KAO, LEE & YIP v. DONALD KOO HOI YAN and Others

IN THE COURT OF APPEAL

1994, No. 20
(Civil)

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J U D G M E N T

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Godfrey, J.A. (giving the judgment of the court):

1. This is an application for leave to appeal to Her Majesty in Council from a decision of this court (the order of the court has not yet been drawn up) to the effect that a covenant in restraint of trade contained in clause 16(b) of a Deed of Partnership dated 15 June 1988 ("the 1988 Deed") and made between (1) Emmanuel Kao and others ("the appellants") and (2) Donald Koo ("the respondent") is not enforceable against the respondent. This court announced its decision on 23 August 1994 and adjourned (eventually to 12 October 1994) any question of costs or otherwise which might arise as a result of its decision (including this present application for leave to appeal to the Privy Council).

2. The appeal was heard by a division of this court consisting of Godfrey J.A., Kaplan and Leonard, J.J. It was not possible for Kaplan J. to be present at the hearing on 12 October 1994 of this application for leave to appeal to the Privy-Council, and this application has been heard by a division of this court consisting of Power V.P., Godfrey J.A. and Leonard J. There is nothing in the Supreme Court Ordinance, Cap. 4, or in the Rules of the Supreme Court, which provides that an application for leave to appeal from a decision of this court to the Privy Council can be entertained only by a division of this court constituted as was the division of this court hearing the original appeal; and the practice of this court has been to list applications for leave to appeal to the Privy Council before a division of this court consisting of any three judges qualified to sit as members of the court. Is there anything wrong with this practice, as Mr. Charles Ching Q.C., for the appellants, suggested that there was?

3. In our judgment, there is not.

4. For the purposes of appeals to the Privy Council, the "court" means either the full court of the Supreme Court of Hong Kong or other the highest Court of Appeal for the time being established in the colony of Hong Kong, or a single judge of such Supreme Court or Court of Appeal, according as the matter in question is one in which, under the rules and practice (emphasis added) for the time being in force in such Supreme Court or Court of Appeal, properly appertains to the said full court or to a single judge of such Supreme Court or Court of Appeal: see rule 1 of the Order in Council regulating appeals from the Supreme Court or Court of Appeal for Hong Kong to His Majesty in Council, 10 August 1909 (as amended). We take this opportunity to affirm the practice of this court (with which we see nothing wrong) in listing applications for leave to appeal to the Privy Council before any three judges qualified to sit as members of this court; although of course the listing authority should, when possible, list (as we believe it usually does list) such applications before a division of this court consisting of the same three judges as those who heard the appeal.

5. The appellants claim to be entitled to appeal as of right. The respondent argues otherwise. Who is right?

6. Rule 2 of the 1909 Rules (as amended) provides as follows:

"2. Subject to the provisions of these Rules, an Appeal shall lie-

(a) as of right, from any final judgment of the Court, where the matter in dispute on the Appeal amounts to or is of the value of $500,000 or upwards, or where the Appeal involves, directly or indirectly, some claim or question to or respecting property or some civil right amounting to or of the value of $500,000 or upwards; and

(b) at the discretion of the Court, from any other judgment of the Court, whether final or interlocutory, if, in the opinion of the Court, the question involved in the Appeal is one which, by reason of its great general or public importance, or otherwise, ought to be submitted to His Majesty in Council for decision."

7. It is to be observed that the class (a) appeal arises only where the matter in dispute is of the value of (or in excess of) $500,000. This is a precise figure. It cannot be right to construe rule 2 as conferring a right of appeal in a case in which the appellants' claim is for a sum which has not yet been ascertained: see Zuliani v. Veira [1994] 1 WLR 1149, especially at p. 1155. However, as is there suggested, if it can be said, as a matter of utmost probability, or even of virtual certainty, that the sum ultimately awarded will be in excess of $500,000, it would be open to this court, as a matter of discretion, to take the view that the question involved in the appeal ought to be submitted to the Privy Council for decision under class (b) even if the question is not of great general or public importance; for class (b) cases include cases which are "otherwise" thought fit to be submitted to the Privy Council for decision.

8. In the present case, we agree with the respondent that the appellants have no automatic right of appeal. The only claim the appellants have against the respondent which can be quantified in money terms is a claim for damages for breach of contract, the respondent (if the appellants are right) having broken the terms of the contract constituted between the appellants and the respondent on the terms of the 1988 Deed. But the value of that claim has not been quantified, and, so far as case (a) is concerned, that is the end of the matter. (We should perhaps add that the respondent, in taking on work for former clients of the firm, has made profits, as he concedes, in excess of $500,000. But the appellants are not entitled to an account of profits as against the respondent; the claim of the appellants against the respondent is not a claim in tort for infringement of copyright, or misuse of trade-mark or confidential information, or the like; it is simply a claim for damages for breach of contract. There is no reason to think that these damages would exceed $500,000.)

9. So far as discretion is concerned, the appellants have failed to satisfy this court that there is any question of great general or public importance which ought to be submitted to the Privy Council for decision. The case turns on the unusual provisions of the 1988 Deed and, in the opinion of this court, raises no such question. The one point which was emphasised before us by Mr. Charles Ching Q.C., for the appellants, was based on the position of one of the plaintiffs, Alexa Lam. It was said that the judgment of this court on the appeal ignored the special position of Alexa Lam, a partner in the firm of Kao, Lee and Yip on terms precisely the same as the respondent, so that as between Alexa Lam and the respondent there was that mutuality of interest which would have enabled Alexa Lam, if not the other appellants, to enforce the restrictive covenant in question against the respondent. In fact, the judgment of this court did take note of that argument; but rejected it. In any event, the point is one which arises on the particular terms of the 1988 Deed, and does not raise any issue of general importance. The remaining points which, it was said, did raise such issues were, on analysis, no more than the product of the practice, unfortunately all too prevalent in Hong Kong, of drafting notices of appeal by the mechanical process of trawling through the judgment, isolating every finding in it, and treating each such finding as a point of law fit for consideration by an appellate court. There is nothing in any of these other points. In fairness to Mr. Charles Ching Q.C., we must record that he had the good judgment not to press them.

10. In all these circumstances, this court is not minded to exercise its discretion in favour of the appellants and grant them leave to appeal to Her Majesty in Council. This application is accordingly refused. The costs of the respondent of this application must be taxed and paid by the appellants to the respondent. The costs of the respondent of the appeal itself must likewise be taxed and paid by the appellants to the respondent. The order of this court disposing of the appeal and of this application should now be drawn up by the solicitors for the respondent and lodged with this court for approval.