HUNG FUNG ENTERPRISES HOLDINGS LTD AND ANOTHER v. THE AGRICULTURAL BANK OF CHINA

CACV 235/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 235 OF 2010

(ON APPEAL FROM HCA NO. 16549 OF 1998)

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BETWEEN

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REASONS FOR JUDGMENT

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Hon Kwan JA (giving the Reasons for Judgment of the Court):

1.  This is the plaintiffs’ application for leave to appeal to the Court of Final Appeal against the judgment of this court on 14 June 2012 ([2012] 3 HKLRD 679). The application is made on three bases:

(1)  the “as of right” ground under the second limb of section 22(1)(a) of the Hong Kong Court of Final Appeal Ordinance, Cap 484;

(2)  discretionary leave under section 22(1)(b) on the ground that the appeal involves a question of great general or public importance; and

(3)  discretionary leave under the “or otherwise” limb in section 22(1)(b).

2.  We dismissed the application after hearing submissions and these are the reasons for judgment.

The “as of right” ground

3.  The plaintiffs’ argument that they are entitled to appeal as of right is on the following lines:

(1)  The proposed appeal involves directly some claim or question to or respecting property in respect of a property in Sheung Shui, the value of which exceeds $1 million.  The judge, who dismissed the plaintiffs’ claim, ordered, among other things, the 1^st plaintiff to give vacant possession of the Sheung Shui property to the defendant bank, which was mortgaged by the 1^st plaintiff to secure Facility 3.  In the Notice of Appeal, the plaintiffs sought to set aside this order on the basis that if they should succeed on appeal and obtain judgment for damages in their favour, this would be used to set off the indebtedness owed to the defendant under the facilities granted including Facility 3 and the 1^st plaintiff would not have to deliver up vacant possession of the mortgaged property.  They contended that the judgment of the Court of Appeal affects the 1^st plaintiff’s interest in the Sheung Shui property and if the appeal is allowed, this would immediately confer on the 1^st plaintiff a financial benefit exceeding $1 million and correspondingly impose a financial detriment to the defendant of the same sum.

(2)  The proposed appeal involves indirectly some claim or question to or respecting properties or some civil right respecting properties which exceed $1 million in that the claim involves the wrongful detention of 7 land use certificates (“LUCs”) of land in Shenzhen.  The argument in (1) is repeated.

4.  We hold that the plaintiffs are not entitled to appeal as of right.  The proper approach to section 22(1)(a) has been summarised by the Appeal Committee in Chinachem Charitable Foundation Limited v Chan Chun Chuen & Anr, FAMV 20 of 2011, 28 October 2011, para 20.  The plaintiffs’ claim in this action is for unliquidated damages, based on breach of contract, misrepresentation, breach of warranty and conversion.  It does not involve assertion of any entitlement to a particular property or proprietary right.  An unliquidated claim for damages falls not merely outside the first limb of section 22(1)(a), but outside section 22(1)(a) altogether.  The second limb of this provision should be interpreted consistently and must not undermine the established construction of the first limb.  To come within the words “some claim or question to or respecting property or some civil right” in the second limb, the claim must be a claim to some particular property or to a proprietary right of the requisite value.  Other types of claim are insufficient, even if they are incidental to the enjoyment of property rights which are not themselves the subject-matter of the claim.  The Sheung Shui property and the LUCs merely have some connection with the plaintiffs’ claim, but that does not bring the plaintiffs’ claim within section 22(1)(a).

Discretionary leave involving a question of great general or public importance

5.  The question said to be of great general or public importance relates to the plaintiffs’ claim based on conversion.  The question as framed in the skeleton submissions of the plaintiffs is as follows:

“Whether a deliberate failure or omission to correct the misapprehension or understanding of the relevant facts by the owner would render the necessity for an overt act of reclaiming the chattel unnecessary?”

6.  We decline to grant leave as this question lacks factual basis, for the reasons submitted by the defendant.  On the concurrent findings of To J and this court, it was held that (1) the plaintiffs and the defendant had only reached a consensus and not a binding agreement to exchange securities and the plaintiffs knew that the consensus was an agreement subject to the approval of the credit approval committee of the defendant[1]; and (2) what the defendant had represented to the plaintiffs was no more than an intention to process the application for exchange of securities and the application for a new loan, and there was no representation of a committed intention of the defendant to exchange the securities[2].

7.  There is no factual basis for the plaintiffs to contend that they have any misapprehension or misunderstanding of the relevant facts.  Besides, the law on conversion is well settled.

Discretionary leave under the “or otherwise” limb

8.  The plaintiffs recognise that granting leave on the “or otherwise” limb is an exceptional course (Chao Keh Lung v Don Xia (2004) 7 HKCFAR 260 para 9) but argued nevertheless they come within this limb notwithstanding the concurrent findings of fact against them, contending that there was no or no reliable evidence to support the concurrent findings and there was a serious miscarriage of justice or violation of some principle of law or procedure.

9.  The plaintiffs’ submissions in this application were by and large a repetition of the submissions made before us in the appeal unsuccessfully.  We fail to discern any apparent merit in the submissions.

10.  We also refuse leave on the “or otherwise” limb.

Costs

11.  We order costs of this application to the defendant, to be paid forthwith.  We decline to give a certificate for two counsel.  There is no reason why this application should require the number of bundles placed before us.  We bear this in mind when we assess costs on a gross sum basis.  We reduce solicitors’ work from 23.5 hours to 11.5 hours and fee for one counsel to $80,000.  With the undisputed items for manual work, we assess the costs payable to the defendant at $134,525.