LI TAT KONG v. THE OFFICIAL RECEIVER & ANOTHER

CACV 220/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 220 OF 2000

(ON APPEAL FROM HCB NO. 741 OF 1995)

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REASONS FOR DECISION

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Hon Rogers VP:

1. This was an application on the part of the appellant, the bankrupt, for an order confirming that the conditions contained in the order of this court dated 12 July 2001 granting conditional leave to appeal had been fulfilled or alternatively that there be an extension of time for fulfilment of the said conditions. At the hearing, this application was dismissed. The court said that it would give its reasons in writing, which we now do.

2. In the judgment dated 12 July 2001, this court gave the appellant leave to appeal to the Court of Final Appeal on the basis of two questions which were contained in paragraph 18 of the judgment, which were different from the questions for which application were made. The relevant questions were:

"(1) Whether Section 30A of the Bankruptcy Ordinance requires that any order under Subsection (3) that time shall cease to run has to be made prior to the date when the relevant period would have expired in accordance with Subsection (2) had no order been made or whether such an order can be made subsequent to that date and would relate back to that date.

(2) Whether the Court has power to make an interim Order under Section 30A(3) of the Bankruptcy Ordinance that time should cease to run and whether such an order can be prior to the time when the merits of the application have been considered."

3. Paragraph 2 of the order made by the court was that:

"The Appellant do on or before 9 August 2001 give security to answer costs in case any shall be awarded to be paid by the Appellant to the 1st and 2nd Respondents by making lodgment in Court of the sum of HK$400,000 in respect of each of the 1st and 2nd Respondents by cash banker's draft or by provision of a bank guarantee of the like amount which guarantee shall have been approved by the Registrar and until such lodgment be made and notice thereof given to the Registrar and to the Solicitors for the 1st and 2nd Respondents (such notice to be given on the same day as the lodgment made) all proceedings in the said Appeal are to be stayed."

4. There followed a convoluted series of events following the making of that order. On the following day, 13 July, the Clerk of the Court of Appeal drew attention to the necessity to have the order drawn up as soon as possible, particularly in view of the imminent retirement of one of the judges and the impending long vacation.

5. It transpires that a sum of $800,000 was given to the appellant's solicitors on 24 July in respect of the security for costs. It also appears that the appellant's solicitors were seeking to be put in funds for payment of fees, including counsel's fees, and a partial instalment of such funds was made.

6. On 27 July, the final amendments to the draft order were made by the parties. Those amendments were agreed by the appellant's solicitors on 13 August and the draft order was then lodged for approval. On 15 August, the appellant's solicitors wrote to the Official Receiver indicating that security for costs would be paid into court immediately the order was approved.

7. The approval of the order was delayed until the return of the court from vacation. The order was approved on 29 August.

8. It appears that the order was not retrieved from the solicitors' box in the court until 17 September. The order was apparently sealed on that day and on 22 September, additional sealed copies of the order were obtained.

9. On 4 October, the Official Receiver wrote to the appellant's solicitor inquiring as to whether the funds for the security for costs had been lodged in court. On 15 October, the appellant's solicitors replied to that letter stating that the money would be paid into court within "the next few days". On 16 October, the Official Receiver certified that no payment of security had been made within the time limit. On 17 October, the appellant's solicitors lodged the money in respect of the security for costs in court. On the same day, they wrote to the Official Receiver saying:

"The Appellant has now made payment into Court and his Appeal ought properly to proceed.

As such, since Master CB Chan has already adjourned the Public Examination once, on the basis of the irreparable prejudice to the Appellant that a Public Examination might entail pending the hearing of his Appeal to the Court of Final Appeal, we again respectfully invite all concerned to consent to our application for adjournment of the Public Examination due to be heard on Monday 22nd October, 2001, not least for the saving of costs."

That letter was copied to the 2nd respondent's solicitors.

10. The appellant's application for a stay of the public examination was refused and the first day of the public examination has already taken place. However, three further days are required for the hearing of that application. On 31 October, the appellant's solicitors issued the summons to make the present application.

11. It was at the public examination that it first became known that the appellant's solicitors had, indeed, received the $800,000 on 24 July.

12. It is the Official Receiver's case that there is no jurisdiction to make the orders sought. It is said that the security for costs was entered into outside the statutory time limit. The point was taken in correspondence and has been amplified in the skeleton arguments and, indeed, the oral argument of Miss Linda Chan on behalf of the Official Receiver.

13. The point taken turns upon section 25 of the Hong Kong Court of Final Appeal Ordinance, Cap. 484. For convenience the section is set out:

"25. Grant of leave to appeal

(1) Where the Court of Appeal or the Court decides or is required to grant leave to appeal pursuant to an application made under section 24 it may grant leave subject to such conditions as it considers necessary.

(2) Without restricting the generality of subsection (1) leave granted under subsection (1) may be granted-

(a) upon a condition that the appellant shall enter into good and sufficient security, for the due prosecution of the appeal, and the payment of all such costs as may become payable to the respondent in the event of the appeal being dismissed for non-prosecution, or of the Court ordering the appellant to pay the respondent's costs of the appeal; and

(b) upon such other conditions (if any) as to the time or times within which the appellant shall procure the preparation of the record as the Court of Appeal or the Court considers appropriate.

(3) The security required under subsection (2)(a) shall-

(a) be entered into within a period to be fixed by the Court of Appeal or the Court, but not exceeding 3 months from the date on which the application for leave to appeal is granted; and

(b) be to the satisfaction of the Court of Appeal or the Court in a sum not exceeding $400000 in respect of each respondent.

(4) The Court of Appeal or the Court, as the case may be, may vary any conditions it has imposed under this section in such manner as it considers fit.

(5) The Chief Executive in Council may by order published in the Gazette amend subsection (3)(b) to vary the amount specified. (Amended 120 of 1997 s. 4)

(6) Without prejudice to subsection (2) the Court of Appeal or the Court, as the case may be, may when granting leave under subsection (1) impose a timetable on any party for the prosecution of the appeal and may either on the application of a party or of its own motion vary that timetable."

14. In my view, the meaning of the section is clear. The Court of Appeal and the Court of Final Appeal are given power to impose conditions when leave is given to appeal to the Court of Final Appeal. Sub-section (2) specifies that amongst those conditions may be an order for security for costs. Sub-section (3) only comes into effect if, and when, an order for security is made. In my view, the meaning of sub-section (3)(a) is clear that whatever period the Court of Appeal or the Court of Final Appeal may fix for providing the security for costs, the security which has been required must be entered within a period which does not exceed three months from the date on which the application for leave to appeal was granted. The restriction on the Court of Appeal's power in respect of the time limit for the provision of the security is thus limited by the overall restriction that the security has to be provided within three months. Likewise the limitation of $400,000 in respect of the amount of security which is contained in sub-section (3)(b), is a limit of jurisdiction.

15. Whilst sub-section (4) gives the Court of Appeal or the Court of Final Appeal power to vary the conditions imposed, that power to vary conditions cannot be a power to vary them beyond the jurisdiction of the court.

16. It may well be that in some circumstances it would be possible for a condition requiring security for costs to be waived. That, however, cannot affect the fact that if security for costs is still a condition of leave to appeal there is an overall statutory time limit for its provision.

17. In the circumstances the court did not hear argument as to whether, if there were jurisdiction to grant the order sought by the appellant in paragraph 2 of the summons, such order should be granted. For completeness it might be noted that the order sought on paragraph 1 was simply misconceived.

18. At the conclusion of the hearing Mr Thomson on behalf of the appellant indicated that the matter might be taken to the Court of Final Appeal and requested this court to make an order staying the proceedings and in particular the public examination of the appellant. The application was made informally. Nevertheless, this court indicated that such an application was inappropriate, to say the least. The appellant was adjudicated bankrupt on 22 November 1995. Only one day of the public examination has so far taken place and a further three days are, apparently, required. There is no challenge to the validity of the order adjudicating the appellant bankrupt on 22 November 1995. It would appear that efforts have been made on behalf of the appellant to adjourn the public examination indefinitely and, indeed, reference has already been made to the letter of 17 October 2001. That itself refers to applications which had previously and were subsequently to be made.

19. At the hearing, the court indicated to the parties that not only did it consider that there were no grounds for delaying the public examination any further but that it should be proceeded with, with all due despatch. Indeed, had the court considered that it had jurisdiction to make the orders sought on the summons it might have been minded to do so only upon an undertaking being given by the appellant to allow the public examination to proceed with all due dispatch and not to seek any further adjournments of the public examination.

Hon Yuen J:

20. I agree.

Hon Sakhrani J:

21. I agree.