Law Siu Hong Albert and Others v. Cheung Kin Ping and Another

CACV 114/1997

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 114 OF 1997

(ON APPEAL FROM COMPANIES WINDING UP NO. CWU 103 OF 1995)

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REASONS FOR DECISION

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Hon Woo JA:

Decision

1. After hearing the 1st respondent and the 1st petitioner on 28 July 2000, we granted leave to the 1st respondent to fix a date for the hearing of his appeal, and stated that we should hand down our reasons later. These are the reasons.

Introduction

2. On 20 February 1997, after a hearing lasting six days, Rogers J (as he then was) gave judgment for the four petitioners against the first, second, third and fourth respondents, ordering the latter to purchase the shares in Gold Colour Limited ("the Company") belonging to the four petitioners. The 3rd and 4th respondents do not appear in the formal parts because they have not joined in the appeal. The four petitioners and the four respondents were at all material times the shareholders of the Company. Following the judgment, an order was sealed on 18 April 1997, containing the following terms:

1. the 1st and 2nd respondents do purchase the petitioners' shares in the 5th respondent at the rate of HK$6.67 per share; the purchase of the 120,000 shares respectively owned by the petitioners, namely as to the 1st petitioner 45,000 shares, as to the 2nd petitioner 30,000 shares, as to the 3rd petitioner 30,000 shares and as to the 4th petitioner 15,000 shares, shall take place within 21 days from the date when the petitioners tender to the 1st and 2nd respondents or their solicitors Bought and Sold Notes and Instruments of Transfer in respect of the said shares duly executed by the petitioners, at which time the 1st and 2nd respondents shall forthwith pay to the petitioners the price for the said shares in the sum of HK$800,400.00 together with interest at judgment rate thereon from 30th October 1994 until full payment;

2. the 1st and 2nd respondents do pay to the petitioners a sum of HK$530,582.00 together with interest at judgment rate thereon from 30th October 1994 until full payment, being repayment of directors' loans respectively owed to the petitioners, namely, as to the 1st petitioner HK$173,000.00, as to the 2nd petitioner, HK$110,613.47, as to the 3rd petitioner, HK$194,050.90 and as to the 4th petitioner HK$52,918.00;

3. the 1st and 2nd respondents do pay the petitioners their costs of action to be taxed if not agreed; ...

3. The order also contains a paragraph 4, which is an order nisi in the same terms as paragraphs 1, 2 and 3 above against the 3rd and 4th respondents that unless within 14 days an application be made by the 3rd and 4th respondents to the contrary, the order would become absolute and they should be subject to it.

4. On 29 May 1997, within the time allowed, the 1st and 2nd respondents filed a notice of appeal against Rogers J's judgment. On the same day, those respondents also filed a notice of setting down of the appeal. It was not until 25 February 2000 that the 1st respondent filed an application to fix a date for the hearing of the appeal.

5. On 8 March 2000, Wong JA refused to grant the 1st respondent's application because of the delay and because he considered that the appeal was not meritorious.

6. On 25 April 2000, the 1st respondent renewed his application to fix a date for hearing the appeal before this Court. On 16 June 2000, the date of hearing of the application, this Court ordered the hearing to be adjourned so as to allow the petitioners to be informed of the application and to appear, if they so wished, in the resumed hearing as their interests were involved.

The criteria

7. Although the time for setting down appeal is prescribed by Order 59, rule 5 of the Rules of the High Court, there is no specific provision for a time limit within which an appellant must apply to fix a date for hearing of the appeal. However, we are of the view that because of the delay, it is within the inherent power of the Court whether to allow a date to be fixed for the hearing of the appeal, so as to regulate its own business and to prevent excessive delays in the proceedings that it has to handle. Whether to allow such an application is a matter of discretion. In A Solicitor v. Law Society of Hong Kong [1998] 2 HKC 88, Nazareth VP stated that the following factors would normally be taken into account on an application for extension of time for setting down an appeal :

(1) the length of the delay;

(2) the reasons for the delay;

(3) the chances of the appeal succeeding if time for appeal is extended; and

(4) the degree of prejudice to the potential respondent if the application is granted.

8. Although the application we are dealing with is for fixing a date for the hearing of an appeal, and not for setting down an appeal, we are of the view that generally the four factors mentioned by Nazareth VP should be considered. However, in the absence of the opponents to the appeal when hearing an application for fixing a date for hearing an appeal, it is difficult for the court to assess whether, and if so how much, prejudice has been caused or will be caused to them.

Length of delay

9. As far as the Court is concerned, as from 29 May 1997, the date when the notice of appeal was filed, there had been inaction on the part of the 1st and 2nd respondents till 25 February 2000 when the 1st respondent applied to fix a date for hearing. The delay had been in excess of 2 1/2 years and it is doubtless substantial.

Reasons for the delay

10. By the documents he filed with this Court, the 1st respondent informed us that the 2nd respondent, his co-appellant, had reached a settlement with the petitioners in about January 1998. As far as the 1st respondent is concerned, he has done the following things in preparation of his appeal :

(a) He applied for part of the transcript of the trial proceedings and obtained the same on or about 21 August 1997.

(b) On 6 September 1997, he paid his former solicitors who were handling the trial before Rogers J $10,000 for the purpose of the appeal.

(c) On 9 December 1997, the Court made available another part of the transcript at his request.

(d) He also started negotiations with the petitioners for a settlement by talking to the 2nd petitioner over the phone on 27 December 1997, talking to the 1st petitioner over the phone on 8 January 1998, talking to the 2nd petitioner over the phone on 22 May 1998, meeting with the 2nd petitioner in a restaurant on 23 May 1998, talking to the 1st petitioner over the phone on 6 June 1998, and meeting and discussing with the 1st petitioner on 7 January 2000.

(e) In the meantime, on 30 November 1998, his former solicitors ceased business. Thereafter, he applied for legal aid but failed. He had to handle the case all by himself without legal advice.

11. The 1st respondent has experienced difficulties in handling the appeal all by himself because the trial proceedings as well as many documents relating to the trial and the appeal are in English and the standard of his English is very low; he only obtained a grade 8 or H in the School Certificate Examination. Not only that, what has been happening to him has also affected his preparation of the appeal. As from May 1997, up to even as recently as June 2000, he and his family had been subjected to disturbances from debt collectors who, he believed, were pressing him for payment on behalf of the petitioners. He provided particulars of such disturbances, namely,

(a) On 6 June 1998, there was red paint splashed on the front gate and front door of his home, in respect of which he made a report to the police.

(b) On 30 December 1998, someone sprayed paint on the front gate of his premises and the corridor. He also made a report to the police.

(c) Between the end of 1999 and early 2000, he was disturbed almost everyday by money collectors. In the month of January 2000 alone, there were disturbances for a total of 25 days.

(d) At the hearing before this Court on 28 July 2000, the 1st respondent told us that there were about ten occasions of disturbances in respect of which he had made reports to the police but he could only remember the report numbers of the two occasions referred to in (a) and (b) above.

12. The 1st respondent also informed us that the 2nd respondent, his younger brother, and his family, had been similarly disturbed by debt collectors. There were two attacks on the 2nd respondent's wife and baby daughter. The 2nd respondent was so frightened that he settled with the petitioners in January 1998. The 1st petitioner confirmed that he had instructed debt collectors to collect the judgment debt from the 1st respondent, but he was of the view that if those debt collectors used illegal means or assaults, the police should deal with them. He also confirmed that the 2nd respondent had compromised with the petitioners, by agreeing to pay one half of the judgment sum by instalments.

13. The 1st respondent impressed upon us that he has never dropped the appeal. After learning that there was an advertisement in the newspaper trying to find him, he provided his telephone number to the petitioners' solicitors on 26 May 1998. By a letter of 17 March 1999, he notified the petitioners' solicitors that he was handling the appeal documentation, and he again provided his telephone number. Similarly, by letters of 2 February 2000 and 11 February 2000, he notified the petitioners' solicitors of his handling of the appeal documentation and provided them with his address. In the latter letter, he complained about the disturbances. He also told us that he had been requesting the petitioners' solicitors to set out the sums due from him and reasons for such sums, and he sent a letter of 20 March 2000 asking for particulars. When appearing before us on 28 July 2000, he told us that his communications to the petitioners' solicitors about his appeal had totalled about 20 times after he lodged his appeal.

14. It appears to this Court that the delay in the year 1997 is totally justified in that the 1st respondent was applying to the court for transcript of the trial proceedings and obtaining the same from the court. The transcript is of course relevant to his preparation of the appeal.

15. Regarding his negotiations with the 1st and 2nd petitioners with a view to reaching to a compromise, they took place mainly from the end of 1997 to the middle of 1998. Such negotiations resulted in nothing, because every time, the 1st respondent's proposals were flatly rejected by the two petitioners. Such negotiations do not, strictly speaking, amount to reasonable explanation for the delay, although had they been successful, the appeal would be rendered unnecessary.

16. His notifications to the petitioners' solicitors similarly do not amount to reasonable explanation for the delay. However, this Court takes the view that the notifications did pass on the idea clearly to the petitioners that the 1st respondent had at no time been abandoning his appeal, with the effect of preventing the petitioners from alleging that the inaction in taking steps to prosecute the appeal led them to believe that the appeal had been effectively abandoned. In this connection, it is important to note that the petitioners have so far done nothing to attempt to strike out the appeal.

17. It was unfortunate for the 1st respondent that the solicitors acting for the respondents at the trial, to whom he had paid $10,000 for the appeal had ceased to carry on business in the end of November 1998, their business thenceforth being handled by the Law Society. This had caused the 1st respondent to have to pursue the appeal all by himself, because retaining another firm of solicitors who had not conducted the trial to handle the appeal would understandably be much more expensive, his attempt to obtain legal aid having failed. Moreover, whatever those former solicitors had done was rendered to be of little benefit to the 1st respondent. While dealing with the appeal papers, the 1st respondent's smacking of the English language posed serious problems. We therefore take the view that the delay up to the end of 1998 is excusable in the circumstances.

18. The 1st respondent's description of the disturbances suffered by him and his family members is supported by reports to the police and some photographs. These are very serious allegations and we are not disposed to decide one way or another on the truth of them, without hearing full evidence from all parties concerned. However, if these disturbances are true, there is little doubt that the debt collectors and those who instructed them to perpetrate such activities should be brought to justice, and we would have great sympathies with the 1st respondent and his family. Had such disturbances been pursued for the purpose of compelling the 1st respondent to pay up and abandon his appeal, we would have no hesitation to allow the application on this ground alone. The courts must not be seen in any way to lend any support to this kind of obstruction of a person's right to access justice by rejecting the 1st respondent's attempt to prosecute his appeal. For the time being, unless proven otherwise, we have to take what the 1st respondent stated and treat these disturbances as a reasonable excuse for certain portions of his delay in preparing the appeal.

Prejudice to the petitioners

19. On 26 July 2000, the petitioners filed a Notice to Act in Person. At the hearing on 28 July 2000, the 1st petitioner appeared, but not the other three petitioners. The 1st petitioner told us that he thought (wrongly) that he was authorised by the Notice to Act to represent the other three petitioners at the hearing. When asked by us what prejudice he had suffered from the delay, he complained that he had spent quite a lot of money on legal costs for the trial and he was still paying them. He also told us that his former solicitors had told him that as there was delay in the prosecution of the appeal, it meant that the appeal could not be pursued any further and therefore he had been devoting his time and effort to doing business rather than to get prepared for this appeal. All these cannot properly be considered as prejudice caused by the delay. Apart from taking no step to strike out the appeal, the petitioners have not be able to show us that they are in any way prejudiced by the delay in the 1st respondent not having a date fixed for the hearing of the appeal.

Chances of success of the appeal

20. We now turn to the merits of the appeal. Rogers J's judgment is based on his findings of fact whereby he concluded that the conduct of the respondents was prejudicial to the interests of the four petitioners who were the minority shareholders of the Company. These findings are on facts which it is difficult for us to decide at this stage whether they are wrong. However, there are two matters in the judgment which cause us some anxiety.

21. The first matter is the order that the 1st and 2nd respondents, or the 3rd and 4th respondents, do purchase the petitioners' shares at the price of $6.67 per share with interest from 30 October 1994. Whether the order for interest in the circumstances was warranted is doubtful: see Bird Precision Bellows Limited [1986] Ch 658, CA. The order for purchase of the shares was made by Rogers J on 20 February 1997, and for the time being, without hearing full arguments from the parties, it is doubtful whether such an order of interest can be justified.

22. Another matter which gives rise to concern is the manner how the order against the 1st and 2nd respondents, and the 3rd and 4th respondents, is to be enforced in case the petitioners wish to enforce it. There is no clear provision in the order of Rogers J as to which of the four respondents is to purchase the shares of which of the petitioners. As the order stands, it appears that each of the respondents, to the exclusion of the other respondents, can be asked by the petitioners to buy all the petitioners' shares at the rate fixed by the order. This might create unfairness among the respondents because of the different percentages of their shareholding in the Company that might result from the purchase. It might also create hardship on the respondent against whom the petitioners would like to enforce the judgment, because he might not be able to shoulder the financial burden so chosen to be imposed on him for purchasing all the petitioners' shares. The compromise between the petitioners and the 2nd respondent underlines these problems.

Conclusion

23. In all the circumstances of this case, we are of the view that the application to fix a date for the hearing of the appeal should be granted. That was why we granted leave for the 1st respondent to do so on 28 July 2000.