SIU KAI MING v. LAU SAI HING

CACV 143/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 143 OF 2013

(ON APPEAL FROM HCA NO 2131 OF 2008)

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J U D G M E N T

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Hon Poon J (giving the judgment of the Court) :

INTRODUCTION

1.  By a judgment handed down on 20 March 2014, we dismissed the defendant’s appeal and upheld the order of Deputy High Court Judge Seagroatt dated 4 June 2013, ordering the defendant to convey to the plaintiff the title to the Property (as defined in our judgment) with consequential directions for conveyancing and to deliver vacant possession of the Property to the plaintiff.

2.  The defendant now seeks leave to appeal to the Court of Final Appeal under the second “as of right” limb and the “or otherwise” limb pursuant to section 22(1)(a) and (b) of the Hong Kong Court of Final Appeal Ordinance, Cap 484 respectively.  The defendant also asks for a stay of the execution of our judgment if leave to appeal to the Court of Final Appeal is granted.  The plaintiff opposes the application for leave to appeal.  If, however, leave is granted and a stay is imposed, the plaintiff submits that condition should be imposed.

THE SECOND “AS OF RIGHT” LIMB

3.  Section 22(1)(a) of the Ordinance provides that an appeal shall lie to the Court of Final Appeal :

“as of right, from any final judgment of the Court of Appeal in any civil cause or matter … where the appeal involves, directly or indirectly, some claim or question to or respecting property or some civil right amounting to or of the value of $1,000,000.00 or more …”

4.  The Court of Final Appeal laid down the proper approach to an application for leave to appeal on the second limb of section 22(1)(a) in China Field Ltd v Appeal Tribunal (Buildings) (No 1) (2009) 12 HKCFAR 68 and WLK v TMC (No 1) (2009) 12 HKCFAR 473, which was recently summarised by Ribeiro PJ in Chinachem Charitable Foundation Ltd v Chan Chun Chuen (2011) 14 HKCFAR 798 at §20.  For present purposes, we would refer to what Ribeiro PJ had said in China Field pertaining to the second “as of right” limb under section 22(1)(a) :

“22. Having identified the claim or question involved in the appeal, the section requires the court to ask whether it is a claim to property or a civil right amounting to or of the value of $1,000,000.00 or more, or what amounts to the same thing, whether it is a question respecting such property or right.

23. In our view, the language of the section undoubtedly focuses on the value of the claim which is the subject-matter of the appeal and not on any property or right which has some connection with that claim….

24. Consistently with the strict approach adopted in relation to the first limb of section 22(1)(a), it is only proper to ascribe a value which qualifies for leave as of right to the candidate claim or question if (i) on the evidence, such value is clearly quantifiable as a value of $1 million or more; and (ii) the court is satisfied that the Court’s order made upon disposing of the proposed appeal would take effect by immediately conferring or imposing on the relevant parties a financial benefit or detriment in the quantified amount.  It is not enough that one is able plausibly to say that such a financial impact is a likely eventual result of the appeal.

25. In so holding, we bear it in mind that the section applies to an appeal which involves ‘directly or indirectly’ some claim or question to or respecting property or some civil right of the requisite value.  In our view, the words in quotation marks do not detract from the foregoing construction.  We construe those words as applying to the nature of the claim asserted and not as affecting the requirement for immediacy of the consequences of the Court’s order.  Thus, for instance, a claim for specific performance of a contract to convey land or a declaration that a party comes within a class of beneficiaries entitled under a trust to certain property would be covered as involving indirect claims to the relevant property if over the threshold in value.  In such instances, it remains the case that the measurable financial impact on the parties is immediately felt upon the Court disposing of the appeal and making or refusing the order sought.”

5.  Mr Hung, for the defendant, submitted that the plaintiff’s claim is the transfer of title of the Property by the defendant. According to the evidence adduced at trial, the highest of the three valuations obtained of the Property was HK$2,440,000.00.  Since the value of the Property exceeds the statutory threshold, the second “as of right” limb is engaged.

6.  Mr Mak, for the plaintiff, argued that the present dispute concerned the value of the defendant’s right to buy back the Property, not the value of the Property itself.  In the context of the 2006 Agreement, the value of the defendant’s right to buy back the Property has to take into account the expenditure incurred by the plaintiff in building the House.  As recorded by the Judge below at §10 of his judgment, the plaintiff had incurred HK$1,536,200.00 as expenses for building the House.  The actual value of the right to buy back the Property, measured by the benefit to the plaintiff, would be HK$2,440,000.00 – HK$1,536,200.00 = HK$903,800.00.  That is below the statutory threshold.  The second “as or right” limb is not engaged.

7.  We first consider if the parties’ claims fall within the second “as of right” limb under section 22(1)(a).  The Property evidently lies at the heart of the parties’ dispute.  The plaintiff claimed specific performance of the 2006 Agreement which entailed a transfer of the title to the Property and in terms sought “an order that the Defendant do assign the Plaintiff’s Property to the Plaintiff” with vacant possession thereof. Conversely, the Defence and Counterclaim (and the proposed appeal) was (and is) premised on an alleged “binding contract... for the sale and purchase of the rights and interest of the Plaintiff” in the Property, on which basis there is a counterclaim for an order for sale by the plaintiff of his interests and rights in the Property at HK$2,440,000.00.  It follows that the rival claims are clearly indirect claims to the Property within the meaning of the second “as of right” limb under section 22(1)(a).

8.  We next consider if the values of the parties’ rival claims exceed the statutory threshold of HK$1 million.  The starting point is of course the value of the Property, which according to the evidence of valuations adduced at trial exceeds the threshold.  Plainly, the value of the Property represents the value of the defendant’s counterclaim.  In assessing the value of the plaintiff’s claim, we do not think the expenses already incurred by the plaintiff for building the House should be deducted from the value of the Property.  If the Court of Final Appeal disposes of the proposed appeal in the plaintiff’s favour, the plaintiff would be better off financially by the value of the Property.  The fact that he would then be able to recoup the expenses does not detract from the financial benefit received, which is the value of the Property.

9.  For the above reasons, we hold that the second “as of right” limb of section 22(1)(a) is engaged.

THE “OR OTHERWISE” LIMB

10.  It is well established that the grant of leave under the “or otherwise” limb in section 22(1)(b) of the Ordinance is an exceptional course.  It is incumbent on the applicant to meet the high threshold of showing the existence of exceptional circumstances.

11.  Mr Hung contended that after the plaintiff had, by his solicitors’ letter dated 22 October 2008, accepted that the defendant’s repudiation of the new contract for sale and purchase of the Property upon the exercise of the option on 16 December 2007, that new agreement was not rescinded ab initio.  The plaintiff was only entitled to damages and not the Property.  The defendant therefore has a good prospect of success and in the interest of justice, leave should be granted on the “or otherwise” limb.

12.  In our view, Mr Hung’s argument is misconceived.  The plaintiff might well be entitled to damages under the new agreement.  But that did not detract from the fact that under the 2006 Agreement, the plaintiff was entitled to be assigned the Property.

DISPOSITIONS

13.  For the above reasons, we grant leave to the defendant to appeal to the Court of Final Appeal under the second “as of right limb” of section 22(1)(a) but refuse leave under the “or otherwise” limb of section 22(1)(b).

14.  We further order a stay of our judgment pending the disposal of the appeal by the Court of Final Appeal.  But the stay should be granted on terms.  The Judge ordered as part of the consequential relief that the defendant is to pay interest to the plaintiff in the sum of HK$621,376.63 on the sum of HK$1,808,560.00 at commercial rate from 27 October 2007 to 4 June 2013.  We subsequently clarified that as a result of our judgment, interest should only commence on 22 October 2008.  As a condition for the stay of our judgment, we order the defendant to pay into court within 14 days from the date of this Decision an amount representing the interest on the sum of HK$1,808,560.00 at commercial rate from 22 October 2008 to 4 June 2013.

15.  Finally, we order that the costs of this application be in the cause of the appeal to the Court of Final Appeal.