Beijing Tong Gang Da Sheng Trade Co Ltd v. Allen & Overy (A Firm) and Another

CACV 34/2014 AND CACV 124/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS. 34 OF 2014 AND 124 OF 2014

(ON APPEAL FROM HCA NO. 1491 OF 2011)

________________________

________________________

(Heard together)

________________________

JUDGMENT
________________________

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

1.On 22 May 2015, we handed down judgment in CACV 34/2014 (an appeal against a strike out order) and CACV 124/2014 (an appeal against an order dismissing a joinder application), which were heard together. We set aside the strike out order and the order dismissing the joinder application and gave leave to Greater Beijing Region Expressways Ltd (“GBRE”) to be substituted as the plaintiff in the action in place of Beijing Tong Gang Da Sheng Trade Co Ltd (“the plaintiff”) and that the amended writ and statement of claim be amended accordingly. We made these orders nisi on costs: we did not disturb the costs orders of the judge below in favour of the 1^st and 2^nd defendants on the strike out and joinder applications; for the costs of the two appeals, we made a global order awarding costs to the plaintiff and GBRE, but reduced the costs by one-third[1].

The application to vary the costs orders nisi

2.On 4 June 2015, the plaintiff and GBRE issued a summons to vary the costs orders nisi as follows:

(a) the costs of the joinder application be paid by the 1^st and 2^nddefendants forthwith, such costs to be taxed if not agreed; and

(b) the costs of the appeals be awarded to the plaintiff and GBRE in full and be paid by the 1^st and 2^nd defendants forthwith, such costs to be taxed if not agreed.

3.Mr Carolan submitted on behalf of the plaintiff and GBRE that as the appeal against the dismissal of the joinder application was wholly successful, the appellants should have the costs of the hearing below of the joinder application on 25 April 2014 and the costs of the appeals should not have been reduced by one-third “to take into account points not taken below and the course the plaintiff’s former counsel had invited the judge to take”[2].

4.He contended this court has slightly misinterpreted the sequence of events in §72 of its judgment.  Former counsel of the plaintiff and GBRE had not asked the judge “to defer considering the joinder application until judgment was available on the strike out application”, as stated in §72.  What actually happened was that at the conclusion of the hearing on 28 January 2014, when both the strike out and joinder applications were before the judge, the judge ordered the writ and the statement of claim be struck out there and then with reasons to be handed down.  Former counsel for the plaintiff and GBRE then asked to be heard on the joinder before the order pronounced by the judge was to be drawn up[3].  Mr Carolan submitted it is not a sufficient reason to preserve the judge’s award of costs to the defendants that the plaintiff and GBRE had asked to be heard on the joinder before the order on strike out was to be drawn up.

5.Mr Carolan referred to the written submissions of GBRE before the judge for the joinder hearing on 25 April 2014 and made the point that its “primary argument” – that there was no limitation bar given the same cause of action had originally been brought by the assignor well within time – which was rejected by the judge[4] had succeeded on appeal.  The only difference was that the judge rejected this argument by reasoning that the assignor had abandoned its claim while this court disagreed.  As the relevant points were taken before the judge and the joinder appeal has wholly succeeded, the costs of the appeals need not have been reduced by one-third.

6.Mr Carolan relied also on a letter of the solicitors for the plaintiff and GBRE to the defendants on 25 February 2013 proposing to cancel the assignment of the claims in HCA 1491/2011 to the plaintiff (“the Assignment”) and the assignor GBRE would continue with the action.  The defendants did not accept the proposal and instead issued the summonses to strike out.

7.We do not think we have misinterpreted in any way the sequence of events in the court below, which was summarised in §23 of the Judgment and was based on §2 of the 2^nd Decision.  It was at the outset of the hearing on 28 January 2014 that former counsel for the plaintiff and GBRE informed the judge he would defer argument on the joinder summons until after judgment on the strike out applications was available.  In §§55 to 56 of the Judgment, we contrasted the approach and position taken by the former counsel before the judge with that of Mr Carolan taken on appeal.  Because of the position adopted by former counsel, the judge granted the reliefs as sought in the strike out summonses and did not consider the alternative of amending the writ and statement of claim to add GBRE as a plaintiff.  As we have mentioned in §55, although former counsel had argued at the first hearing that the judge could have exercised the power under Order 15 rule 7(2) to join GBRE as a party, he did not develop his arguments on joinder in full.  We took the view in §72 these are matters which should be taken into account.

8.As for the letter of 25 February 2013, we are not inclined to give any weight to this given all the circumstances.  As pointed out by Mr Dawes, SC, the proposal to cancel the Assignment and reinstate GBRE as plaintiff was never the plaintiff’s formal position in response to the strike out applications.  The plaintiff and GBRE even entered into a deed of amendment, confirmation and ratification the day before the hearing on 28 January 2014, not to cancel the Assignment, but to change the division of the proceeds in the action.

9.We are not persuaded by Mr Carolan there is any sufficiently cogent reason to disturb the judge’s costs order regarding the joinder application.

10.As for the costs of the appeals, when we made our order nisi we were alive to the fact that the arguments on limitation advanced below had succeeded on appeal.  The costs order on appeal was a global order for the two appeals.  We have rejected the arguments in the strike out application that the finding of champerty was erroneous, and those arguments featured significantly in the hearing before us.  We do not think it right to award all the costs of the appeals to the successful appellants.  We decline to vary the order nisi regarding the costs of the appeals.

11.The summons also seek an order that the amendments to the amended writ and statement of claim by way of substitution of the plaintiff be made in the absence of written submission from the defendants or, as the case may be, such amendments do await consideration of submissions and compliance with terms, if any, as referred to in §73 of the Judgment.  As the defendants have since indicated they will not ask the court to impose terms as conditions to granting leave to amend, and GBRE is content to accept the direction proposed in the defendants’ submissions, there is no need to vary the order made in §71(3) of the Judgment giving leave to GBRE to be substituted as the plaintiff in the action and that the amended writ and statement of claim be amended accordingly.  We would merely give directions at the invitation of the parties that the time for the service of the defence by the defendants is to be extended until 28 days after the disposal of the defendants’ applications for leave to appeal to the Court of Final Appeal or of their appeals if leave to appeal be granted.

12.For the costs of the summons to vary the costs order nisi, we make an order awarding costs to the defendants.

The application for leave to appeal

13.The defendants filed separate notices of motion on 17 and 18 June 2015 seeking leave to appeal to the Court of Final Appeal.  The questions said to be of great general or public importance or which otherwise ought to be submitted to the Court of Final Appeal for determination are identical and read as follows:

“In a situation where the assignor of a cause of action had dropped out of the action originally commenced by it by substituting the assignee in its place but the assignment is void for champerty, to what extent can Order 20 rule 5(1) of the Rules of the High Court be invoked to reinstate the assignor as a plaintiff? Further, does a limitation issue arise if the application is made after the expiry of the relevant limitation period?”

14.Mr Dawes submitted there appears to have been no decided authority in the Commonwealth dealing with the situation where an assignment of a cause of action was declared void for champerty and the assignor, who had earlier removed itself as the plaintiff, applied to be reinstated as the plaintiff after the limitation period had expired.  He contended that the point raised is of great general or public importance as it deals with the proper approach of the court in reinstating the assignor of a champertous assignment as a plaintiff.  Further, the proposed appeal falls within the “exceptional circumstances” required for leave to be granted on the “or otherwise” ground.

15.Mr Dawes submitted that the proposed appeal is reasonably arguable.  In gist, as the Assignment was upheld by this court to be champertous, GBRE’s cause of action was not validly assigned to the plaintiff, so the plaintiff did not assert and could not have asserted GBRE’s cause of action when it was substituted as plaintiff in place of GBRE and the Judgment was wrong to hold otherwise in §63.  Asia-Pac Infrastructure Development Ltd v Shearman & Sterling (a firm) [2012] 3 HKLRD 321 is distinguishable as the assignment there was valid and no new party was sought to be introduced.  He contended that a limitation issue arises when GBRE purports to re-assert the cause of action by seeking to be reinstated as the plaintiff after the limitation period had expired.

16.We are not persuaded that any question of great general or public importance arises in the present context.  The proposed appeal is concerned with procedural issues that arose in special circumstances.  As submitted by Mr Carolan, the point decided in the Judgment only arose because the assignee had been substituted for the assignor instead of being added as an extra plaintiff.  And as observed in Massai Aviation Services & Anr v The Attorney General [2007] UKPC 12 at §1: “If the assignment was void the assignor could simply continue the action, which had already been begun before the assignment took place.”

17.We do not accept Mr Dawes’ contention there is no room for the assignor of a legal assignment to remain as a plaintiff, having assigned the cause of action.  It is permissible to plead inconsistent alternatives of fact under Order 18 rule 12A.

18.For the above reason and because we do not think the proposed appeal is reasonably arguable as the action was commenced in time and no new cause of action is sought to be introduced (as explained in the Judgment at §§63 to 68), we decline to exercise our discretion to grant leave to appeal on the limb of a question of great general public importance.

19.We also refuse leave on the “or otherwise” limb.  We are not satisfied there are exceptional circumstances to justify the granting of leave.  The defendants have not stated clearly why it is suggested that the matters in question may support leave to appeal under this limb (Dr Leung Shu Piu v Medical Council of Hong Kong [2014] 3 HKLRD 328 at §14).  In any event, it is the usual practice of this court to leave it to the Appeal Committee of the Court of Final Appeal to decide whether leave should be granted on this limb.

20.The defendants’ notices of motion are dismissed with costs to the plaintiff and GBRE.

Written submissions by Mr Paul Carolan, instructed by Cheng, Yeung & Co, for the Plaintiff (Appellant) and GBRE

Written submissions by Mr Victor Dawes SC, instructed by Deacons, for the 1^st Defendant (1^st Respondent)

Written submissions by Mr Victor Dawes SC, instructed by Kennedys, for the 2^nd Defendant (2^nd Respondent)