise on which this contention is made, namely that the plaintiffs will suffer extreme prejudice in not being able to prosecute their claim whilst the defendants will be able to pursue their counterclaim, is established.

13.Finally, we note that the summons for leave to appeal seeks, in the alternative to such leave, an order that the time for compliance with the Deputy Judge’s order for the provision of security for costs be suspended.  In the plaintiffs’ statement in support of the application, we are told (at §3) that, in view of pending appeals before this Court, the parties have agreed to suspend preparation of witness and expert evidence until after the appeals and have filed a consent summons to this effect.  Even if trial preparation has (presumably subsequent to the order for security for costs) been put on hold as indicated, the question of whether or not, in light of that subsequent fact, the time for provision of the security for costs ordered by the Deputy Judge should be suspended is a matter for a judge of the Court of First Instance by way of an application for extension of time for compliance with the Deputy Judge’s order, rather than for this Court on appeal.

14.For these reasons, we dismiss the plaintiffs’ summons for leave to appeal.  Further, since we consider it to be totally without merit, we make a direction, pursuant to O.59 r.2A(8), that no party may request the determination to be reconsidered at an oral hearing inter partes.

15.We make an order nisi that the plaintiffs pay the defendants’ costs of the application.  We propose to assess those costs on a gross sum basis and, to that end, we direct the defendants’ solicitors to submit a bill of costs within seven days hereof and give leave to the plaintiffs to submit their response within seven days thereafter.

Written submissions by King & Wood Mallesons, Solicitors for the Plaintiffs / Applicants

Written submissions by Dechert, Solicitors for the Defendants / Respondents