杭州日月電器股份有限公司 v. THE REGISTRAR OF COMPANIES AND OTHERS

HCMP 2647/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 2647OF 2014

(ON AN APPEAL FROM HCMP NO. 653 of 2014)

________________________

________________________

_______________

JUDGMENT

_______________

Hon Lam VP (giving the Judgment of the Court):

1.  This is an application by the 3^rd Respondent for leave to appeal against the judgment of Ng J made on 12 September 2014. By that judgment, the learned judge ordered the reinstatement of Cretec Electronics (HK) Limited which had previously been deregistered. The judge refused to grant leave to appeal on 23 October 2014. The 3^rd Respondent applied to this court for leave on the same date. The application is opposed by the Applicant.

2.  After reading the papers, the court raised query by a letter dated 17 November 2014 as to why it is necessary to have leave before an appeal could be launched.  The 3^rd Respondent replied by a statement of 3 December 2014.  However, he did not explain in that statement why his intended appeal should be regarded as interlocutory as opposed to final.  Leave to appeal is required in respect of the former but not the latter.

3.  The court directed the matter to be listed for hearing and it was indicated that if the matter is final in nature, the 3^rd Respondent needs leave to appeal out of time.

4.  We have heard the parties on 30 January 2015. The test for determining whether a judgment is final or interlocutory for the purpose of section 14AA(1) of the High Court Ordinance is the application test: see Shell Hong Kong Ltd v Yeung Wai Man Kiu Yip Co Ltd (2003) 6 HKCFAR 222. An order is a final order if, whatever the outcome of the application, it is finally determinative of the entire cause or matter or finally determinative of a crucial or substantive issue in the cause or the matter. One has to examine what is the cause or matter in these proceedings by reference to its originating process, see Lehman & Co Management Ltd v Effiscient Ltd CACV 140 of 2011, 3 Oct 2011 at paras 9 to 10. The originating summons for the proceedings below (HCMP 653 of 2014) sought the reinstatement of the company as final relief.  That relief was granted by the judge.  An appeal against the judgment of the judge must be final in character.  As such, leave to appeal was not required originally. However, due to the lapse of time, the time limit for appeal has expired and the 3^rd Respondent now needs leave to appeal out of time.

5.  The factors for considering whether leave should be granted out of time are: (1) the period of delay; (2) reasons for delay: (3) merits of the intended appeal; and (4) prejudice to the other party.

6.  5 grounds were raised in the document “上訴狀” attached to the affirmation of the 3^rd Respondent of 24 October 2014 as “證據二”.  He said firstly the reinstatement of the company has no bearing on the progress of the litigation in the mainland.  Secondly, he had lost confidence in the Hangzhou court.  Thirdly, he said the company did not owe any money to the applicant. Fourthly, he said it was wrong for the applicant to suggest that the company still carried on activities after 19 Jan 2011.  Fifthly, he referred to the fact that the deregistration of the company was done by the unanimous resolution passed by all the shareholders of the company.

7.  Having considered the arguments advanced by the 3^rd Respondent to challenge the judgment of Ng J, we are of the view that the intended appeal has no merit.  In light of the order of the Hangzhou court (which in effect stayed the proceedings until the reinstatement of the company), it must be correct for the judge to reinstate the company.  Hong Kong courts will not be involved in the debate as to whether there are other means to continue with proceedings in the mainland even if the company is not reinstated. It suffices to say that given the role played by the company in the relevant transactions, the need for it to be reinstated is obvious.

8.  The fact that the company was deregistered with the unanimous consent of all the shareholders is not germane in light of the reasons for reinstatement as explained in the judge’s judgment of 12 September 2014.

9.  The other matters are to be litigated in the mainland legal proceedings.  In that regard, the judge had correctly applied the principles set out in Re Active System Trading Ltd HCMP 5173 of 2003, 17 May 2004. In that case, it was held by Tang J (as Tang PJ then was) that for the purposes of reinstatement of a company under section 291AB (the relevant section of the predecessor ordinance to the current Companies Ordinance, thus the equivalent of section 767 of the current Companies Ordinance), it was sufficient that the applicant had a bona fide dispute against the company. If there was a genuine claim against a de-registered company, the circumstances would have to be very unusual for the court to refuse to reinstate the company. His Lordship also held that in an application for reinstatement, the court should leave the parties to resolve their substantive differences in the appropriate forum and in the appropriate way.

10.  The substantive questions between the parties, which will have to be tried in the mainland legal proceedings, are whether the company or the 3^rd Respondent owed the applicant the sums it claimed and whether the company had transferred assets to the 3^rd Respondent.  These issues cannot be resolved in the context of the application for reinstatement and Ng J, quite rightly, did not attempt to resolve the same. The judge was also, quite rightly, satisfied that there are bona fide disputes.

11.  Whether the company continued to carry on activities after 19 Jan 2011 is beside the point. 

12.  Hence, even though the delay might be attributable to the 3^rd Respondent’s misapprehension on the character of the judgment below (notwithstanding he was legally represented at that stage), we do not think this court should extend the time for a hopeless appeal to be advanced.   Such an appeal would inevitably delay legal proceedings in the mainland which can be regarded as a prejudice to the applicant.

13.  For these reasons, the application by the 3^rd Respondent is dismissed with costs.