HONESTWIN LTD v. MEZELY TRADING LTD

CACV 311/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 311 OF 1998

(ON APPEAL FROM HCA 9024 OF 1996)

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D E C I S I O N

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Rogers, J.A. :

1. This is an application by the Appellant for leave to serve notice that the appeal has been set down out of time.

2. The brief facts of the matter were that there was a judgment entered against the Appellant on 4th November of last year. The Appellant therefore had some 6 weeks in which to appeal, it being a final judgment. On 15th December of last year, the Appellant filed a Notice of Appeal and according to the Court file also set down the appeal. Under Order 59 rule 5(4), the Appellant must give notice of the setting down of the appeal within 4 days after the appeal has been set down. It must do that to all parties on whom the Notice of Appeal has been served.

3. Two events happened close to that time. On 14th December, Messrs. Koo & Partners who are the solicitors now acting for the Plaintiff in the action, the Respondent on this appeal, served a 21-day demand under section 178 of the Companies Ordinance demanding the payment of the judgment sum. Afterwards, on 16th December, the same firm served notice of change of solicitors.

4. Mr. Pin, who is the managing director of the Appellant, refers to these in his affirmation of the 9th April this year and he says that he was advised about the provisions of Order 59 rule 5(4) and was advised that the notice should be served not later than 19th December. He goes on to say in his affidavit :

"7. As I believed it would not have done justice to the Defendant, nor was it acting in the interest of the Defendant, to proceed with the appeal under the circumstances, I instructed WONG to for the time being withhold further step of the appeal but first concentrate on the issue of conflict. The Defendant would give further instructions regarding the same in due course.

8. Pending the matter of conflict, I had instructed WONG to obtain the transcript of the trial before the Honourable Mr. Justice Seagroatt as soon as possible because, once the issue of conflict was clear, the Defendant may proceed with the captioned appeal without delay.

9. In early January 1999, the Defendant gave instructions to WONG that a formal complaint should be launched to Messrs. Koo and Partners putting forth the issue of conflict of interests in their representation. The parties then exchanged a few correspondence."

5. I would observe at the beginning that I find it a little bit surprising that irrespective of the merits of the complaint about the conflict of interest, of which I make absolute no comment in this decision, that the objection was resisted. I consider that it may be advisable for any legal adviser against whom the conflict of interest is alleged, simply to wash his hands of the matter and pass on the papers to somebody against whom no conflict is alleged but, that, as far this decision is concerned, is an aside.

6. The question that I have to decide in this case is whether the Court's discretion should be exercised to give leave to serve the notice of setting down in the circumstances that prevail in this case. I have been extremely troubled by this and it is with the greatest of reluctance that I am prepared to extend time in this case. It seems to me that under paragraph 7, a deliberate decision was taken by Mr. Pin not to comply with the rules of Court in this regard. Instead of immediately applying for a stay of the appeal or applying, as was subsequently done, to have the solicitors removed from file, Mr. Pin in effect took the proceedings in his own hands and exercised his own judgment as to what should happen.

7. I have to say that if it had been a case where no Notice of Appeal had been served, or that the appeal had not actually been set down on 15th December, then the matter would probably have been different and I would not have exercised my discretion.

8. In the circumstances in this case, I consider that it is unlikely that any delay has been occasioned to the appeal as a result of the failure to take the proper steps and that is a matter which I have taken into account. I also note that from about the 8th January the matter of a conflict of interest was pursued. There it seems to have been some delay on both sides. I also have to say that I am not blind to the fact that it seems to me that the Appellant is a company which seems to be totally without resources. That is a matter which is now coming up before Godfrey, J.A. on Friday when a further application for stay of execution pending appeal is made and it is a matter which will no doubt exercise the Companies Judge next Monday when the adjourned hearing of the winding-up petition is heard. It is a matter which I have to bear in mind to decide whether the whole course of the Defendant's conduct is a mere delaying exercise and it is a matter which has troubled me but in the circumstances, purely as a matter of caution, I have felt it necessary to exercise my discretion.

[Further Argument]

9. Appellant's application for adjournment of the application for security for costs refused.

[Further Argument]

10. This is a case where the Appellant is clearly arguably impecunious. In those circumstances, it falls to be considered whether security for costs should be ordered. This is a case of company in business which has had its rights determined. There is no evidence to show that if security is ordered that would stifle the appeal. On the face of the papers before me, there are clearly entities linked with the Appellant and no details have been provided in respect thereof. Giving a discount based on my estimation of fees which would not regarded as in any way excessive I would order a sum of $412,000.

11. Form of Order read out and made available to parties to copy after the hearing. No stay pending the provision of security.