TANG KWOK PANG v. KOT SEE FOR

FAMV No. 255 of 2021

[2021] HKCFA 36

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 255 OF 2021 (CIVIL)

(ON APPLICATION FOR LEAVE TO APPEAL

FROM CACV NO. 536 OF 2019)

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DETERMINATION

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Mr Justice Fok PJ:

1.  The applicant, Tang Kwok Pang, applied by Notice of Motion dated 25 June 2021 for leave to appeal to the Court of Final Appeal in respect of various questions of law said to be of great general or public importance and on the or otherwise basis.

2.  On 17 August 2021, the Appeal Committee granted conditional leave to appeal to the applicant in respect of 3 of the questions of law posed (those numbered 1, 2(a) and 2(b)) but refused leave to appeal on the or otherwise basis.[1]

3.  In keeping with the usual practice on the grant of such leave, the order drawn up (“the AC’s conditional leave order”) was based on the standard order referred to in paragraph 2 of PD 2.3 (Leave to Appeal to the Court of Final Appeal in Civil Cases) and in the form set out in Schedule 1 to that Practice Direction.

4.  Paragraph 2 of the AC’s conditional leave order required the applicant to pay the sum of HK$400,000 into court:

“as security for the due prosecution of the appeal and payment of all such costs as may become payable to each respondent in the event of the appeal being dismissed for non-prosecution or of the Court ordering the Applicant to pay such Respondent’s costs of the appeal”. (Emphasis added)

5.  The requirement to pay such security is stipulated in section 25(2)(a) of the Hong Kong Court of Final Appeal Ordinance (Cap.484) (“HKCFAO”) which provides:

“(2) Without restricting the generality of subsection (1) leave granted under subsection (1) may be granted—

(a) upon a condition that the appellant shall enter into good and sufficient security, for the due prosecution of the appeal, and the payment of all such costs as may become payable to the respondent in the event of the appeal being dismissed for non-prosecution, or of the Court ordering the appellant to pay the respondent’s costs of the appeal; and” (Emphasis added)

6.  Paragraph 5 of the AC’s conditional leave order provided:

“Upon due compliance with the condition regarding the provision of security as hereinbefore provided, the Applicant should apply for final leave in accordance with Rule 13 of the Hong Kong Court of Final Appeal Rules and, upon the Registrar certifying such compliance by letter to the parties, final leave shall be deemed to be granted by the Court on the date of the said letter without further order.”

7.  Rule 13 of the Hong Kong Court of Final Appeal Rules (Cap. 484A) (“HKCFA Rules”) is headed “Final leave” and provides:

“(1) An application for final leave shall be made within 7 days after the expiry of any period fixed by the Court for complying with the conditions attached to the grant of conditional leave.

(2) An application for final leave shall be supported by an affidavit verifying the fulfillment of the conditions attached to the grant of conditional leave and stating the names and addresses of the persons on whom notice of the application was served.

(3) The Court may determine an application for final leave without a hearing.”

8.  Paragraph 6 of the AC’s conditional leave order provided:

“In default of the Applicant complying with the aforesaid condition as to the provision of security within 3 months from the date of this Order, leave to appeal granted in paragraph 1 above shall be rescinded and the Application for Leave to Appeal shall stand dismissed with costs to the Respondent to be taxed if not agreed, without further order.”

9.  Thus, as will be seen, failure to comply with the condition of providing security upon the grant of conditional leave will lead to the leave so granted being rescinded and the application for leave to appeal being dismissed with costs to the respondent.

10.  In the present case, the applicant duly paid the security of HK$400,000 into court on 30 August 2021, which was within 14 days of the date of the AC’s conditional leave order. 

11.  Thereupon, by reason of paragraph 5 of the AC’s conditional leave order, reflecting rule 13 of the HKCFA Rules, the applicant was required to apply for final leave to appeal within 7 days of the expiry of the date fixed for payment of the security into court, supported by the prescribed affidavit.

12.  However, on 15 September 2021, having failed to apply for final leave to appeal pursuant to rule 13 of the HKCFA Rules, the applicant wrote to the Court stating “the Applicant does not intend to prosecute his appeal any further”.  This letter was sent by the applicant’s new solicitors, Ellen Au & Co., notice having been served on 10 September 2021 as to a change of solicitors acting for him.

13.  The parties are in dispute as to (1) the proper resolution of the application for leave and consequential matters.  Those consequential matters are: (2) the disposition of the security paid into court; (3) the effect of the appeal to the Court of Final Appeal not proceeding on the stay of execution granted in respect of the Deputy Judge’s injunction order; (4) the status of the affirmation in the sealed envelope furnished by the applicant in order to permit the leave hearing to proceed on 17 August 2021; and (5) the costs of the application for leave to appeal.

14.  As directed by the Registrar, the respondent has issued a summons seeking directions in respect of the disposition of this case and consequential matters (“Summons”). Written submissions have been filed by the respondent and the applicant respectively and, pursuant to the Registrar’s directions, the Appeal Committee has considered the Summons on the papers without an oral hearing.

(1)     The status of the leave application and its resolution

15.  The question here is whether the leave application has been disposed of, so that an appeal is in existence and the Court is now seized of jurisdiction over it so that the appeal may be dismissed for non-prosecution or withdrawn, or whether, alternatively, the leave application is still live in the sense that the conditional leave granted may be rescinded and the application for leave dismissed by the Appeal Committee.  The respondent contends that the former is the position and has proposed an order that “the appeal be dismissed for non-prosecution by the Applicant” (Summons at [1]).

16.  As will be apparent from the need for an application for final leave to appeal to be made, the order made by the Appeal Committee has not finally disposed of the Notice of Motion applying for leave to appeal.  Although the process of applying for final leave after the grant of conditional leave is essentially formal, the step of applying for final leave supported by an affidavit verifying the fulfilment of the conditions attached to the grant of conditional leave (rule 13) must be complied with before the leave application is finally disposed of.

17.  In the present case, that condition not having been complied with, it follows that the conditional grant of leave must be rescinded and the Notice of Motion seeking leave to appeal must stand dismissed with costs to the respondent.

18.  It should be noted that an appeal may be dismissed for non-prosecution.  Rule 18 of the HKCFA Rules provides:

“18. Dismissal of appeal for non-prosecution

(1) Where an Appellant fails—

(a) to comply with any timetable imposed on him for the prosecution of his appeal by the Court of Appeal or the Court; or

(b) to take any step in the prosecution of his appeal within the time prescribed by these Rules,

the Registrar may either on the application of a party or of his own motion call upon him to explain his default.

(2) If no explanation is offered, or if the explanation offered is, in the opinion of the Registrar, insufficient, the Registrar may issue a summons to the Appellant calling upon him to show cause before the Court why the appeal should not be dismissed for non-prosecution.

(3) A copy of the summons shall be sent to each Respondent and each Respondent shall be entitled to be heard at the hearing of the summons and to ask for his costs and other relief.

(4) The Court may, after considering the matter, order that the appeal be dismissed for non-prosecution, or give such other directions therein as the justice of the case may require.”

19.  However, it will be noted that dismissal under rule 18 presupposes the existence of a subsisting final appeal.  This will have required the applicant to have applied for final leave to appeal (rule 13) and to have issued a Notice of Appeal (rule 14).  On the issue of a Notice of Appeal, the Registrar will assign a final appeal number to the appeal (in the case of a civil appeal, FACV [number] of [the relevant year]).

20.  The applicant suggests in his written submissions that rule 18 is applicable and moreover that, in the circumstances, he has offered a sufficient explanation to the Registrar.  He points out that no summons under rule 18(2) has been issued by the Registrar and therefore speculates that his solicitor’s letter to the Court dated 15 September 2021 indicating he did not intend to proceed with the appeal any further was accepted by the Registrar as sufficient.  This is a spurious argument.  There was no reason for the Registrar to invoke the procedure in rule 18, since it applies to a subsisting final appeal.  As no such final appeal was in existence in the present case, there was no basis for the application of rule 18.

21.  Similarly, under section 38 of the HKCFAO, an appellant may apply to withdraw an appeal:

“38. Withdrawal

(1) An appellant may at any time with leave of the Court withdraw his appeal.

(2) Where an appeal has been withdrawn under subsection (1) the respondent shall, subject to any agreement between himself and the appellant to the contrary, be entitled to apply to the Court for his costs of and incidental to the appeal.”

22.  But withdrawal under section 38 is of an appeal, not an application for leave to appeal, and again presupposes the existence of a subsisting final appeal.

23.  It is also relevant to refer to rule 11 of the HKCFA Rules, which provides for the withdrawal of an application for leave to appeal.  Rule 11 is in these terms:

“11. Withdrawal of application

(1) An applicant who wishes to withdraw his application shall give notice, in Form D in Schedule 1, to the Registrar and to all the other parties to the proceedings in the court below.

(2) Where an application is withdrawn, the Respondent may, subject to any agreement between the parties to the contrary, apply to the Court for his costs.”

24.  In this case, the applicant has not applied to withdraw the Notice of Motion for leave to appeal and has not invoked rule 11.  His stance is simply that, having obtained conditional leave to appeal, he no longer wishes to proceed with the appeal. As indicated above, the position is that the leave application has not yet been finally disposed of and no appeal is formally in existence.  Instead, the conditional leave that has been granted is susceptible to being rescinded and the Notice of Motion thereafter dismissed.

25.  In his written submissions, the applicant, relying on rule 18 rather than rule 11, seeks a direction giving leave to the applicant to withdraw his application for leave to appeal.  There is no basis for applying rule 18 for the reasons already explained.  Insofar as this direction is sought in reliance on rule 11, its terms have not been complied with.  No notice in Form D of Schedule 1 to the HKCFA Rules has been given by the applicant.  It should be noted, in any event, that if this rule were engaged, rule 11(2) would expressly entitle the respondent to seek his costs on the withdrawal of the application for leave to appeal.

26.  In the circumstances, the appropriate orders to be made are: (1) an order rescinding the conditional grant of leave by the Appeal Committee on 17 August 2021; and (2) an order dismissing the applicant’s Notice of Motion seeking leave to appeal dated 25 June 2021.  The question of costs of the Notice of Motion will be addressed in section (5) below.

(2)     The disposition of the security paid into court

27.  The respondent invites the Appeal Committee to direct that the HK$400,000 paid into court by the applicant as security on 30 August 2021 be applied to pay the respondent’s costs of responding to the Notice of Motion for leave to appeal (Summons at [5]).  This is put on the basis that the appeal is dismissed for non-prosecution (under rule 18) or withdrawn with leave (under section 38).

28.  However, as stated above, the appeal has yet to come into existence pending the grant of final leave to appeal.  As such there is no appeal to be dismissed for non-prosecution or to withdraw.

29.  The condition that the appellant shall “enter into good and sufficient security, for the due prosecution of the appeal, and the payment of all such costs as may become payable to the respondent in the event of the appeal being dismissed for non-prosecution, or of the Court ordering the appellant to pay the respondent’s costs of the appeal” as provided in section 25(2)(a), and reflected in paragraph 2 of the AC’s conditional leave order, is not triggered by the circumstances which have occurred here.

30.  This does not, however, mean that the security for costs must be returned to the applicant. It is a well recognised principle that the Court has implied jurisdiction to regulate its practice and procedure which is ancillary to its statutory jurisdiction (HKSAR v Cheng Chee Tock Theodore (2015) 18 HKCFAR 292 at [48]) and, more generally, implied jurisdiction to make whatever orders are necessary to give effect to its own judgments (Kam Leung Sui Kwan v Kam Kwan Lai (2015) 18 HKCFAR 501 at [39]).

31.  Applying that principle in the circumstances of the present case is appropriate.  The applicant has sought a discretionary order of the Appeal Committee and could have pursued the appeal pursuant to the conditional leave to appeal granted to him.  The fact that he has chosen not to proceed has resulted in the respondent incurring unnecessary litigation costs.  The respondent should be compensated for the expenditure of those costs of defending the abortive leave application.  Had the appeal proceeded and been dismissed, the costs of the Notice of Motion for leave to appeal would have been costs in the cause of the appeal (as provided for by paragraph 10 of the AC’s conditional leave order) and so would have been secured by the security paid into court by the applicant.  The security should therefore, in principle, be available to satisfy the costs order that is now to be made upon the dismissal of the applicant’s Notice of Motion (as to which see Section (5) below).

32.  In the written submissions of the applicant (at [15]), his new solicitors submitted that the payment was made without the authority of the applicant, although it is then submitted (applicant’s submissions at [17]), inconsistently, that the payment “was intended to secure the costs for the ‘appeal proper’ stage, not for the costs of the Leave Application stage”.  It is unnecessary for us to consider this allegation of lack of authority.  That is a matter between the applicant and his former solicitors, although the inconsistent stance as to the authority of his former solicitors to pay the sum into court throws doubt on the substance of this point.

(3)     The effect of the dismissal of the leave application on the contempt proceedings

33.  At the hearing before the Appeal Committee on 17 August 2021, the applicant also applied, by summons filed on 28 June 2021, for a stay of execution of paragraphs 2 to 5 of the order of Deputy High Court Judge MK Liu dated 3 May 2019.  By those paragraphs of his order, the Deputy Judge granted an interim injunction for the preservation of the antiques which were the subject of the action and an order for disclosure by affirmation of what dealings there had been with, and what had become of, them.  Upon the conditional grant of leave, the stay of execution was granted (paragraph 9 of the AC’s conditional leave order).

34.  The respondent seeks an order that the stay of execution be uplifted (Summons at [2]).

35.  Although the applicant suggests the order sought by the respondent is otiose, making such an order will avoid further argument in the future as regards the applicant’s obligation now to comply with the Deputy Judge’s order.  There is no basis on which the stay of execution should remain in place.  The intended substantive appeal sought to raise an argument of law as to why, on the basis of the invocation of the privilege against self-incrimination, the applicant should not have to comply with the disclosure order.  Upon the application for leave to appeal being dismissed, the applicant should duly comply with the order made by the Deputy Judge.  The stay is therefore lifted.

36.  As regards the underlying contempt proceedings that have been instituted by the respondent against the applicant in the Court of First Instance, these are not before the Appeal Committee and the further conduct of those proceedings is to be dealt with by the Court of First Instance.

37.  In his written submissions (at [29]-[31]), the applicant seeks a direction that paragraph 2 of the Deputy Judge’s injunction order “be deemed to be complied with (subject to the Respondent’s right to seek further and better particulars on the contents of the Affirmation within a certain time frame)”.  Whether or not there has been due compliance with the order for disclosure is a matter to be determined by a judge of the Court of First Instance and we refuse the direction sought by the applicant.

(4)     Inspection of the sealed envelope and the filing of the applicant’s affirmation

38.  The respondent seeks a direction that the affirmation filed by the applicant on 23 July 2021 in a sealed envelope pursuant to the direction made by the single permanent judge (Ribeiro PJ) on 16 July 2021, as a condition for listing the hearing of the leave application, be unsealed and that leave be granted to the respondent and/or his solicitors to open, inspect and have access to the full contents of the affirmation and to make copies thereof (Summons at [6]).

39.  In correspondence, the applicant has not disputed the respondent’s entitlement, in principle, to open the sealed envelope and to inspect and have access to the contents of the affirmation.  However, the applicant seeks confirmation that this is subject to the respondent’s undertaking not to divulge the information disclosed to any third party, including the police, Department of Justice or any law enforcement authority.

40.  The respondent has indicated in correspondence (repeated in his written submissions) that he has already given an undertaking in the terms requested when the injunction order was made.  The undertaking is in the following terms:

“AND UPON the undertaking of [the Respondent] not to by himself, or through his nominees, agents or servants or any of them, divulge any information disclosed by [the Applicant] in compliance with the Injunction to any third party, including police, Department of Justice or any law enforcement authority …”.

41.  For the avoidance of doubt, that undertaking can be repeated and embodied in the order to be made by the Appeal Committee.  In the circumstances, upon that undertaking, there is no good reason not to make an order in terms of paragraph [6] of the Summons. Whether or not the affirmation is found to be compliant with the Deputy Judge’s disclosure order can be determined when the sealed envelope is unsealed and the affirmation inspected.

42.  The respondent further seeks an order that the applicant do serve on the respondent’s solicitors a copy of the affirmation within three days of the date of the order to be made (Summons at [7]).  The respondent submits that the applicant is under a duty to file and serve the affirmation regardless of the respondent’s right to unseal, open, inspect and access the full contents of the affirmation.

43.  The affirmation was filed when it was filed in the sealed envelope.  Now that the envelope is to be unsealed, the affirmation will be treated as filed on the Court file. The applicant should serve a copy of that affirmation, so filed, on the respondent’s solicitors and we so order.  If and insofar as the applicant did not retain a copy of the affirmation, leave will also be granted to the applicant to inspect and have access to the contents of the sealed envelope in order to make a copy for service on the respondent’s solicitors.

44.  In correspondence, the applicant’s new solicitors indicated that he would have difficulties in doing so.  In his written submissions (at [23]-[26]), the applicant’s position is put differently.  His submission now is that it would be “oppressive” to oblige him to undertake the additional burden of serving the affirmation on the respondent’s solicitors.  It is suggested that ordering the applicant to serve a copy of the affirmation on the respondent “would leave a loophole for the Respondent to unscrupulously exploit its undertaking not to disclose, since the undertaking does not cover any disclosure of ‘copy’ be that deliberate or otherwise.”  This is an unrealistic submission and there is no evidential basis for such a tendentious accusation.  Nor is it clear why the undertaking to be repeated by the respondent would not cover the information obtained by him when the copy of the affirmation is served on his solicitors and there is, therefore, no apparent potential for abuse as alleged.

(5)     The costs of the application for leave to appeal

45.  The applicant’s Notice of Motion for leave to appeal being dismissed, it falls to consider the costs of that application.  The applicant submits (written submissions at [9] to [11]) that there is good reason to depart from the usual rule that a party withdrawing an application should bear the costs unless there is good reason to depart from that position.  He relies on cases concerned with applications discontinued under the English Civil Procedure Rules (Rule 38): see e.g. Brookes v HSBC Bank plc [2011] EWCA Civ 354 at [6], and Nelson’s Yard Management Co. v Eziefula [2013] EWCA Civ 235.

46.  The applicant submits that, since leave was granted for him to appeal in respect of questions of law said to be “difficult and unsettled”, the appeal was “strong” and he was justified in pursuing the appeal, these amount to good reason to depart from the starting point that, where a party withdraws an application, he should bear the costs of the other party.  The applicant does not seek an order of costs in his favour but asks that there be no order as to the costs of his Notice of Motion applying for leave to appeal.

47.  We do not think that is appropriate.  We see no good reason to depart in the present case from the usual rule that costs should follow the event.  Here, the event is the dismissal of the applicant’s Notice of Motion applying for leave to appeal to the Court of Final Appeal.  The fact that conditional leave was granted is not sufficient to justify depriving the respondent of his costs.  Nor do we think it right that the Appeal Committee should form a view on the strength of the now abandoned appeal, or that this view should be taken into account in determining the costs of the abortive application for leave to appeal.  Those costs were wasted when the applicant chose not to pursue the appeal, leading to the dismissal of his Notice of Motion.

48.  The respondent invites the Appeal Committee to make a gross sum assessment of the costs of the application for leave to appeal (Summons at [3] and [4]).  It has previously been held that a single permanent judge has jurisdiction to so assess the costs of an interlocutory application properly made to him and that this will be appropriate as a means of saving the Court’s time, avoiding satellite litigation, discouraging unmeritorious applications and preventing successful litigants from being kept out of pocket for their interlocutory costs: Tsit Wing (Hong Kong) Co Ltd v TWG Tea Co Pte Ltd (2015) 18 HKCFAR 283 at [16].

49.  In the present case, however, there is no pressing need for the costs to be summarily assessed on a gross sum basis.  The application for leave to appeal is the applicant’s substantive application itself and not in the nature of a satellite to some other application.  Moreover, since leave was granted, it was not considered by the Appeal Committee to be unmeritorious.  That a gross sum assessment is not required to avoid keeping the respondent out of pocket is all the more so the case since, as concluded above, the sum of HK$400,000 security paid into court by the applicant is available to secure the costs order of the Appeal Committee on the dismissal of the applicant’s Notice of Motion, including costs incurred on any taxation in default of the costs being agreed.  That sum should be sufficient to cover all the respondent’s costs of responding to the Notice of Motion for leave to appeal and, once the costs are quantified, they can be paid immediately from that security.

50.  Accordingly, the costs of the Notice of Motion will be payable by the applicant to the respondent, with a certificate for two counsel, to be taxed in the usual way before the Registrar if not agreed.

51.  The respondent also seeks an order for the costs of the application for these directions by summons to be paid by the applicant, also to be assessed on a gross sum basis (Summons at [8]).  For the same reasons set out above, these costs should form part of the costs of the Notice of Motion for leave to appeal and should be payable by the applicant to the respondent, to be taxed if not agreed and recoverable out of the sum in Court.

Disposition

52.  For the reasons set out above, we therefore order that:

(1) The conditional grant of leave to appeal by the Appeal Committee on 17 August 2021 be rescinded and the applicant’s Notice of Motion dated 25 June 2021 be dismissed;

(2) The costs of the Notice of Motion, including the costs of the respondent’s application by summons dated 12 October 2021, be paid by the applicant to the respondent, with a certificate for two counsel, to be taxed if not agreed;

(3) The sum of HK$400,000 paid into Court by the applicant on 30 August 2021 pursuant to the Appeal Committee’s order dated 17 August 2021 and all interest accrued thereon be applied towards discharge of the costs ordered to be paid pursuant to paragraph (2) above and that the balance, if any, be released to the applicant;

(4) The stay of execution pursuant to paragraph 4 of the Appeal Committee’s determination dated 17 August 2021 and paragraph 9 of the Appeal Committee’s order dated 17 August 2021 be removed;

(5) Upon the respondent giving an undertaking in the following terms:

“AND UPON the undertaking of the respondent not to by himself, or through his nominees, agents or servants or any of them, divulge any information disclosed by the applicant in the affirmation filed by the applicant on 23 July 2021 in a sealed envelope pursuant to paragraph 3 of the directions made by the Hon. Mr Justice Ribeiro PJ on 16 July 2021 to any third party, including police, Department of Justice or any law enforcement authority”

the affirmation filed by the applicant on 23 July 2021 in a sealed envelope pursuant to paragraph 3 of the directions made by the Hon. Mr Justice Ribeiro PJ on 16 July 2021 be unsealed, and leave be granted to the applicant and the respondent (and/or their respective solicitors) to inspect and have access to the full contents of the affirmation and make copies thereof; and

(6) Subject to the said undertaking, the applicant do serve on the respondent’s solicitors a copy of the affirmation within 3 days from the date of the order herein.