HONG KONG HOUSING SOCIETY v. TANG KAR HUNG

CACV 153/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 153 OF 1999

(ON APPEAL FROM HCCT NO. 91 OF 1998)

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J U D G M E N T

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Keith JA (giving the first judgment at the invitation of Leong JA):

1. This is an application for leave to appeal to the Court of Final Appeal against the dismissal by the Court of Appeal of the appeal of Tang Kar Hung from the order of Findlay J giving the Hong Kong Housing Society ("the Society") summary judgment against Mr Tang under Ord. 14 for the sum of $21.8m. plus interest. Mr Ben Beaumont for Mr Tang contends that an order for summary judgment under Ord. 14 is a final judgment, with the consequence that Mr Tang is entitled to appeal to the Court of Final Appeal as of right.

2. The Appellate Committee of the Court of Final Appeal has recently held in Wai Hung Stationery Co. v. HKSAR [1998] 1 HKLRD 445 that the "applications" test is the correct test, namely that an order will only be regarded as final if it would finally have determined the proceedings whichever way the application which resulted in the order would have been decided. It follows that an order for summary judgment under Ord. 14 is not a final order because, had the defendant been granted leave to defend the action, the action would have continued. In those circumstances, leave to appeal can only be granted to Mr Tang at the court's discretion under section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance (Cap. 484).

3. Mr Beaumont's skeleton argument sets out four questions of great general or public importance which the appeal is said to involve. The first three questions relate to the letters of demand:

(i)	Compliance. The question is whether a guarantee or performance bond can only be activated if the terms for its activation are strictly complied with, or whether substantial compliance with those terms is sufficient. In my view, that question does not arise because the Court of Appeal found, whatever the correct test was, that the letters of demand satisfied the more stringent test.
(ii)	Delegation. The question is whether the Society's opinion that Hing Lee was in default of the construction contracts or the supplementary agreements was an opinion which could be delegated to its solicitors to form. Again, that question does not arise because, although one of the letters of demand referred to the opinion as having been that of the Society's solicitors, the judge found that the evidence before him showed that the Society had formed that opinion as well. No question of delegation therefore arose.
(iii)	Nature of obligation. The question is whether the obligations which Mr Tang assumed amounted in law to performance bonds or guarantees. In my opinion, that does not arise because the only practical difference between the two (once the issues of compliance and delegation are seen not to arise on the facts) upon which Mr Beaumont can rely is that, if they were guarantees, the Society's opinion had to have been honestly held, whereas if they were performance bonds, it was sufficient for the Society to rely on its unsubstantiated opinion. Assuming in Mr Tang's favour, but without deciding, that that distinction is correct, the judge's finding on the evidence that the Society had formed the opinion that Hing Lee was in default under the construction contracts or the supplementary agreements was tantamount to a finding that the Society was in fact of the opinion which it professed to have.

4. The final question of great general or public importance is said to relate to the alleged breach by the Society of its fiduciary duties to Hing Lee's nominated sub-contractors. At one stage, it looked from his skeleton argument as if Mr Beaumont was saying that the Court of Appeal was wrong to follow the judgment of Hunter J (as he then was) in Hsin Chong Construction Co. Ltd v. Yaton Realty Co. Ltd [1987] HKLR 229. However, it emerged that what Mr Beaumont is in fact saying is that, although the Society's interest in the retention money was as trustee for Hing Lee and not the nominated sub-contractors, the circumstances in which the retention money could be released to Hing Lee had not arisen. That argument cannot be right. For my part, I fail to see how there can be a breach of trust if the trustee releases trust money to the only beneficiary with its consent, which is what Mr Tang himself accepted was the case. Accordingly, the correctness of Hunter J's judgment in Hsin Chong does not arise, merely its application to the particular facts of this case. That does not involve a question of great general or public importance, but even if it did, the answer to that question in my view is plain. I should add that even if it had been intended to challenge on the appeal the correctness of Hunter J's view in Hsin Chong, which I accept may have involved a question of great general or public importance, I am so persuaded that his view of the law is correct that I would have decided, in my discretion, that that was not a question which ought to be submitted to the Court of Final Appeal.

Leong JA:

5. I agree. The application is refused.