KING FUNG CONSTRUCTION WORK CO LTD v. YIP KWAI CHOR AND ANOTHER

HCMP 51/2008

IN THE HIGH COURT OF

THE HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 51 OF 2008

(On An Intended Appeal from HCA 2183/2004)

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DECISION

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Hon. Yuen JA:

1.  This is an application by King Fung Construction Work Co Ltd (“King Fung”) for an extension of time to serve a notice of appeal which was late by 6 days.  The application is resisted.   However before I consider the relevant principles and their application, it is necessary to point out that this is not a typical application - there are some unique circumstances in this case which merit special consideration.

2.  King Fung was a company in which Lau Kai Yan and Yip Kwai Chor were shareholders and directors.  Mr Yip controlled another company Sing Yip Construction Engineering Ltd (“Sing Yip”) which also had business transactions with King Fung. 

3.  As a result of certain disputes, in July 2004 Mr Yip commenced proceedings to wind up King Fung.  In turn, in September 2004 King Fung issued HCA 2183/2004 (“the High Court Action”) making certain claims against Mr Yip and Sing Yip.  In 2005, Mr Yip abandoned his petition to wind up King Fung but instead sought relief under s.168A Companies Ordinance - these proceedings became known as HCMP375/2005 (“the s.168A application”). 

4.  The allegations in the High Court Action and the s.168A application were closely intertwined and both sets of proceedings were heard together.   The hearing before Recorder A. Ho S.C. took place over a period of 16 days.

5.  On 12 December 2006 the learned Recorder handed down a detailed 70-page judgment.  It would be fair to say that none of the parties got everything each of them had sought. 

6.  As far as King Fung’s High Court Action against Mr Yip and Sing Yip were concerned, the recorder ordered Sing Yip to pay King Fung a sum of about $3.2 million but dismissed the rest of King Fung’s claims.  It is material to the present application that King Fung’s claims against Mr Yip personally were dismissed. 

7.  As far as the s.168A proceedings were concerned, the recorder found that Mr Lau had been guilty of unfairly prejudicial conduct and he made an order that Mr Lau should purchase Mr Yip’s shares in King Fung.  As the recorder had found that Mr Lau had misapplied King Fung’s money, he also made an order that Mr Lau should repay King Fung various sums of money.  He also ordered Mr Lau to account to King Fung for various other sums received by another company.  The recorder had also found that Mr Lau had wrongly diverted a particular business opportunity from King Fung, and accordingly he made an order that Mr Lau should pay King Fung the profit it would have earned from that business opportunity.

8.  At the end of his judgment, the recorder invited further submissions on issues relating to the orders he had made in the s.168A application, i.e. relating to the date and other parameters for the valuation of Mr Yip’s shares in King Fung.  He said “in the circumstances, I propose not to make any formal orders in either set of proceedings at this stage”.  As events transpired, the parties appeared before the recorder again in August 2007 for further submissions and on 18 October 2007 he handed down a decision in relation to these issues.  

9.  It was as a result of these unusual circumstances that the order in the s.168A application was sealed on 31 October 2007 and the order in the High Court Action was sealed on 5 December 2007.

10.  In respect of the s.168A application, Mr Lau served his notice of appeal in time, on 28 November 2007.  In respect of the High Court Action, the deadline for serving the notice of appeal fell on Wednesday 2 January 2008.  However the notice of appeal was not served as Mr Yau now accepts.  King Fung’s solicitor Tang Tat Ming has gone on affirmation to say that that was an “oversight”.  On Tuesday 8 January 2008 the present summons (bearing the date of 7 January 2008) was issued for extension of time.

11.  It is well-established that in the exercise of its discretion whether to extend time to lodge a notice of appeal, the court would normally take into account: (1) the length of the delay; (2) the reasons for the delay; (3) the chances of the appeal succeeding; and (4) the prejudice to the other party to the appeal (Chiu Sin Chung v Yu Yan Yan, Angela [1993] 1 HKLR 225). 

12.  These are of course guidelines and as Sir Thomas Bingham MR observed in Costellow v Somerset County Council [1993] 1 WLR 256 (quoted by Hartmann J in Mobil Petroleum Co Inc & Anor v Registrar of Trade Marks [2000] 4 HKC 670 and approved by this Court (Le Pichon and Cheung JJA) in Nantong Angang Garments Co Ltd v Hellmann International Forwarders & Ors [2005] 4 HKC 86), “a rigid mechanistic approach is inappropriate”.  The court must take into account all the circumstances of the case in determining how its unfettered discretion should be exercised in the overall justice of the case.

13.  In the present case, King Fung’s delay was in reality only 4½ days (as it could not have filed any papers for extension of time on Saturday afternoon or Sunday 5-6 January 2008).  The delay is not a long one. 

14.  As for the excuse proffered by King Fung’s solicitor Mr Tang of “oversight”, in my view that should have been expanded upon and is hardly acceptable.  The judgment of Le Pichon JA in Secretary for Justice v Hong Kong & Yaumati Ferry Co Ltd & Anor [2001] 1 HKC 125 should be well-known to the profession by now and there is no excuse for solicitors to still fail to go into the necessary detail.     

15.  But in the circumstances of this case, there is one material factor which in my view outweighs other relevant factors.  It is significant that this High Court Action was heard together with the s.168A application, that the issues in both sets of proceedings were dealt with globally and not separately, and that the learned recorder decided not to make a formal order in the High Court Action until after consequential directions in the s.168A application.  And as I have said, the s.168A application is already the subject of an extant appeal.  In so far as a sum may have to be paid to Mr Yip in the s.168A application, that sum may well be affected by any sums he may be held liable to pay King Fung should the company’s appeal in the High Court Action succeed.  In the face of those unique circumstances, to refuse an extension of time of less than 5 days for a procedural error would cause a substantive injustice.    

16.  Mr Yip and Sing Yip would not suffer any prejudice by an extension of time.  They have all along been aware of the fact that King Fung intends to contest the order in the High Court Action as well as in the s.168A application.  This was because as long ago as January last year, King Fung had already sent them a draft notice of appeal in the High Court Action.  However as I have said, that intended appeal could not be lodged with the Court by reason of the recorder’s directions. 

17.  In the circumstances of this case, I am sure that the only proper exercise of my discretion is to make an order in terms of the summons filed on 8 January 2008 and I so order.

(After submissions on costs)

18.  I make a gross sum order in the sum of $25,000.