THE PRUDENTIAL ENTERPRISE LTD AND ANOTHER v. P.H. SHEK LTD AND ANOTHER

CACV000179A/1989

IN THE COURT OF APPEAL

1989, No. 179 (Civil)

BETWEEN

	THE PRUDENTIAL ENTERPRISE LIMITED	1st Plaintiff
	THE PRUDENTIAL MALL LIMITED	2nd Plaintiff
	AND
	P.H. SHEK LIMITED	1st Defendant
	PIREST LIMITED	2nd Defendant

----------

Coram: Hon. Sir Derek Cons, V.P., Clough & Macdougall, JJ.A.

Date of hearing: 2 October 1990

Date of delivery of judgment: 2 October 1990

-----------------

JUDGMENT

-----------------

 

Sir Derek Cons, V.P. :

1. This is an application for leave to appeal to Her Majesty in Council a decision given by this Court on the 1st March whereby we reversed an order as to costs made by Liu J. in favour of the Plaintiff in the litigation below and substituted therefore an order in favour of the Defendant. The amount involved by the order is probably in the region of HK$1 million.

2. Section 14 of the Supreme Court Ordinance, Cap. 4 provides that no appeal shall lie to this Court

"without the leave of the court or tribunal in question or of the Court of Appeal, from an order of the High Court ... relating only to costs which are by law left to the discretion of the court of tribunal ...''

 

No leave to bring the appeal was obtained from Liu J. and no application was made to this Court. Reliance was placed instead upon Scherer v. Counting Instruments Limited [1986] 1 WLR 615, a reliance we concluded to be well founded, being satisfied that the judge had not judicially exercised his discretion. That decision of necessity involved a question of law.

 

3. The Order in Council which regulates appeals from this Court to Her Majesty in Council provides by Rule 2 that:

                    "an Appeal shall lie

 

(a)

as of right, from any final judgment of the Court, where the matter in dispute on the Appeal amounts to or is of the value of $500,000 or upwards, or 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 $500,000 or upwards; and

(b)

at the discretion of the Court, from any other judgment of the Court, whether final or interlocutory, if, in the opinion of the Court, the question involved in the Appeal is one which, by reason of its great general or public importance, or otherwise, ought to be submitted to Her Majesty in Council for decision."

The Notice of Motion relied upon both paragraphs of the rule. Mr. Tang, who appears today for the Plaintiff for the first time in this litigation, has not pursued any application under paragraph (a). He accepts very sensibly that the authorities are too much against him. He has supported the application under paragraph (b) on the ground that it involves a question of great general or public importance but, with every respect to him, I am unable to accept that any of the questions suggested, whether in the Notice of Motion or in the course of argument, fall within that definition.

4. His main argument has been premised on the "or otherwise" limb of paragraph (b). He has drawn our attention to Donald Campbell and Company Limited v. Pollak [1927] AC 732. In that appeal to the House of Lords approval was given to the words of Sir Joseph Napier sitting in the Judicial Committee of the Privy Council in the case of Yeo v. Tatem (1871) LR 3 PC 696 @ 702:

"Their Lordships do not mean to question or recede from the decisions that have been pronounced regarding not allowing an appeal for costs, but where there has been a mistake upon some matter of law that governs or affects costs - some matter that involves the due application of principles of law - the party prejudiced was entitled to have the benefit of correction by appeal."

The position was stated generally by Viscount Cave, the Lord Chancellor, at p. 747:

"My Lords, I have gone through this long succession of cases only for the purpose of ascertaining what is the precise rule which has been laid down by this House; for I agree that, if a rule of practice exists, it ought not now to be disturbed, and that the rule (whatever it may be) was not abrogated by s. 3 of the Judicature Act, 1876. The result of my examination appears to me to be (1.) that there is no universal rule that an appeal as to costs only will not be entertained by this House, but the true rule is as stated by Lord Northington in Cowper v. Scott, by Lord Eldon in Tod v. Tod, and by Lord Selborne in Metropolitan Asylum District Managers v. Hill, as well as by Sir Joseph Napier in the Judicial Committee and by Lord St. Leonards and Lord Cranworth in the Appeal Committee; and accordingly (2.) that in this House, as in the Court of Appeal, an appeal from a discretionary order as to costs will not be received, except, perhaps, in cases where there is also a bona fide appeal on merits; but (3.) that when it is alleged that the Court of Appeal in dealing with costs has fallen into error on a point of law which governs or affects costs, an appeal on that question will be heard."

5. In his turn Viscount Dunedin, at p. 757, affirmatively setting out three rules as to when an appeal would lie, said:

"3.     If the Court of Appeal has based its judgment on a point of law which may or may not be erroneous. Illustration: the present case.             In all other cases no appeal will lie.           I do not fancy there is any controversy as to the soundness of my first two rules. It is the third that is controverted. My Lords, I confess I think the justification of the third is that without it there would be grave injustice done."

Mr. Tang relies very strongly upon these words as being apt in the present instance. He also refers us to an illustration given by Viscount Haldane at p. 751:

"Speaking for myself, after examination of the authorities, I do not think that they establish the list of exceptions collected above as an exhaustive list. If an order as to costs were, for example, made without jurisdiction, I do not think that they show that there could be no appeal to get rid of the illegality committed."

Mr. Tang suggests that if we were wrong about the judge below, then we too acted without jurisdiction.

6. Mr. Mills-Owens, for the Defendants, observes that if that be so, whenever the Court of Appeal interferes upon Scnerer principles the losing party automatically obtains an appeal as of right. If so, then, for my part, and for the reason given by Viscount Dunedin, I would think the submission no worse.

7. But I do not take the view that an appeal would automatically become as of right, for I apprehend that this Court would not give leave, even then, unless satisfied that the Plaintiff had an arguable case to put before Their Lordships. To that end we eventually requested Mr. Tang to address us on that aspect and we gave Mr. Mills-Owens the opportunity to reply. I do not think it is necessary or desirable to comment on the arguments then put forward. It is sufficient to say that, for my part, on consideration of the reasons given on the last occasion I am not satisfied that the case which the Plaintiff wishes to pursue is unarguable.

8. I accept that the point is not of great general or public importance. It arises from a situation which, although it has occurred at least once before, does not seem to me to be likely to occur often because of the difference between the English and the Hong Kong legislation as to the need for leave to appeal as to costs. I am satisfied the point falls within the "or otherwise" provision of paragraph (b) of the Order in Council.

9. I accept also that Their Lordships have indicated clearly that they do not wish to be troubled by questions of costs alone except in very exceptional circumstances. But for the reasons which Their Lordships gave in Donald Campbell and Company Limited v. Pollak the circumstances are in my view sufficiently exceptional and I would give leave to appeal.

Clough, J.A. :

10. I agree that, for the reasons just given by My Lord, the Vice President, leave should be granted to the Applicant.

Macdougall, J. A. :

11. I also agree that leave should be granted to the Applicant.

(Sir Derek Cons) Vice President

(P.G. Clough) Justice of Appeal

(N. Macdougall) Justice of Appeal

Representation:

Robert TANG, Q.C., and Geoffrey T.L. MA (M/s. Tai, Ho & Chan) for 2nd Plaintiff/Applicant.

Richard Mills-Owens, Q.C. & Ronny WONG (M/s. Deacons) for the Defendants/Respondents.

CACV000179/1989

IN THE COURT OF APPEAL	1989, No. 179
	(Civil)

BETWEEN

	THE PRUDENTIAL ENTERPRISE LIMITED	1st Plaintiff (1st  Respondent)
	THE PRUDENTIAL MALL LIMITED	2nd  Plaintiff (2nd  Respondent)
	AND
	P.H. SHEK LIMITED	1st  Defendant (1st Appellant)
	PIREST LIMITED	2nd  Defendant (2nd Appellant)

---------

Coram: Cons, V.P., Kempster & Clough, JJ.A.

Date of hearing: 28 February & 1 March 1990

Date of delivery of judgment: 1 March 1990

-----------------

JUDGMENT

-----------------

 

Cons; V.P.:

1. The material facts pertinent to this appeal are as follows: -

2. The 2nd Plaintiff (I shall simply refer to "the Plaintiff") as landlord brought an action against its tenants, the 1st and 2nd Defendants, to enforce a forfeiture of the lease by reason of unlawful subletting. The Plaintiff obtained judgment in August, 1988 from Rhind, J. The judge made an order for recovery of possession of the premises in question and for damages to be assessed. At the same time he dismissed the Defendants' Counterclaim for relief from forfeiture and dealt with the costs of the action up to that stage.

3. Damages were claimed in paragraph 10 of the Amended Statement of Claim, with Particulars in these words:-

"The Plaintiffs will claim the mesne profits, fees and charges, as pleaded in the prayer herein, less any interim payments made by the Defendants and accepted by the Plaintiffs."

4. The fees and charges, "pleaded in the Prayer", were put at specific rates in respect of separate items of air-conditioning, management fees, water charges and rates. This betrays a misunderstanding of the true nature of "mesne profits", a misunderstanding which seems to have been shared by all involved in the subsequent assessment. But that has no effect upon this appeal, for it is common ground that all such fees and charges were paid directly to and accepted by the plaintiffs in full up to the 12th October, 1988, the date on which the Defendants vacated the premises in accordance with the order of Rhind, J.

5. The assessment dealt only with what might be termed "the rental aspect" of the mesne profits and only that element of the interim payments, which had been ordered by Master Jennings and Master Perrior on the 11th September, 1987 and the 31st May, 1988 respectively, were taken into account in the final award of damages which was made by Liu, J. on the 23rd June, 1989.

6. The hearing before Liu, J. commenced on the 21st January and lasted seven days. It was conducted by leading counsel on both sides. The judge gave his decisionon the 28th February. Unfortunately there was misunderstanding when his decision was perfected by sealing the order in court, but that was put right under the slip rule - (the corrected version appears at p. 86 of the Appeal Bundle) - on the 23rd March when proceedings were further adjourned. On the 31st May and 1st June leading counsel addressed the judge on the question of costs. He reserved his decision which was delivered on the 23rd June (perfected on the 25th October) and required the Defendants to pay the Plaintiff, in round figures, $2.85 million together with the costs of the assessment and the costs of the further two days' argument. The figure of $2.8 million was obtained by deducting frow the gross amount which the judge found to be due the total amount of the two interim payments.

7. This appeal questions the correctness of that order as to costs and asks that the order be reversed. It is a matter of some importance, for we understand that an order for costs relating just to the assessment would be some where in the region of $1 million. The appeal is premised on a payment-in of the 2nd July, 1988, i.e. before the trial on liability. It was in the sum of $3.75 million, i.e. more than the amount ultimately awarded by Liu, J.

8. The Notice of Payment into Court (p. 39 of the bundle) is in these terms:

	"       TAKE NOTICE that 1st and 2nd Defendants have paid HK$3,750,000.00 into court.
	The said sum of HK$ 3,750,000.00 is in satisfaction of the cause of action in respect of which the 1st and 2nd Plaintiffs claim and after taking into account and satisfying the above-named 1st and 2nd Defendants' cause of action in respect of which they counterclaim."

It does not comply with Order 29, rule 16, which provides that:

"where, after making an interim payment whether voluntarily or pursuant to an order, a defendant pays the sum of money into court under Order 22, rule 1, the notice of payment must state that the defendant has taken into account the interim payment"

It is a little difficult to understand the need for this rule for rule 17 provides for

"adjustment as may be just having regard to the interim payments when judgment is delivered"

and the notes in the Supreme Court Practice at 29/9-18/16 illustrate how this is normally done in practice, as happened in the present instance. It follows that any plaintiff faced with a payment-in subsequent to an order for interim payment should appreciate that the payment-in had taken account of these payments. I note also that the wording of rule 16, as I read it, leaves a defendant with no choice in the matter, although the comment of 22/1/16 of the Supreme Court Practice indicates that the learned editors take a different view.

9. Section 14 of the Supreme Court Ordinance, Chapter 4, provides by Subsection 3 that:

            "No appeal shall lie -

......

(e)

without the leave of the court or tribunal in question or of the Court of Appeal, from an order of the High Court or any other court or tribunal made with the consent of the parties or relating.only to costs which are by law left to the discretion of the court or tribunal"

No such leave has been obtained in this instance or even applied for. It is submitted that it is not necessary. Reliance is placed upon Scherer v. Counting Instruments [1986] 1 W.L.R. 615 which was approved by the House of Lords in Bankamerica Finance Ltd. v. Nock [1988] A.C. 1002.We were referred, in particular, to the judgment of Lord Brandon, @ p. 1009, who expressly endorsed the principles derived by the English Court of Appeal from the earlier authorities, of which No. 10 is:

"if, however, he (that is the judge below) has made his order having no relevant grounds available or having in fact acted on extraneous grounds this Court can entertain an appeal without leave and can make what order it thinks fit".

That endorsement is in effect binding upon this Court: de Lasala v. de Lasala [1980] A.C. 546.

10. I note a slight distinction between the English leglislation and that in this jurisdiction, there being no provision in the former for a further application for leave to the Court of Appeal itself, but the absence of that factor does not appear to be material to the reasoning of the English Court of Appeal.

11. Mr. Swaine, for the Plaintiff, emphasizes the very heavy burden imposed upon the appellant Defendants and seeks to persuade us that the burden has not been discharged and indeed, that in the circumstances, the order of the judge is correct. With every respect, I find myself unable to agree.

12. I am influenced to my conclusion by three factors. The first is that it is well accepted that payments-in can only be made in respect of monetary claims, so that anyother reference in the notice of payment-in must be immaterial.

13. Secondly, that once the question of liability had been settled in the instant case, then, having regard to the common ground as regards the fees and charges, the only matter that remained in dispute"between the parties, and the only matter which could be thought by anyone, properly applying his mind to the situation, to continue to be the subject of the payment-in was the rental aspect of the claim for mesne profits.

14. Thirdly, having regard to Order 29, rule 16, on which I have already commented, the only conclusion to which anyone likewise applying his mind could come, would be that the interim payments had already been taken into account. In the particular instance that conclusion would be reinforced by reason of para. 10 of the Amended Statement of Claim, which clearly makes the Plaintiffs' claim, in satisfaction of which the payment-in was expressly made, subject to discount for the interim payments already made,even though on the face of it, the paragraph was in breach of rule 15.

15. I accept, at any rate for the purposes of this appeal, that failure to include in the formal notice a reference to the interim payments would preclude the Defendants from relying on any entitlement tnat would otherwise be given by Order 62, rule 5(b). The order for costs would be at large in the discretion of the judge, having regard to all the circumstances of the case, including those relating to the payment - in. As to that, if I understand the judgment correctly, the judge felt that the defects of the Notice were so great that it was not worthy of serious consideration by the Plaintiff and therefore not a factor to be considered in the exercise of his discretion. He does not appear to have considered the factors I have mentioned, and in particular that one to which I attach great importance, namely the wording of para. 10 of the Statement of Claim. Instead he appears to have considered the failure to comply with the formal requirements of rule 16 as in itself decisive. For that reason he has not, in my view, judicially exercised his discretion.

16. For myself, looking at the matter as a whole, I think the only way in which a judge having regard to all the circumstances could properly have exercised his discretion would have been in favour of the Defendants. I would, therefore, allow the appeal and reverse the order made below as to the costs of the assessment.

Kempster, J.A.:

17. For the reasons given by my Lord, the Vice President, I agree that we are entitled to entertain this appeal, that it should be allowed and that a consequential order should be made as he proposes.

Clough, J.A.:

18. I also agree.

(D. Cons)	(M.E.I. Kempster)	(P.G. Clough)
Vice President	Justice of Appeal	Justice of Appeal

Representation:

Richard Mills-Owens, Q.C. & Ronny WONG (M/s Deacons)for Defendants/Appellants

John Swaine, Q.C. & Geoffrey T.L. MA (M/s Tai, Ho & Chan) for 2nd Plaintiff/Respondent