FULL WISDOM HOLDINGS LTD AND OTHERS v. TRAFFIC STREAM INFRASTRUCTURE CO LTD AND OTHERS

CACV266/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 266 OF 2003

(ON APPEAL FROM HCA NO.1939 OF 2002)

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J U D G M E N T

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Hon Ma CJHC :

1. On 30 April 2004, this Court (differently constituted) dismissed the appeal of the 5th to 7th Defendants ("the Defendants") from the decision of Chung J granting summary judgment to the Plaintiffs. The issues arising in the proceedings are set out in the judgment of Le Pichon JA in the Reasons for Decision handed down on 16 June 2004. I would draw attention only to the fact that the relief granted to the Plaintiffs in the summary judgment included confirmation of the appointment of the 1st to 3rd Plaintiffs as directors of various Hong Kong companies (being the 1st to 4th Defendants), of the removal of the 7th Defendant as the secretary of these companies and of various resolutions passed by the new directors on 14 May 2002. It is clear that the effect of the summary judgment was to confirm the change of management in the relevant companies which, as set out in the Reasons for Decision, are involved in a number of road projects in the Mainland.

2. The 5th to 7th Defendants now, by a motion dated 13 July 2004, seek leave to appeal out of time to the Court of Final Appeal under section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, Cap.484 ("the Ordinance").

3. There are 2 interconnected issues before us today :-

(1) Did the Defendants have a reasonable excuse for failing to make the application for leave in time?

(2) The merits of the application itself.

Reasonable excuse

4. Under section 24(2) of the Ordinance, motions applying for leave should be filed within 28 days from the date of the judgment appealed from. In the present case, the deadline was accordingly 28 May 2004. No application was made within that time, or indeed at anytime prior to the present Notice of Motion, for an extension of time.

5. The grounds put forward by the Defendants in seeking the extension are as follows :-

(1) The Reasons for Decision were not handed down until 16 June 2004. Until then, the Defendants could not obtain any concrete advice as to the prospects of success of a further appeal to the Court of Final Appeal.

(2) At that time, the Defendants had already changed solicitors. The new solicitors advised that leading counsel be retained as soon as possible. It would appear, however, that leading counsel was not instructed until late June. In early July, well over a month since the deadline, the Defendants were advised that there might be good grounds of appeal.

(3) Although the present Notice of Motion was not taken out until 13 July 2004, by a letter dated 8 July 2004, the Defendants' solicitors had notified the Plaintiffs' solicitors of their instructions to apply for leave.

(4) No prejudice would be caused to the Plaintiffs by the late application.

(5) On the merits, leave to appeal should be granted.

6. In my view, the delay was both substantial and inexcusable :-

(1) The delay in making the present application for leave was over 6 weeks. Even taking into account the fact that the Reasons for Decision were not handed down until 16 June 2004, there was a delay of nearly 4 weeks before the present Notice of Motion was taken out.

(2) A very slack attitude to time limits was adopted by the Defendants. The affirmation of the 5th Defendant supporting the application for leave out of time provides virtually no details of any real efforts made to instruct counsel, whether Senior or Junior, to advise on the merits of an application for leave. And even when counsel advised, apparently in early July, that there might be good grounds of appeal, it took another 10 days before the Notice of Motion was taken out. Here, I would just note as an aside that in fact in late June, the Defendants had already decided to appeal. This exacerbates the delay even more.

(3) Although it is said that no prejudice is caused to the Plaintiffs by the late application, I do not accept this contention. I have already mentioned that the relief obtained by the Plaintiffs in the summary judgment ordered by the Court related to a change in the management of actively trading companies. As a matter of commonsense alone, the sooner all this is finally resolved, the better. I note in the evidence before us that in late June and early July, letters were sent by the Defendants and their solicitors to a number of the parties involved in the China road projects indicating the Defendants' desire to appeal to the Court of Final Appeal. This has had the effect of disrupting talks between the Plaintiffs and the Mainland partners to the joint ventures. For their part, the Defendants say this was unintentional but the fact remains that this continued litigation is disruptive. As Miss Cheng has said in her written submissions, the Plaintiffs should have been able to assume that with no action having been taken by the Defendants by the said deadline date of 28 May 2004, this litigation was at an end.

7. Good grounds have to be shown before the Court's discretion under section 24(5) of the Ordinance can be exercised. It is important to bear firmly in mind in the context of applications for extension of time to seek leave to appeal to the Court of Final Appeal, that by definition, the would-be appellant has already had, twice, his 'day in Court'. At this stage, I would have thought that the Court will be inclined to give an extension only where exceptional or at least very good grounds are shown. However, it is perhaps unnecessary in the present case to examine the question whether the principles governing applications for extension of time to appeal to the Court of Appeal, as contained in cases like Secretary for Justice v Hong Kong and Yaumati Ferry Co Ltd and anor [2001] HKC 125 are perhaps understated and not stringent enough as regards extensions of time for leave to appeal to the Court of Final Appeal. As I have said, it is unnecessary to resolve this point today and I am content to apply the principles established in the Hong Kong and Yaumati Ferry Co Ltd case.

8. I wish, however, to make it clear that I do not accept the argument implicit in the Defendants' application that nothing could be done (or be expected to be done) until the Reasons of Decision came out. First, the time limits stipulated in section 24(2) of the Ordinance do not refer to the time when the Reasons for Decision are handed down. Time begins to run from the date of judgment. Accordingly, irrespective of whether reasons for the decision have been given, the requisite time limits have to be observed unless an extension has been obtained. Secondly, as Miss Cheng has also pointed out in her written submissions, the notification of intention to appeal (see section 24(2) of the Ordinance) does not require any grounds to be stated. I appreciate there may be many cases in which it would be desirable to see the Reasons for Decision first before the application for leave is heard but this does not provide any excuse for the proper procedure and timetable laid down by statute to be ignored.

9. On the facts before the Court, the Defendants have provided no reasonable excuse for their failure to make the application for leave within time. In my view, as stated above, the delay was both substantial and inexcusable. The fact there also exists some prejudice is an additional factor very much against the granting of the indulgence sought. In a more serious case, it might be right to refuse the indulgence sought even on the basis alone of the prejudice suffered.

10. I now turn to the merits of the application itself. In the Hong Kong and Yaumati Ferry Co Ltd case, it was held that where the delay was substantial and inexcusable, a real prospect of success on the merits had to be shown. The relevant prospects of success here are of course those of the application for leave to appeal itself. I will adopt this test in the present case in considering the merits. As I have said, if the prejudice suffered by the Plaintiffs as a consequence of the delay had been worse, it may not have been necessary to consider the merits at all but this is not the situation here.

The merits

11. The grounds of appeal in the Notice of Motion can be divided into two parts (to follow the requirements of section 22(1)(b) of the Ordinance) : there are identified, first, questions said to be of great general or public importance and secondly, grounds of appeal which show that the matter ought otherwise be submitted to the Court of Final Appeal. The points said to be of great general or public importance are as follows :-

"3. The proposed appeal raises the following questions of great general or public importance which ought to be submitted to the Court of Final Appeal :

3.1 The correct approach of the Hong Kong courts in determining a summary judgment application involving questions or issues of foreign law, when there is no contradicting evidence on foreign law adduced by the other party.

3.2 In particular, when the expert evidence on foreign law adduced by one party is not challenged by contrary evidence from the opposing party, whether the Hong Kong court is right to attempt to analyze the expert evidence on foreign law itself using the court's own approach, without expert assistance as to the proper foreign approach or legal reasoning process."

12. Both those points involve at their core simply the way in which a Court deals with and evaluates questions of fact. Everyday, the Courts face situations in which a piece of evidence is uncontradicted. Whether or not that evidence can be accepted is a matter for the Court to determine depending on the veracity and cogency of it.

13. All that Le Pichon JA did in her judgment in the present appeal was to reiterate the approach of the Courts, an approach which has been consistently adopted in Hong Kong and elsewhere. A good summary is provided in Dicey & Morris on The Conflict of Laws, 13th edition at paragraph 9-016. None of the authorities referred to by Mr Siu, properly analyzed, says anything to the contrary.

14. In the present case, this Court found the evidence on PRC law adduced by the Defendants to be highly unsatisfactory and, though uncontradicted by any evidence on the part of the Plaintiffs, simply could not be accepted at face value. It is particularly to be borne in mind that the very provision that the Defendants relied on to support their argument of illegality (namely, the PRC State Council Notice No.43 of 2002 relating to "the Proper Handling of Existing Foreign Investment Projects with Guarantee of Fixed Return") was one that, by its own terms, would appear to point to the opposite conclusion to that which the Defendants were advancing. There are no questions of great general or public importance involved here.

15. As to the other grounds contained in the Notice of Motion, these can only go to the point that there otherwise exist good grounds for the matter to be heard by the Court of Final Appeal. Upon analysis, the stated grounds do no more than repeat the submission that the Court of Appeal was wrong in its approach to the evidence. Even if (which I do not accept) this was arguable, this provides no basis for the "otherwise" provision in section 22(1)(b) to be used to justify leave being granted. It is also to be observed that the Defendants have not attempted to address the point in the judgment regarding section 501(11)(c) of the Indenture.

16. For the above reasons, I am of the view that there are no grounds for leave to be given to appeal to the Court of Final Appeal and no grounds to extend time. Accordingly, I dismiss the Notice of Motion with costs.

Hon Le Pichon JA :

17. I agree.

Hon Sakhrani J :

18. I also agree.