PINE ENTERPRISES LTD v. CYBER STRATEGY LTD AND ANOTHER

CACV 116/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 116 OF 2008

(On Appeal from HCA 1221 of 2006)

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REASONS FOR JUDGMENT

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Hon. Yuen JA (giving the judgment of the court):

1.  On 14 March 2008 Deputy Judge To gave judgment in favour of the Plaintiff and the 1^st Third Party against the Defendants with costs on an indemnity basis.  (As a matter of completeness, I would mention that the Defendants abandoned their claim against the 2^nd Third Party during the trial).

2.  The Defendants lodged a Notice of Appeal on 29 April 2008.

Summons for security for costs

3.  By a summons filed on 20 June 2008, the Plaintiff and 1^st Third Party sought security for costs of the appeal in the sum of $2 million.

Rogers V-P’s order for security for costs (“the Security order”)

4.  The summons was heard by Rogers VP on 18 July 2008.  He ordered that the Defendants give security for costs of the appeal in the sum of $1.2 million on or before 15 August 2008.  The security could be provided by means of cash payment or bankers draft or a bank guarantee.  The Vice-President further ordered:

“in default of the 1^st and 2^nd Defendants or either of them making such lodgment as aforesaid within the time specified above or within such further time as the Court may for special reasons allow, the said Appeal do (upon the Solicitors for the Plaintiff and the 1^st Third Party certifying such default to the Registrar) stand dismissed out of this Court without further order”.  (Emphasis added).

5.  There was no appeal from the Security order.

Summons for extension of time to lodge security

6.  On 12 August 2008, 3 days before the deadline for compliance with the Security order, the Defendants issued a summons for an extension of time for a period of 42 days from the deadline.

7.  The summons was supported by an affirmation from the Defendants’ solicitors made on 12 August 2008 in which he exhibited a letter dated 7 August 2008 from Beijing Olympics Ltd, a BVI company which is the holding company of the Defendants.  In this letter, it is alleged that “the standstill situation in Beijing due to the Olympic Games has created difficulties to our funding arrangement to Hong Kong”, but that it was expected that matters would return to normal in mid-September 2008. 

8.  The summons was listed for hearing on Monday 18 August 2008, which was after the deadline for compliance on Friday 15 August 2008.  Apparently no interim stay of the Security order was obtained.

Rogers V-P’s order refusing extension of time (“the No Extension order”)

9.  Be that as it may, on 18 August 2008, the Vice-President heard the summons and refused to extend the deadline for compliance.  The Vice-President’s reasons were set out in his written Decision of the same day.  The Vice-President also ordered the Defendants to pay gross sum costs in the amount of $30,200.

10.  No appeal from that order was lodged within the time stipulated by the Rules of the High Court i.e. 28 August 2008.

Summons for leave to appeal out of time

11.  It was not until 26 September 2008, nearly a month later, that the Defendants issued the present summons for:

(1)  leave to appeal the No Extension order out of time;

(2)  setting aside that order;

(3)  leave to pay into court forthwith the sum of $1.2 million for the appeal against Deputy Judge To’s judgment to be proceeded with.

12.  This summons was supported by an affirmation of the Defendants’ solicitor stating first, that a cashier order in the sum of $1.2 million was made available by the Defendants on 11 September 2008; secondly, that the solicitors for the Plaintiff and the 1^st Third Party had on 12 September 2008 refused to agree to an extension of time for compliance with the Security order; and thirdly, that in the 2 weeks after that refusal, the Defendants did not apply for leave to appeal the No Extension order out of time as they “were then pre-occupied with the Plaintiff’s application for an order for sale of Union Resources shares and also wanted to seek further counsel advice on the matter”.  

13.  We have considered the submissions of Counsel for the Defendants Mr CY Li (who did not appear at the hearing of the application on 18 August 2008).  At the conclusion of the hearing on 11 December 2008 we dismissed the Defendants’ summons with costs.  Our reasons appear below.

Discussion

14.  First, the delay of nearly a month (28 August 2008 - 26 September 2008) in lodging the appeal against the No Extension order is inordinate when viewed in light of the period allowed by the Rules of the High Court (10 days).

15.  Also we do not accept that there has been any satisfactory explanation for the delay.  There was no reason why the Defendants could not have lodged an appeal within time.  If they considered that the Vice-President was wrong in refusing to accept that the Olympic Games caused difficulties in funding, the fact that the funds did not arrive before mid-September should not have stopped the Defendants’ proceeding with the appeal.  More importantly there was a further 2-week delay between 11 September 2008 when the funds did arrive and 26 September 2008 when the summons was issued.  The excuses proffered for that further period of delay do not bear scrutiny at all.

16.  As for the merits of the application, we take the view that the Vice-President was entitled to refuse the Defendants’ application for extension.  Putting to one side the Vice-President’s concerns about Beijing Olympics Ltd and whether it has any assets, the fact of the matter is that the application for extension was based, and based only, on the letter of 7 August 2008.  That letter was far from sufficient to justify an extension of time “for special reasons”.  The Security order had been given on 18 July 2008, a period of 3 weeks before the commencement of the Olympic Games (the date of which was well-publicized beforehand).  There was no evidence of what the “difficulties” of the funding arrangement were, or when they were first encountered, nor what the “standstill situation” meant, or when it arose.  If what was meant was an unforeseen problem in remittance from the Mainland to Hong Kong, one would have expected to see supporting documents from a bank or other financial institution.  There were (and are) none. 

17.  Although the funds have been made available since the No Extension order, the fact remains that under the Security order (from which there has been no appeal), an extension would be granted only for “special reasons”.  No such special reasons have been shown on the Defendants’ evidence. 

18.  As for prejudice, we are well aware of the fact that the refusal to extend time for lodging security means that the Defendants would have lost their opportunity of appealing Deputy Judge To’s judgment and they would suffer severe prejudice .  But as we pointed out in the course of the hearing, the Defendants’ fate was in their own hands.  It was for them to provide evidence of a far better quality to justify an extension “for special reasons” and they have no-one to blame but themselves for not having done so.  It is well-established that the lack of prejudice to the other party is not in itself a ground for granting an extension which is otherwise unjustified. 

19.  Finally we have also considered the merits of the Defendants’ appeal.  Having read Deputy Judge To’s judgment and the grounds of appeal, we are inclined to agree with the Vice-President that the appeal revolves around findings of fact.  That impacts on the likelihood of success on appeal, as the Court of Appeal rarely interferes with a trial judge’s finding of facts.

Order

20.  Taking all those matters into account, we dismissed the Defendants’ summons filed on 26 September 2008 with costs to the Plaintiff and the 1^st Third Party.

21.  The Plaintiff and the 1^st Third Party have asked for gross sum costs.  Mr Li did not object to that course and has left the assessment to the court.  Having considered the costs statement provided at the conclusion of the hearing, we take the view that the time taken by the handling partner in considering documents and dealing with correspondence should be reduced by 4 hours, and we would round down the gross sum to $60,000 which we order to be paid by the Defendants to the Plaintiff and 1^st Third Party.