LI XIAO YUN AND ANOTHER v. CHINA GAS HOLDINGS LTD

CACV 215/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 215 OF 2013

(ON APPEAL FROM HCCL NO. 18 OF 2011)

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REASONS FOR DECISION
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Hon Cheung JA (giving Reasons for Decision of the Court) :

1. There were three matters before us which we had to address, namely,

(1) costs of the appeal and below;

(2) leave to appeal to the Court of Final Appeal against our judgment of 15 October 2015; and

(3) stay of execution of our judgment.

2. The first two matters were to be dealt with on paper, while the third matter was listed for hearing today, 17 February 2016.  In their written submissions on costs the parties also referred to the issue of interest.

3. As explained to the parties at the hearing today, the only reason why we withheld giving a decision on the first two matters was because on the contested issue of pre-judgment interest, another division of this Court has recently heard appeals from the two cases referred to by the parties in their written submissions in which the applicable rate for pre-judgment interest was addressed, namely, Waddington Limited v Chan Chun Hoo Thomas and Others, HCA 3291/2003 (unreported, judgment dated 10 March 2014) and Tadjudin v Bank of America, National Association (No. 2)[2015] 3 HKLRD 331.  The judgments are reserved.  It is important that there should be uniformity on matters concerning practice and procedure.  Accordingly we decided earlier to withhold our decision on costs pending the delivery of the judgment in these two appeals.  This caused the leave to appeal decision to be withheld as well.

4. However, with the new application to stay our judgment, we suggested to the parties at today’s hearing to have the pre-judgment interest issue dealt with separately after the two pending judgments have been delivered so that the parties may know where they stand in terms of the leave to appeal application.  The parties agreed.  Accordingly we gave our decisions on the first two pending matters.

1)  Costs and post-judgment interest

5. This matter has largely been agreed by the parties. Accordingly we ordered :

(1) the plaintiffs are to have the costs of the appeal and below with certificate for two counsel;

(2) the plaintiffs are to have post-judgment interest on the judgment sums at judgment rate from the date of our judgment until payment.

6. We reserved our decision on pre-judgment interest in respect of the applicable rate and the duration for which such interest is to be awarded.

2)  Leave to appeal to the Court of Final Appeal

7. We refused to grant leave to appeal and ordered the defendant to pay the costs of the application.

8. The defendant relied on the great general or public importance ground and framed the following two questions :

‘ (1) What is the proper approach under Hong Kong law of an appellate court to interfering with the trial judge’s findings of foreign law where the evidence before the judge was incomplete or inconclusive or not subject to direct consideration by both parties’ experts (the ‘Proper Approach Issue’)?

(2) In what circumstances is the document issued by the State Administration of Foreign Exchange (‘SAFE’) of the People’s Republic of China (the ‘PRC’) entitled ‘Operating Rules for Foreign Exchange Control in Respect Of The Participation By Domestic Individuals in Employee Stockholding, Stock Option and Other Such Plans of Overseas-Listed Companies’ (‘Circular 78’) applicable where PRC-domiciled individuals seek to exercise options to purchase shares in companies listed on the Hong Kong Stock Exchange, and what are the consequences in this regard of  failing to comply with Circular 78 (the ‘Circular 78 Issue’)?’

9. We are of the view that the first question is not reasonably arguable.  This question is framed in a most vague and general way.  The defendant had certainly not at the appeal advocated a different approach in the assessment of the expert evidence on foreign law.  Instead, as correctly pointed out by the plaintiffs, the defendant in their written submission at the appeal relied on the case of MCC Proceeds Inc v. Bishopgate Investment Trust Plc [1999] CLC 417 which set out the principles on the approach of an appellate court on findings of foreign law.

10. We find it unacceptable that, just because a new team of lawyers is now instructed on behalf of the defendant, it can now argue that it should be granted leave on the vague basis that the Court of Final Appeal is being invited to consider the proper approach in respect of a finding on foreign law on appeal when it has not even begun to show that the MCC Proceeds Inc line of authorities no longer represents good law, or make any attempt to show what the law ought to be.  More importantly the defendant has not even begun to show that our determination is outside the ambit of the recognised principles.  The contention that this Court has made independent inquiry of its own and construed the relevant PRC foreign exchange rules and regulations without consideration of the expert evidence is completely off the mark. 

11. Likewise the second question is also not reasonably arguable.  The defendant has simply not shown that the transaction comes within the ambit of a domestic or a cross-border foreign exchange transaction. Further the decision is fact specific.

12. For the purpose of considering whether the second question involves an issue of great general or public importance, it is of note, as pointed out by the plaintiffs, that Circular 78 has been repealed in 2012.

13. Accordingly leave was refused.

3)  Stay of execution

14. The parties have consented to a stay of execution on terms.  Accordingly we made an order in terms of the Consent Summons as amended by the parties themselves.

15. As the consented terms did not provide for certificate for two counsel, the costs of one counsel is allowed according to the agreed terms.