NANTONG ANGANG GARMENTS CO LTD v. HELLMANN INTERNATIONAL FORWARDERS LTD

FAMV No. 15 of 2006

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

 MISCELLANEOUS PROCEEDINGS NO. 15 OF 2006 (Civil)

(ON APPLICATION FOR LEAVE TO APPEAL FROM
CACV No. 64 of 2005)

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Appeal Committee: Chief Justice Li , Mr Justice Chan PJ and Mr Justice Ribeiro PJ

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 D E T E R M I N A T I O N

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Mr Justice Ribeiro PJ:

1.  The plaintiff sued the defendant freight forwarder for misdelivery of air cargo shipped in Shanghai for carriage to the United States.  The allegation is that the shipment was re-routed to Hong Kong without the plaintiff’s authority, and that the cargo was misdelivered here by the defendant to the third parties. 

2.  Shortly after commencement of the trial before Stone J in November 2002, the defendant submitted to judgment in favour of the plaintiff.  It then proceeded to prove its case against the two third parties who were not represented in court, resulting in judgment against them in favour of the defendant.  The third parties knew of the judgment but did nothing to challenge it until two years later when enforcement proceedings were taken in New York.  An application was made before Stone  J to re-open the judgment out of time.  It failed.  His Lordship refused to exercise his discretion to extend time and held that there were no underlying merits.

3.  The Court of Appeal conducted a detailed review of the procedural and substantive issues and allowed the appeal.  Le Pichon JA pointed out that before settling with the plaintiff, the defendant had subpoenaed Mr Au Hoi Fung, who was a director of Silking, to give evidence relevant to a defence raised by Silking and adopted by the defendant.  However, in the light of its settlement with the plaintiff, Mr Au, who had meanwhile been stood down, was not recalled to court.

4.  Stone J was told that no one was representing the third parties.  He was not told that Mr Au was a director of Silking and no one asked Mr Au whether he was seeking to represent the third parties. 

5.  In proving its case against the absent third parties, the defendant amended its pleadings to rely on a letter of indemnity given to it, allegedly on behalf of both third parties, covering “responsibilities/liabilities whatsoever directly or indirectly arising from or relating to the said route change”.  However, that amendment was not served on the third parties.  Nevertheless, the defendant obtained judgment on the basis of the amended case, as well as in reliance upon a common law doctrine concerning implied indemnities as originally pleaded.

6.  The third parties complained that Mr Au was in fact seeking to represent them but was never given the chance to be heard.  They also contended that they had meritorious substantive points concerning the scope of the express and implied indemnities which were the foundation of the judgment. 

7.  The Court of Appeal concluded that Stone J had not adequately recognized the possible substance in the procedural and substantive arguments, vitiating his exercise of discretion.  Substituting its own exercise of discretion, it allowed the appeal and ordered a re-trial of the third party proceedings before a different judge.

8.  The defendant now seeks leave to appeal against the decision of the Court of Appeal.  As it is an interlocutory decision, it must show that the proposed appeal is one which, by reason of its great general or public importance, or otherwise, ought to be submitted to the Court for decision.  

9.  We were invited to grant leave primarily on the “or otherwise” ground on the footing that the exercise of discretion by the Court of Appeal was wrong.  We do not, however, consider this an arguable basis for appeal.  For the reasons it gave for ordering a re-trial, it was open to the Court of Appeal to take the course it adopted.  Such decisions are very much for the intermediate appellant court.

10.  As to the questions which have been put forward as questions of great general or public importance, these merely bear on how the court’s discretion to extend time ought to be exercised.  That is plainly a matter which must be approached flexibly and contextually on the facts of each particular case.  It is not susceptible to formulation along the lines suggested. 

11.  The application is therefore dismissed with costs.