HONG JING CO LTD v. ZHUHAI KWOK YUEN INVESTMENT CO LTD

CACV 63/2011
CACV 254/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS. 63 & 254 OF 2011

(On Appeal from HCA No. 156 of 2006)

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BETWEEN

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D E C I S I O N

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Hon Cheung JA (giving decision of the Court):

The plaintiff’s application

1.  In our judgment of 17 July 2012, we ordered a retrial, specifically on the issues of ‘double dealing’ and ‘change of stand’.

2.  The plaintiff now applies for leave to appeal to the Court of Final Appeal against our judgment on the ‘as of right’ and ‘or otherwise’ grounds.

2.1)  As of right

The plaintiff’s argument

2.1(1)  The plaintiff argued that it has pleaded a liquidated claim.  In its prayer for an account of profits arising from the defendant’s breach of trust, it pleaded a claim for $171,990,000 which was the introduction fee received by the defendant from BOCGI.  Even if this sum should only be $61,990,000 (which is the difference between $171,990,000 and $110,000,000 that the defendant was entitled to receive under the agreement between the plaintiff and the defendant), it still exceeds the $1 million threshold under section 22(1)(a) of the Court of Final Appeal Ordinance (Cap. 484).  The plaintiff argues that if the Court of Final Appeal was to allow the appeal and restore Yam J’s judgments, this would immediately confer on the plaintiff a financial benefit in the form of a liquidated amount or a value in respect of a proprietary right in excess of the threshold amount.

Principles

2.1(2)  The Court of Final Appeal has recently summarised the position under the second limb of section 22(1)(a) in Chinachem Charitable Foundation Limited v. Chan Chun Chuen and Another, FAMV 20/2011, 28 October 2011 as follows :

‘ 20. The proper approach to an application for leave to appeal based on the second limb of section 22(1)(a) as laid down in China Field (2009) 12 HKCFAR 68 and WLK v TMC (2009) 12 HKCFAR 473 may be summarised as follows:

(i)  A further appeal to the Court is in principle oppressive to the party who has won in the Court of Appeal where the appeal is without substance.  Unless it involves a point of law of public importance or unless grievous injustice would be done if the final court does not intervene, a successful litigant should not be dragged before a third tier of court.  Appeals as of right deprive the Court of this beneficial discretion and are exceptional in courts of final appeal.

(ii)    Section 22(1)(a) should therefore receive a narrow construction.  It is well-established that the first limb must be narrowly construed, limiting it to liquidated claims which exceed the threshold amount.  The second limb should be consistently interpreted and must not undermine the established construction of the first limb.

(iii)  An unliquidated monetary claim falls not merely outside the first limb, but outside section 22(1)(a) altogether.

(iv)   To come within the words “some claim or question to or respecting property or some civil right”, 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.

(v)    In considering the threshold amount, the Court focuses on the value of the claim which is the subject-matter of the appeal and not on the value of any property or proprietary right which merely has some connection with the claim.

(vi)   The value of the claim must be clearly quantifiable in the sum of $1 million or more.

(vii)  The order which the Court would make in disposing of the proposed appeal must have the immediate effect of conferring or imposing on the relevant parties a financial benefit or detriment in the quantified amount.  It is not enough to show that such a financial impact is a likely eventual result of the appeal.

(viii)    The words “directly or indirectly” describe the nature of the claim asserted and do not affect the requirement for immediacy of the economic consequences of the Court’s order.’

Our view

2.1(3)  We disagree with the plaintiff’s contention.  In this case the plaintiff has yet to make an election on whether to proceed by way of damages or an account of profits. Even in respect of the latter, the prayer is for ‘the said HK$171.99 million or such other sum as found by the Court’.  The amount has yet to be quantified.  Further in Yam J’s 2^nd Judgment, he ordered the ‘Defendant be liable to the plaintiff as a constructive trustee for all unauthorised profits/commissions it received the amount of which to be assessed at the quantum part of the Trial’.  This means that there is no liquidated claim and there is no immediate entitlement to a financial benefit in respect of a proprietary right of the requisite value since the amount has yet to be assessed.

2.1(4)  The plaintiff argues that it is sufficient if the amount is ‘quantifiable’.  We disagree.  In Active Profit Ltd. v. Nissho Iwai Hong Kong Corporation Ltd. and Others, FAMV 21/2005, 2 September 2005, the Court of Final Appeal granted leave to appeal to the applicant (the plaintiff) on the discretionary ground but not on the ‘as of right’ ground.  In respect of the latter it held that,

‘ ……The civil right asserted is the right to relief for breach of trust. And the relief in question consists of damages for breach of trust or an account of profits derived from such breach. Those damages or profits require quantification. Therefore they are unliqidated and do not come within s.22(1)(a). Accordingly the applicant is not entitled to leave to appeal as of right.’

2.1(5)  This statement covers the present case.  The plaintiff seeks to explain the decision by referring to the final judgment of the Court of Final Appeal in that case when it dismissed the plaintiff’s claim for breach of trust.  Hence, the argument goes, the claim was not based on breach of trust.  We do not consider this to be a proper basis for departing from the Court of Final Appeal’s view on the ‘as of right’ requirement which it had specifically addressed in the leave application.

2.2)  ‘Or otherwise limb’

The plaintiff’s argument

2.2(1)  The plaintiff argues that it is of utmost probability that the damages ultimately awarded will be in excess of the $1 million threshold.  It argues that our judgment to order a retrial would cause the plaintiff injustice or the situation is so exceptional that it falls within the ‘or otherwise’ limb.  It argues that a retrial even on the limited issues is grossly unfair to the plaintiff in terms of the substantial costs of the trial that it has to incur and also it would give the defendant a second chance to make good the evidential deficiencies. Instead of a retrial, this Court could in fact find for the plaintiff.

The test

2.2(2)      In Chao Keh Lung v. Don Xia (2004) 7 HKCFAR 260, the Court of Final Appeal held that,

‘ The words “or otherwise” are found in s.22(1)(b) in the context of the Ordinance laying down, as the usual condition of granting discretionary leave, the high-threshold requirement that the appeal should involve a question of great general or public importance……..As Bokhary PJ pointed out in Hui Yiu Wing v Regional Council (unrep., FAMV No 16 of 2002, [2002] HKEC 1223), the granting of leave to appeal under the “or otherwise” limb is an exceptional course.’

See also Greatworth Industrial Ltd. v. Chevalier (Construction) Co. Ltd. (2006) 9 HKCFAR 857.

Our view

2.2(3)  We disagree with the plaintiff’s contention.  Our decision to order a retrial was given after anxious consideration in the light of the lack of specific finding by the Judge on important issues and the lack of reasons being given for his decision.  The burden of costs is an inevitable feature in litigation.  The prospect of the defendant filling in gaps of the evidence that was lacking in the first trial is clearly a matter for submission at the retrial.  We do not consider that a retrial would cause grave injustice or is so exceptional as to justify leave being granted on the ‘or otherwise’ ground.

The defendant’s application

The defendant’s case

3.1  The defendant applies, first, for extension of time to apply for leave to appeal to the Court of Final Appeal after the judgment in the retrial.  Alternatively it asks for leave to appeal under section 22(1)(b) in respect of two questions of great general or public importance, namely

‘ (1) Whether, as a matter of law, a duty to use reasonable or best endeavours to perform a certain task vis-à-vis a third party can be implied into a contract, given that in law there can be no duty to negotiate in good faith in a bipartite situation (paragraph 17 of Judgment).

(2)   Whether in assessing damages for loss of a chance the Court is entitled to take into account its knowledge of what had subsequently occurred (by applying the “Bwllfa principle” in Bwllfa and Mertby Dare Steam Collieries (1981) v. Pontypridd Waterworks Co. [1903] AC 426) (paragraph 90 of  Judgment). ’

Our view

3.2(1)  The first relief sought is not appropriate.  This would cause further delay in the proceedings. If there are issues in our judgment that the defendant disagrees with, it should seek leave now so that all the contentious issues could be addressed together before the retrial.

3.2(2)  In any event, we do not consider there are issues of great general or public importance involved. The implication of the term of reasonable or best endeavour on the part of the defendant must be considered in the context of the case where the agreement between the parties imposed a contractual duty on the defendant to approach and deal with a third party, BOCGI, on the sale of the debts and properties.

3.2(3)  The ‘Bwllfa’ principle has been applied recently by the House of Lords in Golden Strait Corpn v Nippon Yusen Kubishika Kaisha [2007] 2 AC 353.  Although it is a majority decision of three to two, clearly it is a most persuasive authority to be considered.

Conclusion

3.  Accordingly the applications are refused with a provisional costs order and a certificate for two counsel.