LAI YUET CHUN v. SUPER DELUXE INTERNATIONAL LTD AND OTHERS

HCCW 186/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 186 OF 2001

____________

____________

_____________

D E C I S I O N

_____________

1. This is a summons issued by the 2nd to 4th respondents herein on 24 June 2003 under section 14(3)(e) of the High Court Ordinance, Cap. 4, seeking leave to appeal from a decision I made only in respect of costs handed down on 3 June 2003.

2. No supporting affirmation was filed with the summons, no draft Notice of Appeal was provided by the respondents. The grounds of the proposed appeal appear only in the written submissions of counsel for the respondents served the day before the hearing.

3. It was submitted by Mr Pat Lun Chan, who appears for the respondents, that the test for leave to appeal in this situation is that leave will normally be granted unless the grounds of appeal have no realistic prospects of success, founding himself on principles as set out in O. 59 r. 14 and paragraph 59/14/7 of the Hong Kong Civil Procedure 2002 Vol. 1.

4. That may be correct up to a point. It must, however, be emphasised that the proposed appeal relates to the exercise of a discretion of the Court of First Instance. An appellate court is always slow to interfere with the exercise of a discretion entrusted to a judge at first instance, it is even more slow to interfere when that discretion is exercised with regard to costs. To justify an appeal as to costs only, the appellate court must be satisfied that the judge at first instance has taken into account wholly extraneous and irrelevant matters or has acted unjudicially in that his decision was so aberrant that no reasonable judge regardful of his duty could have reached it (per Cons JA in Chen Hsiao Mei Oung Lilian v. Chen Shih Ta Michael [1992] 1 HKC 40). In Choy Yee Chun (the representative of the estate of Chan Pui Yiu) v. Bond Star Development Ltd [1997] HKLRD 1327 at 1337, Stock J (as he then was) has put it this way:

"It is well established that this Court will not interfere with the exercise of a judge's discretion in the award of costs unless it be shown that he failed to exercise the discretion, or exercised it upon a false principle, or did not exercise it judicially."

5. The burden on a party seeking leave to appeal in this situation is thus a heavy one. In asking myself if the proposed appeal would have any realistic prospects of success, I must be guided by the approach in the above cases of the Court of Appeal. The question I ask is whether the respondents have shown that I had not exercised my discretion in awarding costs in the manner that I did, in that I had taken wholly irrelevant matters into account, or whether they have shown that I had exercised my discretion unjudicially, in that I was plainly wrong.

6. I turn to the grounds of the proposed appeal.

7. The first ground is that I should have decided the issue as to costs on a "truncated" form of hearing, based on affidavit evidence or witness statements and I should not have heard oral evidence or allowed cross-examination on affidavits.

8. I cannot see any justification for this complaint from the respondents. As pointed out by Ms Linda Chan, who appears for the petitioner, it was the respondents' leading counsel who had submitted at the hearing that the court should receive evidence and make a finding on the petitioner's entitlement to the reliefs sought for the purpose of ruling on the costs liability of the petition generally (see paragraphs 12 and 13 of my decision). Mr Chan, who did not appear for the respondents at the hearing, should at least have ascertained from his instructing solicitors what were the submissions made on behalf of the respondents at the hearing. If he had read the written submissions of the respondents' leading counsel dated 26 May 2003, paragraphs 2 to 11, he could have been left in no doubt as to the approach which the respondents had asked the court to adopt at the hearing.

9. I see no prospect of success on the first ground of the proposed appeal. In view of the stance taken by the respondents at the hearing, I am not persuaded that it would be appropriate for the respondents to ask the Court of Appeal to adopt a different or a narrower approach in receiving material for the purpose of ruling on costs, or to clarify the law in Ta Tung China & Arts Ltd v. Fontana Restaurant Ltd [1999] 1 HKLRD 404, as the respondents would wish the Court of Appeal to do.

10. The second ground, as I understand it, is that there was an abuse of the process of the court in that it was unreasonable for the petitioner to seek winding-up relief in view of the respondents' open offer to purchase her shares by letter dated 2 April 2001. It was submitted that the respondents' liability for costs should have ceased on 2 April 2001. It was further submitted that the court should not have made separate orders for costs in respect of the respondents' summons to strike out the petition and in respect of the petitioner's summons for specific discovery.

11. Whether the petitioner had acted unreasonably in seeking winding-up relief was considered at length in my decision at paragraphs 33 to 39. Whether the petitioner had acted unreasonably in pursuing the proceedings notwithstanding an open offer to purchase her shares made on 2 April 2001 was considered in detail in the decision at paragraphs 21 to 33. I had ruled there was no abuse of process on the petitioner's part. I had rejected the submission that the petitioner should be awarded costs up to 2 April 2001, alternatively 7 September 2001, as I took the view that the offers on those dates do not constitute reasonable offers, see paragraphs 46 and 47 of the decision. It was submitted by Mr Chan that in so ruling, I had taken an extraneous matter into account in respect of the shareholders' loans, in that this was not pleaded in the petition. I am quite unable to see how that could be regarded as extraneous. This matter was dealt with in paragraphs 28 and 29 of the decision.

12. I am not persuaded that there are realistic prospects of establishing that I had taken any irrelevant matter into account or that I had exercised my discretion unjudicially or on false principles.

13. I also fail to see any valid basis for the complaint that I should not have made separate orders for costs in relation to the respondents' summons for striking out and the petitioner's summons for specific discovery. As pointed out by Ms Chan, a determination on the costs of the strike out summons was necessary as both the petitioner and respondents were seeking costs of this summons. The same applies to the summons for specific discovery.

14. The last ground of the proposed appeal would appear to be that the respondents should not be liable for the petitioner's costs after 2 April 2001 or 29 September 2001 with the offers made on those dates by the respondents. This submission was made by the respondents at the hearing and rejected for the reasons given in paragraphs 26 and 47, 24 to 32 of the decision.

15. It has not been shown that the respondents have any realistic prospects of success in establishing that the court had not exercised its discretion in awarding costs in that extraneous matters were taken into account or that the discretion was exercised unjudicially.

16. For the above reasons, I dismiss the application for leave to appeal.

17. I award costs of the application to the petitioner to be paid forthwith by the 2nd to 4th respondents. I assess the petitioner's costs of this application on a gross sum basis at HK$20,000.00.