ACADA DEVELOPMENT CO LTD v. GOLD WAY TRADING CO LTD

Headnote

    The Court of Appeal has jurisdiction to hear an appeal from the grant or refusal by a judge of leave to appeal under S 23 of the Arbitration Ordinance - Cap 341.

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R U L I N G

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Hunter, J.A.:

Ruling on Jurisdiction

1. On 8th April 1988 the arbitrator, Mr Anthony Dicks, made an interim award adverse to Acada Development Co Ltd the respondent buyers, and in favour of the claimant sellers Gold Way Trading Co Ltd. On 13th October Sears J refused the buyers leave to appeal against that decision. The buyers now appeal to this Court. The sellers object that the order of Sears J is in effect final and that this Court has no jurisdiction to hear any appeal.

2. The matter turns upon the true construction of two enactments which closely follow earlier legislation in the UK. The first is section 14 of the Supreme Court Ordinance (Cap 4) whose progenitors were first sections 28 and 31 of the Judicature Act 1925, and after 1st January 1982 sections 16 and 18 of the Supreme Court Act 1981. The relevant parts of section 14 provide :-

"14. (1)   Subject to subsection (3), an appeal shall lie as of right to the Court of Appeal from every judgment or order of the High Court in any civil cause or matter.

(3)    No appeal shall lie-

(a)    from an order of the High Court allowing an extension of time for appealing from a judgment or order;

(c)    from a judgment or order of the High Court, where it is provided by any Ordinance or by rules of court that the same is to be final;

(ea)    except as provided by the Arbitration Ordinance, from any decision of the High Court-

(i)    on an appeal under section 23 of that Ordinance on a question of Taw Arising out of an arbitration award;".

There are no material differences between the Hong, Kong Ordinance and the UK Statute. The express arbitration exception was added late in both jurisdictions. In the UK it was first enacted in section 18(1) (g) of the Supreme Court Act 1981 without first being added by amendment to section 31 of the Judicature Act 1925. In Hong Kong our provision was enacted in July 1987.

3. It is not in dispute that the proceedings before Sears J constituted "a civil cause or matter" or that his refusal of leave was "an order" in such proceeding. It is equally plain that this order does not fall within exception (ea) because he has given no "decision" on the appeal. The argument was that upon a line of authority originating in Lane v Esdaile [1891] AC 210 such an order was either not within the intent of section 14(1) or that for the avoidance of absurdity a further restriction should be implied into section 14(3).

4. The second enactment is section 23 of the Arbiration Ordinance (Cap 341) which was part of the Arbitration (Amendment) Ordinance 1982 passed on 11th March 1982. It is necessary here to look at the chronology, and the relationship between the Hong kong and UK Legislation, in rather more detail.

5. On 4th April 1979 the Arbitration Act 1979 was enacted in the UK. Section 1 of that Act was the progenitor of section 23 of the Hong Kong Ordinance. The material provisions of section 1 of this Act - are as follow :-

(1)    This abolished existing modes of the appeal.

"(2)    Subject to subsection (3) below, an appeal shall lie to the High Court on any question of law arising out of an award made on an arbitration agreement;.....

(3)    An appeal under this section may be brought by any of the parties to the reference-

(a)    with the consent of all the other parties to the reference; or

(b)    Subject to section 3 below, with the leave of the court.

(4)    The High Court shall not grant leave under subsection (3) (b) aboveunless it considers that, having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights on one or more of the parties to the arbitration agreement; and the Court may make such leave which it gives conditional upon the applicant complying with such conditiohns as it considers appropriate.

(7)    No appeal shall lie to the Court of Appeal from a decision of the High Court on an appeal under this section unless-

(a)    the High Court or the Court of Appeal gives leave; and

(b)    it is certified by the High Court that the question of law to which its decision relates either is one of general public importance or is one which for some other special reason should be considered by the Court of Appeal".

Section 23(1) of the Hong Kong Ordinance was to the same effect as subsection 1; and section 23(2), (3) & (4) were identical to their corresponding subsections. But there is a material difference in subsection 7 . In Hong Kong section 23(7) follows section l(7) only to the end of (a); (b) was not enacted.

6. The first recorded application for leave to appeal was made in The Nema. Robert Goff J granted leave, [1980] 1 Lloyds Rep 519. His decision was appealed. A brief note to the report of Robert Doff J's decision records that Lord Denning MR held that the court had jurisdiction to interfere but declined to do so. We have no details of the arguments put before the court, but haying regard to the identity of the experienced commercial counsel who appeared, I assume that the Lane v Esdaile line of authority must have been referred to in order to enable the jurisdiction argument to he mounted at all. The court must I think have concluded that the restriction in section 1 (7) applied only to a decision on the appeal and not to an application for leave; that there was no express restriction upon the right of appeal in that respect; and that no such restriction should be implied in either section 1 of the 1979 Act or section 31 of the Judicature Act.

7. When the substantive appeal in The Nema reached the House of Lords, by leave of the House to resolve the differences of opinion which had arisen under this section, Lord Diplock said :-

"If ever there was a case which under the new procedure ought never have been allowed to get any further than the arbitrator award, this was one."

But no criticism was directed to the Court of Appeal for entertaining the first appeal. That decision was also assumed to be correct by the English Court in the Rio Sun [1982] 1 WLR 158 and the Wenjiang [1982] 1 LloydS Rep 128. In this field I should be slow to differ form the albeit persuasive authority of decisions of the Court of Appeal in England, which have survied the scrutiny of the House of Lords on a jurisdictional issue. Finally, this court made the same assumption in Attorney General v Technic Construction Co Ltd [1986] HKLR 541.

8. Section 148 of the Supreme Court Act 1981 added a new subsection to section 1 of the 1979 Act namely subsection (6A). This provided:-

"Unless the High Court gives leave, no appeal shall lie to the Court of Appeal from a decision of the High Court-

(a)    to grant or refuse leave under subsection 3(b) or 5(b) above; or

(b)    to make or not make an order under subsection (5) above".

A similar amendment was made to section 2 which corresponds to our section 23A. It may be significant that this amendment did not take the form of making the High Court Order "final" which the sellers contended was the true pre-amendment position. An appeal is permissible with leave. So if the seller argument is correct, Parliament was not reversing the decision in The Nema, which was the view of Sir John Donaldson MR in National Westminster Bank PLC v Arthur Young McClelland Moores and Co [1985] 1 WLR 1123, 1125; or reducing the number of appeals, which was the view of Mustill LJ in Aden Refinery Co Ltd v Ugland Mangement Co Ltd [1987] QB 650, 662, but on the contrary was creating a right of appeal when none had previously existed. I cannot agree, and prefer the views of Donaldson MR and Mustill LJ.

9. The Arbitration Amendment.. Ordinance 1982 was enacted after the UK Supreme Court Act 1981, and after its amendment to section l of the Arbitra . ti . on Act 1979. Significantly section 23 :-

(a)    precisely, followed the UK section 1 in the subsections (2), (3) and (4);

(b)    did not incorporate the new section 1(6A);

(c)    did not incorporate in subsection 7 section 1(7) (b) which enables the High, Court by refusing a certificate to prevent any appeal. Section 23A followed the same pattern in not enacting all the UK restrictions. The form of these amendments necessarily suggests a decision not to incorporate the additional appellate fetters contained in subsections (6A) and 7(b) of the UK Statute. The view would seem to have been taken that they were not appropriate in Hone Kong where conditions differed markedly from England both in the number of applications to be expected and in the breadth of local commercial experience. In my judgment therefore the seller's objection fails upon what I regard as the true construction of section 23.

10. I reach the same conclusion upon the true construction of section 14 of the Supreme Court Ordinance, because I can see no justification for reading into section 14(3) additional words of exclusion relating to arbitrations beyond those which now appear in subsection (ea). The principle of Lane v Esdaile has no direct application. As was noted in the Aden Refinery case, that was a case where the Court of Appeal had refused leave to appeal to the House of Lords; it was, in UK terminolgy, a subsection 6A not a subsection 3 situation. Other cases relied upon either fell outside the ambit of section 14 as not involving judgments or orders, eg The National Westminister Bank case and Podberry v Peak [1981] 1 Ch 344, 351; or are covered by the express terms of section 14(3)(c) because the order was final eg Kay_v Briggs [1889] 22 QBD 343. The only case which might on one reading support the sellers objection is ex-parte Stevenson [1892] 1 OR 609. There the court seems to have extended Lane v Esdaile when apparently applying it, and felt able to resort to the principle of construction sometimes called the presumption against absurdity see Maxwell Interpretation of Statutes 12 edition n 210. The Court therefore treated as final an order which did not fall within the equivalent of section 14(3). But the Court was there construing a very special statutory provision which seems almost to have required the equivalent of a certificate from the High Court. In relation to the grant or refusal by the High Court of leave to appeal from the decision of an arbitrator, I can see no justification for resorting to that principle of construction, or for treating every appeal as necessarily "needless" or "frivolous".

11. For these reasons I world rule that the Court has jurisdiction to entertain this appeal.

Fuad, V.-P.:

12. I agree.

Clough, J.A.:

13. 1 agree that this court has jurisdiction to entertain, this appeal.

14. I arrive at that conclusion notwithstanding my doubts regarding the soundness of the decision of the English Count of Appeal in The Nema [1980] 1 Lloyds Rep. 519 (C.A.). I feel that there is considerable force in the, proposition that, as a matter of interpretation, where an act or an ordinance confers a right of appeal to the High Court from an arbitrator's decision with the leave of the High Court and does not also confer express power on the Court of Appeal to grant leave or to entertain an appeal from the decision of the High Court granting or refusing leave, then the decision of the High Court is intended to be final because otherwise the check imposed on appeals by the provision for leave becomes illusory. I have difficulty in not accepting the argument that that is the effect of Lane v. Esdaile [1891] A.C. 210 (H.L.) as applied in Ex Parte Stevenson [1892] 1 Q.B. 609 (C.A.): c.f. the following dictum of Sir John Donaldson M.R. in Bland V. Chief Benefit Officer [1983] I W.L.R. 262 (C.A.) at p.266 F expressing his understanding of part of the reasoning of the Court of Appeal in Stevenson:

"The court held that the grant or refusal of leave to appeal is^-a very special kind of decision from which prima facie there can be no appeal, and, as Lord Esher M.R. said for the reasons set out in the judgments, it would require express words to enable any appeal to be brought."

15. In the 1979 Supplement to the 19th edition, of Russell on Arbitration, which was published soon after the passing of the Arbitration Act 1979, the editor (Mr. Anthony Walton Q.C.) seems to have had the principles enunciated in Lane v, Esdaile and Stevenson in mind when, at the reference to page 510, he expressed the view that the Act prohibited appeals sub silentio from the decision of the High Court granting or refusing leave to appeal from an arbitrator under section 1(3)(b) of the Act.

16. However those principles were evidently not considered to be applicable by the Court of Appeal in The Nema. In the report of chat care in [1980] 1 Lloyds . Rep, at p.522 Lord Denning M.R. is reported as holding that the Court of Appeal did have jurisdiction -to entertain such an appeal. No argument or reasons for this decision are reported. Moredver when the case was first reported in the Times newspaper on the 16th February 1979 Lord Denning is reported as saying merely ''that an appeal probably lay to the Court of Appeal in such a case" and that "Assuming that there was jurisdiction" the court would not alter the judge's decision to grant leave to appeal.

17. This court always regards any decision of the English Court of Appeal as persuasive authority which it would be slow to depart from, although it is not bound by such a decision: see de Lasala v. de Lasala [1980] A.C. 546 (P.C.) at p.557. The absence of, any reported reasons -for the decision in The Nema, in particular, the absence of any' indication why the Lane v. Esdaile line of authority was not applied, has caused me grave concern. However in the end I have felt constrained to attach decisive weight to the fact that, as Hunter J.A. has pointed out, the decision in The Nema on the jurisdictional issue was never challenged but applied during its short life span, and it survived the close scrutiny of the House of Lords.

18. Furthermore a proper understanding of the judgments in National Westminster Bank Plc. v. Arthur Young McLelland Moores & Co. [1985] 1 W.L.R. 1123 (C.A.), upon which Mr. Mills-Ovens relied, indicates than the highly qualified suggestion by Megaw L.J. at p. 1125 that the decision in The Nema was made per incuriam is solely referable to the attempt to extend the scope of that decision to the granting or refusal of a certificate under section 1 (7) of the Arbitration Act 1979 despite the authority of Gelberg v. Miller [1961] 1 W.L.R. 459 (H.L. ) .

19. In the absence of any trace of disapproval of the Nema decision by the eminent minds in the English judiciary who had ample opportunity to voice such disapproval, I have respectfully deferred to their apparent: acceptance of that decision and to the views of the other members of this court when agreeing that this court has jurisdiction to entertain this appeal.