Wason Holdings Ltd and Others V.Bhp International Markets Ltd and Another

HCA 1692/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1692 OF 2014

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DECISION
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INTRODUCTION

1.I have before me an application by the 1^st defendant by summons dated 8 April 2015 seeking (inter alia) leave to appeal against an earlier decision given by me on 20 March 2015 (“the Decision”), and a stay of execution of the order set out in paragraph 64(3) of the Decision pending the determination of the 1^st defendant’s appeal (assuming that leave to appeal is granted).

The application for leave to appeal

2.The basic facts of this case are set out in the Decision and I shall not repeat them here.

3.The applicable principles governing an application for leave to appeal against an interlocutory judgment or order of the Court of First Instance to the Court of Appeal are clear.  Leave to appeal shall not be granted unless the court hearing the application for leave is satisfied that (a) the appeal has a reasonable prospect of success; or (b) there is some other reason in the interests of justice why the appeal shall be heard.  Further, as explained by the Court of Appeal in SMSE v KL [2009] 4 HKLRD 127, at paragraph 17 per Le Pichon JA (with whom the other member of the Court of Appeal agreed), a “reasonable” prospect of success for this purpose means a prospect which is more than “fanciful” but without having to be “probable”

4.In the Decision, I considered and rejected:-

(1)  the 1^st defendant’s application to strike out the writ of summons herein, which application was advanced on three grounds, namely, (a) the plaintiffs’ cause of action arose only after the date of the issue of the writ, (b) abuse of process, and (c) breach of undertaking;

(2)  the 1^st defendant’s application to discharge the ex parte injunction order originally granted by Mr Justice Anthony Chan on 28 August 2014 (as subsequently continued by me), which application was also advanced on three grounds, namely, (a) no useful purpose would be served by continuing the injunction, (b) material non-disclosure, and (c) failure to make full disclosure in respect of subsequent material development or fresh relevant information.

5.I also ordered the 1^st defendant to make disclosure of information and documents relating to the past and present location or locations of the proceeds of sale of all or any of the 288,520,000 shares in Powerlong Real Estate Holdings Limited in issue in these proceedings or of the present equivalents of such proceeds.

6.The 1^st defendant’s proposed grounds of appeal against the Decision are set out in paragraphs 9 to 14 of a draft notice of appeal attached to its summons of 8 April 2015.

(1) Paragraphs 9 and 10 of the draft notice of appeal relate to my decision not to strike out the writ of summons under grounds (a) and (b) mentioned in paragraph 4(1) above.

(2) Paragraph 11 to 13 of the draft notice of appeal relate to my decision not to discharge ex parte injunction order under grounds (a), (b) and (c) mentioned in paragraph 4(2) above.

(3) Paragraph 14 of the draft notice of appeal relates to my decision to order the 1^st defendant to make disclosure of information and documents mentioned in paragraph 5 above.  This ground of appeal states as follows: “Given that the ex parte injunction order ought to have been discharged, the learned judge erred in making the disclosure orders sought by the Plaintiffs.”  It is apparent that this ground of appeal cannot stand on its own.  Its validity depends on an acceptance that the ex parte injunction order ought to have been discharged in the first place.

7.Mr Jin Pao (for the 1^st defendant) has, in his written submissions dated 13 April 2015 and oral submissions this morning, developed some of the aforesaid grounds of appeal.  Those submissions were, by and large, the same submissions which were advanced on behalf of the 1^st defendant at the hearing on 13 January 2015, and dealt with by me in the Decision.  There is no useful purpose for me to re-analyse those submissions.  With the exception of paragraphs 12 and 14 of the draft notice of appeal, I am not convinced that the other proposed grounds of appeal have a reasonable prospect of success, or there is any other reason in the interests of justice why the appeal shall be heard on those grounds.

8.Paragraph 12 of the draft notice of appeal relates to the 1^st defendant’s allegation that the plaintiffs obtained an order from the Singapore court to restrain Miss Lam Ching Ching from giving evidence on behalf of the 1^st defendant or otherwise assisting the 1^st defendant in these proceedings and in the arbitration.  The 1^st defendant argues that the plaintiffs’ failure to disclose the existence of the restraint order that it had obtained against Miss Lam and what had transpired in the Singapore proceedings and/or the fact that a material, or potentially material, witness, who can cast doubt on the information provided by the plaintiffs at the ex parte stage, had been restrained by action taken by the plaintiffs in the Singapore court from giving evidence in the present proceedings, amounted to a failure to act in utmost good faith and a violation of their continuing duty to make full and frank disclosure, and demonstrated a lack of clean hands on their part.  The 1^st defendant’s complaints under this ground were dealt by me with in paragraph 52 to 58 of the Decision.

9.Although these complaints were ultimately rejected by me in the Decision, I am satisfied that the 1^st defendant’s proposed ground of appeal in paragraph 12 of the draft notice of appeal is reasonably arguable, or has a reasonable prospect of success.  Also, the law regarding the scope or extent of any continuing duty on the part of a plaintiff who has obtained an ex parte injunction from the court to make disclosure of subsequent material development or fresh relevant information appears not to be fully settled: see Network Telecom (Europe) Ltd v Telephone Systems International Inc [2004] 1 All ER (Comm) 418, at paragraphs 68 to 72 per Burton J, and Spry, The Principles of Equitable Remedies, 9^th Ed, page 518.  This is a point on which guidance from the Court of Appeal would be of practical importance.  I consider this to be an additional reason why in the interests of justice the appeal shall be heard.

10.For the sake of completeness, I should mention that some information relating to the order which the plaintiffs obtained from the Singapore court against (inter alia) Miss Lam appears in Mr Russell Coleman SC’s skeleton argument dated 14 April 2015.  I consider, however, that I ought to deal with the present application on the basis of the information and materials before me on 13 January 2015.

11.In so far as the disclosure order is concerned, I consider it also reasonably arguable that, if the ex parte injunction order ought to have been discharged and a fresh injunction order ought not to be made, the disclosure order sought by the plaintiffs should be refused, although there may also be an argument that the disclosure order can stand on its own.

12.In all, I am prepared to grant leave to appeal but limited only to those grounds as set out in paragraphs 12 and 14 of the draft notice of appeal, which I reckon I have jurisdiction to so order under section 14AA(3) of the High Court Ordinance, Cap 4.  The 1^st defendant is of course at liberty to seek a wider order from the Court of Appeal.

The application for stay pending appeal

13.The principles governing an application for a stay of execution of a judgment pending appeal are well established.  The applicant is required to demonstrate a “good reason” for a stay of execution. Generally speaking, the existence of merely an arguable appeal cannot by itself amount to a sufficient reason to justify a stay.  It is the minimum requirement before a court would even begin to consider granting a stay.  In other words, if the court is not convinced that there exist arguable grounds of appeal, no stay will be granted however exceptional the circumstances may otherwise be justifying a stay of execution.  On the other hand, the existence of a strong appeal or a strong likelihood of success will usually by itself enable a stay to be granted because this would constitute a good reason for a stay.  In most cases, where the court is faced with simply the existence of an arguable appeal, it becomes necessary for the applicant to provide additional reasons as to why a stay is justified.  Commonly, this is done by demonstrating that without a stay the appeal would be rendered nugatory, for example, because of an appreciable risk that the respondent to the appeal would not be able to repay in the event of a successful appeal against a money judgment, or because the failure to grant a stay would have a serious deleterious effect on the applicant.  In considering an application for a stay pending appeal, it would be impractical and even undesirable for the court to go deeply into the merits or strengths of the appeal, although the court must still form a preliminary view of these aspects.  For the above principles, see the judgment of Ma J (as he then was) in Stay Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84.

14.As earlier mentioned, I consider that the 1^st defendant has an arguable appeal in relation to the disclosure order.  If execution of the disclosure order is not stayed pending appeal, the appeal against that order will be rendered nugatory, because once information has been provided to the plaintiffs pursuant to the disclosure order it cannot meaningfully be recalled.  I consider that a good reason has been shown for a stay of execution of the disclosure order.

15.In all, I make an order in terms of paragraph 1 and 3 of the 1^st defendant’s summons dated 8 April 2015, but the leave to appeal granted is limited to those grounds of appeal as set out in paragraphs 12 and 14 of the draft notice of appeal attached to the said summons.  Subject to what the parties may say, I consider that the costs of the present application should be in the cause of the appeal.

Mr Russell Coleman, SC, and Ms Theresa Chow, instructed by Messrs Sidley Austin, for the 1^st to 3^rd plaintiffs

Mr Jin Pao, instructed by Messrs Reed Smith Richards Bulter, for the 1^st defendant