ZHANG JIZHI v. HONG KONG TV INTERNATIONAL MEDIA GROUP LTD AND ANOTHER

CACV 96/2022, [2024] HKCA 464

On Appeal From [2022] HKCFI 308

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 96 OF 2022

(ON APPEAL FROM HCA NO 624 OF 2019)

________________________

________________________

________________________

J U D G M E N T

________________________

Hon Chow JA (giving the Judgment of the Court):

1.  On 3 August 2020, Master Sabrina Ho gave summary judgment for the Plaintiff against the 1^st and 2^nd Defendants, ordering (i) the 1^st and 2^nd Defendants to jointly and severally pay the Plaintiff damages for breach of contract in the sum of HK$11,904,754; or (ii) alternatively, the 1^st Defendant to make restitution to the Plaintiff by paying the sum of HK$11,904,754 on the ground of unjust enrichment.

2.  On 28 January 2022, Marlene Ng J gave judgment (“the CFI Judgment”) dismissing, inter alia, the 1^st Defendant’s appeal against the summary judgment given by the Master.

3.  On 9 January 2024, this Court gave judgment (“the CA Judgment”) dismissing, inter alia, the 1^st Defendant’s appeal against the judgment of Marlene Ng J. The basic facts of this case and the Court’s reasons for dismissing the 1^st Defendant’s appeal are set out in the Court’s Reasons for Judgment dated 12 April 2024 (“the Reasons for Judgment”) and will not be repeated here. In this judgment, we shall continue to use the expressions and abbreviations as defined in the Reasons for Judgment.

4.  By a notice of motion dated 6 February 2024 (“the Notice of Motion”), the 1^st Defendant applied for leave to appeal the CA Judgment to the Court of Final Appeal. In the Notice of Motion, the 1^st Defendant contends that a question of great general or public importance is involved in the intended appeal, namely, “whether post-contractual conduct is admissible for the purpose of construing a contract in the context of ascertaining the identities of [the] parties to the contract”[1]. For this purpose, the 1^st Defendant relies on the fact that the 2^nd Defendant and the Plaintiff executed the “Undated Documents” in September 2017[2] as being the relevant post-contractual conduct[3].

5.  At §14 of the Notice of Motion, the 1^st Defendant formulates the proposed question of great general or public importance as follows:

“Where the identity/identities of a party/parties to a written agreement is/are at issue, whether post-contractual conduct of a party/parties or a purported party/parties is admissible for the purpose of determining who were the parties to the relevant contract? And if the answer is in the affirmative, the Court of Final Appeal is invited to give definitive guidance on the prerequisites, if any, which must be satisfied before such departure from the parole evidence rule or from the general rule in Marble Holdings Ltd v Yatin Development Ltd (2008) 11 HKCFAR 222 is allowed.”

6.  Pursuant to paragraph 3 of Practice Direction 2.1, we determine the present application for leave to appeal on paper without an oral hearing.

7.  Under s 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, Cap. 484, an appeal shall lie to the Court of Final Appeal at the discretion of the Court of Appeal or the Court of Final Appeal in any civil cause or matter if, in the opinion of the Court of Appeal or the Court of Final Appeal (as the case may be), the question involved in the appeal is one which, by reason of its great general or public importance, or otherwise, ought to be submitted to the Court of Final Appeal for decision.

8.  We are not satisfied that leave to appeal ought to be granted in respect of the proposed question of law mentioned in §5 above. By the proposed question, the 1^st Defendant seeks to challenge the Judge’s view expressed at §§221-227 of the CFI Judgment that “post-contractual conduct is not generally relevant”[4]. However, as correctly pointed out by Mr Lau (for the Plaintiff), although the 1^st Defendant’s Notice of Appeal filed on 22 February 2022 specified the particular paragraphs of the CFI Judgment sought to be challenged by the 1^st Defendant, they did not include §§221-227 of the CFI Judgment[5]. In any event, the post-contractual conduct relied upon by the 1^st Defendant does not assist its “capacity” defence:

(1)  The Judge took the view that under Clause 1(2), which was the essence of the Agreement, the Plaintiff would acquire the Shares either by way of (i) a transfer from the existing shareholders (including the 2^nd Defendant) of the 1^st Defendant, or (ii) a capital increase/allotment by the 1^st Defendant[6]. While the fact that the 2^nd Defendant executed the Undated Documents with the Plaintiff in September 2017 would point towards the 2^nd Defendant “being a member of Party A with contractual obligation to give the Shares to the Plaintiff ”[7], it could not lead to any inference that the 1^st Defendant was excluded from Party A.

(2)  This Court agreed with the Judge’s view that a transfer of shares by the 2^nd Defendant to the Plaintiff was only one of two alternative modes of performance by Party A of its obligations to provide the Shares to the Plaintiff under the Agreement, the other being direct allotment of shares by the 1^st Defendant. Hence, the fact that the 2^nd Defendant executed the Undated Documents with the Plaintiff in September 2017 could not be viewed as evidence pointing to the 1^st Defendant’s exclusion from being a constituent part of Party A[8].

9.  Further, the Judge did give consideration to “post-contractual conduct (assuming that they would be taken into account)” for completeness sake[9], and took the view that, insofar as the Undated Documents[10] were concerned, they “pointed obviously towards D2 being a member of Party A with contractual obligation to give the Shares to P being Party B”[11].

10.  The Plaintiff did not in fact take any issue with the 1^st Defendant that post-contractual conduct could be relied upon for the purpose of determining the identity of the contracting parties – the Plaintiff relied on the Undated Documents to contradict the 2^nd Defendant’s defence that he was not a party to the Agreement[12].

11.  In all, the proposed question of law raised by the 1^st Defendant, even if it is answered in its favour, is not material to the outcome of the present case.

12.  There is a further reason why we would refuse to grant leave to appeal based on the proposed question of law mentioned in §5 above. The question of law raised by the 1^st Defendant is relevant only to its “capacity” defence to the Plaintiff’s claim for breach of contract. However, even if the 1^st Defendant should succeed in the capacity defence, it is still faced with the judgment given by the Master for the same amount based on unjust enrichment/restitution. The Master’s judgment on this alternative basis was upheld by the Judge and the Court of Appeal.

13.  The “or otherwise” limb in s 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance is reserved for special or exceptional cases. We do not consider that there exist any special or exceptional features in the present case to justify granting leave to appeal based on the “or otherwise” limb. In any event, it is the settled practice of this Court to leave the question of whether the “or otherwise” limb should be invoked to the Appeal Committee of the Court of Final Appeal for its consideration.

14.  For the above reasons, the Notice of Motion is dismissed. In view of the dismissal of the Notice of Motion, there would be no reason to grant any stay of execution of the judgment given by the Master. Accordingly, the 1^st Defendant’s summons dated 20 February 2024 (“the Stay Summons”) for stay of execution pending determination of the application for leave to appeal or the determination of the substantive appeal (in the event that leave to appeal is granted) is dismissed.

15.  The 1^st Defendant shall pay the costs incurred by the Plaintiff to resist the Notice of Motion and the Stay Summons, to be summarily assessed. We have considered the Plaintiff’s Statement of Costs dated 2 May 2024 lodged for the purpose of summary assessment. The present applications are relatively straight forward. The involvement of 3 fee earners is unnecessary, and the time spent on attendance on client/counsel, perusal of documents and research cannot be justified. The costs incurred in “Preparation for Summary Assessment” are generally not recoverable (see §13 of Practice Direction 14.3). The amount of costs claimed by the Plaintiff ($192,728) is excessive and disproportional. The Plaintiff’s costs are summarily assessed in the sum of $100,000.