CHOW HOW YEEN MARGARET AND OTHERS v. WEX PHARMACEUTICALS INC AND ANOTHER

HCMP 1516/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 1516 OF 2013

(ON AN INTENDED APPEAL FROM HCA NO. 1035 OF 2011)

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BETWEEN

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Hon Fok JA (giving the Judgment of the Court):

Introduction

1.  This is the plaintiffs’ application by summons for leave to appeal against the judgment of Chung J dated 7 March 2013 (the Judgment).

2.  The summons is supported by a draft notice of appeal, affidavit and skeleton.  For their part, the defendants have filed a statement in opposition to the application, to which the plaintiffs have filed a statement in reply.

3.  Under RHC O.59 r.2A(5), the court may determine an application for leave to appeal on the basis of written submissions only. We consider that it is appropriate for us to do so.

The ambit of the application

4.  The application by summons dated 19 June 2013 is in terms for (i) an extension of time to apply for leave to appeal, and (ii) leave to appeal (if necessary) against the Judgment.

5.  Application (i) is appropriate because the plaintiffs did not apply to the Judge below for leave to appeal within 14 days of the Judgment (O.59 r.2B(1) & (2)).  As explained in the White Book (Note 59/2B/2), the court below has no power to extend time, so an out-of-time application must be made to the Court of Appeal and, in such a case, it is appropriate to make a composite application for leave to appeal and for an extension of time for appealing.  This is not, however, an application made under O.59 r.2B(4): although the Court of Appeal may permit an application to be made directly to it under that rule, such an application must be made within 14 days of the judgment sought to be appealed; here, that was not done.

Whether leave to appeal required

6.  The question of necessity for leave to appeal is raised in the summons (at §2) without any grounds being advanced, either there or in the draft notice of appeal, as to why leave is not required.  In a letter dated 21 June 2013, the plaintiffs’ solicitors suggest that leave is not required because of O.59 r.21(2)(i) but accept that there are some matters outside that rule.  On the latter footing, it is common ground that leave is required at least in respect of some parts of the appeal.  However, no submissions are made in the plaintiffs’ skeleton as to why leave is not required and what parts of the appeal might not require leave.

7.  O.59 r.21(2)(i) concerns a judgment determining in a summary way the substantive rights of a party by way of an order refusing to allow an amendment of a pleading to introduce a new claim.  The new claim aspect of the hearing before the Judge was a separate question following from the first issue as to whether good reason was shown for the extension of the validity of the writ.  It seems to us that, if the Judge’s conclusion that no good reason for the writ extension was shown is not appealable because we take the view that a challenge to it does not meet the relevant threshold (as to which, see below), then the mere fact that disallowance of the amendment on its own might have given rise to an appeal as of right does not assist the plaintiffs. Therefore, the question of whether or not leave is unnecessary can be put to one side because, on the principal question on which the plaintiffs must succeed to proceed any further (i.e. extension of validity of the writ), it is not suggested that leave to appeal against the Judgment is not required. Further, and in any event, any appeal as of right is now subject to the discretion of this court whether to grant an extension of time for appealing since any such appeal is out of time.

The appropriate threshold test on this application for an extension of time

8.  The Judgment is dated 7 March 2013.  The 14-day period in which to apply for leave to appeal expired on 21 March 2013 (and, for any appeal as of right, the 28-day appeal period would have expired on 4 April 2013).  The application for leave to appeal was not made until 19 June 2013, nearly three months out of time, and so the delay is substantial. The explanation for the delay given by the 1^st plaintiff on behalf of the plaintiffs, in essence that she did not appreciate the consequences of the Judgment, is not a proper excuse for the delay.  As such, the delay is inexcusable and, in the circumstances, in order to obtain an extension of time for appealing the plaintiffs must show a real prospect of success in the appeal on the merits: SJ v HK & Yaumati Ferry Co Ltd [2001] 1 HKC at p. 129I.

Whether a real prospect of success on the merits shown

9.  The Judge was seized with an application (by the defendants) to set aside the writ extension order made by the Master.  The writ was issued on 21 June 2011 and the application for an extension was made on 13 June 2012, just within its validity; the Master granted the extension on 22 June 2012.  The Judge was also seized with an application (again by the defendants) to disallow the amendments to the writ and statement of claim issued on 17 September 2012 and to set aside the grant of leave to serve the writ out of the jurisdiction on the 1^st defendant and to set aside service of the writ on the 2^nd defendant in Hong Kong and the 1^st defendant in Canada.

10.  As at the date of the application to the Master for an extension of the validity of the writ, the claim in the action (for breach of contract) was already time-barred: the 1^st plaintiff’s 2nd affidavit (at §5) acknowledged that the limitation period for that claim would have expired on 29 June 2011, so at the time the application was made, the writ was still (just) valid but the limitation period had already expired.  Although we think the Judge was mistaken (Judgment §9) in attributing the reason why the case was not category (1) (as defined by Lord Brandon in Kleinwort Benson Ltd v Barbrak Ltd (The Myrto) [1987] AC 597 at pp. 622G-623D) to the fact that the application was not made within the validity of the writ, the case was not category (1) because, as at the date of application, 13 June 2012, the limitation period for the claim in the writ (as it then stood) had, on the plaintiffs’ own case, already expired (on 29 June 2011).  The limitation period having expired, it was necessary for the plaintiffs to show good reason why the writ should be extended.

11.  By the time the case came before the Judge on the defendants’ applications, matters were complicated by the fact that the plaintiffs had, in September 2012, amended the writ and statement of claim to include a claim for fraudulent misrepresentation.  This was a claim which the plaintiffs maintained was one for which, by reason of deliberate concealment within s. 26(1)(b) of the Limitation Ordinance (Cap. 347), the limitation period did not begin to run until May 2012 and so was not time-barred.

12.  Accordingly, in our view, it would have been appropriate first to consider the question of whether the amendments should be disallowed before considering the question of whether the writ extension order should have been set aside.  That is because deciding what cause or causes of action were live in the writ was material to the question of whether good reason for the extension had been shown to exist.

13.  On the question of whether the amendments to the writ and statement of claim in September 2012 should have been disallowed, the Judge rightly identified the case of Global Bridge Assets Ltd and Others v SHK Securities Ltd [2012] 4 HKLRD 474 as laying down the applicable test where a plaintiff seeks to resist disallowance of an amendment on the ground that the claim is said to be time-barred (so that the amendment acts to the prejudice of the defendant because of the doctrine of relation-back), namely whether it can be shown that the defendant has no reasonably arguable defence of limitation to the new claim.

14.  Applying that test, the Judge was plainly not satisfied that the defendants could be shown to have no reasonably arguable defence of limitation to the new misrepresentation claim advanced by way of the amendments to the writ and statement of claim.  As such, following the course adopted in Global Bridge Assets, it was appropriate to leave the plaintiffs to advance the new claim in a fresh action.  This they have done in HCA 537/2013, the writ in which was issued on 3 April 2013.  The question of whether the claim is not time-barred by reason of the operation of s. 26(1) of the Limitation Ordinance can be resolved in that action.

15.  We are not satisfied that a real prospect of success is shown in respect of the appeal against the Judge’s decision to disallow the amendments on the basis of the test in Global Bridge Assets. That is not to say, however, that we consider that the Judge was holding that the new claim was time-barred (as to which, see our further comments below). His decision, being based on Global Bridge Assets, was plainly limited: namely, that there was a reasonably arguable case that the claim was time-barred, not that it was actually determined by him to be time-barred.

16.  Having reached the conclusion that the amendments to the writ and statement of claim should be disallowed, the only claim in the writ was the breach of contract claim for which (on the plaintiffs’ own case) the limitation period had expired on 29 June 2011.  The question then is whether there is an appeal with a real prospect of success against the Judge’s decision to set aside the writ extension order.  That question depends on whether the plaintiffs had shown good reason for the writ extension.

17.  The affidavit supporting the writ extension order does not, in our view, provide a good reason for not serving the original writ.  The reason given appears to be that the plaintiffs were gathering information in order to advance the new misrepresentation claim by way of amendment.  That is not a good reason for withholding service of a writ containing another cause of action, soon to become time-barred.  It has not been suggested that the defendants were evading service or that there was some other reason of substance preventing the plaintiffs from serving the writ.  In these circumstances, we are satisfied that no good reason was or could be shown to justify an extension of the original writ, limited as it should have been (because of the disallowance of the amendments to add the new claim) to the breach of contract claim.

18.  It follows then that the writ extension order was properly set aside and, although the reasons leading us to that conclusion are different to those of the Judge, we are not satisfied that it has been demonstrated that the proposed appeal against the Judge’s order setting aside the writ extension order enjoys a real prospect of success on the merits.

19.  However, having said that, we do not consider that it is correct to read §§26 and 27 of the Judgment as ruling definitively that the plaintiffs’ misrepresentation claim (now advanced in HCA 537/2013) is time-barred, which is a contention the defendants are apparently maintaining in an application seeking to strike out the writ in the new action.  In our view, such a contention is taking the Judge’s comments in §§26 and 27 of the Judgment out of context and attributing consequences to them which were either not intended or not necessary for the Judge to express.  For our part, we think those paragraphs should be understood as explaining the reason why the Judge concluded that the new misrepresentation claim was arguably time-barred (which was all that he needed to decide in order to resolve the question of whether the amendments should be disallowed).

Conclusion

20.  For these reasons, we conclude that the plaintiffs have not demonstrated that the proposed appeal against the orders made by the Judge in the Judgment enjoys a real prospect of success and we therefore refuse to grant an extension of time for appealing and leave to appeal.

21.  Further, since we consider that the application is totally without merit, we make an order under O.59 r.2A(8) that no party may request the determination to be reconsidered at an oral hearing inter partes.

22.  As to the costs of this application, these must be paid by the plaintiffs to the defendants.  The defendants have provided a statement of costs for summary assessment.  The plaintiffs’ solicitors are directed to file the plaintiffs’ list of objections to those costs (if any) within 7 days of this Judgment.