KEEN LLOYD HOLDINGS LTD AND OTHERS v. COMMISSIONER OF CUSTOMS AND EXCISE AND ANOTHER

HCMP 203/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 203 OF 2015

(ON AN INTENDED APPEAL FROM HCAL NO. 113 OF 2013)

________________________

________________________

(ON AN INTENDED APPEAL FROM HCAL NO. 82 OF 2013)

________________________

(Consolidated by order of the Honourable Mr Justice McWalters
dated the 22^nd day of May 2013)

________________________

REASONS FOR JUDGMENT

________________________

Hon Lam VP (giving the Reasons for Judgment of the Court):

1.  On 23 December 2014, McWalters JA sitting as an additional judge in the Court of First Instance handed down his judgment in HCAL 113 of 2012 and HCAL 82 of 2013. In that judgment, the learned judge granted the following declarations and orders:

“(i) I declare that search warrants numbered 3, 4 and 9 purportedly issued by a magistrate under section 22(2) of the IEO in respect of commercial premises were issued without lawful authority and I quash them.

(ii) I declare that search warrants numbered 1, 2, 5, 8, 10, 11, 12, 13, 14 and 16, not being executed within a reasonable time from the date of their issue, had lapsed by the date of their execution and I quash them. I declare that all seizures effected under these warrants were illegally made and must be returned to the persons from whom they were seized. Insofar as copies of these seizures have been provided to others I order that the Commissioner of Customs and Excise use his best endeavours to retrieve all such documents from those others.

(iii) I declare that section 21(1) of the IEO is inconsistent with Article 29 of the Basic Law and is thus unconstitutional and that in so far as the entries onto the premises that were made in warrants 3, 4 and 9 depend upon section 21(1) for their legitimacy, those entries were unlawful and hence any seizures effected therein were effected in the course of a trespassory entry and search and must be returned to the persons from whom they were seized.”

2.  His Lordship also directed that he would hear the parties on the order that he should make in respect of damages.  Subsequently, a directions hearing was scheduled to take place on 29 January 2015 and the assessment of damages was scheduled to be heard on 26 February 2015.

3.  On 15 January 2015, the Department of Justice (representing the Respondents) wrote to the court requesting an opportunity to address the question of relief in relation to the constitutionality issue as counsel had reserved his position on that aspect of the case during the hearing. 

4.  The judge gave directions on 15 January 2015 to the effect that he had to be persuaded that he was not functus if the Respondents wished to apply to the court to vary the relief.

5.  In the meantime, by another letter dated 15 January 2015, the Respondents requested the court to withhold the sealing of the order pending further arguments from the parties.

6.  On 16 January 2015, Ms Ho (Senior Government Counsel) acting for the Respondents was informed by the clerk to the judge that there would be a direction hearing on the relief in respect of the constitutional issue and in the meantime the sealing of the order would be withheld.

7.  On 20 January 2015, the Department of Justice served a notice of appeal on solicitors for the Applicants appealing against the order made on 23 December 2014 in terms of those declarations and orders set out in paragraph 1 above.

8.  Although one of the grounds of appeal challenged the finding of unconstitutionality, the other grounds addressed other matters decided in the judgment.       

9.  However, because of the withholding of the sealing of the order in the circumstances set out above, the Respondents could not comply with Order 59 Rule 5(1)(a) and the appeal cannot be set down by the Registrar in accordance with Rule 5(2).

10.  On 21 January 2015, a Government Counsel wrote to solicitors for the Applicants asking for consent to extend the time to set down the appeal in light of the circumstances.

11.  As there was no positive response from the solicitors acting for the Applicants, a summons was taken out by the Government Counsel on 27 January 2015 seeking such extension of time pending the final determination of the relief by the judge.

12.  On 28 January 2015, this court gave directions for the service of the papers and enquired as to the stance of the Applicants over the extension of time.

13.  On 17 February 2015, solicitors for the Defendant indicated that the application for extension of time would be opposed on three grounds:

(a)  The delay is unacceptable;

(b)  The appeal has no reasonable prospect of success; and

(c)  The prejudice suffered by the Applicants if extension is granted.

14.  On 2 March 2015, this court gave directions to facilitate the consideration of whether the matter can be dealt with by way of paper application.  Pursuant to such directions, submissions were lodged by the parties.

15.  At the same time, McWalters JA decided on 29 January 2015 that he should hear the Respondents on remedial interpretation.  On 26 February 2015, the judge heard arguments on that issue.  On 16 April 2015, the judge handed down his judgment refusing the application for remedial interpretation.  He also made an additional order in respect of warrants 3, 4 and 9 concerning the retrieval of materials which had been provided by the Commissioner to others.  

16.  On 27 March 2015, having read the submissions then lodged by the parties, and noting the fact that McWalters JA had re-opened the matter and the order had yet to be finalized, this court directed further submissions on whether the appeal is pre-mature and an oral hearing of the matter.

Whether the appeal is premature?

17.  By reason of Order 59 Rule 4(1)(c) of the Rules of the High Court, in respect of an intended appeal against a substantive decision in an application for judicial review, a notice of appeal must be served within 28 days from the date of the judgment, order or decision concerned.

18.  Unlike under the old rules, time starts to run from the making of the relevant order despite the fact that the order in question has not yet been perfected.

19.  The order made by the judge in his judgment of 23 December 2014 was not provisional in terms or substance.  To this extent, this case is different from the situation in Angela Ho & Co v Kwong Ka Yin CACV 32 of 2015, 25 March 2015.  As far as the declaration of unconstitutionality is concerned, it is based on the conclusion of the judge that on the existing wording of the statute the relevant section is inconsistent with Article 29 of the Basic Law.  Whether one should apply a remedial interpretation to ameliorate the effect of the section by reading down or other permissible techniques is to be considered on the premise of this primary conclusion.  The judge was not invited to re-visit this primary conclusion. 

20.  Of course, the first instance court does have the power to re-visit the order pending the perfection of its order.  If the power is exercised and if the order is varied as a result of that exercise, a party aggrieved should appeal against the order as varied instead of the original order.  In respect of such appeal, time would start to run from the making of the varied order.

21.  However, there is always an interim period between the date of the original order and the decision by the first instance judge on the application for variation.  In the present case, the position as at 20 January 2015 (the date when the Notice of Appeal was served) was that though there was a pending application by the Respondents for re-opening the relief, the court had not agreed to entertain such application and it was uncertain, even if the court were to entertain the application, whether the order would be varied.  As it turned out, McWalters JA heard the application but refused to vary his order apart from the making of an additional order as mentioned above.

22.  It is inherent in a regime of time of appeal starting to run from the making of an order and the first instance judge having the power to revisit his order before its perfection that there could be appeals being brought before the order is finalized.  This does not mean that such appeals are premature.  But it means that there may be procedural hiccups.

23.  Facing with uncertainties during the interim period, an intended appellant has two options:

(a)  To wait for the outcome of the application for variation of relief; and

(b)  To serve a notice of appeal in respect of the original decision right away.

24.  If he adopts option (a), he takes the risk that if the application is refused (either because the court declines to re-open the matter or after re-opening the matter the court comes to the same decision as the original decision), it may be argued that he is out of time in respect of his appeal against the original decision.  In that case, he would have to apply for an extension of time to appeal.

25.  If he adopts option (b), he may face the difficulty (like the Respondents in the present case) of not being able to comply with Order 59 Rule 5(1)(a) and in the event that the judge agrees with him on the variation application, and if he is still minded to appeal, he would have to appeal against the order as varied and the original appeal might be said to be premature.  In the meantime, like the Respondents, he would have to apply for extension of time to comply with Order 59 Rule 5(1)(a) of the Rules of the High Court.

26.  In our view, depending on the circumstances of the case, it may be reasonable for an intended appellant to adopt either one of these options.  In either option, costs may have to be incurred in respect of an application for extension of time.  However, in case of option (b), the opposite party would have been served with a notice of appeal at an earlier date and in that respect it would be more in line with the policy of timely notification of intention to appeal to parties affected.  Further, as explained below, it might be easier to justify an application for extension of time under option (b).

27.  Given the above analysis, we do not think the service of the Notice of Appeal on 20 January 2015 is premature.  It follows that the application for extension of time by the Respondents, adopting option (b), is not otiose.

Whether an extension should be granted?

28.  It should be noted that this is not an application for extension of time to serve a Notice of Appeal.  The Notice of Appeal has been served on 20 January 2015 within time.  The application is in respect of extension of time to comply with Order 59 Rule 5(1)(a) due to the withholding of the sealing of the order pending application to re-open the question of relief.  

29.  In other words, the Applicants were aware of the intention of the Respondents to appeal within time.  Steps were taken by the Respondents to initiate the appeal process within time.  Everything indicates that the Respondents would get on with the appeal once the order for relief is finally settled.  The need for the extension of time cannot be said to be the fault of the Respondents.  In these circumstances, we do not think that one should treat the application in the same way as an application for extension of time to serve a notice of appeal.  The policy which informs the approach to the latter kind of application as laid down in cases like Norwich & Peterborough Building Society v Steed [1991] 1 WLR 449 cannot be applied directly to the present application.

30.  We have no hesitation in rejecting the Applicants’ objections based on delay and prejudice.  In the overall scheme of things, bearing in mind the issues raised in the appeal, it is unlikely that the postponement of the setting down of the appeal pending the final determination of the Respondents’ application for remedial interpretation could have much impact on the reasonable progress of the appeal.  The judge reached his decision on that application on 16 April 2015.  Even if the appeal had been set down within 7 days after the Notice of Appeal was served, application to fix a date for the hearing would not been made sooner than expiration of the period for the filing of respondent’s notice.  In all likelihood, if the court were informed about the pending application for remedial interpretation, it would not fix a date for the appeal until such determination.

31.  In respect of the merits of the appeal, we must emphasize that this application should not be turned into a platform for the pre-running of substantive arguments in the appeal.  It suffices to say that as far as we can see, the appeal is not so devoid of merits that this court should summarily pre-empt the same by refusing to grant an extension in the present circumstances.

32.  As we see it, this is an application for extension of time under Order 3 Rule 5 and the overriding consideration is the interests of justice.  It is essentially a matter of case management and for the reasons canvassed above, we have come to a very clear conclusion that justice demands that the Respondent should be given an extension to comply with Order 59 Rule 5(1)(a) until 7 days after our decision.     

33.  We would take this opportunity to remind litigants and practitioners of their duty under Order 1A Rule 3.  It should be obvious from what we have said above that we do not find the opposition to application to extend time to be meritorious.  We reiterate what had been said in a letter from the Registrar to the Law Society on 15 April 2003 referred to at paragraph 3/5/3 of Hong Kong Civil Procedure 2015 and the commentary therein based on Order 1A r 4(2)(a).  We take the view that the Applicants should have consented to the extension of time.

34.  In this instance, since this may be the first case where this court has discussed the principles governing extension of time in respect of Order 59 Rule 5(1)(a) as opposed to extension of time for service of Notice of Appeal, notwithstanding our observation at the preceding paragraph, we ordered that the costs of this application be in the cause of the appeal.  In the future, litigants and those advising them can expect the court to be more vigilant in discouraging unmeritorious opposition to similar applications for an extension of time by ordering such opposing party to bear the costs of the summons.