KWOK CHIN WING v. 21 HOLDINGS LTD AND ANOTHER

Press Summary (English)

Press Summary (Chinese)

FACV No. 9 of 2012

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 9 OF 2012 (CIVIL)

(ON APPEAL from CACV NO. 55 OF 2011)

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Chief Justice Ma:

A INTRODUCTION

1.  The only issue for determination in this appeal was essentially a factual one, which I shall presently identify.  The appeal came to the Court under s 22(1)(a) of the Hong Kong Court of Final Appeal Ordinance[1], the “as of right” provision.  After hearing submissions from counsel for the Appellant[2], we dismissed the appeal with costs, our Reasons to be handed down on a subsequent date.

2.  In the underlying action, the Appellant (I shall refer to him also as the Plaintiff) claimed both the sum of $44.5 million (and interest thereon) as against the Respondent[3] (as 1^st Defendant) and also damages as against an individual, Mr Chan Sheung Wai (as 2^nd Defendant).  After a 14 day trial, Saunders J[4] held in favour of the Plaintiff as against RHL but dismissed the claim against Mr Chan.  RHL appealed to the Court of Appeal[5] and the appeal was allowed.[6]  Mr Chan took no part in the appeals to the Court of Appeal and to this Court.

3.  Before identifying the relevant issue for determination, I should first briefly set out the factual background.

4.  The Plaintiff was the co-founder of a group of companies loosely known as the Rockapetta Group.  The Group was in the business of the design, manufacture, sale and distribution of children’s toys.  RHL was incorporated in Bermuda in 1994 with a view to a listing on the Hong Kong Stock Exchange; it was so listed and this remains the position of the Respondent.[7]  RHL was the holding company in the Group, holding the shares in Group companies such as Rockapetta Industrial Company Limited (“RICL”)[8], Grand Extend Investments Limited (“GEIL”)[9] and other companies.  Being the majority shareholder in RHL, the Plaintiff was its chairman and was also an executive director of the company until he finally disposed of his shareholding in early 2001.  Save as to a number of aspects to which I shall return, it is not important for present purposes to go into the details of the sale of the Plaintiff’s shares in RHL.  It is sufficient to refer only to the fact that the sale by the plaintiff was to Mr Chan through their respective corporate vehicles.  Before the sale of the shares in 2001, RHL increased its share capital, and agreements were entered into for the placing and subscription of shares involving the Plaintiff through his corporate vehicle.

5.  Between May 1995 and March 1998, the Plaintiff made several advances totalling $83 million to Group companies: $23 million was advanced in 1995, $34 million in 1996, $21 million in 1997 and $5 million in 1998.  The Plaintiff was repaid $38.5 million, leaving a balance of $44.5 million and this was the sum claimed by the Plaintiff in the present proceedings.  The issue at trial, and the issue that has remained throughout in the appeal to the Court of Appeal and in the present appeal, was simply: who was or were liable for the repayment of the loans?  This question was, as observed at the outset, essentially a factual one.

B THE PLAINTIFF’S CASE ON THE ISSUE AND ITS RESOLUTION IN THE COURTS BELOW

6.  In the Re-Re-Re-Amended Statement of Claim (“the Statement of Claim”), the Plaintiff pleaded the loans in the following way:-

“5. Between March 1995 and March 1998, the Plaintiff advanced to the [Rockapetta] Group a total sum of HK$83 million (as to HK$69 million advanced to or through RICL and as to HK$14 million to or through GEIL (collectively, “the Loans”)) for the purpose of repaying the bank facilities granted by various banks to companies within the Group and the general working capital requirements of the Group. At all material times, funds and other income of the Group were treated as a common pool of funds for the whole Group. Therefore, although each company of the Group maintained its own bank accounts, funds of the Group were transferred freely from one bank account of one company to another within the Group as and when they were required, or a company in the Group would make payments on behalf of other companies in the Group when required (as the case may be).

6.   By two letters of agreement both dated 31 March 1999 from the Plaintiff to RICL and GEIL and countersigned and agreed by RICL and GEIL respectively, it was agreed, inter alia, that the Loan shall not be repayable by 1st April 2000 and interest shall accrue thereon at the prime lending rate for Hong Kong Dollars quoted by the Hongkong and Shanghai Banking Corporation Limited from time to time (“the prime lending rate”) from 1st April 1999 up to and including the date of full repayment of the Loans.”

7.  The claim for the balance $44.5 million made against RHL was pleaded in the Statement of Claim under two alleged agreements:-

(1) In March 2000, it was agreed between the Plaintiff and the directors of RHL that in consideration of the Plaintiff not making demands for the immediate repayment of the loans and waiving his entitlement to some interest, RHL would repay the loans together with interest, and for such purpose would undertake a series of fund raising exercises.[10] This agreement was referred to in the pleading as “the Initial Agreement”.

(2) The second alleged agreement was pleaded to have been made on 19 June 2000 whereby in consideration of the Plaintiff again not demanding immediate repayment of the loans and interest thereon, RHL would repay the outstanding balance of the loans and interest thereon, doing so from the price of goods sold or to be sold by the Group.[11] This agreement, referred to as “the Subsequent Agreement”, was said to be supplemental to the Initial Agreement.

8.  The breaches pleaded by the Plaintiff against RHL referred only to the Initial Agreement and the Subsequent Agreement[12] and no other. Certainly, no claim was made against RHL on the basis of any pre-existing liability on its part.  As mentioned above, claims were also made against Mr Chan, the 2^nd defendant in the proceedings, on the basis of fraudulent misrepresentation but these are of no relevance for present purposes.

9.  In his judgment, the trial judge dismissed the claims made by the Plaintiff under the Initial Agreement and the Subsequent Agreement[13] and that ought to have been the end of the matter as no other claim was pleaded against RHL.  However, for reasons which are not entirely clear, the learned judge found that liability against RHL was established on the basis of an oral agreement said to have been made between the Plaintiff on the one hand and one Leung Yuk Lun[14] on the other to the effect that while funds advanced by the Plaintiff could be used by subsidiary companies within the Group, nevertheless the holding company (that is, RHL) would be responsible for the repayment, the loans being treated to have been advanced to RHL itself.[15]  The basis for this finding was certainly not pleaded by the Plaintiff nor were we referred to the evidential basis for this finding either.

10.  It therefore came as no surprise that RHL appealed to the Court of Appeal.

11.  In the judgment of Kwan JA, with which the other judges agreed, this finding of the trial judge was reversed.  After noting that this factual basis was not pleaded, Kwan JA went on to say[16] that there was simply no evidence of such an agreement having been reached and it was recorded that leading counsel for the Plaintiff could not point to any such evidence either.

12.  The Plaintiff however adopted a fallback position in the Court of Appeal.  It was argued that the liability of RHL to the Plaintiff was a joint and several liability assumed by that company together with the other companies in the Rockapetta Group.  As far as I can see, this was the first time in the history of the action that a case based on joint and several liability had been raised by the Plaintiff.  The factual basis for this cause of action appeared to be merely that monies had been advanced by the Plaintiff to the whole Group without specification as to which entity should receive any particular tranche, it being left to the Group’s accountants to deposit monies into whichever company needed funds.  According to the Plaintiff’s testimony, all the companies in the Group had access to the loans extended by him.  One part of the Plaintiff’s evidence, which it was said indicated his intention, came during his cross examination[17]:-

“A. Well, but to me all the companies has equal access to use my money. Likewise all the companies bear the responsibility of repaying me the loans because every company use my money. Therefore I did not bother with which accounts of whichcompanies was the money deposit. If I did not deposit the money into the company, the company itself would have been closed down or liquidated much earlier on.”

13.  The Court of Appeal also rejected the Plaintiff’s case made on this basis.  The following extract from the judgment of Kwan JA made this clear:-

“48. I would agree with Mr Chan. Lending to nine companies with each of them made jointly and severally liable for repayment of the loan to the external creditor is unusual, to say the least. Although companies in a group may pool their resources and internal lending may take place, and a loan obtained from an external creditor may be on-lent by a company to another company within the group, this does not provide a legal basis that vis-à-vis the external creditor, all the companies in the group should assume liability for the external loan. Mr Ramanathan changed his position in his oral submission and sought to argue that in a lending to a group of companies, not all the companies would be made liable but only the holding company and whichever company in the group that had the use of the funds. That would depend on the loan agreement that was actually made, and this is not a case pleaded by the plaintiff.”

14.  The judgment of Kwan JA analysed the evidence at some length to reject the submission that the loans of $83 million were made to the Group companies as a whole and that liability would somehow attach to individual companies within the Group, in particular RHL (whether on the basis of some joint or several liability, or on some other alleged basis). The appeal was accordingly allowed and the Plaintiff’s action against RHL was ordered to be dismissed.

C RESOLUTION OF THE APPEAL BEFORE THIS COURT

15.  As mentioned earlier, the appeal to this Court did not require leave, it being “as of right”.[18] And as also mentioned earlier, the issue raised was really one of fact.  If leave to appeal had been required under s 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, there is no doubt that such leave would have been refused.  I shall say something more about this at the end of my judgment.

16.  In the appeal before us, the Plaintiff all but abandoned the basis on which the trial judge had found in his favour.[19]  Instead, he relied on the case against the Respondent being founded exclusively on the joint and several liability that it was said the companies in the Rockapetta Group (including RHL) had assumed regarding the loans made by the Plaintiff.

17.  Valiantly argued though the appeal was by leading counsel for the Plaintiff, the appeal was a hopeless one.  This is for the reasons which are dealt with under the following headings.

C.1 Pleadings

18.  The Statement of Claim, even though it had undergone four amendments, did not plead a case against RHL based on a joint and several liability that had been agreed by all the companies in the Group. The only agreements that had been pleaded in relation to the loans were those made by RICL and GEIL (see para 6 of the pleading[20]) and, as far as RHL was concerned, the Initial Agreement and the Subsequent Agreement.[21]

19.  When pressed, Mr Westbrook SC referred to para 5 of the Statement of Claim[22] as pleading a case based on joint and several liability.  It did no such thing.  In support of his submission here, counsel stated that only material facts, rather than law, must be pleaded.  This is of course correct but an agreement to establish a case on the basis of joint and several liability must – like any other agreement – be properly pleaded: when and how the agreement was made, its material terms, the consideration therefor, breach, the sum due thereunder, and where appropriate, damages.  It is right to point out that in other parts of the Statement of Claim, the Plaintiff did adequately plead a case based on agreements having been made (viz. the Initial Agreement and the Subsequent Agreement), and in that part of the pleading dealing with the Initial Agreement, there was specific mention of the term “joint and several liability”.  However, nothing in the rest of the Statement of Claim was even remotely sufficient to raise the case the Plaintiff sought to argue before this Court.

20.  Mr Westbrook urged upon us that para 5 of the Statement of Claim led inevitably[23] to the legal conclusion that the companies in the Group were each jointly and severally liable to the Plaintiff for the loans.  This submission cannot be accepted and no authority was provided to support it.  Quite apart from the necessity to make one’s case clear on the pleadings, the mere fact that loans are made for the benefit of a group of companies, with monies being freely transferable within the group and payments made to any company as and when required, did not without more make the liability of the companies a joint and several one, or even a joint one.  Where, as seems to have occurred in the present case, it was left to the Group’s accountants to book the loans, the more likely conclusion was that the companies to which any particular amount of money was specifically directed, would be the entity legally liable to repay the loan as far as the Plaintiff (the lender) was concerned.  And how a group of companies chose, as between themselves, to treat monies lent to the group would generally be of no concern to the lender in the absence of specific agreement.

21.  It should by now really be quite unnecessary to issue yet another reminder on the rationale behind pleadings.  The basic objective is fairly and precisely to inform the other party or parties in the litigation of the stance of the pleading party (in other words, that party’s case) so that proper preparation is made possible, and to ensure that time and effort are not expended unnecessarily on other issues:- Wing Hang Bank Limited v Crystal Jet International Limited[24].  It is the pleadings that will define the issues in a trial and dictate the course of proceedings both before and at trial.  Where witnesses are involved, it will be the pleaded issues that define the scope of the evidence, and not the other way round.  In other words, it will not be acceptable for unpleaded issues to be raised out of the evidence which is to be or has been adduced.  As the Court of Appeal remarked in Wing Hang Bank Limited v Crystal Jet International Limited[25]:-

“(2) In a trial, particularly where evidence is given by witnesses, it becomes extremely important that each side knows exactly what are the live issues. Where issues are sought to be introduced that have not been adequately or properly pleaded, amendments must be sought unless the consent of the other party or parties has been obtained. It will simply not do for unpleaded issues to be ‘slipped in’ when evidence is being given in the hope that the other side is not sufficiently alert to object.”

22.  In the present case, much reliance was placed on the Plaintiff’s testimony given in cross examination to evidence the assertion made before us to the effect that the Rockapetta Group companies accepted a joint and several liability in respect of the Plaintiff’s loans.[26]  It is simply not permissible for an issue to be raised in this way: one does not sift through the evidence adduced in a trial in the hope that something was said that can conceivably found a cause of action.  Issues, I would reiterate, must be properly pleaded unless for some reason the pleadings have assumed a less significant role in the proceedings.  I would perhaps also observe here that in any event the said passage from the Plaintiff’s testimony at best indicates only a subjective intention on his part.  This is not admissible to establish the terms (or even the existence) of an agreement.

23.  The purpose of pleadings, in clearly and unambiguously setting out the true extent and nature of a dispute not just for the benefit of the parties but also for the Court in managing and trying cases, remains important under our system of civil justice.  The retention of the old rules as to pleading as well as the introduction of new provisions over four years ago under the Civil Justice Reform, reinforce this.

24.  One of the new provisions introduced under the Reform was RHC o.18 r.12A which reads:

“ A party may in any pleading make an allegation of fact which is inconsistent with another allegation of fact in the same pleading if–

(a) the party has reasonable grounds for so doing; and

(b) the allegations are made in the alternative.”

If the Plaintiff had, as he ought to have done, sought leave to plead a case on joint and several liability, questions would inevitably have been raised as to whether the Plaintiff could in the first place properly plead such a cause of action, which would have been (at least at first blush) quite inconsistent with his pleaded case based on the Initial Agreement and the Subsequent Agreement. The cause of action based on these Agreements assumed that there was no pre-existing liability as far as RHL was concerned, hence the need to enter into agreements which made RHL liable for the repayment of the loans to the Plaintiff.  In these circumstances, it would therefore have been quite difficult to see how a pre-existing liability jointly and severally assumed with others, fitted in.  Before us, the Plaintiff did not provide any enlightenment on this.  To me, this only served to highlight even more the insuperable weaknesses in the Plaintiff’s case made on this new basis.

25.  Another new provision is the important RHC o 41A dealing with statements of truth.  If, in the present case, that provision had applied to any amendment which the Plaintiff might have sought to make in order to plead a case of joint and several liability, he would have been required to verify the amendment by a statement of truth.[27] Given this requirement, the rule would have posed yet another difficulty for the Plaintiff alongside o 18 r12A.  Both these new provisions emphasise the continuing important role of pleadings in any modern system of civil justice.

26.  This appeal is the second case in which this Court has recently had occasion to comment on pleadings (or rather, the lack thereof).  In Sinoearn International Limited v Hyundai-CCECC Joint Venture,[28] Ribeiro PJ referred to the “extraordinary” position of a party being permitted to run at trial an unpleaded case.  I associate myself with the sentiments expressed in that judgment.  As stated by Ribeiro PJ[29]:-

“34. Pleadings are not mere formalities. They impose a necessary discipline and are fundamental to enabling every procedural facet of the adversarial system to operate fairly.”

27.  The failure properly to raise a cause of action based on joint and several liability would have been enough to dispose of this appeal.  For the sake of completeness, however, I should also mention that the case was all the more hopeless when one examined the evidence.

C.2 The evidence

28.  The documents at trial overwhelmingly pointed to the fact that the loans made by the Plaintiff were to RICL and GEIL, and it was these two companies which became primarily liable towards the Plaintiff in relation thereto.  There was no document which indicated otherwise; certainly no document pointed towards joint and several liability.

29.  In the judgment of Kwan JA, reference was made to the annual reports of RHL, RICL and GEIL (for the relevant years when the loans were made) which all stated that the loans were made to RICL and GEIL.[30]  These were signed by the Plaintiff, as indeed were written resolutions[31] of the Board of Directors of both these two companies which stated expressly that loans were made by the Plaintiff to RICL and GEIL.  There were also letters passing between the Plaintiff and the two companies from 1999 to 2001 which again evidenced this.[32]

30.  Mr Westbrook SC contended that some documents supported the Plaintiff’s case on joint and severally liability.  With respect, they did no such thing:-

(1) First, three of the 20 cheques issued by or on behalf of the Plaintiff which made up the $83 million loans were drawn in favour of “Rockapetta” as the payee.  It was said that this evidenced a payment to the Group.  It is curious that the trial judge treated this piece of evidence as indicating that payments were made to RHL itself, but the Plaintiff does not seek to uphold this finding and was content merely to say that it indicated payments made to the Group as a whole.  Even if this was the effect of these three cheques (which I doubt), it goes nowhere near supporting a case based on joint and several liability.

(2) Secondly, reliance was also placed on the annual reports of RHL for the years 1999 to 2001 in which was stated that the interest payable on the loans was payable by the Group. Whatever else this statement may have indicated, it could not in my view evidence a joint and several liability assumed by each Group company towards the Plaintiff in relation to the loans.  In any event, these reports had to be seen against the other annual reports of RHL, to which reference has already been made.[33]  Such reports referred unequivocally to the fact that the loans were made to subsidiary companies.

(3) Thirdly, the Plaintiff relied on certain repayments of the loans[34] having been made by RHL as pointing towards an acceptance by RHL that it was liable to the Plaintiff for repayment.  However, when seen against the other instances of repayment (when cheques were issued to the Plaintiff by RICL and another subsidiary company), the evidence pointed more to the financial workings of a group of companies[35] than any support for the joint and several liability case run by the Plaintiff.  It is also important in this context to note that in his witness statement for the trial,[36] he referred to the repayments of $38.5 million as being payments made pursuant to the Initial Agreement and the Subsequent Agreement (rather than pursuant to any pre-existing liability).  It will be recalled that the case based on these two agreements was rejected by the trial judge.

(4) Lastly, reliance was placed on a draft deed in March 2000 to be made between the Plaintiff, RHL, RICL and GEIL in which (in the Recitals) it was stated that loans of $83 million had been advanced to RHL through RICL and GEIL.  The trial judge placed reliance on this draft deed in his judgment.  The Court of Appeal was right in holding that not much could be inferred from an unexecuted deed.  It was also inconsistent with the case now advanced by the Plaintiff inasmuch as the only liability referred to in the draft deed was that of RHL, and not of the Group companies as a whole on the basis of joint and several liability.

31.  A general submission made by Mr Westbrook SC regarding the documents which were against the Plaintiff’s case was that they somehow only represented the way the Group’s accountants chose to treat the loans.  The clear suggestion implicit in this submission was that these documents did not reflect reality.  It was also submitted that insofar as the documents made reference to RICL and GEIL being liable to the Plaintiff for the repayment of the loans, this was correct since they were liable under (according to the Plaintiff) a joint and several liability together with other Group companies (including RHL).

32.  These submissions might conceivably have been arguable if there was evidence supporting this factual scenario.  However, no evidence was adduced by the Plaintiff to this effect.  I have already made reference to the Plaintiff’s witness statement.  In para 32 of that statement, the Plaintiff dealt with the background to the Initial Agreement and why, according to him, it was in RHL’s interest to enter into it:-

“32. I verily believe that the Initial Agreement was and would be inthe interests of the Defendant for the following reasons:-

(1) Without the Defendant's agreement to repay theLoans and interest thereon to me, I could immediately after 1^st April 2000 demand RICL and GEIL respectively to forthwith make repayment in full of the Loansand interest thereon to me, and would no doubt insist upon such repayment in view of my intended disposal of my interests in the Defendant.

(2) At that time, the Group did not have enough available funds to repay the Loans and interest thereon in full to me. According to the Consolidated Balance Sheet of the Group as at 31" December 1999 (containedin the Annual Report of the Defendant covering the period from 1st April 1999 to31st December 1999 [Item 2 of the Plaintiff’s List of Documents], the amount of "Bank balances and cash" was only HK$17,237,000.00. If RICL and GEILwere demanded tomake immediaterepayment in full of` the Loans and interestthereon,then, even if the available funds of the whole of the Group were utilised for such purpose, it was highly likely that they would default in such repayment or would at least have great difficulties in doing so.

(3) Since the core business and assets of the Group were held by RICL, the default on the part ofRICL (and the possible winding up of RICL consequent thereon) would no doubthave grave financial impact on the whole of the Group, including the Defendant.  The listing status of the Defendant might well be affected.  Allthese would have disastrous effectonthe Defendant.”

33.  Far from assuming that RHL was already liable to him for the repayment of the loans, on the basis whether of joint and several liability or any liability, the Plaintiff was stating that the liability lay with RICL and GEIL.

34.  This stance was entirely consistent (as we have seen) with the documents and also consistent with his conduct.  I need only refer to one aspect of the Plaintiff’s conduct.  The present litigation was not the only set of proceedings instituted by the Plaintiff which touched on the question of the repayment of the loans.  In 2006, he issued writs against his financial consultant[37] and his solicitors[38], as well as the purchasers of his shares in RHL,[39] all on the basis that loans had been advanced by him to Group companies (which, in context, could only mean RICL and GEIL).  Further, this was the position he adopted when he was sued by RHL in 2002[40].  He also petitioned for the winding up of RICL[41] on the basis of the failure to repay the loans made by him to that company (not on the basis that the loan was to someone else and that RICL was jointly and severally liable).

D CONCLUSION

35.  For these reasons, the appeal was dismissed.

E POSTSCRIPT

36.  I have already mentioned that the Plaintiff’s appeal to this Court was as of right under s 22(1)(a) of the Hong Kong Court of Final Appeal Ordinance.  This is yet another and all too common example of an unmeritorious appeal which has reached the Court of Final Appeal by this route.  Permanent Judges of this Court have frequently remarked on s 22(1)(a) of the Ordinance as being anachronistic and, in a case such as the present, giving rise to unfairness to respondents in an appeal: see the remarks of Ribeiro PJ in China Field Limited v Appeal Tribunal (Buildings) (No. 1)[42] and Bokhary PJ in Wealth Duke Limited v Bank of China (Hong Kong) Limited.[43]  It is also to be noted that in the latter case, Bokhary PJ observed that Hong Kong ought to be in line with other common law jurisdictions by abolishing appeals as of right; see also similar observations made by Ribeiro PJ in Chinachem Charitable Foundation Limited v Chan Chun Chuen.[44]

37.  In Champion Concord Limited v Lau Koon Foo (No. 2),[45] I referred to the fact that the experience of this Court has been that the vast majority of appeals brought by this route have been “a drain on resources, waste time and hinder in a very tangible way the resolution of other, far more meritorious proceedings”.  Indeed they are and the present case demonstrates this point.

38.  As we have seen, the present appeal was devoid of merit, and if leave had been required, there was no prospect of such leave being granted.  Yet, it was listed before the Court for a two day hearing. Part B of the Record (the documents bundle) occupied 600 pages.  When the parties were first approached in relation to the bundles to be used in the appeal, the Plaintiff (the Appellant) submitted 15 lever arch files comprising over 3,700 pages of documents.  Following a series of paper directions and one oral hearing before the Registrar of the Court, the Court eventually agreed to the two Part B files used in the appeal.  The Respondent eventually filed another bundle of documents for use in the appeal (comprising over 150 pages). Both the Appellant and the Respondent lodged Cases and Supplemental Cases (consisting of 34 pages of submissions on the Appellant’s part and altogether 46 pages on the Respondent’s).  35 authorities were referred to in the parties’ Cases and produced to the Court.

39.  Cases such as the present appeal are inherently wasteful of resources which the Courts have in limited supply.  Following the Civil Justice Reform introduced in 2009, this kind of wastage ought no longer be tolerated by the public.  It is unfair to the successful parties in a litigation, it is unfair on other litigants who have deserving cases before the Courts and it is ultimately unfair to the community.

Mr Justice Chan PJ:

40.  I agree with the judgment of the Chief Justice and the observations made by Mr Justice Mortimer NPJ.

Mr Justice Ribeiro PJ:

41.  I agree with the reasons for judgment of the Chief Justice.

Mr Justice Mortimer NPJ:

42.  I agree with the reasons given by the Chief Justice for the dismissal of this appeal with costs.

43.  I would however add my voice to his comments concerning unmeritorious appeals brought under the ‘as of right’ provision of s.22 (1)(a) of the Hong Kong Court of Final Appeal Ordinance.

44.  Whatever good historical reasons there may have been for this provision, it no longer has any validity or proper purpose.  This has led other common law jurisdictions to abolish similar provisions because hopeless appeals brought as of right result in injustice and unfairness.

45.  It is unjust to the successful respondent whose remedy is delayed and who may not recover all his costs; it is of no benefit to the losing appellant who will fail and then pay all the costs; it is unfair to waiting litigants who suffer unnecessary delay in having their disputes resolved; it wastes the time of the court and the judges; and it is an unnecessary additional burden on the public purse.

Sir Thomas Gault NPJ:

46.  I agree with the reasons for judgment given by the Chief Justice.