CHINA METAL RECYCLING (HOLDINGS) LTD (PROVISIONAL LIQUIDATORS APPOINTED) AND ANOTHER v. CHUN CHI WAI AND OTHERS

HCA 1412/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1412 OF 2013

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D E C I S I O N

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1. I have before me a summons taken out by the 1^st and 13^th defendants on 14 April 2016 (“the Leave Summons”) seeking leave to appeal to the Court of Appeal from an order made by me on 8 April 2016 (“the Order”) dismissing their application for relief from sanction imposed by an earlier unless order made by me on 17 November 2014 (“the Unless Order”).

2. The procedural history of this matter has been set out in two previous decisions given by me on 17 November 2014 and 8 April 2016 respectively.  I do not propose to repeat them here, save to state the following.

3. On 17 November 2014, I made the Unless Order requiring the 1^st and 13^th defendants to comply with a previous disclosure order made by L Chan J on 9 April 2014 (“the Chan Order”) within 14 days of the Unless Order, failing which the defence of the 1^st and 13^th defendants was to be struck out.

4. On 12 October 2015, Deputy High Court Judge Anita Yip, SC held that the 1^st and 13^th defendants had failed to comply with the Unless Order, and the sanction of strike out of the 1^st and 13^th defendant’s defence automatically took effect by reason of their failure to comply with the Unless Order. 

5. By a summons dated 5 November 2015 (“the Relief Summons”), the 1^st and 13^th defendants applied for relief from sanction.  In that summons, the 1^st and 13^th defendants sought:-

(1)  an extension of time to make the application for relief from sanction; and

(2)  relief from sanction imposed in the Unless Order, whereby the amended defence of the 1^st and 13^th defendants shall be reinstated.

6. On 8 April 2016, I dismissed the Relief Summons in its entirety.

7. As explained in paragraph 6 of my written decision dated 6 May 2016 (relating to the 1^st and 13^th defendants’ application that the Order is one that is referred to in Order 59, rule 21(1)(a) of the Rules of the High Court, ie an order determining in a summary way the substantive rights of a party to an action, and hence leave to appeal from it is not required), the dismissal of the Relief Summons meant that the application for extension of time to apply for relief from sanction was refused.

8. The 1^st and 13^th defendants now apply for leave to appeal against the Order.

9. The applicable principles for leave to appeal from an interlocutory order made by a judge at first instance to the Court of Appeal are well established.  Under section 14AA(4) of the High Court Ordinance, leave to appeal from an interlocutory judgment or order of the Court of First Instance shall not be granted unless the court hearing the application for leave to appeal is satisfied that:-

(1)  the appeal has a reasonable prospect of success; or

(2)  there is some other reason in the interests of justice why the appeal should be heard.

10.    The expression “reasonable prospect of success” for the purpose of section 14AA(4)(a) has been interpreted to mean that the prospects of success of the appeal must be more than “fanciful” but do not have to be shown to be “probable”: see SMSE v KL [2009] 4 HKLRD 125, at paragraph 17 per Le Pichon JA.

11. In considering the question of whether the proposed appeal in the present case has a reasonable prospect of success, it is important to bear in mind that whether to grant an extension of time is a matter of discretion which is general in nature. Likewise, a decision whether to grant relief from sanction under Order 2, rule 5 of the Rules of the High Court involves an exercise of discretion, although the matters which are relevant to the exercise of that discretion are set out, not exhaustively, in rule 5(1) of that order.

12. This morning, Mr Tang has raised a few points in support of the Leave Summons. 

13. First, it is said that there is a pending appeal from the decision of the learned Deputy Judge to the Court of Appeal, and it is postulated that the Court of Appeal may make findings regarding the “nature and extent” of the breach of the Unless Order which may impact on the issue of relief from sanction.  As I see it, if the Court of Appeal upholds the 1^st and 13^th defendants’ appeal, no question of relief would arise.  On the other hand, if the Court of Appeal dismisses the 1^st and 13^th defendants’ appeal, but makes findings which may impact on the question of relief and considers that relief from sanction ought to be granted, the Court of Appeal would have ample power to deal with the situation as it deems just in all the circumstances of the case, including granting leave to appeal out of time. That is matter entirely for the Court of Appeal.

14. Second, Mr Tang argues that I failed to take into account a number of relevant matters and took into account a number of irrelevant matters in dismissing the Relief Summons. I agree with the submissions made by Miss Sit in paragraphs 9 to 11 of her skeleton submissions dated 17 May 2016 in relation to those complaints, and do not propose to repeat them here.

15. I would only mention that, in so far as it is said that the 1^st and 13^th defendants had a good explanation for the delay in making the relief application, namely, that until the learned Deputy Judge handed down her decision on 17 November 2014, the 1^st and 13^th defendants did not know the reason or basis for their breach of the Unless Order and thus would have no good reason to apply for relief prior to that date, the grounds of the plaintiffs’ contention that the 1^st and 13^th defendants had failed to comply with the Unless Order were made known to them by the time that the parties appeared before Anthony Chan J in June 2015. Further, I have been informed by Ms Sit that, at both hearings before Anthony Chan J in June 2015 and the learned Deputy Judge in September 2015, the plaintiffs expressly raised the point that the 1^st and 13^th defendants had not made any application for relief from sanction and thus that was not an issue which the court should be concerned with.  As I see it, the 1^st and 13^th defendants could, but chose not to, apply for relief from sanction earlier.

16. In my view, the 1^st and 13^th defendants’ real complaint, if any, is that they should not have been found by the learned Deputy Judge to have failed to comply with the Unless Order.  That is an issue which I understand will be fully ventilated before the Court of Appeal in due course.  If the Court of Appeal agrees with the learned Deputy Judge that the 1^st and 13^th defendants failed to comply with the Unless Order, it seems to me plain that their application for relief from sanction is without merit, and there would be no ground to grant any extension of time to enable them to apply for relief from sanction.  It follows that I do not consider that leave to appeal from the Unless Order should be granted on either limb under section 14AA(4) of the High Court Ordinance.

17. For the foregoing reasons, I dismiss the Leave Summons.  I shall now deal with the question of costs, including summary assessment of those costs.