CHOY BING WING v. OFFICIAL RECEIVER

HCB 242/1992

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 242 OF 1992

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J U D G M E N T

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1. This is an appeal from the ruling of Master B Kwan made on 22 May 2001 sitting as the Registrar of Civil Appeals. She ruled that the Notice of Appeal filed by the applicant Mr Choy Bing Wing was invalid because no leave to appeal was obtained as required under s.14(3)(e) of the High Court Ordinance, Cap.4. The relevant provisions read as follows:

"14. Appeals in civil matters

(1) Subject to subsection (3), an appeal shall lie as of right to the Court of Appeal from every judgment or order of the Court of First Instance in any civil cause or matter.

(3) No appeal shall lie -

(e) without the leave of the court or tribunal in question or of the Court of Appeal, from an order of the Court of First Instance or any other court or tribunal made with the consent of the parties or relating only to costs which are by law left to the discretion of the court or tribunal."

2. It would be convenient to set out the background matters first.

3. The applicant issued a Notice of Motion under s.84(1) of the Bankruptcy Ordinance, Cap.6 for an inquiry into the conduct of the Official Receiver and trustee of the estate of Ng Yat Chi, a bankrupt who has since been discharged, relating to the sale of the bankrupt's shares in a company known as Alljean Investment Limited.

4. On 15 February 2001, the Notice of Motion was dismissed by Yuen J who was not satisfied that there was sufficient substance in the allegations of misconduct of the Official Receiver to justify an inquiry under s.84. In dismissing the application, Yuen J made an order nisi that the applicant was to bear the Official Receiver's costs of the application.

5. On 5 March 2001, the applicant issued a summons to vary the order nisi as to costs. The ground of his application was that the court has no jurisdiction to order costs against him in an application under s.84. It was contended by the applicant that on the true construction of s.84(1), that provision has imposed an administrative function and not a judicial function on the court hearing the application. Hence, the judge would have no discretion to order costs against an unsuccessful applicant in an application under s.84(1).

6. Yuen J heard the application to vary the order nisi on 26 April 2001 and gave a decision on 2 May 2001. She rejected the applicant's submission on the construction of s.84(1). She held that the court has jurisdiction to award costs against the applicant and she exercised her discretion to award costs against the applicant having regard to r.32A of the Bankruptcy Rules which provides that under the general rule the costs of an application to the court which is opposed shall follow the event.

7. The order of 2 May 2001 which was drawn up was as follows:

"It is ordered that:

(1) the Order Nisi be made absolute, and

(2) there be an order nisi that the Applicant do bear the Respondent the costs of the Summons."

8. On 4 May 2001, the applicant filed a Notice of Appeal to appeal against the order of Yuen J on 2 May 2001. In the Notice of Appeal, he seeks an order that (1) the order of 2 May 2001 be set aside in its entirety and the appeal be allowed, and (2) the court do enquire into the complaint made by the applicant against the conduct of the Official Receiver under s.84(1) of the Bankruptcy Ordinance and take such action thereon as may be deemed expedient.

9. If by (2) above, the applicant seeks to appeal against the decision of Yuen J given on 15 February 2001, the time for filing a Notice of Appeal has expired. It has been clarified with the applicant at the hearing before Master Kwan that he does not wish to appeal against the decision on 15 February 2001. He only seeks to appeal against the order of 2 May which is in the terms as I have quoted above and that is still the position of the applicant today as I have ascertained from him.

10. Having thus clarified the matter with the applicant, the Master ruled in favour of the Official Receiver that the intended appeal is caught by s.14(3)(e) of Cap.4, so leave to appeal is necessary.

11. The applicant has submitted before the Master and before me that no leave is required, relying on the decision of the English Court of Appeal in Hellyer v. Sheriff of Yorkshire [1975] Ch 16, in which Rusell LJ stated at 24A-C as follows:

"It is not always essential to an ability to appeal against an order as to costs only that there should be leave when those costs are in the discretion of the judge. I refer in this connection to the notes in the Supreme Court Practice (1973) p.884 under the side legend 62/2/25 and 62/2/26. In the present case, if it should be held, as I would hold, that the judge was wrong on the central point of law in the case, it is, in my view, quite clear that there was no relevant material upon which he could properly have exercised his discretion as to costs by ordering the sheriff to pay the unsuccessful liquidators' costs of the originating motion; and in those circumstances, in my view, leave to appeal was not required. The particular order for costs would have been made without (in law) any material upon which it could be justified as an exercise of the judicial discretion over costs. For those reasons, we decided that this was a case in which the appeal lies without leave of the judge below."

12. In my judgment, the applicant's reliance on Hellyer is misconceived for the following reasons.

13. The relevant provision considered by the court in Hellyer (s.31(1)(h) of the Supreme Court of Judicature (Consolidation) Act 1925, replaced by s.18(1)(f) of the Supreme Court Act 1981) is different from s.14(3)(e) of the High Court Ordinance. Under the English Act, if leave to appeal from an order as to costs is refused by the court below, the dissatisfied party would have no means of redress. Our s.14(3)(e) is different, in that the party aggrieved may seek leave to appeal from either the court below or from the Court of Appeal.

14. This difference between our legislation and the English legislation is the subject of comments of the Court of Appeal in Ho Lee Man v. Wong Wai Kai [1993] 1 HKC 183, see 185-6 and 189. Under the English legislation, the Court of Appeal did not have power to give leave to appeal in this situation and it was for this reason that the English Court of Appeal fashioned a means of redress in the form of a principle known as the Scherer principle, named after the case of Scherer v. Counting Instruments Limited [1977] FSR 569. That principle was developed before the decision in Scherer was given (see the extract from 1993 Supreme Court Practice, para.59/1/31 as set out in Ho Lee Man at 184H-185A).

15. Under the Scherer principle, where the judge below has not exercised the discretion as to costs at all or has not exercised the discretion judicially, the Court of Appeal would have entertained an appeal as to costs notwithstanding that no leave has been obtained.

16. The dicta I have quoted earlier from Hellyer relied on by the applicant, which is to the effect that no leave to appeal is required if there is no material on which the judicial discretion to award costs could be exercised, is but a variation of the Scherer principle. As our Court of Appeal has commented in Ho Lee Man, there is no justification for importing the Scherer principle into Hong Kong as our legislation is very different.

17. For the above reasons, I rule that leave is required for the applicant to appeal from the order of 2 May 2001. As no leave to appeal has been obtained, the Notice of Appeal filed on 4 May 2001 is invalid, and the Court of Appeal has no jurisdiction to entertain the appeal.

18. The time limit for lodging an appeal from the order of Yuen J made on 2 May 2001 and sealed on 10 May 2001 has expired. What the applicant should do in this situation, if he is minded to press on with his appeal, is to make a composite application to a single judge of the Court of Appeal seeking (1) leave to appeal under s.14(3)(e) of Cap.4, and (2) an extension of time for appealing from the order of 2 May 2001 (see Hong Kong Civil Procedure para.59/14/4).

19. For the above reasons, I dismiss the appeal against the ruling of Master Kwan made on 22 May 2001 and I would hear the parties on costs.