FAMV No. 27 of 2009
IN THE COURT OF FINAL APPEAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MISCELLANEOUS PROCEEDINGS NO. 27 OF 2009 (CIVIL)
(ON APPLICATION FOR LEAVE TO APPEAL
FROM CACV NO. 309 OF 2008)
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Between:
NG YEE WAH Plaintiff
- and -
LAM CHUN WAH 1st Defendant( 1st Respondent)
GRAND SINO INTERNATIONAL LTD 2nd Defendantnd Respondent)
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Appeal Committee:
Chief Justice Li, Mr Justice Bokhary PJ and Mr Justice Ribeiro PJ
Date of Hearing:
14 September 2009
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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 (“Ms Ng ”) was previously married to the 1st defendant (“Mr Lam ”). They have become enmeshed in post-divorce litigation concerning the 2nd defendant (“Grand Sino ”), a company in which they are registered as equal shareholders. Three actions are relevant.
2. In 2003, Ms Ng started what I shall call “the original action ”. This purported to be a derivative action brought on Grand Sino’s behalf,[1] the complaint being that Mr Lam had, in breach of fiduciary duty, caused Grand Sino to acquire from himself a 35% interest in a company called June Just Co Ltd (“June Just ”) and that he had misappropriated a dividend payable to Grand Sino by June Just. Mr Lam’s defence was that he was the beneficial owner of Ms Ng’s shares of Grand Sino and also of Grand Sino’s holding of June Just shares. That action was settled by a consent order in December 2005, with judgment entered for Ms Ng against Mr Lam for $3,418,091.20 “as agreed damages” on Ms Ng agreeing that on receipt she would transfer to Mr Lam all her shares in Grand Sino at a price to be determined on a valuation.
3. Ms Ng started the present action (again purportedly a derivative action on Grand Sino’s behalf) in November 2007, complaining that unknown to her, Mr Lam had caused Grand Sino to dispose of its June Just shares to a third company in September 2005. This is said to be a breach of fiduciary duty for which a claim of $7 million is made. When Mr Lam pleaded in defence once more that he was the beneficial owner of Ms Ng’s Grand Sino shares and of Grand Sino’s June Just shares, Ms Ng took out a summons under Order 14A contending that Mr Lam was estopped by the consent order in the original action from raising those defences and that in consequence, they should be struck out and judgment for the sum claimed entered in her favour.
4. In July 2008, Mr Lam started HCA 1324/2008 which I shall call “the third action ”. He sought thereby to set aside the consent judgment on the grounds of misrepresentation and undue influence. I understand that there has been an application to strike that action out, which is pending.
5. But two months after the third action was begun, in September 2008, Poon J decided the Order 14A application in Ms Ng’s favour,[2] holding that the consent order in the original action gave rise to an issue estoppel, striking out Mr Lam’s defences and entering judgment for $7 million in Ms Ng’s favour as claimed in the present action.
6. That decision was overturned by the Court of Appeal.[3] Stone J (with whom Rogers VP and Le Pichon JA agreed) identified three reasons for allowing the appeal. One is of particular importance in the present context, namely, that it was premature to give judgment on the basis of an issue estoppel founded on the consent order when the validity of that order itself was being challenged in the third action. His Lordship held that Poon J should have stayed the Order 14A application pending resolution of that challenge and, upon allowing the appeal, the Order 14A application was dismissed. Leave to appeal to this Court was refused by the Court of Appeal.[4]
7. Mr Anthony Neoh SC, appearing with Mr Lawrence Ng for Ms Ng, seeks leave to appeal under section 22(1)(a) of the Court’s statute on the basis that leave is as of right. In our view, that is not tenable since that section only applies to appeals from final judgments of the Court of Appeal. The Court of Appeal’s decision is the antithesis of a final judgment. What it held was that Poon J was in no position finally to determine the parties’ rights unless and until the challenge to the consent order forming the premise of the Order 14A application was resolved. Indeed, at the end of his judgment, Stone J directed that the Order 14A application should stand adjourned until the third action was dealt with. However, Mr Neoh understandably expressed his concern at the fact that Stone J had gone on to add as a reason for allowing the appeal that he was not satisfied that the consent order did give rise to an issue estoppel, allied with the fact that the Court of Appeal’s order as perfected was for the Order 14A application to be dismissed as opposed to adjourned.
8. In our view, the Court of Appeal’s decision was plainly only interlocutory, no final judgment having been given regarding anyone’s rights. Mr Benjamin Chain, appearing for the respondent, properly accepts that the Order 14A application was dismissed on the ground of prematurity without having been determined on the merits and that if the third action is dismissed, it would be open to the plaintiff to issue a fresh Order 14A summons.
9. The application for leave to appeal must accordingly be dismissed with costs.
(Andrew Li)
(Kemal Bokhary)
(R A V Ribeiro)
Chief Justice
Permanent Judge
Permanent Judge
Mr Anthony Neoh SC and Mr Lawrence Ng (instructed by Messrs Kwok Ng & Chan) for the applicant
Mr Benjamin Chain (instructed by Messrs Pansy Leung Tang & Chua) for the 1st respondent
2nd respondent, acting in person, absent
[1] HCA 3349/2003.
[2] HCA 2457/2007 (22 September 2008).
[3] [2009] 2 HKLRD 427
[4] CACV 309/2008 (29 May 2009) Rogers VP, Le Pichon JA and Stone J.