TO PUI KUI v. NG KWOK PIU AND OTHERS

CACV 281/2012
CACV 1/2013 &
HCMP 2466/2012
(Heard together)

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS. 281 OF 2012, 1 OF 2013 AND

MISCELLANEOUS PROCEEDINGS NO. 2466 OF 2012

(ON APPEAL FROM HCA NO. 523 of 2008)

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REASONS FOR DECISION

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Hon Lam VP (giving the Reasons for Decision of the Court):

1. The 1^st, 4^th, 5^th, 7^th and 9^th Defendants applied for leave to appeal against the decision of Deputy High Court Judge Seagroatt on 24 October 2012 refusing leave to amend their defence in the course of the trial of High Court Action 523 of 2008. The judge refused to give leave to appeal on the same day.

2. Though on 1 November 2012 the defendants applied for leave to be given on an urgent basis at the conclusion of the trial whilst waiting for judgment, this court refused to entertain such application.  Judgment was handed down on 30 November 2012.  Of the two main issues, using the expressions adopted by counsel in skeleton submissions placed before us, the judge held in favour of these defendants on the Allotment Issue whilst he held against them on the Share Transfer Issue.

3. These defendants appealed in CACV 281 of 2012 against the judgment in respect of the Share Transfer Issue whilst the plaintiff appealed in CACV 1 of 2013 against the judgment in respect of the Allotment Issue.  These appeals were scheduled to be heard on 15 July 2014.

4. In the meantime, the application for leave to appeal in respect of the refusal of leave to amend the defence (HCMP 2466 of 2012) was directed by the court to be heard at the same time as these appeals and, if leave were to be granted, to be heard together.

5. On 7 July 2014, the court directed the application for leave to appeal to be heard first, on 15 July 2014, together with two summonses issued by the plaintiff for the amendment of her Notice of Appeal in CACV 1 of 2013 and her Respondent’s Notice in CACV 281 of 2012.

6. After hearing the parties, we refused to grant leave to appeal in HCMP 2466 of 2012. On the basis of Mr Aiken SC’s assurance that the substance of the plaintiff’s submissions in support of the amended grounds were set out in the skeleton submissions (including the supplemental submissions of 14 July) that already been lodged with the court, we granted leave pursuant to the plaintiff’s summonses of 26 June 2014.  We now give our reasons for such decisions.

HCMP 2466 of 2012

7. We refuse to grant these defendants leave to appeal.  It is accepted by Mr Wong SC on their behalf that the decision of the judge in refusing leave to amend in the course of the trial is a case management decision.  It is also accepted that a party seeking to appeal against such a decision would face a very high threshold, see Li Xiao Yun v China Gas Holdings Ltd HCMP 466 of 2013, 11 March 2013; 厦門新景地集團有限公司v Eton Properties HCMP 13 of 2012, 14 Feb 2012, para 9.

8. As pointed out by Mr Aiken SC, the defendants did not explain why the amendments were not made at an earlier stage.  The lack of explanation is an important consideration for such a late amendment, even before the CJR, see Allan Chan v Susana Ho CACV 393 of 2004, 10 Jan 2005. Bearing in mind the disruption that such late amendments might cause to the trial, we do not think it is remotely arguable that the judge was wrong in disallowing the amendments.  We do not agree with Mr Wong that these amendments were simple pleas to tighten their legal analysis without any need to re-examine the facts.  The proposed pleas of variation and estoppel are fact-sensitive.  Even assuming that the defendants may not need to add anything to their evidence to support these pleas, the plaintiff must be given fair opportunity to re-examine the pleadings to see whether she would need to supplement her case by way of response.  The same can be said with regard to the limitation defence.  As submitted by Mr Aiken, the plaintiff might plead extension of the limitation period by reason of fraud and concealment.

9. Further, we do not see any purpose is to be served by granting leave.  Most of the proposed amendments relate to the Allotment Issue.  As we said, in the judgment of 30 November 2012 the judge held in favour of these defendants on this issue. Though there is an appeal by the plaintiff against such finding, the only basis pleaded in the Statement of Claim to strike down the effect of the so-called “official resolution” is forgery, see paras 8 to 10.  And as confirmed by Mr Aiken, that is the only basis advanced to support the appeal by the plaintiff against the judge’s conclusion on the Allotment Issue.  As accepted by Mr Wong, if the plaintiff were successful in persuading this court that the “official resolution” was forged, none of these proposed pleas could be of any assistance to these defendants.

10. As far as the allegation of gift (in respect of the Share Transfer Issue) is concerned, it is a point of little moment in terms of the main issues in the substantive appeal.  The judge did not hold against these defendants on the ground of lack of consideration.  Nor does the plaintiff seek to uphold the conclusion of the judge by reference to lack of consideration by her Respondent’s Notice. 

11. We are not satisfied that the intended appeal has any relevance to the issues we have to decide in the substantive appeal and it would not be right for leave to be granted to challenge a case management decision of the trial judge which does not appear to us to be clearly wrong.  For these reasons, leave should not be granted under Section 14AA of the High Court Ordinance.

12. We also order these defendants to pay the costs of the plaintiff in respect of HCMP 2466 of 2012, such costs to be taxed if not agreed, with certificate for 2 counsel.

The summonses of the plaintiff

13. Though Order 59 Rule 7(1)(b) permits a party to an appeal to amend his notice of appeal or respondent’s notice by supplementary notice served not less than 3 weeks before the hearing of the appeal (and that was done by the plaintiff on 23 June), the plaintiff seeks leave to amend pursuant to Order 59 Rule 7(1)(a) as her solicitors failed to file the amended notices within 2 days as required by Rule 7(2).

14. Insofar as leave is necessary, we granted leave.  It should be noted that the proposed amendments are wholesale replacement of new grounds for those set out in the original documents.  There is no explanation by the plaintiff as to why the amendments were not put in earlier.

15. In this jurisdiction, the caseload of our Court of Appeal is extremely heavy and judges have to be familiar with the case (by reading the relevant materials in advance) to ensure the efficient case management of appeals.  Thus, the proper preparation of appeals by parties and their legal advisers is essential.  In order to facilitate the pre-reading of the relevant materials by judges, compliance by counsel, solicitors and litigants with the requirements of PD 4.1 on the lodging of bundles (21 days in advance, where there is a cross-appeal, as in the present case), the filing of skeleton submissions by an appellant 14 days in advance and the filing of skeleton submissions by a respondent 7 days in advance, is expected.  Failure to comply with such obligations may result in inadequate time for proper preparation of an appeal by the judges and, depending on the circumstances, may lead to prolongation of hearing time or even adjournment of the appeal which in turn will increase the costs of the proceedings.  These are of course undesirable and practitioners and litigants should, in line with their obligations under Order 1A Rule 3, prepare for the appeal well in advance to ensure strict compliance with those requirements in PD 4.1.

16. Against such background, last minute substantial amendment of the grounds of appeal (like the wholesale replacement of the grounds in the present case) carries with it a serious risk of disruption to the proper preparation for the hearing of the appeal.  Though technically a party can rely on Order 59 Rule 7(1)(b) to make the amendment without leave up to 3 weeks before the hearing, it does not mean that he or she could wait until the last minute to instruct counsel to examine the grounds of appeal.  For the reasons given above, if the scale and impact of the amendment is such that the appeal is to be argued on a different basis from the grounds as set out in the original notices, appeal bundles may have to be revised and skeleton submissions may have to be re-written.  This would occasion delay to the proper preparation on the real issues to be argued at the appeal.  In a case where late skeleton submissions are lodged and the court finds it has insufficient time to digest the materials on the new grounds, the court may consider adjourning the appeal with an order that the defaulting party shall bear the costs thrown away.  Even if the appeal is not adjourned, the court may take such disruptive conduct into account in making its order for costs. 

17. Nowadays, pursuant to Order 1A Rule 3, parties and their legal representatives have a positive duty to assist the court in furtherance of the underlying objectives set out in Order 1A Rule 2.  Those objectives include: (a) to increase the cost-effectiveness of any practice and procedure; (b) to ensure that a case is dealt with as expeditiously as is reasonably practicable.  For reasons canvassed above, the early and timely settlement of grounds in notices of appeal and respondent’s notices and the ensuring of no last minute disruption to the preparation of the appeal on the part of all stakeholders (including judges who must be given sufficient lead time to read the papers in order to manage an appeal effectively) are important aspects of the duty under Order 1A Rule 3.  Failure to observe such duty, depending on the circumstances, can be a relevant consideration on the question of costs pursuant to Order 62 Rule 5(1)(aa), Rule 7 and Rule 8. 

18. Hence, in cases where a party applies at a late stage for leave to substantially amend the grounds in the notices, bearing in mind Order 1A Rule 2, the court will examine its potential impact on the disruption to the orderly preparation and hearing of the appeal.  Further, it will also be relevant to consider the reasons why the amendment is not made earlier and whether the proposed new grounds are arguable. 

19. In the present case, but for Mr Aiken’s intimation that all the submissions he would advance in support of the amended grounds have been set out in the skeleton submissions already lodged with court (including those supplemental submissions of 14 July 2014), and Mr Wong’s indication that his team would be able to deal with the same without any adjournment, we would have to be persuaded that leave should be granted.

20. In the event, in light of those intimations by counsel before us, we decided to grant leave to amend pursuant to the 2 summonses.  As the plaintiff is seeking an indulgence, we order the plaintiff to bear the costs of Mr Wong’s clients in respect of these 2 summonses, with certificate for 2 counsel.