LI XIAO YI AND ANOTHER v. ALAN CHUNG WAH TANG AND ANOTHER

HCB 345/2001

[2018] HKCFI 1811

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 345 OF 2001

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D E C I S I O N

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1.  I have before me a summons dated 14 May 2018 taken out by the two Applicants herein, as amended with leave on 14 June 2018.

2.  One of the reliefs sought is that, insofar as necessary, leave be granted to the Applicants to appeal from my decision dated 30 April 2018 (“the Decision”) which dismissed the discovery applications made by the Applicants in support of their application for the removal of the trustees in bankruptcy in this matter, who are the Respondents herein. 

3.  Another relief, sought in the alternative, is that a direction be given that the Decision is one falling within Order 59 r 4(1)(b) of the Rules of the High Court (Cap 4A) and s 98(2) of the Bankruptcy Ordinance (Cap 6) in respect of which no leave to appeal is required.  This proposed “direction” is odd because it does not fall within the type of direction that this court is empowered by Order 59 r 21(3) to give, and its juridical nature and status are in some doubt.  It seems to me that if leave to appeal is as a matter of law not required, I should simply dismiss the application for leave to appeal on that basis, rather than give the direction sought.

4.  On the question whether leave to appeal is required, I raised a number of matters at the hearing which the Applicants have since addressed by supplemental written submissions.  Although the Official Receiver did not take part in the application, after the hearing I asked for her assistance on this question of law and I am grateful for the submissions made in response, signed by Ms Ophelia Lok (Acting Assistant Official Receiver), on behalf of the Official Receiver.

5.  There is no direct authority on the point.  The question has arisen because of the different legislative provisions found in the Bankruptcy Ordinance on the one hand and in the High Court Ordinance and the Rules of the High Court on the other.  S 98(2) of the Bankruptcy Ordinance provides as follows:

“ Every order of the court or the Registrar shall be subject to appeal to the Court of Appeal. The notice of appeal shall be served within the time for appealing against an order made in the matter of any bankruptcy as specified in Order 59, rule 4(1)(b) of the Rules of the High Court (Cap. 4 sub. leg. A).”

6.  Section 13(2) of the High Court Ordinance (Cap 4) provides:

“The civil jurisdiction of the Court of Appeal shall consist of—

(a) appeals from any judgment or order of the Court of First Instance in any civil cause or matter;

(b) appeals under section 63 of the District Court Ordinance (Cap. 336); and

(c) any other jurisdiction conferred on it by any law.”

7.  Section 14(1) provides:

“Subject to subsection (3) and section 14AA, an appeal shall lie as of right to the Court of Appeal from every judgment or order of the Court of First Instance in any civil cause or matter.”

8.  Section 14AA(1) provides as follows:

“ Except as provided by rules of court, no appeal lies to the Court of Appeal from an interlocutory judgment or order of the Court of First Instance in any civil cause or matter unless leave to appeal has been granted by the Court of First Instance or the Court of Appeal.”

9.  When one turns to the rules of court, one finds that Order 59 r 4(1) provides as follows:

“ (1) Except as otherwise provided by these rules, a notice of appeal must be served under rule 3(5) within —

(a) in the case where leave to appeal to the Court of Appeal is required under section 14AA (not being a case to which sub‑paragraph (b) applies) or section 14(3)(e) or (f) of the Ordinance, 7 days after the date on which leave to appeal is granted;

(b) in the case of an appeal from a judgment, order or decision given or made in the matter of the winding up of a company, or in the matter of any bankruptcy, 28 days from the date of the judgment, order or decision; and

(c) in any other case, 28 days from the date of the judgment, order or decision concerned.”

10.  Mr Justin Ho who appeared for the Applicants submitted that the meaning of the statutes and the rules taken together is that any order falling within s 98(2) may be appealed to the Court of Appeal as of right without leave.  The Official Receiver also submitted that it is more likely that the legislative intention is not for s 14AA to apply to a judgment or order in bankruptcy proceedings, against which an appeal therefore remains as of right. Mr Tin who appeared for the Respondents submitted that leave is required, and drew to my attention two cases which I deal with in §20 below.

11.  Having considered the submissions made to me, I agree with the Applicants and the Official Receiver that leave is not required.  The reasons are as follows.

12.  There is no dispute that the Decision is an interlocutory one.  The Decision dismissed two discovery summonses taken out by the Applicants in the bankruptcy proceedings (HCB 345/2001) for the purposes of their application to remove the trustees in bankruptcy under s 96(2) of the Bankruptcy Ordinance also taken out in HCB 345/2001.  The basis of the Decision was that the Applicants did not have the requisite standing or legitimate interest (see paras 19-21 of the Decision).  In my view the Decision is as such an order of the Court of First Instance sitting in its bankruptcy jurisdiction, which is therefore an order of the “court” within the meaning of s 98(2) (see s 2 of the Bankruptcy Ordinance), as well as an order “made …. in the matter of any bankruptcy” within the meaning of Order 59 r 4(1)(b). 

13.  As submitted by the Official Receiver, the appellate jurisdiction of the Court of Appeal in a bankruptcy matter stems from s 98(2).  This means that within the meaning of s 13(2) of the High Court Ordinance which defines the jurisdiction of the Court of Appeal, bankruptcy appeals fall within s 13(2)(c) (“any other jurisdiction conferred on it by any law”) rather than s 13(2)(a) (“appeals from any judgment or order of the Court of First Instance in any civil cause or matter”).[1]  As such, there is basis for saying that neither s 14(1) (“Subject to … section 14AA, an appeal shall lie as of right to the Court of Appeal from every judgment or order of the Court of First Instance in any civil cause or matter”) nor s 14AA(1) (“Except as provided by rules of court, no appeal lies to the Court of Appeal from an interlocutory judgment or order of the Court of First Instance in any civil cause or matter unless leave to appeal has been granted …”) is intended to apply to bankruptcy appeals the jurisdiction for which is provided by s 98(2), not generally by s 13(2)(a) as a civil cause or matter.

14.  S 98(2) is in mandatory terms.  It has exclusive application to bankruptcy matters.  Being a more specific provision, it should be given effect over s 14AA: Mita Kogyo Kabushiki Kaisha v Mitac, Inc [1993] 1 HKC 207; WFM Motors Pty Ltd v Malcolm Maydwell [1996] 2 HKLR 236.  It provides that every order of the court or the Registrar shall be subject to appeal to the Court of Appeal.  This language does not seem to me to admit of a requirement of leave to appeal.

15.  It was the intention behind the legislative changes introduced as part of the Civil Justice Reform in 2009 that the requirement for leave to appeal from interlocutory judgments is subject to exceptions.  Thus it was stated in the Recommendation 110 of the Final Report of the Chief Justice’s Working Party on Civil Justice Reform:

“Interlocutory appeals from the CFI judge to the Court of Appeal should be subject to a condition of leave to appeal save in relation to (i) defined classes of interlocutory decisions which are decisive of substantive rights; and (ii) certain other defined categories of decisions, including those concerning committal, habeas corpus and judicial review.”

Although this passage did not mention bankruptcy, the Final Report had noted earlier (at para 143), albeit in the section on commencement of proceedings, that RHC Order 1 r 2(2) excludes from the ambit of the Rules of the High Court generally, certain types of proceedings which have their own procedural rules, including bankruptcy.

16.  Immediately prior to the Civil Justice Reform, Order 59 r 4(1)(b) provided that, “in the case of an appeal from an order or decision made or given in the matter of the winding up of a company, or in the matter of any bankruptcy”, the time prescribed for serving a notice of appeal was 28 days following the date on which the judgment or order was sealed or otherwise perfected.[2]  As part of the Civil Justice Reform, r 4(1)(b) was amended to its present form (quoted in §9 above), in order to specify that time should run from the date of the judgment or order rather than the date of its sealing or perfection.  The separate treatment of, inter alia, bankruptcy matters was however retained.  The understanding behind that amendment was that r 4(1)(b) applied to cases where leave to appeal was not required.  Thus it was stated in the Revised Proposals for Amendments to Subsidiary Legislation under the Civil Justice Reform put forward by the Steering Committee on Civil Justice Reform, at para 2.9(2):

“The time for appealing (in cases where leave is not required) will be calculated from the date the relevant judgment, order or decision is made and not (as now) from the date of perfection: - O.59, rr.4(1)(b) and (c). References to the date of perfection are deleted: - O.59, rr.4(1) and 5(1).” (emphasis added)

17.  The language of Order 59 r 4(1)(a) (“in the case where leave to appeal to the Court of Appeal is required under section 14AA (not being a case to which sub‑paragraph (b) applies)”) draws a distinction with cases falling within r 4(1)(b), and also suggests in my view that an appeal from a judgment or order in the matter of a bankruptcy does not require leave (although the application of these paragraphs to winding up cases is problematic – see §21 below).

18.  It will be recalled that the second sentence of s 98(2) specifically provides that the notice of appeal shall be served within the time for appealing against an order made in the matter of any bankruptcy as specified in Order 59 r 4(1)(b).  Reading these provisions together, it seems tolerably clear that the legislative intention is that in bankruptcy matters, leave to appeal is not required irrespective of whether or not the judgment or order is interlocutory, and that the time for serving a notice of appeal is, as prescribed by Order 59 r 4(1)(b), 28 days from the judgment or order, rather than any time linked to the grant of leave to appeal as provided in r 4(1)(a).

19.  Further, as has been pointed out on behalf of the Official Receiver, if leave to appeal is required for an interlocutory order in a bankruptcy matter, these provisions would have the anomalous result that a notice of appeal may have to be filed before an application for leave can be heard and determined.  This is an anomaly that strongly militates against the assumed interpretation.

20.  As for the cases relied upon by the Respondents, namely, Re Chu Wai Tung (a bankrupt) (No 2) [2018] 1 HKLRD 398 and Re Wan Po Jun Mary Pauline, a bankrupt (unrep, HCMP 2203/2013, 17 February 2014), where the courts apparently dealt with applications for leave to appeal from an order in a bankruptcy matter on the assumption that leave was indeed required, it is to be noted that in both cases the court dismissed the application for leave, the applicant was an unrepresented bankrupt, the point did not appear to have been argued or even raised, and, in the case of Wan Po Jun Mary Pauline, the applicant was out of time and would have required the court’s permission even if leave to appeal was at such not required.  Accordingly, with great respect, I do not think these cases shed much light on the question at hand.

21.  I should mention that there is apparently no legislative provision equivalent to s 98(2) in relation to companies winding-up, as a result of which Order 59 r 4(1)(a) and (b) seems to be infelicitously worded as far as appeals in winding-up matters are concerned.  Mr Ho suggested that their true construction is that, as far as companies winding-up is concerned, r 4(1)(b) only applies to final judgments or orders in winding up matters, where leave to appeal is not required, whereas r 4(1)(a) applies to interlocutory judgments or orders in winding up proceedings. It is, however, unnecessary for me to express any view on this.

22.  For the above reasons, I conclude that the Decision falls within s 98(2) and that no leave to appeal is required.  The Applicants’ summons will therefore be dismissed.  It is unnecessary for me to express any view on the prospects of success of the intended appeal. 

23.  In the special circumstances of this case, although the summons is dismissed, I make no order as to costs.