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HCMP 241/2012 AND HCMP 407/2012
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
MISCELLANEOUS PROCEEDINGS NOS. 241 AND 407 OF 2012
(ON AN INTENDED APPEAL FROM HCA NO. 1934 OF 2011)
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| BETWEEN |
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FALCON PRIVATE BANK LIMITED |
Plaintiff |
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and |
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BORRY BERNARD EDOUARD CHARLES LIMITED |
1st Defendant |
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BORRY BERNARD EDOUARD CHARLES |
2nd Defendant |
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(Heard together)
| Before: Hon Kwan, Lunn JJA and McWalters J in Court |
| Date of Hearing: 15 November 2013 |
| Date of Judgment: 26 November 2013 |
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J U D G M E N T
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Hon Kwan JA (giving the judgment of the Court):
Introduction
1. This judgment is to be read with our judgment in CACV 42/2012, HCMP 241/2012, HCMP 407/2012 and HCMP 2693/2012 handed down on 10 September 2013 (“the 1st Judgment”). In the 1st Judgment, we have set out in considerable detail the relevant background matters. We will adopt here the terms as defined in the 1st Judgment.
2. We have before us two notices of motion in HCMP 241/2012 and HCMP 407/2012 filed by the defendants on 24 September 2013 pursuant to Order 59 rule 2A(7). In essence, the defendants seek to renew their application in an oral hearing for leave to appeal to the Court of Appeal against the 1st and 2nd Unless Orders made by To J on 27 January 2012 and 22 February 2012, leave to appeal having been refused by this court (Kwan and Lunn JJA and McWalters J) in the 1st Judgment. The present applications arose in this way.
3. The defendants’ summonses in HCMP 241/2012 and HCMP 407/2012 (filed on 9 February 2012 and 7 March 2012 respectively) for leave to appeal against the two Unless Orders were listed for hearing on 20 August 2013, at the same time as the hearing of CACV 42/2012. At the conclusion of the arguments in CACV 42/2012, we indicated to the parties we were minded to deal with HCMP 241/2012 and HCMP 407/2012 on the basis of the skeleton arguments lodged by them. At that time, none of the counsel before us expressed a wish to address the court orally on those leave applications.
4. In the 1st Judgment, we allowed the defendants’ appeal in CACV 42/2012 against the decision of To J on 15 May 2012 to refuse to recuse himself in hearing the Discharge Summons and the Strike-out Summons on the ground of apparent bias. We dismissed the applications for leave to appeal in HCMP 241/2012 and HCMP 407/2012, as we do not think the draft grounds of appeal have any reasonable prospect of success[1]. In so doing, we did not mention that pursuant to the power in Order 59 rule 2A(8), where the determination is made on the basis of written submissions only, no party may, under rule 2A(7), request the determination for leave to appeal be reconsidered at an oral hearing inter partes. We did not mention this as it did not occur to us that HCMP 241/2012 and HCMP 407/2012 listed before us on 20 August 2013 was not an oral hearing, notwithstanding our indication to counsel at the time that we would be minded to deal with the applications on the basis of their written submissions.
5. After we handed down the 1st Judgment, the defendants’ solicitors wrote to this court seeking an oral hearing to renew their leave applications in HCMP 241/2012 and HCMP 407/2012. As we did not wish to be drawn into the controversy between the parties whether our determination in the 1st Judgment was made on paper without an oral hearing, we decided to err in favour of the defendants who are the parties aggrieved by our determination and permitted them to issue the present applications for an oral hearing to renew their leave applications.
6. Having obtained permission to restore the leave applications, on 11 November 2013, the defendants filed summonses in HCMP 241/2012 and HCMP 407/2012 to amend the draft grounds of appeal in their proposed appeals. It was confirmed by Mr Gerard McCoy, SC[2] at the hearing that all the grounds which were considered and rejected by us in the 1st Judgment are abandoned and new grounds would be relied on to mount the proposed appeals. We allowed the defendants to rely on the substituted grounds in the draft notices of appeal.
HCMP 241/2012
7. It was contended in the substituted grounds to appeal the 1st Unless Order that this order was consequential to the Ex Parte Order of 10 November 2011. The Ex Parte Order is liable to be set aside, and the plaintiff’s claim is liable to be struck out, on the determination of the defendants’ Discharge Summons and the Strike-out Summons, which would be heard afresh in two months’ time before a judge other than To J, as ordered by this court when we allowed the appeal in CACV 42/2012. The Ex Parte Order will “inevitably” be set aside for material non-disclosure, and for positive misrepresentation in asserting critical facts unsupported by evidence. The plaintiff’s claim is “heretical” and “completely unsustainable”. Hence, as the entire basis of the 1st Unless Order would be removed when the Ex Parte Order and the plaintiff’s claim struck out, the 1st Unless Order should be set aside on appeal.
8. The above arguments are not any different from the arguments advanced before To J to the effect that he should dismiss the plaintiff’s application for an unless order to enforce compliance with the Ex Parte Order as the plaintiff’s claim is bound to be struck out in due course. They are just variations on the same theme. We had expressed our full agreement with the judge in the 1st Judgment, see paragraphs 76 to 78. We stated categorically that we could discern no error of principle or factual assessment in the January Judgment, which set out the reasons of To J in the exercise of his discretion in making the 1st Unless Order.
9. The arguments in the substituted grounds of appeal are wholly untenable. To J was entitled to take the view that the Ex Parte Order must be obeyed until it is revoked, “and it is no answer to proceedings alleging disobedience to such an order that it was subsequently revoked or shown to have been wrongly made.” (Heatons Transport (St Helens) Ltd v Transport and General Workers’ Union [1973] AC 15 at 65D to F, per Roskill LJ)
10. We understand from the plaintiff’s counsel Mr Douglas Lam that the defendants no longer have any outstanding obligations under the 1st Unless Order. Even if the appeal were allowed to proceed, this would just be an academic exercise.
11. In any event, we remain of the firm view that the threshold requirement for leave to appeal against the 1st Unless Order is plainly not satisfied. We dismiss the application for leave to appeal in HCMP 241/2012.
HCMP 407/2012
12. In the substituted grounds of appeal against the 2nd Unless Order, two broad grounds were raised. Firstly, the 2nd Unless Order was consequential to the Ex Parte Order, which is liable to be set aside on the determination of the Discharge Summons and the Strike-out Summons in two months’ time. Secondly, there was real possibility of apparent bias on the part of the judge when he made the 2nd Unless Order so this order should be set aside and the plaintiff’s summons for an unless order remitted to another judge for determination, alternatively, the summons for an unless order should be dismissed.
13. There is no need to say anything further about the first broad ground, as we have rejected an identical ground in HCMP 241/2012.
14. Mr McCoy’s arguments on apparent bias ran as follows.
15. In the 1st Judgment, we have held the circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility the judge was apparently biased against the defendants as the judge had severely criticised the defendants’ counsel, Mr Colin Wright, in paras 7 to 8 of the February Judgment (handed down on 30 March 2012, in which the judge gave reasons for making the 2nd Unless Order), and that the judge should have recused himself from hearing the Discharge Summons and the Strike-out Summons in May 2012. In light of the 1st Judgment, it is not open to the plaintiff to argue there was no appearance of bias. If this court were to refuse leave to appeal, this would be inconsistent with our holdings in the 1st Judgment. The 2nd Unless Order will “inevitably” be set aside on appeal on the ground of the appearance of bias of the judge, so the proposed appeal would clearly meet the proposed requirement.
16. Mr McCoy submitted that as held in the 1st Judgment[3], the hypothetical observer would also have regard to relevant passages in the July Judgment[4] and the August Judgment[5], in which the judge repeated his criticism of counsel and explained with greater clarity the comments he made in paras 7 to 8 of the February Judgment. See also Howell v Millais [2007] EWCA Civ 720 at para 7, in which Sir Anthony Clarke, MR stated that “the material circumstances to be considered by the fair-minded and informed observer will include any explanation given by the judge under review as to his knowledge or appreciation of those circumstances.”
17. Furthermore, although the 2nd Unless Order was made at the hearing on 22 February 2012 and the judge’s strong criticism of counsel first appeared in the reasons given in the February Judgment one month later, this must relate back to what had transpired at the hearing. What transpired at the oral hearing was the cause, the effect of which was the criticism which came later. Mr McCoy submitted it would be wrong to sever the 2nd Unless Order from the comments of the judge in the February Judgment.
18. Mr McCoy also drew the court’s attention to the fact that the judge, in the absence of opposition of the plaintiff, made an order on 6 May 2013 giving leave to the defendants to appeal para 3 of his order on 27 March 2013, by which he reserved to himself the substantive hearing of the plaintiff’s summons for a stay of the proceedings until the conclusion of CACV 42/2012.
19. We are of the view that Mr McCoy’s arguments are superficially attractive but entirely without merit on further analysis.
20. First and foremost, it is pertinent to note that all through there is no allegation that the judge was actually biased, whether in the hearing on 22 February 2012 or any subsequent hearing of various applications in these proceedings. The defendants have all along proceeded on the basis there was an appearance of bias, applying the test of the informed and fair-minded observer. It has never been the defendants’ contention that the judge was in fact unable to bring an impartial mind to bear on the submissions made to him at the hearing on 22 February 2012 or that he had in fact prejudged the matters in issue.
21. It is important to keep an inquiry about apparent bias distinct from an inquiry about actual bias. As stated by the High Court of Australia in Michael Wilson & Partners v Nicholls (2011) 244 CLR 427 at 446 para 67:
“… an allegation of apprehended bias requires an objective assessment of the connection between the facts and circumstances said to give rise to the apprehension and the asserted conclusion that the judge might not bring an impartial mind to bear upon the issues that are to be decided. An allegation of apprehended bias does not direct attention to, or permit consideration of, whether the judge had in fact prejudged an issue. To ask whether the reasons for judgment delivered after trial of the action somehow confirm, enhance or diminish the existence of a reasonable apprehension of bias runs at least a serious risk of inverting the proper order of inquiry (by first assuming the existence of a reasonable apprehension). Inquiring whether there has been “the crystallisation of that apprehension in a demonstration of actual prejudgment” impermissibly confuses the different inquiries that the two different allegations (actual bias and apprehended bias) require to be made. …”
22. The 2nd Unless Order was made by the judge in the course of the hearing on 22 February 2012 which lasted for two and a half hours. How the judge conducted himself at the hearing is obviously relevant to the inquiry if there was a reasonable apprehension of bias. From our examination of the transcript of the hearing, the judge’s conduct towards the parties was exemplary. He listened with patience to the submissions on both sides, merely exercising some control when there was repetition in counsel’s arguments. He raised questions with Mr Wright regarding his submission, expressed disagreement with some of his contentions[6], but there was no strong personal criticism of counsel at any time.
23. On the basis of what had happened at the hearing, an informed and fair-minded observer could not possibly have reached the conclusion that there was any reasonable apprehension of bias. There was plainly no appearance of bias in the way the judge conducted the hearing, at the conclusion of which he made the 2nd Unless Order and refused an application of Mr Wright (made promptly without waiting for any reasons for judgment) for leave to appeal.
24. The reasons for making the 2nd Unless Order, being the February Judgment, set out the judge’s thinking and views on counsel’s submission. It was in para 7 and 8 that he criticised Mr Wright strongly for misleading the court. And in the July Judgment and August Judgment, the judge returned to his criticism and explained his comments in the February Judgment with greater clarity, in the course of which he mentioned several times that counsel had attempted “deliberately” to mislead the court, thereby attacking not just the competence of counsel but his professional integrity. For those reasons, we held in the 1st Judgment that the hypothetical observer based on the comments in the February Judgment would reasonably comprehend that the judge would not bring an impartial mind to bear on the adjudication of the case, so the judge should have recused himself from hearing the applications in May 2012.
25. What gave rise to an appearance of bias were the comments in the February Judgment. And the consequence of that is that the Judge should recuse himself from hearing the applications that would come up before him in May 2012. It is wrong to say that the subsequent comments should relate back to the 2nd Unless Order for the purpose of the inquiry of apparent bias, as there was plainly no appearance of bias at the time that order was made and we are not inquiring into and assessing the judge’s state of mind when he made his decision. In other words, we are not concerned with an inquiry if the judge was actually biased when he made that order. The subsequent reasons for the 2nd Unless Order are not relevant to the present inquiry of apparent bias. The July and August Judgments, which explained the criticism and comments in the February Judgment, are likewise not relevant to the present inquiry.
26. To paraphrase what was quoted earlier in Michael Wilson & Partners v Nicholls, to ask whether the reasons for judgment delivered after the hearing somehow confirm the existence of a reasonable apprehension of bias runs a serious risk of inverting the proper order of inquiry, by first assuming the existence of a reasonable apprehension. It is not permissible to reason backwards from the reasons for judgment to the conclusion that it might reasonably be apprehended that the judge might have prejudged the matters in issue before him (Michael Wilson & Partners v Nicholls, para 73).
27. The above conclusion is in no way inconsistent with our finding of apparent bias in the 1st Judgment. And the fact that there was reasonable apprehension of bias arising from the subsequent words of the judge does not mean a previous order made at a time when there was no apprehension of prejudgment should likewise be impugned, bearing firmly in mind we are not inquiring whether there was actual bias or prejudgment when the judge made the previous order.
28. We note in passing that the allegation of reasonable apprehension of bias when the judge made the order on 22 February 2012 (as opposed to reasonable apprehension of bias arising from the judgments published on 30 March 2012) was not raised until November 2013, when the defendants capitalised on their last opportunity and indicated their intention to amend the draft grounds of appeal. From April 2012 to September 2013, the defendants had on a number of occasions applied for recusal of the judge, they had not thought fit to make the present allegation.
29. As for the order made by the judge on 6 May 2013 giving leave to the defendants to appeal against his order to hear the stay application himself, we do not think this has any relevance to the present application. We are satisfied from the plaintiff’s skeleton argument dated 3 May 2013 that the plaintiff decided not to oppose the leave application because of the limited nature of that intended appeal and in order to save time and costs.
30. We are satisfied that the defendants’ arguments on apparent bias would have no reasonable prospect of success. We dismiss the leave application in HCMP 407/2012.
Costs
31. Having heard arguments on costs, we order the defendants to pay the plaintiff’s costs in HCMP 241/2012 and HCMP 407/2012, and that the costs in HCMP 241/2012 are to be taxed on an indemnity basis. We take the view it is bordering on an abuse of process to pursue the leave application in HCMP 241/2012, as both the original grounds (which have been rejected in the 1st Judgment and abandoned by counsel at the hearing) and the substituted grounds (which are not really new grounds) are plainly without merit.
| (Susan Kwan) |
(Michael Lunn) |
(Ian McWalters) |
| Justice of Appeal |
Justice of Appeal |
Judge of the Court of First Instance |
Mr Douglas Lam, instructed by Lipman Karas, for the plaintiff (respondent)
Mr Gerard McCoy SC and Mr Colin Wright, instructed by Stephenson Harwood, for the defendants (applicant)
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