Big Island Construction (HK) Ltd v. Wu Yi Construction Co Ltd and Another
Read the full judgment text of FAMP 1/2014 on BabelCite. This Court of Final Appeal judgment was delivered on 4 December 2014 before Ribeiro PJ.
Court of Final Appeal – application to vary order for security for costs – leave to appeal granted by Court of Appeal – whether Court of Final Appeal has power to vary conditions imposed by Court of Appeal – Hong Kong Court of Final Appeal Ordinance (Cap 484) s.25(1) and s.25(4) – purposive interpretation – variation power would be rendered nugatory otherwise – whether consent order for security of HK$400,000 should be increased to HK$400,000 for each respondent totalling HK$800,000 – general practice – maximum under s.25(3)(b) – appellant dormant company with no assets – agreement muddled by incorporation of inapposite Standard Order provisions from Practice Direction 2.3 – whether additional condition requiring proof on oath of net assets of HK$1.4 million should be imposed – rejected as pointless given common ground that appellant has no assets – costs ordered against respondents – Practice Direction 2.3 Standard Order only intended for orders made by Appeal Committee granting leave – not appropriate to insert Standard Order terms into Court of Appeal orders – postscript suggesting possible reform of practice – application granted in part.
Legal issues: Power of the Court of Final Appeal to vary conditions imposed by the Court of Appeal · Discretion to vary security for costs to HK$400,000 for each respondent · Imposition of additional condition requiring proof on oath of net assets
Outcome: Application for variation granted in part; security for costs increased to HK$400,000 for each respondent (HK$800,000 total) payable within 21 days; application for additional condition requiring proof of net assets dismissed
Cited by 2 cases · Cites 3 cases
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FAMP No. 1 of 2014 IN THE COURT OF FINAL APPEAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MISCELLANEOUS PROCEEDINGS NO. 1 OF 2014 (CIVIL) (ON APPLICATION FOR LEAVE TO APPEAL FROM CACV NO. 189 OF 2011) _______________________ BETWEEN
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________________________ DECISION ________________________ Mr Justice Ribeiro PJ: 1.This is an application made by the respondents to a single Permanent Judge for variation of an order for security for costs made by the Court of Appeal. The practice of the Court of Final Appeal as reflected in Practice Direction 2.3 has evidently been misunderstood and it is appropriate that it should be clarified. A. The Court of Appeal’s Order 2.On 25 April 2014, the Court of Appeal[1] dismissed appeals by Big Island Construction (HK) Ltd (“BIC”) against the judgment of Poon J dismissing BIC’s actions against the respondents. BIC sought leave to appeal to this Court on the basis that such leave was as of right. The respondents did not dispute the grant of leave and the application was dealt with by the Court of Appeal on the papers. On 7 July 2014, it endorsed on the Motion: “Order in terms on usual conditions” and directed the parties to consider reaching an agreement as to the terms of the order. Correspondence ensued between Messrs Rowdget W Young & Co (“RWY&Co”) solicitors for the appellant and Messrs Ford Kwan & Co (“FK&Co”) solicitors for the respondents, to that end. 3.On 10 July 2014, RWY&Co proposed an order making leave to appeal conditional on the appellant providing security for costs in the sum of HK$400,000. Confusion then set in. FK&Co suggested, and RWY&Co agreed, that the Order (subsequently approved by the Court of Appeal on 16 July 2014 and referred to here as “the Consent Order”) should be in the following terms:
B. Inappropriate terms 4.Such an order was misconceived. Its terms are derived from the Standard Order set out in Schedule 1 to PD 2.3 (reproduced in the Annex to this Ruling). As the Practice Direction explains, it “concerns the practice to be adopted where the Appeal Committee [not the Court of Appeal] grants leave to appeal to the Court of Final Appeal in civil cases” and “aims to streamline procedures with a view to saving time and costs”. PD 2.3, §2 continues:
5.The Standard Order is therefore automatically made whenever the Appeal Committee grants leave to appeal so that a separate application for standard procedural directions is unnecessary, saving time and costs. Usually, those savings are achieved, the Standard Order setting the quantum of security for costs at HK$400,000 “as security for the due prosecution of the appeal and payment of all such costs as may become payable to the respondent”. However, there will obviously be cases where a variation of its terms may properly be sought. That is why paragraph 3 of the Standard Order provides:
6.Paragraph 3 only operates where a Standard Order has automatically been made so that an application for a variation of that order is contemplated if an alternative order is sought. In the present case, the Court of Appeal directed that the parties try to agree the terms of the order giving leave. There was no question of seeking a variation of any order made automatically by default. 7.Paragraph 3 also demonstrates that the Standard Order is only intended to be made at the level of the Court of Final Appeal since it is obviously not within the remit of the Court of Appeal to give directions as to how applications are to be dealt with by a single Permanent Judge of this Court. Similarly, paragraphs 4 to 7 of the Consent Order only make sense as part of an Order made by the CFA and not the Court of Appeal. C. The present application 8.The normal practice where leave to appeal has been granted is for security to be ordered in the sum of HK$400,000 for each respondent.[2] That is the maximum sum for “each respondent” provided for by section 25(3)(b) of the Court’s statute.[3] 9.On 17 July 2014, before the Consent Order was sealed, FK&Co realised this and wrote to the Court of Appeal asking in effect for the order to be varied to provide security of HK$400,000 for each respondent, although its letter was couched in language requesting “clarification” of that Court’s order. BIC objected, so the respondents took out a summons before the Court of Appeal seeking such variation and also seeking the addition of a further condition for leave to appeal. That application was dismissed, Yuen JA holding[4] that the parties had clearly agreed the Consent Order and that, in the light of the reference in paragraph 3 to variations being sought before a single Permanent Judge, the Court of Appeal was functus officio. 10.The respondents then took out a summons before a single Permanent Judge which relevantly seeks the following orders:
11.I directed that this application be dealt with on the papers. Accordingly, affirmations dated 25 September 2014 and 20 October 2014 were filed by Lian Mingshun on behalf of the respondents and an affirmation dated 8 October 2014, filed in reply by Ben P Lee on behalf of BIC. Written submissions of counsel[5] have also been lodged. D. Whether the amount of security should be varied D.1 Power to vary Consent Order? 12.The first question is whether this Court has power to vary the Consent Order. Section 25(1) of the Court’s statute confers broad powers on the Court to impose conditions upon the grant of leave to appeal [6]:
13.It was pursuant to this power that the Court of Appeal made the Consent Order. The power to vary the conditions imposed is contained in section 25(4) which states:
14.This is not happily drafted. On its face, it appears to provide that only the Court which originally imposed the conditions has power to vary them. However, such a confining interpretation runs counter to the expansive language giving powers to vary “any conditions” in “such manner as it considers fit”. Purposively, it makes no sense to deprive the Court of Final Appeal of power to vary conditions originally imposed by the Court of Appeal. After that Court has granted leave, it drops out of the picture and thereafter, any variations (which are plainly intended to be catered for) must necessarily be made by this Court. Section 25(4) must therefore, in my view, be read as empowering the Court to “vary any conditions ... imposed under this section” to prevent the power to vary from being rendered nugatory in cases where leave is granted by the Court of Appeal. On that basis, my view is that this Court has power to vary the Consent Order. D.2 Should the Consent Order be varied? 15.Counsel for BIC argues that the Consent Order should not be interfered with because (i) the parties specifically agreed the sum of HK$400,000 as security for both respondents; (ii) the appeal is likely merely to be a one-day (or at most a day-and-a-half) appeal; (iii) the two respondents are fellow subsidiaries whose defences are identical and who will be represented by the same legal team with a single set of costs; and (iv) it is relevant to note that BIC’s appeal is brought as of right. 16.The case for varying the Consent Order is put by Counsel for the respondents on the basis that (i) the parties did not in fact arrive at a final agreement as to the amount of security to be provided; (ii) the actual costs of the appeal are estimated to be HK$2.277 million, over-topping even HK$800,000 by far; (iii) as is common ground, BIC is a dormant company with no apparent assets, relying on Mr Ben P Lee for the funding of this litigation; and (iv) there is no suggestion that the appeal would be stifled if an additional sum of HK$400,000 were to be ordered by way of security. 17.In my view, as a matter of discretion, the Court should (on terms as to costs) vary the condition for grant of leave to appeal so as to require security to be provided in the amount of HK$400,000 for each respondent, so that a total of HK$800,000 has to be paid into court within 21 days from the date of this Ruling. 18.The factors which incline me in favour of such variation are (i) the fact that it is the general practice for such security to be provided – which, properly advised, BIC would have been apprised of when deciding to proceed with the appeal; (ii) that it is common ground that BIC has no assets so that enforcement of an order for costs in the event that BIC loses, would present particular difficulties; (iii) there is no indication that the appeal would be stifled if a variation were granted; and (iv) most importantly, the fact that the apparent agreement embodied by the Consent Order is significantly undermined by confused thinking on both sides. 19.Point (iv) bears some elaboration. The agreement between FK&Co and RWY&Co, reflected in their endorsement of the Consent Order, was plainly a muddle to which both sides had contributed. On the one hand, they expressly agreed that HK$400,000 was to be the quantum of security “for the due prosecution of the appeal and payment of all such costs as may become payable to the 1st and 2nd respondents ...” But on the other, they incorporated inapt Standard Order provisions, subjecting the agreed amount to possible alteration to “such alternative sum or form of security provided in such manner as may be agreed by the parties within 14 days from the date of this Order”, stipulating that an application to a single Permanent Judge under paragraph 3 should be the means of resolving failure to agree on an alternative. 20.If there had been deeper reflection, I daresay that they would not have incorporated those qualifying terms. The parties were, pursuant to the Court of Appeal’s direction, endeavouring to agree the terms on which leave to appeal was to be granted. There is no reason to think that they had merely intended to reach an interim agreement, subject to subsequent alteration, with an application to a single Permanent Judge to resolve any disagreement at that later stage. Yet, that is what the agreed terms provide for and what both sides have subscribed to. I do not think that such an ambivalent, co-authored agreement should be a bar against the respondents seeking a variation to incorporate the usual order for security. E. The additional condition sought 21.The proposed additional condition can be rejected out of hand. It is common ground that BIC has no assets, so that the application to require proof on oath that it has “net assets available to meet any costs order against it (in addition to the security sum of HK$800,000) of HK$1.4 million” appears senseless and bizarre. It is in any event difficult to see what conceivable practical utility such an order might have. 22.Since greater care on the respondents’ part before proposing and endorsing the Consent Order would most probably have obviated the need for the application for a variation, they must bear all relevant costs. F. Disposal of this application 23.For the aforesaid reasons I make the following orders, namely:
24.If, contrary to my expectations, either side should desire to lodge submissions in writing in relation to such costs, they should be lodged within seven days of the date of this Ruling, in default of which the costs order nisi shall stand as an order absolute. Postscript 25.It is for consideration how the Court’s practice regarding cases where the Court of Appeal grants leave to appeal to this Court can be improved. A possible approach may be (i) for the Court of Appeal to grant leave to appeal conditional on the appellants’ satisfaction of such procedural conditions as the Court of Final Appeal shall apply; and (ii) for PD 2.3 to be amended to deem a Standard Order to have been made by the Appeal Committee in all cases where the Court of Appeal has granted leave, catering as the practice direction presently does, for applications to a single Permanent Judge for variations to the Standard Order if required. 26.In the meantime, it should be noted that it is not appropriate to insert the terms of the existing Standard Order into orders of the Court of Appeal granting leave.
Written submissions by Ms Sara Tong, instructed by Rowdget W. Young & Co., for the Appellant Written submissions by Mr Christopher Chain, instructed by Ford, Kwan & Co., for the Respondents ANNEX: Schedule 1 to PD 2.3 STANDARD ORDER
[1] Yuen, Kwan and Chu JJA, CACV 160, 189, 190, and 191 of 2011 and CACV 257 of 2012 heard together. [2] Re Wing Fai Construction Co Ltd (Security for Costs) (2008) 11 HKCFAR 657 at §9 [3] Hong Kong Court of Final Appeal Ordinance (Cap 484). [4] Yuen, Kwan and Chu JJA, CACV 189/2011 (18 September 2014). [5] Mr Christopher Chain for the respondents and Ms Sara Tong for BIC. [6] Cathay Pacific Airways Ltd v Wong Sau Lai (2006) 9 HKCFAR 657. |
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