CHOW CHUNG KAN v. PHOON LEE PILING CO LTD

CACV 22/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 22 OF 2003

(ON APPEAL FROM HCCW NO. 564 OF 2002)

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REASONS FOR JUDGMENT

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Hon Woo JA:

1. When the appeal was heard before us, Mr Choy Bing Wing ("Mr Choy"), on behalf of Phoon Lee Piling Company Limited ("the Company"), made a preliminary application to ask me to disqualify myself from dealing with the appeal. After we dismissed that application, he chose to leave the court without addressing us on the appeal. We then dismissed the appeal with costs and announced that we would hand down our reasons later. They appear below.

Preliminary application

2. At the start of the hearing of this appeal, Mr Choy made an application to ask me to step down from hearing the appeal. His reasons were based on two matters. First, he submitted that I had acted contrary to the law in CACV 1233/2001 when I held that the court has jurisdiction to order costs against the unsuccessful party in a bankruptcy proceeding under s 84 of the Bankruptcy Ordinance. Secondly, when he made a similar preliminary application in CACV 164/2003 for Stone J and I to disqualify ourselves from hearing that appeal, we rejected his application without giving reasons. He submitted that I was not independent to judge cases in which he was involved.

3. We dismissed the preliminary application and announced our reasons. The fact that my judgments in CACV 1233/2001 and CACV 164/2003 may be wrong, described by Mr Choy as being contrary to law, does not in any way support his submission that I am not independent. Mr Choy may find my judgments agreeable or disagreeable. But if it is the latter, there is a very clear avenue for appeal provided by the law. He cannot ask a judge to disqualify himself after the judge has given a judgment to which he disagrees. A litigant has no right to choose the judge to hear his cause.

4. Now I turn to the appeal proper. Notwithstanding Mr Choy's election not to address us, I had perused all the papers relating to this appeal and the skeleton submissions of counsel for the petitioner. With Barma J's agreement, I was able to announce that we dismissed the appeal.

Background

5. On 8 January 2003, Kwan J made an order for the winding up of the Company at the instance of the petitioner on the ground that the Company was unable to pay its debts. The debts concerned were the amounts awarded by a Labour Tribunal in favour of the petitioner and seven other claimants totalling over $1 million against the Company as their former employer. There were two statutory demands but the debts remained unpaid. When making the winding up order against the Company, Kwan J also dismissed the Company's application to strike out the petition.

6. By a Notice of Appeal dated 4 February 2003, the Company lodged an appeal against Kwan J's order.

7. On 24 June 2003, on the application of the petitioner, Le Pichon JA made an order, inter alia, that security for costs in the sum of $143,942 be provided in favour of the petitioner, and that such security be furnished by persons other than the Company and Mr Chung Kau, a director of the Company who had become bankrupt.

8. By a summons dated 3 July 2003, the Company applied to this Court to have Le Pichon JA's order of 24 June 2003 set aside with costs. The application is made pursuant to Order 59 rule 14(12) of the RHC, which is in effect an appeal. This was the appeal before us.

Grounds of appeal

9. By an affirmation of Mr Choy, a director of the Company and who represented the Company before us (and also did so before Kwan J and Le Pichon JA), affirmed on 3 July 2003, the grounds of appeal are stated as follows:

(1)	"The key to the appeal against the Security Order made by Le Pichon JA was her bias and pre-determination before hearing my [Mr Choy's] submission."
(2)	"Le Pichon JA and Kwan J. also made serious errors on the true employer of the Petitioner."

Bias and pre-determination

10. On 27 June 2003, Le Pichon JA handed down her Reasons for Decision in respect of her decision made on 24 June 2003. In the Reasons, the judge dealt with the law on security for costs by referring to Hong Kong Civil Procedure 2002, para 59/10/33, my judgment in In the matter of Wah Nam Group Limited, CACV 310 of 2000 (1 November 2000, unreported) and Cotton LJ's judgment in In re Photographic Artists' Co-operative Supply Association (1883) 23 Ch D 370 at 371-2, and came to the conclusion that security for costs ought to be ordered against the Company. The judge also dealt with the submissions of Mr Choy, who represented the Company in resisting the application for security before her, that she should exercise her residual discretion to decide that security should not be ordered. She went on to deal with the merit of the appeal in the context of Mr Choy's submission that to order security would be tantamount to stifling the appeal. She referred to Order 59 r. 10(5) of the RHC and para 59/10/35 of the Hong Kong Civil Procedure 2002 and the onus of proof on the Company, in such circumstances, to satisfy the court not only that it was unable to furnish security for costs from its own resources, but also that it was unable to raise the required money elsewhere. She stated that no evidence was in fact filed in support of the Company's opposition to the application for security as to Mr Choy's resources. She came to the view that Mr Choy's submissions, namely, that Kwan J had not addressed Mr Choy's main submission to the effect that the real employer of the petitioner and the other claimants was one Chun Wai Engineering Company Limited rather than the Company, did not bear scrutiny. She concluded that the Company had failed to satisfy her that this was a case that warranted the exercise of her residual discretion to decide against granting the application for security.

11. In support of his first ground for setting aside Le Pichon JA's order, Mr Choy's affirmation stated that Le Pichon JA was biased against the Company and she had pre-determined the matter before hearing his submissions. He tended to support this argument by producing the correspondence between the Company and the court, evidencing the Company's application for the transcript of the hearing before Le Pichon JA in Chambers on 24 June 2003 and her refusal of the application.

12. The transcript sought is clearly not a transcript of the evidence to which Order 68 of the RHC applies (also see para 59/9/4 of Hong Kong Civil Procedure, 2002), because no oral testimony was received at the hearing before Le Pichon JA. I do not see the relevance of such transcript as evidence or basis in support of the ground of bias against the Company as alleged by Mr Choy, unless there is dispute as to what happened at the hearing. Save where there is such dispute and where the dispute is relevant to the appeal, this Court and a single judge will normally refuse an application for the transcript. See judgments in Chinese of this Court in CACV 633/2001 (26 July 2001, unreported) and CACV 2795/2001 (15 January 2002, unreported)¹. In his affirmation, Mr Choy did not give any particulars of the alleged bias. He did not put forward any matter that happened at the hearing before the judge that supports his allegations of bias and pre-determination, let alone raising any dispute on such matter. Nor was any such matter alleged in the correspondence that was exhibited to his affirmation.

13. Mr Choy's affirmation and exhibits did not include any detail or particular of the ground that Le Pichon JA was biased or had pre-determined the appeal before her. What I can guess that can be in support of this ground is that Le Pichon JA might have expressed views on issues against the Company regarding the provision of security at the early stages of her hearing of the application for security. If my guess is correct, she was therefore alleged to be biased against the Company or to have pre-determined the issue before hearing Mr Choy's submissions. This is a very serious allegation against the judge and, I think, may well have been caused by a misunderstanding on the part of Mr Choy of the usual happenings in normal court proceedings that deal with an application where no oral evidence is adduced. In preparation for a hearing in such proceedings, a judge or judges of the Court of Appeal will read all the relevant papers and written submissions filed beforehand on behalf of the parties. The relevant documents naturally include the judgment from which the appeal is brought, the affirmations supporting and opposing the application, and the exhibits to such affirmations. The submissions of the parties would naturally include legal authorities the parties intend to rely on. After perusing such documents and submissions, the judge may well have identified the issues that require his decision and formed a preliminary view on such issues. The judge might have been impressed with or inclined to certain views and would therefore, at the hearing, put forward such views to the parties, especially to the party to whom such views are detrimental, so as to give that party an opportunity to answer. The judge would consider such an answer and all relevant oral submissions together with all the documents that he has read in order to reach a determination. This cannot be said to be a pre-determination of the issues before hearing oral submissions, let alone that the judge has a bias against one of the parties.

14. Mr Choy did not identify any bias on the part of the judge. As I said, he might be suggesting that she was strongly inclined to certain views in respect of the issues before her, when she expressed such views and sought the parties' submissions on them. Having considered the materials before me very carefully, I am of the view that there is not a scintilla of basis for this first ground of appeal.

Merit of the substantive appeal

15. The second ground of appeal raised by Mr Choy relates to what he alleges to be serious errors on the issue of the identity of the true employer of the petitioner and the other claimants made by Le Pichon JA and Kwan J. This matter is in effect an assertion or argument that the Company's appeal against Kwan J's order is meritorious and that if the appeal has merit, Le Pichon JA should have exercised her residual discretion not to grant security for costs.

16. I need only state two points. First, on an appeal against a single judge's decision, it is incumbent upon the appellant to satisfy this Court that the single judge had erred in principle in the exercise of his discretion; this Court will not exercise a discretion afresh. See para 59/14/26 of Hong Kong Civil Procedure 2002.

17. Secondly, relating to the merits of the appeal against Kwan J's order, as the basis for Mr Choy's submission that the appeal is meritorious and the effect of an order for security is to stifle the appeal, I need only repeat what I said in In the matter of Wah Nam Group Limited relating to a company appellant which had been wound up for its inability to pay debts, as follows:

"Mr Yuen, for the Company, urges me to exercise my discretion to refuse the applications. He stresses that the directors cannot afford to provide security for costs, and if ordered to do so, that will have the effect of stifling the appeal. He points out that there is nothing to show nor is it suggested that the appeal is doomed to fail or that the appeal is not bona fide. That may well be, but the decisions in the authorities cited above were not based on the merits or fides of the appeal either. I am not disposed to accept that the directors who are behind the prosecution of this appeal are not able to provide security for costs, as stated by Mr William Chan in his very late affirmation filed only yesterday. There is nothing in support of the allegation to show the financial positions of the 'directors' who are not clearly identified but who are described as also creditors of the Company. Even if that allegation be true, I do not see the reason why these creditors in their position as directors could justifiably pursue the appeal at the expense of the petitioners and the three supporting creditors."

18. Moreover, even if I am wrong in my view expressed in that case, it does not affect the correctness of Le Pichon JA's decision. The question of the relationship between the petitioner and the other claimants on the one hand and the Company on the other hand as employees and employer was never raised by the Company before the Presiding Officer of the Labour Tribunal and there was no appeal against the Presiding Officer's awards in favour of the employees. Both Kwan J and Le Pichon JA had examined the circumstances alleged by the Company to challenge the awards and decided against the effect of such challenge. The chances of success of the appeal against Kwan J's order for winding up did not justify Le Pichon JA exercising her residual discretion in favour of the Company against ordering security for costs.

19. The information on the financial position of someone other than the Company and Mr Chung Kau, or on other resources available to the Company, has not been improved upon since the decision of Le Pichon JA. Despite specific reference in the judge's Reasons to the point, the Company has not sought to adduce any evidence to show Mr Choy's financial position or to satisfy the court that there is no other resource available to provide security for costs.

Conclusion

20. I am not satisfied that Le Pichon JA had either erred in principle or had been wrong in any way in ordering security in favour of the petitioner.

21. In the circumstances, with the agreement of Barma J, I dismissed the appeal against Le Pichon JA's order with costs. The costs of the petitioner be taxed in accordance with the Legal Aid Regulations.

Hon Barma J:

22. I agree with the reasons given by Woo JA for dismissing the application for him to disqualify himself from hearing this appeal. As to the Company's appeal against Le Pichon JA's order, like Woo JA, I had, prior to the hearing, studied the papers relating to this appeal and the skeleton argument filed by counsel for the petitioner, and I too would dismiss the appeal for the reasons which Woo JA has given.