RE ROBIN MARK DICKER

HCMP 1923/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1923 OF 2013

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J U D G M E N T

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The application

1. The applicant applies to be admitted, pursuant to section 27(4) of the Legal Practitioners Ordinance (Cap 159), to appear for Moulin Global Eyecare Holdings Limited (in liquidation) in respect of the company’s application to the Court of Final Appeal for leave to appeal from the judgment of the Court of Appeal in CACV 155/2012 and 161/2012 given on 7 December 2012.

2. That judgment concerns the striking out of claims for losses totalling in excess of HK$1.2 billion by the company in a long running action against a former director, Ms Olivia Lee, for breach of duties.  There are three relevant heads of claim, namely, the convertible notes loss, the share repurchase loss and the “IND loss” (“IND” stands for the increase in the net asset deficiency). The claims concerning the first two losses were introduced by an amendment in May 2010.  Ms Lee successfully applied to strike out those claims before Barma J (as he then was) on the ground that the claims, being new causes of action which did not arise from facts already pleaded, were time‑barred; and additionally, regarding the convertible notes loss, the company could not be said to have suffered any loss.  Barma J’s decision to strike out was affirmed by the Court of Appeal.  However, Barma J held that although the IND loss formed a new cause of action, it arose out of facts already pleaded and therefore the claim was allowed to be run.  The Court of Appeal disagreed and reversed the judge in relation to the IND loss.  The Court of Appeal dismissed the company’s application for leave to appeal to the Court of Final Appeal.

3. The company now wishes to bring in the applicant to argue the application for leave to appeal before the Court of Final Appeal, as well as the substantive appeal (if leave is granted).

4. The Bar opposes the applicant’s appearance before the Court of Final Appeal for leave to appeal, but does not oppose his admission if leave is granted to appear in the substantive appeal.

5. It is plain from the submissions of Ms Leona Cheung, Senior Government Counsel, for the Secretary for Justice that the Secretary has his doubts about the present application for admission so far as the leave application is concerned.

6. The application for admission is essentially put on the basis of the “second CFA factor” and, in the papers filed but not at the hearing, the “unusual difficulty and complexity” ground.

Unusual difficulty and complexity

7. This second ground can be disposed of quickly. As both Mr Jason Pow SC (Mr Vincent Lung with him) and Ms Cheung pointed out, one is only concerned with a leave application here, rather than a substantive appeal.  The issues for the Appeal Committee to decide are whether the grounds of appeal raise any matters of great general or public importance and if they do not, whether there are other reasons to give leave to appeal.  Save in the most exceptional circumstances, a leave application would not involve the determination of any unusually difficult or complex issues which would significantly impact on the development of jurisprudence.  Given the questions involved in the intended appeal (see below), the present case is no exception.  This ground must be rejected.

The second CFA factor

8. That leaves the “second CFA factor”, that is, where the admission sought is in relation to a hearing before the Court of Final Appeal.  This court has recently dealt with this factor in Re Dicker QC [2013] 2 HKLRD 245, paras 19 to 21.  In particular, in para 21, the court said:

“ There is of course a difference between an application for leave and an appeal proper before the Court of Final Appeal, but the difference is simply one of degree: Re Green QC HCMP 704/2011, 18 May 2011, Hartmann JA, para. 31. This does not mean, of course, that in each and every application for leave before the Court of Final Appeal, the appearance of overseas counsel is justified in terms of the proper administration of justice. As Ma CJHC observed in Re Jones QC HCMP 2446/2008, 17 December 2008, this second‑mentioned CFA factor (that is, where there is to be a hearing before the Court of Final Appeal), ‘will be in most cases decisive when it is demonstrated that the matter that is involved in the relevant hearing is a substantial one’ (para. 6). What is or is not a substantial matter must turn on the facts. But it is generally not necessary to demonstrate that the relevant overseas counsel would be able to add a significant dimension to the matter, or to demonstrate that the issues to be involved at the hearing are of unusual difficulty or complexity or involve points of jurisprudential value. When one is concerned with a hearing before the Court of Final Appeal itself, all this assumes ‘less importance’ (Re Jones QC, para. 6), in terms of determining whether the application is a ‘substantial’ one.”

9. In short, where an application for admission is in relation to a hearing before the Court of Final Appeal, including an application for leave to appeal before the Appeal Committee of that court, that by itself “will be in most cases decisive” (Re Jones QC, HCMP 2446/2008, 17 December 2008, Ma CJHC, para 6), provided that the matter that is involved in the relevant hearing is a “substantial” one; and it is one “in which overseas counsel is able to contribute significantly by reason of his expertise”: Re Pannick QC [2004] 1 HKLRD 950, para 16(4).

10. Whether a matter is “substantial” depends both on the nature of the application and the issues that are likely to arise in it.  The court is required to examine both the importance of the matter itself (for which the admission of overseas counsel is sought) and also the issues that are involved.  Both are important facets.  Whilst an application for leave to appeal is “usually a substantial one” (Re Pannick QC, para 16(4)), one must focus on the particular application for which overseas counsel is sought to be admitted.  It is to the quality one looks to when looking at the issues and not just to quantity: Re Jones QC, HCMP 2629/2006, 19 January 2007, Ma CJHC, para 12.  If the issues raised are all fact sensitive and involve no more than the application of well known principles; in other words, if the matter is “in reality simple, certainly not substantial”, the court is likely to refuse the application: Re Jones QC (2008), para 7.

11. As regards overseas counsel’s contribution to the hearing, an ability to make a significant contribution by reason of counsel’s expertise is required.  It is therefore usually pertinent to ask whether overseas counsel would be able to provide the necessary assistance to the Appeal Committee beyond that which would be provided by local counsel: Re Jones QC (2007), para 11(2) and (3).  On the other hand, one does not go so far as to require counsel to be able “to add a significant dimension to the matter” – that is only a requirement under the unusual difficulty/complexity ground: Re Jones QC (2008), para 6.  In many cases, the difference between the two is only one of degree.   

The four questions of law

12. Mr Ashley Burns SC for the applicant submitted that the intended appeal raises four questions of great general or public importance: (1) whether the ambit of permissible amendment of a statement of claim, after expiry of the applicable limitation period, is to be determined by reference to the terms of the endorsement on a writ of summons filed within time, or exclusively by reference to the terms of the statement of claim; (2) whether a plea of loss is an essential element of a claim for a breach of fiduciary duty, or whether the cause of action is complete upon breach; (3) what is the correct test to be applied in determining whether a new claim introduced by an amendment is a new cause of action that “arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has been claimed in the action” such that the amendment may be permitted pursuant to section 35(6) of the Limitation Ordinance (Cap 347); and (4) whether a company has any remedy against a director, acting in breach of fiduciary duty, for sums paid away to one creditor at the expense of the other creditors of the company, at a time when the company is insolvent.

13. The first and third questions are plainly general questions of civil procedure.  The applicant’s expertise in company and insolvency law is not in question.  However, I am not satisfied that in relation to these general civil procedural matters, arising in the context of an application for leave to appeal, the applicant will likely be able to provide the necessary assistance to the Appeal Committee beyond that which will be provided by local counsel. In relation to these general issues, I am confident that there are sufficient talents in our Inner Bar who are able to deal with them competently and adequately.

14. In relation to the second and more importantly the fourth questions, they do fall within the specialty of the applicant. However, in relation to the second question, as Ms Cheung pointed out, according to the Notice of Motion for leave (paras 66 to 74), the point is not controversial and is reflected in or has its rationale supported by authorities.  It does not appear that the company will be arguing that the relevant legal principles need to be reviewed or developed, but that the Court of Appeal applied them incorrectly in the judgment under appeal.

The fourth question

15. As regards the fourth question, however, I am persuaded that it is a substantial matter in which the applicant is able to contribute significantly by reason of his expertise.

16. In their written submissions, Mr Pow and his junior submitted that the issue is not of unusual complexity.  Counsel argued that the starting point is that on the brink of insolvency, the creditors become the de facto owners of the assets of the company.  If assets are paid away to one creditor (thereby discharging a genuine debt), the company suffers no loss.  The interests of the general body of creditors may be prejudiced, but their relief lies in unfair preference, not by claiming in the name of the company.  Counsel submitted that although the point in itself might be an “interesting” legal point, it is not of unusual difficulty, still less at this interlocutory stage.

17. But that is not the test.  The question I have to ask is whether the matter is a “substantial” one in which the applicant is able to contribute significantly by reason of his expertise.  In my view, the leave application is certainly a substantial one in terms of its importance in that the company is seeking to make a very substantial claim and striking out the relevant amendments means that it cannot even make it.  As regards the issue raised, there is no suggestion that the authorities on the fourth question are well settled.  It involves a question of law, rather than the application of well settled principles of law to facts.  The test here is not whether the fourth question is of unusual complexity.  The test is whether qualitatively, it is a substantial one, and whether the hearing of that question for the purpose of granting leave to appeal is a matter in which the applicant is able to contribute significantly by reason of his expertise.  The second CFA factor, as has been explained, is different from the unusual complexity/difficulty ground: Re Jones QC (2008), para 6.

18. Mr Pow has certainly suggested an answer to the fourth question.  It is a respectable argument that will have to be considered by the Appeal Committee.  One could see arguments pointing different ways.  It only highlights why the expertise of the applicant is required for the leave application.  It is for the Appeal Committee to decide whether any question of great general or public importance is raised and whether the company’s argument is reasonably arguable.  For my part, I am satisfied that the leave application is a substantial matter both in terms of its importance to the company and in terms of the quality of the fourth question, and (so far as that question is concerned) the leave application is a matter in which the applicant is able to make a significant contribution by reason of his expertise.

19. Mr Pow said that the Notice of Motion for leave to appeal is very detailed and the applicant’s appearance before the court is not required for the leave application, unlike the substantive appeal (if leave is granted).  There is certainly a difference between an application for leave and a substantive appeal.  But as has been pointed out, the difference is one of degree.  Judging from the relevant contents of the Notice of Motion, the Appeal Committee will probably have to hear arguments, no matter how brief, which may ultimately have to be canvassed again at greater length should leave be granted.  In this regard, I note that the hearing for leave to appeal has been set down for three hours.  Given the arguments involved, I am persuaded that the applicant, with his expertise, will be able to substantially assist the Appeal Committee in the relevant area of law.

20. I bear in mind all other relevant factors as well.  In particular, I bear in mind that Mr Burns himself will be briefed to appear before the Appeal Committee together with the applicant.  There is no issue of the local Bar being shut out; rather, there will be the benefits of cross‑fertilisation.  I am therefore not particularly troubled by the lack of attempt to find suitable local senior counsel (to lead Mr Burns) in the leave application (or the substantive appeal): cf Re Green QC, HCMP 704/2011, 18 May 2011, paras 33, 34 and 36.

Disposition

21. For these reasons, I am prepared to grant the admission of the applicant to appear for the company in the forthcoming application for leave to appeal before the Appeal Committee, and, if leave is successfully obtained, the substantive appeal.

22. I thank counsel for their assistance.