GREAT STRATEGY PROPERTIES LTD AND ANOTHER v. WONG WEI GEORGE AND OTHERS

HCA 962/2015

[2020] HKCFI 1060

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 962 OF 2015

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BETWEEN

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DECISION

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1.  The 2^nd to the 6^th defendants applied for the preliminary trial of the issue of whether the claim in the present action is statute-barred or whether the plaintiff may invoke the secondary limitation period pursuant to section 31 of the Limitation Ordinance, Cap 347 (“LO”)[1]. The plaintiffs opposed that. By the decision handed down on 16 January 2020, this court dismissed the application with costs (“the Decision”). The 2^nd to the 6^th defendants now seek leave to appeal.

Background

2.  For the background, reference should be made to the first 26 paragraphs of the Decision.  I shall adopt the definitions and abbreviations there for the present purpose.

The proposed grounds of appeal

3.  This court is said to have erred in the following aspects:

(1) This court misdirected itself in relation to the proper procedure for dealing with the section 31 limitation issue as a result of an erroneous interpretation of §141 of Kensland Realty Ltd v Tai Tang Chong (2008) 11 HKCFAR 237.

(2) This court erred in finding that a preliminary trial of the section 31 limitation issue would require a resolution of the factual dispute as to the acts and omissions on the part of the 4^th and the 5^th defendants (“the Former Liquidators”).

The principles

4.  Section 14AA of the High Court Ordinance, Cap 4 provides that no leave to appeal from an interlocutory order shall be granted unless the court is satisfied that the appeal has a reasonable prospect of success or that there is some other reason in the interest of justice that the appeal should be heard.

5.  There is no dispute that the Decision is a case management decision, which involved the exercise by this court of the discretion pursuant to O33, r3 of the Rules of the High Court, Cap 4A[2].

6.  Case management decisions are within the province of the first instance judge, and the appellate court would not lightly interfere.  The appellate court would not do so, unless it is demonstrated that (i) the judge erred in principle or (ii) was plainly wrong and made orders that clearly involved an injustice or an inability for the trial court to carry out its task or the order made was irrational having regard to the issues that had to be resolved.  See Wong Kar Gee Mimi v Severn Villa Ltd [2012] 1 HKLRD 887 at §31; K&L Gates v Navin Kumar Aggarwal [2019] HKCA 350 at §15.

Ground (1)

7.  It is argued that this court erred in principle by misunderstanding what Hon Ribeiro PJ said at §141 of Kensland Realty[3]. Despite the able argument advanced by Ms Lam, SC for the defendants, I see little chance that the appellate court will agree with her.

8.  Ms Lam describes Hon Ribeiro PJ’s remark as the starting point so that section 31 limitation issue should generally/usually be tried as a preliminary issue, but contrary to that, this court wrongly interpreted that as not the preferred mode at all.  Reading the Decision[4], this criticism cannot be correct.

9.  After setting out the observation of Hon P Chan PJ about the nature of the dispute in respect of the section 31 limitation issue and the need to examine a host of factual issues in resolving the dispute, this court turned to the (not unrelated) remark of Hon Ribeiro PJ. This court explained the context of Kensland Realty that caused his Lordship to make the remark, which I consider to be readily apparent from the remark itself.  The remark, this court says, should not be read to suggest that whenever there is the section 31 limitation issue, preliminary trial of that in advance of the trial should follow.

10.  Where the dispute in respect of the section 31 limitation issue entails a host of factual issues that need to be resolved, those issues ought to be properly investigated and resolved by way of trial of preliminary issue as opposed to striking out on affidavit.  This court did not fail to acknowledge Hon Ribeiro PJ’s preference of such mode of determination in that sense.  However, the further categorization of the remark of Hon Ribeiro PJ as either a starting point or the preferred mode of determination, whenever the section 31 limitation issue arises, suggest that effectively trial of the limitation issue as preliminary issue should follow unless there are counter-balancing considerations.  I am not impressed that the remark of Hon Ribeiro PJ was meant to be understood in that sense.

11.  Lee Tsan Sum v David Wong Pui Hon & Ors [2010] 4 HKLRD 219 cited by Ms Lam was an example of trial of limitation issues as preliminary issues, but does not serve to enhance her argument for the present purpose.

12.  Whether or not the remark of Hon Ribeiro PJ indicates, as a matter of principle, that the determination of the section 31 limitation issue by way of trial of preliminary issue is the starting point or preferred mode, the same cannot be construed as fettering the power of the court under O33, rr3 and 4(2), which is discretionary in nature. Hence this court’s treatment of his Lordships’ explanation as guidance to how the court should exercise the discretion under that rule in similar circumstances[5].

Ground (2)

13.  In arguing that this court erred in holding that a preliminary trial of the section 31 limitation issue would involve the resolution of the factual dispute as to the acts and omission on the part of the Former Liquidators and whether the alleged damage suffered by the plaintiffs was attributable to such acts and omission, Ms Lam stresses that the defendants clearly had knowledge of the facts of their own acts and omission that, by attribution to the plaintiffs, would have sufficed to establish the knowledge on the part of the plaintiffs under section 31(5) to (7) of the LO.  She argues that the requisite knowledge does not have to be that the acts or omission amount to negligence as a matter of law.

14.  Indeed, the requisite knowledge does not have to be that the acts or omission of the Former Liquidators amount to negligence as a matter of law. This was acknowledged in §§37 and 43 of the Decision.  Section 31(6), set out in §29 of the Decision, puts that beyond doubt.  In other words, this court never sought to say otherwise.

15.  The circumstances of this case under consideration consist of what were explained in §§38-41 of the Decision.  Ms Lam argues that the plaintiffs had the requisite knowledge because the Former Liquidators, then in control of the plaintiffs, clearly had knowledge of the fact of their own acts and omission that would therefore be attributed to the plaintiffs for the purpose of section 31(5) to (7).  Yet her argument does not sit together with her clients’ denial of such acts and omission at the same time.  Therefore, the attribution of the Former Liquidators’ knowledge to the plaintiffs will have to be premised on the plaintiffs’ first establishing such acts and omission on the part of the Former Liquidators that are said to constitute negligence at the trial of the section 31 limitation issue as preliminary issue.  Hence the explanation in the Decision from §41 onwards.

16.  The peculiar feature of the present case highlighted above, as explained in the Decision, has bearing on the extent of the trial of preliminary issues sought by the defendants and hence the exercise of discretion under O33, r3 or, in terms as preferred by Ms Lam, the consideration of whether or not there exists good reason to depart from the starting point or preferred mode of trial of preliminary issue.  The concern is whether time and costs will be saved by the preliminary trial.  In the circumstances, even assuming that proposed ground (1) has merit, I am not satisfied that the exercise of discretion in deciding against a trial of the limitation issue as preliminary issue, as a matter of case management, is reasonably impeachable.

Conclusion and order

17.  I am not satisfied that the appeal has reasonable prospect of success on the grounds proposed.  Nor do I see other reason why the appellate court should hear it.  The application is dismissed with costs payable by the 2^nd to the 6^th defendants to the plaintiffs.

18.  Contrary to the submission of Mr Lai, I am not prepared to categorise the application as one that clearly warrants an order for indemnity costs.  In any event, considering the statement of costs submitted on behalf of the plaintiffs, and hearing submissions, I summarily assess such costs to be in the sum of HK$65,000, payable within 14 days.