Hui Shu Leung v. Wah Fung Forest Resources Ltd and Another

CACV 134/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 134 OF 2013

(ON APPEAL FROM HCA NO. 814 OF 2010)

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BETWEEN

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REASONS FOR JUDGMENT

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Hon Cheung JA :

1.The plaintiff lodged an appeal against the Decision of Deputy High Court Judge Le Pichon dated 23 May 2013 whose Reasons for Decision was handed down on 28 May 2013.  The 2^nd defendant applied by summons dated 6 September 2013 to strike out the appeal on the ground that the appeal was not properly constituted : the Decision being an interlocutory judgment, leave to appeal was required but had not been obtained before the notice of appeal was served.  The appeal has not been set down for hearing.  Shortly before the striking out hearing on 7 January 2014 the plaintiff applied by summons dated 2 January 2014 for extension of time to apply for leave to appeal and also for leave to appeal (the composite application).  We refused the plaintiff’s composite application and proceeded to strike out the notice of appeal.  I now give the reasons for our judgment.

Background of the case

2.The background of the case is succinctly set out in the Reasons for Decision of the Judge which I will gratefully adopt.

‘ Background facts

2.  The first defendant (“the company”) is a company of which the sole shareholders and directors are the second defendant and a Mr Wong.  It was formed between the second defendant and Mr Wong to hold a property on Plantation Road purchased as a joint investment in 1991.

3.  In June 2010 the plaintiff commenced this action against the company asserting a beneficial interest in the property on the basis that he had advanced $500,000 between 2005 and 2009 but because Mr Wong (the only other director and shareholder of the company) took no steps about the action, on 11 February 2011, the second defendant obtained an order from Yam J that he “be authorised to act for on behalf of [the company] to deal with this action”.

4.  Master de Souza made two costs orders against the plaintiff in favour of the second defendant, on 23 September 2011 and 28 November 2011 respectively, arising out of summonses for further and better particulars and for dismissal of the action upon Mr Wong’s failure to comply with Master Levy’s order extending the time for providing the particulars sought. 

5.  On the plaintiff’s appeal against the costs orders on the ground that the second defendant, not being a party to the action, was not entitled to receive costs, by orders dated 25 June 2012 (“the June orders”), DHCJ Carlson allowed the plaintiff’s appeal and, in each case, awarded the costs of the appeal to the plaintiff but without identifying the payer.

6.  The plaintiff obtained an order on 31 July 2012 (“the July order”) joining the second defendant as the second defendant pursuant to Order 62, rule 6A of the Rules of the High Court for the purposes of costs only.  The second defendant was ordered to pay to the plaintiff the costs of awarded by the June orders and also the costs of the July order until 9 July 2012.

7.  Thereafter, the plaintiff sought to tax the costs payable by the second defendant under the July order by filing a notice of commencement of taxation on 25 October 2012.

8.  The second defendant applied to stay the taxation.  The summons came before the master [Master K Lo] who made the order staying the taxation leading to the present appeal.

9.  The action (HCA 814/2010) has not yet concluded.  Leave to set the case down for trial was granted on 4 July 2012.’

3.The Judge dismissed the plaintiff’s appeal against which the plaintiff lodged his notice of appeal.

Interlocutory judgment and leave to appeal

4.Section 14AA of the High Court Ordinance (Cap. 4) provides that leave to appeal is required for an appeal to the Court of Appeal against an interlocutory judgment.  The decision of the Judge is clearly an interlocutory judgment in that it merely stayed the taxation pending the conclusion of the action.  It did not finally determine the whole action (see Shell Hong Kong Ltd v Yeung Wai Man Kiu Yip Co Ltd & Another (2003) 6 HKCFAR 222).  As leave to appeal was not obtained before the service of the notice of appeal, the appeal was not properly constituted and was therefore incompetent.  This is clear from the wording of section 14AA that ‘no appeal lies to the Court of Appeal …. unless leave to appeal has been granted.’  See also Cumbes v. Robinson [1951] 1 All ER 661.

The composite application

5.Mr David Chen, counsel for the plaintiff (who did not appear below) recognized the problem and accepted that leave should be obtained first.  He applied by way of the composite application for extension of time to apply for leave to appeal and for leave to appeal itself.

1)   Jurisdiction

6.The 14-day time limit under Order 59, rule 2B(1) of the Rules of the High Court to obtain leave in the first instance from the Judge had long expired.  The further 14-day limit under Order 59, rule 2B(3) for the application to be made to the Court of Appeal after refusal in the first instance had also been long expired.  A direct application (with the approval of the Court of Appeal) to the Court of Appeal within 14 days of the judgment under Order 59, rule 2B(4) had likewise been expired.

7.It is now beyond doubt that the Court of Appeal has power to extend time to apply for leave to appeal and to grant leave even where leave was not applied for in the first instance. This is by the combined operation of Order 59, rule 2B(4) which confers the power on the Court of Appeal to grant leave directly and Order 59, rule 2A(1) which confers the power on the Court of Appeal to extend the time to apply for leave.  But since the plaintiff had not observed the procedural requirements in the first instance, strong grounds must be shown on such a direct application to the Court of Appeal particularly at such a late stage. The plaintiff must explain the reason for the delay and why leave to appeal should be granted (Order 59, rule 2A(1)).  This must be in the form of an affidavit : KNM v. HTF (HCMP 288/2011, [2011] HKEC 1210).  The Court will consider the length of the delay, the reason for the delay, the merits of the appeal and the question of prejudice : see Menno Leendert Vos v Global Fair Industrial Ltd (unrep., HCMP 796/2010, [2010] HKEC 971) and Re LehmanBrown Ltd [2011] 5 HKLRD 668.

2)   Delay and explanation

8.In the present case the composite application was only lodged on 2 January 2014, which was nearly seven months after the expiry of the 14-day period beginning from the Decision dated 23 May 2013.  This is a substantial delay.  The 2^nd defendant’s solicitors had, in fact, upon being served with the notice of appeal, by letter dated 11 July 2013 drawn the plaintiff’s attention that leave to appeal was required.  They further demanded that the notice of appeal be withdrawn by 15 July 2013.  The plaintiff claimed that when the notice of appeal was served he was not advised by his lawyers that leave to appeal was required.  He, however, accepted that he was aware of the 2^nd defendant’s letter but claimed that he was too busy to deal with the matter until recently.  This cannot be a proper excuse for the delay, especially after the introduction of the Civil Justice Reform where one of the overriding principles is to ensure an expeditious resolution of the litigation.

3)   Merits

9.In any event, in my view, the plaintiff had not shown a reasonable chance of success of the appeal.  This is after all an appeal from the exercise of a discretion by the Judge.  The appellate court in such circumstances is not to exercise the discretion afresh and will only interfere if the discretion was improperly exercised on principle or plainly wrong.  Order 62, rule 9D(1) provides that the costs of any proceedings shall not be taxed until the conclusion of the action.  This is the starting point.  A discretion is, however, left to the Court by rule 9D(2) that the Court may order taxation if, under rule 9D(4), there is no likelihood of any further order being made in a cause or matter.  No argument was raised on the issue of a cause or matter before us.  Instead the plaintiff solely relied on the case of Do Ye Tong Doreen v Wai Hei Wan Wesley (No 2) [2011] 2 HKLRD 278 where Rogers VP stated that :

‘ 4. Two matters arise. It has been drawn to our attention that there has been a decision of Registrar Queeny Au-Yeung, as she then was, in January of last year, in the case of Big Boss Investment Ltd v So Lai Kei [2010] 1 HKLRD 793, in which it would appear that the learned Registrar took the view that the amendments to O.62 r.9D, introduced by Civil Justice Reform, had altered the way in which costs would be dealt with in this Court.

5.  Whatever might happen in the Court below, in my view the practice in the Court of Appeal in respect of interlocutory appeals has always been that, if those are dealt with separately from themain action and if an appeal is brought to this Court, in normal circumstances, once the appeal is disposed of, that would normally be the end of that particular aspect of the matter.  The order for costs would follow and the parties would be entitled to tax their costs.

6.  In my view, the new O.62 r.9D does not change that situation because it does not, in terms, deal with appeals and as far as I am concerned the same situation applies as it did before.  The appellant wishes to insert in the order the words “taxed forthwith”.  I see no objection to that.  But normally, if the words “taxed forthwith” are used, that has a slightly pejorative connotation and would be avoided in order not to give offence.  Nevertheless, on this occasion, I am prepared to allow that to be inserted.’

10.Mr Chen argued that the same approach should be adopted on an appeal from the master to the Court of First Instance.  The Judge clearly pointed out that the view of Rogers VP was directed specifically to the practice of an appeal from the judge to the Court of Appeal and not from the master to the judge of the Court of First Instance.  It was urged upon us by the 2^nd defendant that the practice of an appeal from a master to the judge is quite different which is in the nature of a new hearing and where new evidence is frequently adduced.  I am not convinced that the same approach on the taxation practice should be adopted in the present instance.  In my view the plaintiff had not been able to show that he had a reasonable chance of success in his appeal against a discretionary relief under the recognized principles.

Conclusion

11.Accordingly the plaintiff’s composite application was refused with costs to the 2^nd defendant. As the appeal was not properly constituted, the notice of appeal was struck out with costs to the 2^nd defendant.

DECISION ON INDEMNITY COSTS

12.The 2^nd defendant applied for indemnity costs in respect of the striking out application.  As the notice of appeal should not have been served in the first place, I see no reason why the 2^nd defendant should not be fully indemnified on costs.  Accordingly I will order indemnity costs. 

Hon Lunn JA :

13.I agree with the reasons for judgment of Cheung JA and with the order of indemnity costs in favour of the 2^nd defendant.

Hon McWalters J :

14.I agree with the reasons for judgment and decision for indemnity costs of Cheung JA.

Mr David Chen, instructed by Benny Kong & Yeung, for the plaintiff

Ms Abigail Wong, instructed by Cheung Wong & Associates, for the 2^nd defendant