THE JOINT AND SEVERAL TRUSTEE OF THE PROPERTY OF SO CHING WAN v. ASSEN LTD (NOW IN LIQUIDATION) AND OTHERS

CAMP 66/2024, [2025] HKCA 410

On Appeal From [2024] HKCFI 851

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 66 OF 2024

(ON AN INTENDED APPEAL FROM HCB 4475/2002)

____________________

____________________

________________

JUDGMENT

________________

Hon Anthony Chan J (giving the Judgment of the Court) :

1.  There are before the Court two Summonses filed by the Applicant, namely, a Summons filed on 12 April 2024 (“1^st Summons”) seeking leave to appeal against the Judgment of Deputy High Court Judge Reyes SC (“Judge”) dated 18 March 2024 (“Judgment”) and one filed on 26 April 2024 (“2^nd Summons”) seeking leave to appeal against the Judgment out of time.

2.  Having considered the papers and the submissions before the Court, we consider it appropriate to deal with the Summonses on paper without an oral hearing pursuant to O 59, r 2A(5) of the Rules of the High Court, Cap 4A (“RHC”).

Background

3.  The Judgment was concerned with, firstly, the Applicant’s application for review (“Review”) of a taxation review conducted by Master R Lai (“Master”).  The costs in question arose from two judgments decided against the Applicant, one by Deputy High Court Judge William Wong SC dated 6 June 2019 ([2019] HKCFI 1491) and one by the Court of Appeal dated 29 December 2020 dismissing the Applicant’s appeal against that first instance judgment ([2021] 3 HKC 5). 

4.  Secondly, the learned Judge dealt with an application by the Applicant for leave to appeal out of time against an Order of the Master dated 18  July 2022 (“2022 Order”) dismissing his application for discovery (“Discovery Application”) of: (a) the timesheets and time-recording details of the 2^nd to 4^th Respondents’ solicitors (“Respondents’ solicitors”); (b) all documentary evidence of the 2^nd to 4^th Respondents’ agreement to pay the costs and disbursements incurred by the Respondents’ solicitors; and (c) all documentary evidence showing payment by the 2^nd to 4^th Respondents of such costs and disbursements.

5.  After hearing the applications, and for reasons set out in the Judgment, both applications were dismissed by the Judge.  The dismissal of the Review is under appeal (for which no leave to appeal was required) in CACV 144/2024. 

6.  In respect of the refusal by the Judge of leave to appeal out of time against the 2022 Order (“Discovery Decision”), the Applicant’s application to this Court has taken a tortuous route reflecting poor professional standard on the Applicant’s part as well as those of his lawyers.

7.  The Discovery Decision was an interlocutory decision: see Leung So Hung Siem v Carson Wen [2019] 1 HKLRD 1123, [7]-[12].  Leave to appeal against the Discovery Decision has to be obtained pursuant to s.14AA(1) of the High Court Ordinance, Cap 4 (“HCO”).  Pursuant to O 59, r 2B(1) of the RHC, an application for leave to appeal should be made within 14 days from the date of the Order, ie, by 2 April 2024 in this case. Moreover, under O 59, r 2B(2), the application must, so far as is practicable, be made to the Judge.

8.  Furthermore, both O 59, r 14(4) and Practice Directions (“PD”)  4.1, [5], provide that except where there are special circumstances which make it impossible or impracticable to apply to the court below, an application for leave to appeal must not be made to the Court of Appeal unless the Applicant has first applied to the court below but failed.

9.  On 17 April 2024, the Respondents’ solicitors wrote to the Registrar of Civil Appeals (“Registrar”) complaining, inter alia, that: (a) leave to appeal sought under the 1^st Summons should first be obtained from the Judge; and (b) there was no extension of time granted for the application.

10.  After the 2^nd Summons was filed on 26 April 2024, the Respondents’ solicitors wrote to the Registrar again on the same day complaining that: (a) pursuant to O 59, r 2B(6), the Judge had the power to extend the period for making an application for leave to appeal before or after the expiry of the period; and (b) under PD 4.1, [6], applications for extension of time to appeal should be brought in the first instance before the court below. 

11.  On 9 May 2024, requisitions were raised by the Registrar with the Applicant’s solicitors on the matters identified by the Respondents’ solicitors.  A  Summons was eventually filed by the Applicant on 1 August 2024 (“3^rd Summons”) to be heard before the Judge for leave to appeal against the Discovery Decision out of time. 

12.  On 9 August 2024, the 3^rd Summons was dismissed by the Judge with reasons set out in a letter dated 12 August 2024.

The Judgment

13.  The reasons for the Discovery Decision were set out in [4]-[7] of the Judgment as follows :

(1)  There was no justification for the extreme lateness of the appeal.  The Notice of Appeal against the Master’s dismissal of the Discovery Application was issued on 9 February 2024, some 1.5 years out of time.

(2)  The Judge did not accept the Applicant’s explanation for the delay.  Although the Applicant claimed that he did not know of the possibility of appeal against the Master’s decision, ignorance of the law was not an excuse.  Bearing in mind that the Applicant was an experienced insolvency practitioner, he would have known about the possibility of an appeal.  The Applicant’s attempt to explain the delay with vague references to COVID-19 was not accepted as the court was in operation throughout 2023.

(3)  The discovery sought by the Applicant was wide-ranging and could not assist in the Review, which focused on 4 matters raised by the Applicant.  They were referred to in the Judgment as Complaints (1) to (4).  The Discovery Application was essentially a fishing exercise.

The refusal to grant leave to appeal out of time

14.  The reasons given by the Judge were :

(1)    The Applicant’s explanation for the delay in applying for leave to appeal did not justify an extension of time.

(2)  The proposed grounds of appeal had no prospect of success.  The proposed appeal would be one against a judge’s exercise of discretion in relation to discovery, which was essentially procedural in nature.

(3)  The Applicant’s allegation of bias (actual or apparent), which had not been previously raised before the court, was contrived and artificial.

Applicable principles

15.  Pursuant to s.14AA(4) of the HCO, leave to appeal shall not be granted unless the Court is satisfied that the appeal has a reasonable prospect of success, or there is some other reason in the interests of justice why the appeal should be heard.

16.  The principles for determining an application for extension of time to appeal are well established and were summarized by Kwan JA (as she then was) in Lee Chick Choi v Best Spirits Company Ltd, HCMP 371/2015, unrep, 21 May 2015, [19] :

“The legal principles regarding an application to extend time for an appeal are well established. In the exercise of its discretion, the court will take into account the length of the delay, the reasons for the delay, the chances of the appeal succeeding if an extension of time is granted, and the degree of prejudice to the other party if the application is granted. Where the delay is substantial and not wholly excusable, the application must show a real prospect of success on the merits, not merely a reasonable prospect of success. In other words, he would need to demonstrate a strongly arguable case …”.

Length and reasons for delay

17.  As set out above, the steps taken by the Applicant in this appeal are highly unsatisfactory.  The Applicant should have applied to the Judge for leave to appeal against the Discovery Decision (the relevant Order was dated 18 March 2024) by 2 April 2024.  The 2^nd Summons was only filed on 26 April 2024.  The 3^rd Summons was filed on 1 August 2024, nearly 4 months out of time.  After the Applicant was informed of the dismissal of the 3^rd Summons on 12 August 2024, he should have applied to restore the 1^st  and  2^nd Summonses by 26 August 2024 pursuant to the directions of the Registrar.  He only did so on 4 September 2024 after another delay of 9 days. 

18.  In Singh Arjun v Secretary of Justice [2014] 2 HKLRD 678, [12], per Lam VP (as he then was), it was held that :

“…, in the future, litigants and those advising them should be mindful of the approach of the Court in dealing with these applications. Unjustified attempts to sidestep the first-tier stage will not be entertained and this Court will dismiss an application which should be brought in the first instance to the court below. Any delay and costs occasioned by such attempts will have to be borne by the unsuccessful applicant. In such case, such applicant would also have to take the consequence of the delay, even if it means that he would suffer prejudice as a result of his self-generated delay in the application for leave to the court below or in other respects.”

19.  In light of the above dicta, it would not be right to ignore the delay between the filing of the 2^nd Summons on 26 April 2024 and the restoration of the 1^st and 2^nd Summonses on 4 September 2024. 

20.  In respect of the period between 18 March 2024 and the issuance of the 2^nd Summons, the Applicant had put forward the following explanations in his Affirmation filed on 26 April 2024 (“April Affirmation”), the same day as the 2^nd Summons :

(1)  The Judge gave an ex tempore Judgment on 18 March 2024 but the written Judgment was only available on 21 March 2024.

(2)  The Applicant needed time to consider the Judgment with his legal team, but this was delayed by (a) intervening public holidays on 29 March, 1 April and 4 April 2024; and (b) the absence of the Applicant’s counsel from Hong Kong from 25 March to 5 April 2024.

(3)  The Applicant had to prepare for a different matter which was heard on 10 April 2024.

21.  As set out in paras 10 and 11 above, the 2^nd Summons was followed by another complaint of procedural irregularities by the Respondents’ solicitors and requisitions by the Registrar. 

22.  In respect of the delay between 24 May 2024 (when the Applicant’s solicitors confirmed with the Registrar that he would apply to the Judge for leave to appeal out of time) and the issuance of the 3^rd Summons on 1 August 2024, ie, a period in excess of 2 months, the Applicant had filed an Affirmation on 1 August 2024 (“August Affirmation”) in support of the 3^rd Summons. 

23.  In the August Affirmation, apart from repeating the explanations for delay set out in the April Affirmation and making a new point that the transcript of the taxation review before the Master on 18 July 2022 (“Transcript”) was available on 5 April 2024 and considered by the Applicant and his legal team, there was only an unparticularized suggestion that the Applicant’s solicitors had to consult with counsel to clarify the proper procedures.

24.  In respect of the delay in complying with the directions of the Registrar to restore the 1^st and 2^nd Summonses (see para 17 above), the Applicant had put forward the following explanations in his Affirmation filed on 30 September 2024 :

(1)  The Applicant only received the Judge’s decision declining his application for leave to appeal out of time on 12 August 2024. 

(2)  The Applicant needed time to consult with his legal team and seek advice from counsel, particularly in light of the Judge’s view that the intended appeal had no prospect of success.  However, counsel was not in Hong Kong for a few days in mid-August 2024.

(3)  No prejudice had been caused to the 2^nd to 4^th Respondents as a result of the delay.

25.  We regret to say that none of the reasons put forward by the Applicant constitutes an acceptable explanation for the delay. The Applicant was represented by counsel at the hearing before the Judge on 18 March 2024.  No doubt his legal team was present in court when the Judge gave his ex tempore judgment.  The Applicant has been legally represented in relation to his intended appeal.  None of the grounds set out in the draft Notice of Appeal (see below) raises any complex issue of law or fact.

26.  Further, it was held in Mark Richard Charlton Sutherland v CRB (a firm) [2024] HKCA 331, [19], that pursuing an appeal against a judgment is a serious matter, and the handling of multiple court proceedings at the same time does not constitute a good reason for failing to comply with the time limits prescribed by the court’s rules.

27.  There has been repeated failure by the Applicant to have proper regard to the time limits prescribed by the rules of the court and the directions of the Registrar.  The inexcusable delay is significant.  We turn to consider whether the intended appeal has a real prospect of success.

Proposed grounds of appeal

28.  The proposed grounds of appeal are set out in a draft Notice of Appeal annexed to the 1^st Summons (“NoA”).  It is repetitive and poorly drafted.  Some of the points made are simply bare assertions, eg, the purpose of the Discovery Application was to discharge the Applicant’s duty in the due administration of the Bankruptcy Estate (para 7 of the NoA) and that Application was highly relevant pursuant to the “current insolvency practice” (para 8 of the NoA).  Points of such nature do not merit serious consideration by the Court.  Neither is it necessary to deal with points which are patently unsustainable without any particulars, eg, the Judge ought to have exercised his discretion de novo (para 10 of the NoA).

29.  Essentially, there are 3 grounds of appeal, namely :

(1)  The Judge erred in law in ruling that the Discovery Application was a fishing exercise and not relevant to the Review.  The Judge did not fully consider the Indemnity Principle, which the Applicant alleged was breached by the 2^nd to 4^th Respondents as evidenced by the taxing off of 56% of the costs claimed.  Apart from applying for discovery, it was unrealistic and impossible for the Applicant to produce any evidence to put the Indemnity Principle in issue.

(2)  There was no ignorance of law on the Applicant’s part.  The Applicant was under a misapprehension of procedural law and thus was out of time in seeking to appeal against the 2022 Order.

(3)  The 2^nd to 4^th Respondents did not file any evidence, nor adduced the Transcript at the hearing below.  In the absence of such evidence, the Judge could not have properly dealt with the application for leave to appeal out of time.  The Judge failed to adjourn the hearing pending the availability of the Transcript.

Merits of the proposed grounds of appeal

30.  Two points should first be made.  To begin with, the Judge’s refusal to extend time for leave to appeal against the 2022 Order was made in exercise of his discretion.  This Court will not disturb the Judge’s exercise of discretion unless one or more of the following grounds is established, namely, the Judge had misdirected himself with regard to the principles or the evidence in accordance with which his discretion had to be exercised; he had taken into account irrelevant matters; he failed to take into account relevant ones; his exercise of discretion was so plainly wrong that it is outside the generous ambit within which reasonable disagreement is possible (see New Sparkle Roll International Group Ltd & Anr v Sze Ching Lau & Anr [2024] HKCA 336, [68]).

31.  Secondly, there is no challenge made in the NoA to the identification by the Judge of the 4 Complaints advanced by the Applicant in the Review.  Nor is there any challenge to the Judge’s analysis that the discovery sought would not be pertinent to those Complaints.  Para 7 of the Judgement held as follows :

“…The discovery would not be pertinent to Complaints (1) and (2) Complaint (1) is a question of legal principle, namely, should the Applicant have the benefit of the complimentary brief. It does not hinge on the disclosure of further documents. Complaint (2) is a matter of comparing the hourly rates applied by Master Lai with the hourly rates approved by the Chief Justice. Discovery of documents will not help on that comparison. Complaints (3) and (4) are a matter of evaluating whether the hours charged by solicitors and the briefs charged by counsel were excessive given the nature of the application before Deputy Judge Wong. Discovery will not assist in either exercise.”

32.  This Court is of the view that the Applicant’s intended appeal has no merits, let alone any real prospect of success.

33.  The first proposed ground of appeal does not get off the ground without demonstrating that the Judge was wrong in his analyses of the issues of the Review and the lack of relevance of the discovery sought to those issues.  As pointed out above, these analyses are not challenged in the NoA. 

34.  The Indemnity Principle was explained in Lam Lai Wah Susanna v Pacific Century Insurance Co Ltd [2003] 2 HKC 520, per Yuen JA, [8] :

“It is well-established that the principle upon which costs as between party and party are allowed is that the costs are awarded to the claiming party as an indemnity. If the claiming party is not liable to solicitors for their costs, then he would not be in a position to claim to be indemnified by the other party.”

35.  It was further explained in [10] of Lam Lai Wah that where the claiming party had employed solicitors in the action, it is presumed that it had a prima facie obligation to remunerate the solicitors.  It is for the losing party to rebut that presumption.  This presumption would be rebutted if there is evidence of an agreement made by the solicitors with the claiming party (or a third party) that under no circumstances would it be liable to them for the costs of the litigation incurred on its behalf.

36.  As submitted by Mr Lung, who represented the 2^nd to 4^th Respondents with Ms Ho, the bill in the present case was certified by the Respondents’ solicitors to the effect that the amount claimed in the bill did not exceed the 2^nd to 4^th Respondents’ liability for costs to them[1].  The significance of this was discussed by the English Court of Appeal in Bailey v IBC Vehicles Ltd [1998] 3 All ER 570, at 574j to 575c :

“…As officers of the court, solicitors are trusted not to mislead or to allow the court to be misled. This elementary principle applies to the submission of a bill of costs. If a cap or similar arrangement had applied in this case, I should have expected Rowley Ashworth to have disclosed that fact and to have ensured that the union letter either represented a comprehensive rather than a partial explanation of the facts, or to supplement it with information of their own. They would not have produced and signed a bill of costs which included a claim for ‘reasonable costs’ which would have fallen foul of the indemnity principle.

 The defendants’ request that the plaintiff be required to provide information proving that the indemnity principle had been observed represents pointless satellite litigation.  As there is nothing to suggest that the relationship between the union and the solicitors would have resulted in some form of capping of the fees which the solicitors would have submitted to the union if the claim had failed, the information is sufficient to enable the taxation to proceed on the basis that the figures claimed in the bill of costs do not represent an unacceptable breach of the indemnity principle.”

37.  We are unable to accept that a significant taxing off of the bill of costs in question was per se sufficient to suggest that the Indemnity Principle was breached.  We agree with the Judge that the discovery application was a fishing exercise.

38.  Ground 2 is completely devoid of merits.  The Applicant’s evidence before the Judge was that he “was not aware of [his] right to appeal then” and “[i]f [he] had been made aware of the right to appeal, he would have appealed immediately”.  It was only in about January 2024 when the Applicant was asked by his solicitors whether he had appealed against the 2022 Order that he “became fully aware of [his] right to appeal against [that] decision out-of-time”[2]. We are unable to see how it can be said that the Judge was wrong to have attributed the delay in question to ignorance of the law on the Applicant’s part.

39.  In any event, it is not explained why, despite the Applicant’s evidence, the delay was in fact caused by a misapprehension of procedural law or what difference there is to ignorance of the law.

40.  Ground 3 is equally unmeritorious.  We agree with Mr Lung that there was no obligation on the part of the 2^nd to 4^th Respondents to adduce any evidence at the hearing below.  The burdens for both the Review and the application for leave to appeal out of time against the 2022 Order were on the Applicant. 

41.  As for the Transcript, Mr Chu, who represented the Applicant both here and below, did not in the Applicant’s Short Statement filed on 26 April 2024 (“1^st Statement”) or the one filed 30 September 2024 (“2^nd Statement”) identify any matter contained therein or any part of the Transcript which would have been relevant to Discovery Decision.

42.  Mr Chu had made no suggestion that there was an application by the Applicant to adjourn the hearing before the Judge pending the availability of the Transcript, and it was declined by the Judge.  The notion that the Judge should have adjourned the hearing is a complete red herring. 

43.  For completeness, it should be mentioned that, like the Judge, this Court finds the Applicant’s explanation that he did not know about his right to appeal against the 2022 Order unconvincing in light of his experience as a court user.  

Allegation of bias

44.  This Court is concerned that in both Short Statements, allegations of bias were made against the Judge.  Such allegations were made despite the fact that the NoA contains no allegation of bias. 

45.  The submissions made in the Statements in this regard are muddled because both actual and apparent bias were referred to with no suggestion that they represent alterative cases of the Applicant[3] or that there are separate complaints of bias. 

46.  It is very difficult to understand the basis for the bias allegations.  There is an unspecific allegation that the Judge had misdirected himself during the hearing[4].  It is also alleged that the bias point is supported by the fact that the Discovery Decision was made without reviewing the Transcript[5].  Finally, there is an allegation that it was apparent that the Judge had “casted (sic) his mind and was overwhelmed by the decision of the Master’s decision (sic) which resulted in the Learned Judge’s misdirection during the hearing, adversely impacted the hearing proper”[6].

47.  As was pointed out by the Judge, and echoed by Mr Lung (who also appeared below), no suggestion of bias was ever made at the hearing below.

48.  This Court is in no doubt that the allegations of bias are wholly unmeritorious, and should never have been made by counsel. 

Interest of justice limb

49.  The Applicant also seeks to rely on the second limb of s.14AA(4) of the HCO, ie, there is some other reason in the interests of justice why the appeal should be heard.  It is suggested that the intended appeal has a public interest element, namely, the costs liability of Trustees in Bankruptcy in general[7].

50.  Even assuming the existence of relevant public interest, we are unable to see how the public interest will be served by the ventilation of a hopeless appeal.

51.  For completeness, the Applicant asks for leave to appeal against the Discovery Decision and for the appeal to be heard with CACV 144/2024 (the appeal against the dismissal of Review).  It was held in Wang Yuexian v Xinyang Maojian Group Ltd (formerly known as China Zenith Chemical Group Ltd) [2024] HKCA 660, [32]-[35], that there is no general principle to the effect that if there is an appeal on foot brought as of right, leave should be given for another appeal which may be relevant to be considered in conjunction with the one on foot.  Ultimately, it is a matter of judicial discretion.  In view of the complete lack of merits of the intended appeal, we do not see any sufficient reason to exercise our discretion in favour of the Applicant.

Disposition

52.  For the above reasons, the intended appeal has no merits and it would be futile to extend time and grant leave to appeal. Both the 1^st and 2^nd Summonses are accordingly dismissed.

53.  Costs should follow the event, and we order the Applicant to pay the costs of the 2^nd to 4^th Respondents.  As to the basis of taxation, Mr Lung asks for indemnity costs.

54.  We consider it appropriate to exercise our discretion and order indemnity costs against the Applicant in light of :

(1)  The highly unsatisfactory manner in which the Applicant had conducted these proceedings, as set out in paras 6 to 11 and 17 above.

(2)    Such conduct had resulted in delay, wasted costs and unnecessary burden on the court.

(3)  Groundless claims of bias were made against the court below.

55.  According to their Statement of Costs dated 14 October 2024, the 2^nd to 4^th Respondents seek the sum of HK$244,150.50.  We allow such costs in full under summary assessment on indemnity basis. 

56.  The above costs order, including the assessment of costs, is an order nisi, which shall become absolute unless an application is made to vary the same within 14 days from the date of this Judgment. In the event that an application is made to vary the order nisi, the application shall be dealt with on paper.  The Court will give directions (including the filing of submissions) for the further conduct of the application.  No affidavit or submissions may be filed in support of the application without the Court’s leave.

57.  As these applications are entirely without merit, pursuant to O 59, r 2A(8) of the RHC, we further order that no party may under r 2A(7) request this determination to be reconsidered at an oral hearing inter partes.