BAKER & MCKENZIE (A FIRM) v. THE GRANDE HOLDINGS LTD AND OTHERS

CACV 102/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO.102 OF 2011

(ON APPEAL FROM HCMP NO. 1971 OF 2010)

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JUDGMENT

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1.  This is an application by the Plaintiff in HCMP1971/2010 for an “unless” order for the enforcement of certain orders made by Deputy High Court Judge Auyeung on 17 May 2011. 

2.  The learned judge ordered 11 defendants to make interim payments of fees pending taxation.  All 11 defendants have filed appeals against those orders which have been fixed for hearing next month.

3.  The present application is made against the 2^nd - 11^th Defendants (whom I shall refer to collectively as “the Defendants”, unless otherwise indicated).  The application is that unless the interim payments are made within the next 7 days (by 21 December 2011), the Defendants’ notices of appeal be struck out.  (The 1^st Defendant has also lodged an appeal but that appeal has been stayed for reasons immaterial to this judgment).

Background

4.  The background to the proceedings is as follows.  The Plaintiffs were retained as solicitors for the Defendants in 2008-9 in respect of various types of work, including litigation, advising on enquiries from the Stock Exchange, compliance with listing requirements and advising on personal matters concerning the 9^th Defendant. 

5.  The Defendants paid some but not all of the Plaintiff’s fees (including disbursements) and terminated the Plaintiff’s retainer.  When the Plaintiff sued for the outstanding fees, the Defendants asserted that the Plaintiff had been negligent in its advice on the 9^th Defendant’s control over the 1^st Defendant company.

Deputy Judge Auyeung’s orders

6.  On 17 May 2011, the learned judge gave judgment against the Defendants by way of summary judgment under O.28 r.4 RHC.  She ordered taxation of the Plaintiff’s bills, and that the Defendants make interim payment of disbursements for counsel’s fees, and interim payment of 50% of the Plaintiff’s profit costs.  There has been no stay of execution of these orders.  However no payment has been made. 

Appeal

7.  On 14 June 2011, the Defendants filed notices of appeal.  This was after a ruling by the learned judge on 7 June 2011 that her order was a final one, and so leave was not required. However she also held that if, contrary to her view, leave was needed, then she would have granted it as the appeal had reasonable grounds of appeal (see para. 9 of the Reasons for Decision dated 7 June 2011).       

Security for costs of appeal

8.  The Plaintiff sought security for costs of the appeal, and a consent order was filed yesterday. 

Present application

9.  On 7 December 2011, the Plaintiff issued the present summons for an unless order that, unless the interim payments are made by 21 December 2011, the appeal be struck out.  This is opposed by the Defendants.

Single judge?

10.  The first issue before me is whether a single judge of this Court has jurisdiction to hear the summons.  The Defendants have argued that the “unless” order (if not complied with) would have the effect of determining the appeal, and so s.35 High Court Ordinance Cap. 4 does not empower a single judge to make such an order. 

11.  Section 35 HCO provides, where material:

“(1) ... in pursuance of the civil jurisdiction of the Court of Appeal, any order or direction not involving the determination of an appeal to the Court of Appeal (including an order or direction giving leave to appeal to the Court of Appeal) may be made or given by a single judge ...”.

12.  In my view, the present application does not involve the determination of an appeal to this Court.  It only involves the determination of the issue whether an unless order should be given.  The appeal would only be “determined” (and not on its merits) if the proposed order is not complied with.  An order for security for costs (if not complied with) would have a similar effect.  It has never been doubted that an application for security for costs can be heard by a single judge of this Court. 

13.  Since this is not an application involving the determination of the appeal, the judgment of the Court of Final Appeal in Champion Concord Ltd v Lau Koon Foon FACV16 and 17/2010, 12 Nov 2011 does not apply.

14.  Having ruled that a single judge is competent to hear this application, I shall now deal with it substantively.

Jurisdiction to strike out appeal?

15.  The Defendants have argued that this court has no jurisdiction to make the unless order, whether under statute or the rules of court.

16.  It is clear that this court does have inherent jurisdiction to strike out a notice of appeal (Hong Kong Civil Procedure 2012, Vol. 1 para. 59/3/6) and accordingly it must have jurisdiction to give orders making such a strike out conditional.  One example would be where grounds of appeal filed in court are unsatisfactory, but where the court can see some merits in the appeal.  The court would be entirely acting within its inherent jurisdiction in giving an order that the notice of appeal be struck out unless proper grounds of appeal are filed within a certain time.  So I do not, with respect, agree that this court has no jurisdiction at all to make the order proposed.      

Exercise of discretion

17.  In my view, the true issue is whether this court should make such an order in the circumstances of the case. In the exercise of my discretion, I take the view that I should not.  The Plaintiff has not made any attempts to enforce the orders by other means.  It has not commenced taxation.  It has not, for example, served statutory demands to wind up the corporate defendants, or to bankrupt the individual defendants (there is no evidence before me that the individual defendants are out of the jurisdiction).  Instead the Plaintiff has tried to strike out the appeal when, as I have mentioned earlier, the judge has already ruled that the Defendants have reasonable grounds.  The effect of making the proposed order would therefore be to stifle a reasonable appeal when other, less draconian, methods of enforcement have not even been attempted. 

Order    

18.  Accordingly I would dismiss the summons.  Costs are to follow the event, to be taxed if not agreed.