Sherryknoll Enterprises Ltd and Others v. Grand Power Ltd

HCMP 1895/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 1895 OF 2012

(ON AN INTENDED APPEAL FROM HCA NO. 1599 OF 2009)

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BETWEEN

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Before: Hon Kwan and Fok JJA

Date of Judgment: 1 November 2012

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J U D G M E N T

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

1.This is the plaintiffs’ application for leave to appeal against the decision of Deputy Judge Au-Yeung (as she then was) on 23 July 2012 (“the Decision”). The judge refused leave to appeal on 23 August 2012 (“the Leave Decision”).

2.Pursuant to the powers of this court under Order 59 rule 2A(5)(a) of the Rules of the High Court, we determine this application on the basis of the statements in support and in opposition without an oral hearing.

3.By her Decision, the judge refused to grant an interlocutory mandatory injunction to compel the defendant to deliver up to the plaintiffs share certificates for 500 million shares in China Daye Non-ferrous Metal Mining Limited with a view to selling them.  The plaintiffs and the defendant are all companies incorporated in the British Virgin Islands.

4.It is well established that the appeal court has a limited function in an appeal against the exercise of discretion of a judge to grant or refuse an interlocutory injunction.  This court does not exercise an independent discretion of its own.  It must defer to the judge’s exercise of his discretion and must not interfere merely because it would have exercised the discretion differently.  Interference with the judge’s discretion is confined to certain circumstances and they are well established, see Hadmor Productions Ltd v Hamilton [1983] 1 AC 191 at 220.  It is necessary to bear the above considerations in mind in assessing whether the plaintiffs have established that the intended appeal has reasonable prospect of success or that there is some other reason in the interests of justice why the appeal should be heard.  Reasonable prospects of success involves the notion that the prospects of succeeding must be “reasonable” and therefore more than “fanciful”, without having to be “probable” (SMSE v. KL [2009] 4 HKLRD 125 para. 17).

5.We are satisfied in this instance the test is not met.

6.We do not think the judge had applied wrong principles or made errors of law in assessing the merits of the plaintiffs’ case or in analysing the defendant’s defence, as contended by the plaintiffs.  The arguments of the plaintiffs in the intended appeal were canvassed by the judge in the leave application before her and we agree with her for the reasons in her Leave Decision the plaintiffs have failed to show reasonable prospects of success in their grounds of appeal.  It is unnecessary to rehearse those arguments here.  There is no basis to interfere with the conclusion reached in para 48 of the Decision that there are difficulties in each party’s case and at best the plaintiffs have only shown serious issues to be tried.  For the reasons which appeared in paras 8 to 12 of the Leave Decision, we do not think the judge had wrongly conflated the legal test of summary judgment to the legal test of interlocutory mandatory injunction, as contended by the plaintiffs.

7.In refusing to grant the injunction sought, the judge has not lost sight of the practical realities of the situation.  She warned herself against “speculating on the trend of share price or taking away a party’s right to decide on the best time to liquidate its shares” (para 49); she considered the fluctuations in the share price over the years, the imminence of the expiry of the lock up period (this has ended on 7 September 2012), and that the trial would be in April 2013 (paras 67 to 69); she took the view that damages will be an adequate remedy for either party (para 61), that each party runs the risk of an empty judgment and possession of the subject shares is an important safeguard (para 66).  On those considerations, notwithstanding the plaintiffs’ undertakings as modified, she arrived at the conclusion there seems to be greater risk of injustice to grant than to withhold the injunction (para 72).

8.The judge had correctly applied the principles for the grant of a mandatory injunction as summarised in Music Advance Ltd v Incorporated Owners of Argyle Centre Phase I [2010] 2 HKLRD 1041 paras 11 and 12.

9.We refuse to grant leave to appeal and further order pursuant to Order 59 rule 2A(8) that no party may under rule 2A(7) request the determination to be reconsidered at an oral hearing inter partes, as this application is entirely without merit.

10.We make an order nisi the plaintiffs are to pay the defendant’s costs of this application and there would be gross sum assessment.  We decline to certify the application as fit for two counsel, notwithstanding the total value of the shares involved, as the defendant should know from the statement in support that no new argument was raised by the plaintiffs before this court and the case for opposing the application was argued fully for the defendant when it was heard by the judge.  We direct the defendant’s solicitors to serve a skeleton bill for summary assessment of costs within 7 days hereof and the plaintiffs do have leave to serve their response within 7 days thereafter.

Written submissions by Mr William Wong, instructed by Michael Li & Co., for the 1^st to 3^rd Plaintiffs

Written submissions by Mr Ambrose Ho, S.C and Mr Norman Nip, instructed by Keith Lam Lau & Chan, for the Defendant