SINOEARN INTERNATIONAL LTD v. HYUNDAI-CCECC JOINT VENTURE (a firm)

CACV 83/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 83 OF 2011

(ON APPEAL FROM HCA 3987/2003)

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BETWEEN

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REASONS FOR JUDGMENT

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Hon Cheung CJHC:

1.  On 23 December 2011, we allowed the appeal by the plaintiff from the judgment of Au J whereby the judge dismissed the plaintiff’s claim but gave judgment on the defendant’s counterclaim in the sum of HK$3,151,824 together with interest and costs. We set aside the judgment below and ordered that judgment be entered for the plaintiff in the total sum of HK$8,100,000 together with interest. We also granted the plaintiff a declaration of indemnity. We further ordered the dismissal of the defendant’s counterclaim.

2.  The facts and the court’s reasons have been fully set out in the judgment, which I will not repeat.

3.  On 22 March 2012, we dismissed the defendant’s application for leave to appeal to the Court of Final Appeal.  We now give our reasons.

4.  Mr John Scott SC (Mr Martin Wong with him) argued that the defendant is entitled to leave to appeal under the “as of right” limb provided in section 22(1)(a) of the Hong Kong Court of Final Appeal Ordinance (Cap 484).  Counsel accepted that the plaintiff’s claim is unliquidated in nature and therefore he cannot appeal against the court’s judgment for the plaintiff under the “as of right” limb as such.  However, he contended that the defendant’s counterclaim is for a liquidated sum which exceeds HK$1,000,000.  This is because the defendant’s counterclaim is arrived at by mere calculation : the defendant has paid the plaintiff a total of HK$8,900,000 pursuant to the parties’ agreement.  From this sum, the dumping fee of HK$5,748,176 (HK$17 per m³ x 338,128 m³ of mud actually dumped at the plaintiff’s dumping site) is deducted.  The net counterclaim is therefore in the sum of HK$3,151,824.  The fact that evidence of actual dumped volume is required to support the computation does not change the liquidated nature of the claim.

5.  I reject the argument.  The Court of Final Appeal has said on many occasions that the “as of right” limb must be given a narrow construction : see, for instance, China Field Ltd v Appeal Tribunal (Buildings) (No 1) (2009) 12 HKCFAR 68, paras 13‑18; WLK v TMC (No 1) (2009) 12 HKCFAR 473, paras 7‑8.  Where, as here, a contractual dispute is involved and the substantive issue is whether one party or the other to the contract has committed a breach of contract in an “either or” situation, it is unrealistic to divorce the claim from the counterclaim when considering the right to appeal.  In Mr Scott’s case, he cannot realistically appeal only on his counterclaim without also asking the Court of Final Appeal to overturn this court’s judgment for the plaintiff on its (unliquidated) claim.  In other words, he needs to have leave to appeal not only on his failed counterclaim but also on the plaintiff’s successful claim.  Whilst the former is a liquidated claim, the latter is not and an appeal on it must be based on discretionary leave.  Thus analysed, a narrow construction of the “as of right” limb would require the court to exclude the present type of situation from its scope of application.

6.  In reality, the claim and counterclaim are just two sides of the same coin.  They simply represent two opposite ways of looking at the same subject matter of dispute.  To construe section 22(1)(a) otherwise would allow an unliquidated claim to be brought “as of right” before the Court of Final Appeal via the backdoor.  That was, in effect, Mr Scott’s submission.

7.  For these reasons, I reject Mr Scott’s argument based on the “as of right” limb.

8.  Mr Scott also relied on the “or otherwise” limb in section 22(1)(b).  Mr Scott contended that in Cheng Lai Kwan v Nan Fung Textiles Ltd (1997‑98) 1 HKCFAR 204, the Appeal Committee held that the “or otherwise” limb provides a discretion to grant leave which the Appeal Committee may exercise if it can be said as a matter of the utmost probability, or even of virtual certainty, that the damages ultimately awarded will be in excess of the threshold amount, subject always to the grant of leave being justified by the apparent merits of the appeal.

9.  Counsel argued that there is a virtual certainty that regardless of which side prevails, the amount ultimately awarded in the present case will be in excess of HK$1,000,000.  He also argued that his client has a meritorious appeal in relation to liability as well as relief.  He submitted that there is an element of double recovery in the relief granted by the court.

10.  I disagree.  As Bokhary PJ stressed in Hui Yiu Wing v The Regional Council, FAMV 16/2002, 24 September 2002, the “or otherwise” limb is an exceptional course.  Furthermore, it is found in section 22(1)(b) in the context of the Ordinance laying down, as the usual condition of granting discretionary leave, the high threshold requirement that the appeal should involve a question of great general or public importance.  The limb must not be so construed as to wholly subvert that requirement.  The mere fact that the intended appeal has “at least reasonable prospects of success” is in itself quite insufficient to merit the exercise of the discretion by the court in granting leave under the present limb : Chao Keh Lung v Don Xia (2004) 7 HKCFAR 260, para 9 (Ribeiro PJ); China Harbour Engineering Co Ltd v The Secretary for Justice of the HKSAR, CACV 138/2006, 6 September 2007, para 9 (Le Pichon JA).

11.  Mr Scott did not suggest that the present case involves any issues of great general or public importance.  Even assuming in Mr Scott’s favour that his intended grounds of appeal have some reasonable prospects of success, that would not suffice to bring him home on the “or otherwise” limb, in the overall circumstances of the present case.

12.  For these reasons, the application for leave to appeal was dismissed with costs.  We also dismissed with costs the consequential application for a stay pending appeal.

Hon Cheung JA:

13.  I agree.

Hon Yuen JA:

14.  I agree.