CIL HOLDINGS LTD v. KWOK HAN QIAO formerly known as KWOK WAI TAK EDWARD

FAMV No. 62 of 2014

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 62 OF 2014 (CIVIL)

(ON APPLICATION FOR LEAVE TO APPEAL FROM
CACV NO. 90 OF 2013)

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REASONS FOR DETERMINATION

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Mr Justice Ribeiro Ag CJ:

1.  At the hearing, we dismissed this application for leave to appeal with costs for reasons which we now provide.

2.  A writ claiming recovery of $98 million as money had and received was issued by the plaintiff (“CIL”) against the defendant on 16 June 2001.  The last step in the action, the defendant’s filing of his list of documents, was taken on 15 December 2001.  Thereafter, nothing was done to take the proceedings forward until 19 September 2011, almost 10 years later, when CIL took out a case management summons.  The defendant thereupon applied to dismiss the action for want of prosecution, alleging principally that CIL had been guilty of inordinate and inexcusable delay causing prejudice to the defendant and giving rise to a substantial risk that a fair trial was no longer possible. 

3.  Master A Ho struck out the action on the aforesaid ground.[1] However, Chung J allowed the appeal, holding that while there had been inordinate and inexcusable delay, there had not been prejudice threatening the fairness of the trial.[2]  The Court of Appeal allowed the defendant’s appeal and ordered that the action be struck out.[3]

4.  CIL now seeks leave to appeal first, on the basis that a point of law of great general or public importance arises on the appeal, namely:

“... what is the test that an appellate court should adopt when the issue is whether there is a substantial risk that there could not be a fair trial in the context of a striking out for want of prosecution application; in particular, whether the ‘plainly wrong’ test remains to be the correct and applicable test?”

5.  Secondly, leave is sought on the “or otherwise” ground on the basis that:

“...if the ‘plainly wrong’ test was and remained applicable, the CA had not in fact applied such test and had substituted its own view instead in this case.”

The point of law ground

6.  In overturning Chung J’s decision, Yuen JA, writing for the Court of Appeal, recognized that a decision at first instance to dismiss or to refuse to dismiss an action for want of prosecution involves an exercise of discretion and that the appellate court should only disturb that decision if satisfied that it was “plainly wrong”.[4]  For reasons which are considered further below, the Court of Appeal held that the Judge was plainly wrong in holding that there was no prejudice.

7.  Leading Counsel for CIL[5] acknowledged that decisions to dismiss for want of prosecution have consistently been regarded as discretionary[6] and that the Hong Kong courts have adopted the well-known grounds limiting interference with such exercises of discretion.[7]  He accepted that it is not for the appellate tribunal to consider the issues afresh and to make its own discretionary decision but to intervene only on those well-known grounds or where the decision below was “plainly wrong”.[8]

8.  The proper approach to deciding whether a discretionary decision should be disturbed on appeal is therefore well-established.  Nevertheless, Mr Lam SC endeavoured to argue that the proposed point of law mentioned above would arise and is of sufficient public importance to justify the grant of leave.  He relies entirely on the decision of the United Kingdom Supreme Court in In re B (A Child) (Care Proceedings: Threshold Criteria),[9] submitting that such decision makes it “important for the Hong Kong Court to determine whether the ‘plainly wrong’ test is indeed the correct test to be applied”.

9.  In re B is a case involving a challenge to a care order made with a view to a child's compulsory adoption away from her natural parents pursuant to section 31(2) of the Children Act 1989.  The majority of the Court held that the statutory criteria constituting the threshold and substantive requirements for making such a care order and also the issue of proportionality relevant to interference with the right to respect for family life were not discretionary issues, so that the principles limiting appellate interference were inapplicable.  The Court went on to consider whether the appropriate standard for intervention involved concluding that the decision below was “plainly wrong” or simply “wrong”.  It held in favour of the latter, pointing out that “plainly” added little if anything to the assessment. 

10.  What is presently important is that decisions regarding dismissal for want of prosecution have consistently been held to involve the court’s exercise of discretion, defining the limits of appellate intervention.  The applicable approach is therefore well-settled and no assistance is derived from In re B where very different considerations informing appellate policy in a non-discretionary context were in play.

11.  More fundamentally, it is in any event impossible to see how In re B can assist CIL’s case. Yuen JA was satisfied that Chung J’s decision was “plainly wrong”.  If she had adopted the test favoured in In re B instead, the question would have been whether Chung J’s decision was “wrong” instead of “plainly wrong”. Clearly, her Ladyship’s answer would not have been different.  Since she considered the decision below “plainly wrong” it must follow that she would a fortiori have considered it “wrong”.  The point of law ground accordingly provides no basis for the grant of leave.

“Or otherwise”

12.  This Court has repeatedly emphasised that it is only in highly exceptional cases that leave to appeal will be granted on the “or otherwise” ground.[10] This is not such a case.

13.  Trial of CIL’s action would require the Court to decide whether to accept the version of events advanced by CIL or the version advanced by the defendant.  CIL seeks to recover the $98 million alleging that the money had been transferred to the defendant on trust to be applied for specific investment purposes which were not carried out.  The defendant’s version is that the payment made to him was lawfully applied in accordance with oral agreements reached with CIL through its directors named Szeto and Ho, in the presence of an intermediary named Lau, leaving CIL with no entitlement to recovery of the same.

14.  The detailed issues are carefully considered in Yuen JA’s judgment in which aspects lending some plausibility to the defendant’s version are identified.  It is of central importance that Szeto and Lau died in September 2010 and December 2011 respectively.  That was towards the end of the close to 10 year period of inactivity since issue of the Writ, including at least seven years of inordinate and inexcusable delay.  However, the Judge brushed aside Lau’s unavailable testimony as, at highest, merely “corroborative in nature”[11] and described the value of Szeto’s evidence as speculative, adding: “merely because a potential witness is not available for cross-examination is insufficient to found a real risk of no fair trial”.[12]

15.  Her Ladyship analysed the available materials and cogently found that the deceased persons may well have had important testimony to give regarding the poorly documented transactions in issue.  She was fully entitled to find that the delay which deprived the defendant of such potential testimony was prejudice which gave rise to a substantial risk that a fair trial was no longer possible.  Chung J had failed to recognize the potential importance of such evidence and thus failed to take into account highly relevant matters in the exercise of his discretion.

16.  No basis therefore exists for the grant of leave on the “or otherwise” ground.