JOSEPH GHOSSOUB v. TEAM Y&R HOLDINGS HONG KONG LTD AND OTHERS

HCMP 3136/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 3136 OF 2016

(ON AN INTENDED APPEAL FROM HCMP NO 1074 OF 2015)

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J U D G M E N T

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Hon Kwan JA (giving the judgment of the Court):

1.  This is the renewed application of the 1^st to 4^th respondents for leave to appeal to the Court of Appeal against the decision of Deputy High Court Judge Le Pichon dated 16 June 2016 (“the Decision”), in which the judge dismissed their summons to stay the petition presented by the petitioner under section 724 of the Companies Ordinance, Cap 622 for relief based on unfair prejudice. The respondents sought to stay the petition pending determination of the issues raised therein by the High Court of England and Wales on the ground that the allegations in the petition “consist of or give rise to issues or disputes which the Petitioner has agreed should be referred to the exclusive jurisdiction of that court”.

2.  The judge refused leave to appeal by a decision dated 28 October 2016 (“the Leave Decision”).

3.  We exercise our power to determine this application on the basis of written submissions only without a hearing under Order 59 rule 2A(5).

4.  The respondents seek leave to appeal on both limbs under section 14AA(4) of the High Court Ordinance, Cap 4, namely, that the appeal has a reasonable prospect of success and there is some other reason in the interests of justice why the appeal should be heard.

5.  The grounds of appeal in the draft notice of appeal are the same as those in the draft considered by the judge.  We will adopt the abbreviated terms in Decision and the Leave Decision.

6.  We will grant leave to appeal on grounds 2, 3 and 4 for these reasons.

7.  Ground 2 is concerned with the judge’s finding that the exclusive jurisdiction clause in the SPA fetters the petitioner’s statutory right to present an unfair prejudice petition, and to that extent was held to be inoperative.  As pointed out by the respondents, ground 2 is at the heart of the intended appeal.  There is no direct local or English authority on this point.  This is a matter of general principle and public policy is engaged.  We think it would be of benefit for the appeal court to hear further argument on this important question, and clarify any aspect of the law that may need clarification.  We have considered the grounds in §3 of the draft notice of appeal.  Given our views that there is some other reason in the interests of justice why the appeal should be heard, all that we need say about the merits is that we do not think the grounds clearly have no reasonable prospect of success so that the appeal would have been in vain.

8.  Ground 3 is concerned with the finding that the petitioner did not have an effective remedy if it was bound to bring its action in England.  It is connected with the argument that the exclusive jurisdiction clause in the SPA fetters the petitioner’s statutory right to present an unfair prejudice petition.  We think it appropriate to grant leave to appeal on this ground as well so that the respondents would not be unduly hampered in presenting their arguments on the crux of the appeal.

9.  Ground 4 relates to the exercise of discretion in the application for stay of the petition.  We grant leave on this ground solely on the basis that if the respondents should succeed on grounds 2 and/or 3, the appeal court would need to exercise the discretion afresh.

10.  We refuse leave to appeal on ground 1, which is concerned with the finding that the complaints relating to exclusion from management and the Makdessi dispute do not fall within the exclusive jurisdiction clauses in the SPA and the SA.  The grounds of appeal in relation to ground 1 merely repeat the arguments advanced before the judge on a liberal construction of these clauses and the contention that they should be construed as widely as possible.  We are in entire agreement with the reasons given in §§60 to 66 and 106 to 107 of the Decision.  We do not think the grounds of appeal have reasonable prospects of success.

11.  We grant leave to appeal limited to grounds 2, 3 and 4 in the draft notice of appeal.  We give leave to the respondents to file a notice of appeal within 7 days of the handing down of this judgment.  

12.  The respondents seek a stay of the proceedings in the petition and the execution of the directions given by Harris J on 15 September 2016 on the further conduct of the petition pending the determination of the appeal.  As we have decided to grant leave to appeal on three of the grounds, we think it appropriate to grant a stay pending appeal.  Contrary to the respondents’ estimate, we estimate the length of hearing of the appeal to last no more than half a day, so we do not envisage the stay pending appeal to be for very long.

13.  We do not intend to apportion the costs of this application in accordance with the outcome.  We would take a broad brush approach and make an order nisi that the costs of this application be in the cause of the appeal.