ALL OVERSEAS LTD AND OTHERS v. BEST CODES NOMINEES LTD AND OTHERS

CACV 329/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 329 OF 2005

(ON APPEAL FROM HCA NO. 4515 oF 2002)

____________________________

BETWEEN

____________________________

______________________

D E C I S I O N

______________________

Hon Woo VP (giving the decision of the Court):

Introduction

1. After we heard the parties’ arguments on 13 March 2006, we handed down judgment on 22 March 2006 (“our said judgment”), allowing the plaintiffs’ appeal with an order nisi that the plaintiffs have the costs of the appeal and the costs below, save that in respect of the Order 14A summons dated 28 June 2005 and the wasted hearing date of 5 July 2005, the costs be to the defendants.

2. By a letter dated 4 April 2006 written by the plaintiffs’ solicitors, which expressly stated to be an application for variation of the costs order nisi under Order 42 rule 5B(6) of the Rules of the High Court (“RHC”), the plaintiffs seek the following orders from us:

(a)	To vary our order for costs in favour of the plaintiffs in respect of costs below so as to include the costs of the whole of the proceedings below;
(b)	An order for payment out of the sum of $250,000 paid into court by the plaintiffs on 28 December 2005 as security for the defendants’ costs of the appeal; and
(c)	An order for payment out of the sum of $220,000 paid into court by the plaintiffs on 23 February 2005 as security for the defendants’ costs of the proceedings below.

3. The basis for seeking the orders referred to in (a) and (c) above was stated to be the position to be taken by the plaintiffs, which was that they would not proceed further on the action.  The plaintiffs have notified the court by subsequent correspondence that they will give an undertaking not to proceed further with the action.

4. By a letter dated 8 April 2006 written by the defendant’s solicitors, the defendants made known their stance that they would not object to the payment out of the sum of $250,000, referred to in paragraph 2(b) above.  However, the defendants oppose the two other orders sought by the plaintiffs.  The basis for the opposition was stated to be that irrespective of whether the plaintiffs would proceed further with the action, the defendants would amend the pleadings against the plaintiffs pursuant to the leave granted Yam J by including, inter alia, a counterclaim on the validity and/or propriety of the appointment of the 1^st plaintiff as a director of Billion Top Garment Limited (“the Company”), which remains a live issue.

5. By a Notice of Motion dated 18 April 2006, the defendants seek leave from this Court to appeal against our said judgment to the Court of Final Appeal.  Seven grounds of appeal are set out against our said judgment.

Leave to appeal

6. Section 22 of the Court of Final Appeal Ordinance, Cap 484 provides as follows:

“	(1)	An appeal shall lie to the Court in any civil cause or matter—
		(a)	as of right, from any final judgment of the Court of Appeal, where the matter in dispute on the appeal amounts to or is of the value of $1,000,000 or more, or where the appeal involves, directly or indirectly, some claim or question to or respecting property or some civil right amounting to or of the value of $1,000,000 or more; and
		(b)	at the discretion of the Court of Appeal or the Court, from any other judgment of the Court of Appeal, whether final or interlocutory, if, in the opinion of the Court of Appeal or the Court, as the case may be, the question involved in the appeal is one which, by reason of its great general or public importance, or otherwise, ought to be submitted to the Court for decision.”

7. In Shell Hong Kong Ltd v Yeung Wai Man, Kiu Yip Co Ltd & Anor [2003] 3 HKLRD 62, at pp 70C-72C, the Court of Final Appeal enunciated the proper approach in the consideration of whether a decision on an Order 14A application is a final or interlocutory judgment.  Adopting a commonsense approach as advised, since our said judgment is finally determinative of crucial or substantial issues in the cause or matter, as is apparent from the fact that the plaintiffs have, after achieving what they wished to obtain by the action through their success before us, undertaken not to proceed further with the action, our said judgment should properly be regarded as a final judgment.

8. Since the plaintiffs have no quantified claim for damages (liquidated or unliquidated) at all in the action, let alone one for liquidated damages in excess of the threshold amount, there are clear authorities such as Cheng Lai Kwan v Nam Fung Textiles Ltd (1997-98) 1 HKCFAR 205, Shum Kam Fai v Lam Chi Wai & Anor (FAMC 38 of 2002, 16 December 2002, unreported) and Chao Keh Lung v Don Xia [2004] 3 HKLRD 353 that the appeal intended to be brought by the defendants does not satisfy the provision of “the matter in dispute on the appeal amounts to or is of the value of $1,000,000 or more” under section 22(1)(a) of the Ordinance. 

9. However, Mr Alexander Wong, on behalf of the defendants, submits that one of the issues raised in the pleadings involves the validity or otherwise of an agreement made by the defendants purportedly acting for the Company for the sale of the Company’s landed property for a sum of $2,700,000.  As such, it is submitted, the matter in dispute on the intended appeal is within the wider ambit of section 22(1)(a) as it indirectly involves a question respecting the ownership of a property amounting to over $1,000,000. 

10. Mr Wong relies heavily on Wang Din Shin v Nina Kung alias Nina T.H. Wang, CACV 460/2002 (17 November 2004, unreported) in support, whereas Mr Daniel Fung SC, leading Mr Benjamin Chain and Mr Jenkin Suen, for the plaintiffs, refers us to Fletcher v Income Tax Commissioner [1972] AC 414 at 419 per Lord Wilberforce and Hui Shiu-wing v Cheung Yuk-lin [1968] HKLR 176, at 185 per Blair-Kerr J and at 190 per Mills-Owens J to counter. 

11. Although the plaintiffs have in the present action pleaded that the relevant defendants purportedly acting as directors of the Company had entered into an agreement to sell the Company’s property to a third party, no claim has been raised in respect of the agreement.  The plaintiffs have only claimed various declaratory and injunction relief, mainly relating to the extraordinary general meeting of the Company (“EGM”) convened by the defendants, which they claim to be invalid.  The nature of their claims does not indirectly involve any question respecting the ownership of the property.  In our view, the defendants’ intended appeal does not satisfy the wider ambit of section 22(1)(a) either.

12. While Mr Wong argues that issues of great general or public importance are involved so as to justify the defendants’ intended appeal to the Court of Final Appeal under section 22(1)(b), the defendants’ Notice of Motion dated 18 April 2006 does not contain any assertion that the grounds of appeal raised by it relate to any point of great general or public importance.  It is obvious that the grounds of appeal have only raised matters that relate closely to the facts of the present case.  The decision sought from the Court of Final Appeal will thus be fact-sensitive, dependent upon the particular facts of this case. 

13. Mr Wong’s further argument is that the intended appeal allows the Court of Final Appeal to revisit its decision in the Shell case as to the appropriateness of the procedure under Order 14A.  He asserts that decision has made the ambit of Order 14A too wide.  This argument does not, in our view, assist him.  We are bound by that decision, and we see no ground for allowing the defendants leave to challenge it.  We are not satisfied that the intended appeal involves any question of great general or public importance.

14. Mr Wong further argues that, if leave is granted, there would be an application to the Court of Final Appeal to adduce fresh evidence which would remove the footing upon which our said judgment stood, ie, there was a requisition made by the defendants to the directors of the Company to convene the EGM, contrary to our view expressed in paragraphs 31 and 32 of our said judgment.  We need say no more than that we are most sceptical that the conditions laid down by Ladd v Marshall [1954] 1 WLR 1489 can be satisfied. 

15. In all the circumstances, we do not consider that this is an exceptional case for us to grant leave under the “or otherwise” limb of section 22(1)(b). 

16. In the result, the defendants’ application for leave to appeal to the Court of Final Appeal is refused.

The plaintiffs’ applications

17. Regarding the plaintiffs’ applications, the defendants have in correspondence already accepted that the plaintiffs are entitled to the payment out of the sum of $250,000 they had paid into court on 28 December 2005 as security for the defendants’ costs of the appeal.  As we have disposed of the appeal in favour of the plaintiffs, the aim for the security has been rendered inoperative and this sum should be paid out forthwith to them through their solicitors, and we so order. 

18. Regarding the two other applications of the plaintiffs, they relate to facts which were not resolved by us when we decided the appeal.   As stated in the plaintiffs’ solicitors’ letter dated 4 April 2006, the basis for seeking these two orders was that the plaintiffs would not proceed further on the action, and that is supported by their undertaking not to proceed further with the action.  On the other hand, the defendants have made known in their solicitors letter dated 8 April 2006 that they consider the action as being still extant and they will amend the pleadings against the plaintiffs to add a counterclaim on the validity and/or propriety of the appointment of the 1^st plaintiff as a director of the Company.  All these matters were not before us when we were dealing with the appeal.  They relate to the intention of the parties how to further deal with the proceedings below and the future steps to be taken by them.  These are not matters that are directly linked to our disposal of the appeal. 

19. Moreover, the plaintiffs’ undertaking by itself is not sufficient justification for our granting these two opposed applications because their intended withdrawal of, inter alia, the claim regarding the propriety of the 1^st plaintiff’s directorship and his removal as such could, at this stage of the proceedings, only be carried out with leave of the court pursuant to Order 21 rule 3 of the RHC, which entitles the court to impose conditions, including one as to costs.  We do not consider that we should properly decide on these two applications.

20. In the circumstances, the plaintiffs’ applications for varying our costs order in respect of costs below to include the costs of the entire proceedings, as well as for seeking payment out of the sum of $220,000 paid into Court on 23 February 2005 by the plaintiffs as security for costs in the proceedings below are refused.

Costs

21. The parties have agreed that costs should follow the event.

22. Since the defendants have failed in their application for leave to appeal to the Court of Final Appeal, the plaintiffs should have the costs of that application and we so order. 

23. On the other hand, although the plaintiffs are successful in the application for payment out of the sum of $250,000 without objection from the defendants, they have failed in their two contested applications mentioned above.  The defendants should have the costs of these contested applications and we make an order accordingly.  In this regard, we should mention that Mr Fung very readily conceded that the proper venue to deal with these two applications was the Court of First Instance when we raised with him the lack of leave under Order 21 rule 3 of the RHC.  Out of the 45 minutes of the hearing before us, only about 5 minutes were spent on these two applications.