FU LOK MAN JAMES t/a LOKIE LEATHERWARE MANUFACTURING CO v. CHIEF BAILIFF OF THE HIGH COURT

CACV 290/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 290 OF 2002

(ON APPEAL FROM HCA NO. 11796 OF 1996)

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1. I agree with the judgment of Le Pichon JA.

Hon Le Pichon JA:

2. This is an application by the plaintiff for leave to appeal to the Court of Final Appeal. The applicant relies on both paragraphs (a) and (b) of section 22(1) of Cap. 484. The background to the appeal is fully set out in the judgment of this court dated 10 December 2002 and I do not propose to repeat it here. At the hearing, the application was dismissed with costs. The reasons appear below.

Appeal as of right

3. For an automatic right of appeal to arise, the applicant has to show that the "matter in dispute" or "appeal" has a value of $1 million or more. The appeal heard by this court and from which the plaintiff wishes to appeal upheld the order of Burrell J making absolute a charging order to enforce the payment of costs by the plaintiff in the trial of HCA 11796 of 1996 (the High Court action) and awarding costs against the plaintiff in favour of the office of the bailiff of the High Court. The plaintiff submitted that he has an automatic right of appeal because (1) the charging order which was made absolute is in law a final order and (2) the amount involved in the appeal is the amount charged under the charging order which now exceeds $1 million.

4. On the question whether a charging order is a final judgment for the purposes of section 22(1)(a), the applicant placed considerable reliance on the decision of the English Court of Appeal in Rainbow v Moorgate Properties Limited [1975] 1 WLR 788 which concerned the construction of Order 58 rule 2 of the Rules of the Supreme Court. The effect of that decision was that any appeal from any order not caught by the words "other than an interlocutory judgment, order or decision" in sub-rule (1) of Order 58 rule 2 would go straight to the Court of Appeal. At the time Rainbow was decided, an appeal used to lie directly to the Court of Appeal from the decisions of a master concerning, inter alia, garnishee orders. Because garnishee orders and charging orders were closely analogous, it made little sense to construe Order 58 rule 2 in such a manner that would result in appeals in charging orders not lying directly to the Court of Appeal. It was in these circumstances that the English Court of Appeal stated that a charging order absolute was a final order for the purposes of Order 58 rule 2. That, as Mr Mok submitted, was an historical quirk concerned with an interpretation of the English rules of court which has since been rectified by amendments to the rules. The long and short of this is that Rainbow is unhelpful and of little relevance in determining whether a charging order is a final order for the purposes of section 22(1)(a) of Cap. 484.

5. The applicant also relied on Ex parte Chinery (1884) 12 QBD 342 where the question was whether a garnishee order absolute was 'a final judgment' for the purposes of subsection 1(g) of s.4 of the Bankruptcy Act 1883. Mr Chiu relied on Cotton LJ's observation (at 345) that

"... a garnishee order is a final order in the proceeding in which it is obtained ..."

He then invited the court to adopt the approach in Rainbow which was to treat garnishee orders and charging orders in the same way given that they were closely analogous procedures and invited the court to treat a charging order as a final order, presumably, on the basis that no distinction was to be drawn between an 'order' and a 'judgment'. However, Mr Chiu's attention had to be drawn to the following passage later on in Cotton LJ's judgment where it is stated that:

"... ["final judgment"] points to a liability of the debtor to the creditor being established in an action, and not to a proceeding of this kind, which is not an action, but a statutory proceeding, for the purpose, not of establishing any liability of the garnishee to the person who obtains the order, but of attaching a debt due by the garnishee to the debtor whose liability to the judgment creditor had been established by the judgment in the action."

Having regard to those observations, the applicant can derive little assistance from that decision.

6. In my view, in determining whether the judgment upholding the making of a charging order absolute was interlocutory or final, the application test is to be applied. See B+B Construction Ltd v Sun Alliance and London Insurance PLC [2001] HK LRD 1 at 4C. Applying that test, there is little doubt that the judgment is interlocutory in nature having regard to the fact that the charging order is a provisional order, there being jurisdiction in the court to discharge or vary the same even after it had been made absolute. See section 20(B)(4) of Cap. 4 and Order 50 rule 7(1) of the Rules of the High Court. It does not finally dispose of any matter in the action. All it does is to render the creditor a secured creditor. Moreover, further proceedings are necessary for the final enforcement of the creditor's rights under the judgment. This conclusion is fatal to the applicant's case that he has an automatic right of appeal under section 22(1)(a).

7. I now turn to the monetary value of the dispute. The amount charged under the charging order corresponds to the amount of taxed costs of the High Court action which had been awarded 'to the defendant'. Suffiad J had found that it was the office of the Chief Bailiff of the High Court rather than an individual holding that office at any time that was being sued. That was the backdrop to the award of costs. The applicant appealed but he never sought to appeal the costs order. When this court dismissed that appeal in July 1999 ("the 1999 judgment"), the costs order made by Suffiad J and the applicant's liability thereunder became final. There was never any appeal from the 1999 judgment.

8. Mr Mok for the respondent submitted that the "matter in dispute" on the appeal is therefore not the taxed costs of Suffiad J's order which had been rendered final by the 1999 judgment, but the charging order made absolute by Burrell J and which this court upheld and, further, that the subject matter of the appeal, being the charging order, is the beneficial interest of the applicant in the asset in question: see High Court Ordinance, Cap. 4, section 20A(1)(a)(i) and (2)(a). Taxed costs are merely a condition precedent for the application for the charging order: see Cap. 4, section 20(1). The respondent adduced evidence to show that the value of the applicant's interest as one of two registered joint tenants of a property in Sha Tin could not, on any view, be of a value of $1 million or more.

9. Mr Chiu for the applicant conceded that there was no evidence to show that the applicant's interest in the property is of a value of or exceeds $1 million but he submitted that the matter in dispute was not whether the charging order should be made absolute but whether the costs order should be enforced by charging it on the property. He relied on Hui Shiu Wing v Cheung Yuk-Lin [1968] HKLR 176 at 183 where Blair-Kerr J cited the following passage from the speech of Lord Chelmsford in Macfarlane v Leclaire (1862) 15 Moore's PC Cases 181:

"In determining the question of the value of the matter in dispute upon which the right to appeal depends, their Lordships consider the correct course to adopt is to look at the judgment as it affects the interests of the parties who are prejudiced by it and who seek to relieve themselves from it by an appeal."

I do not see how this case helps the applicant particularly having regard to the concluding part of the citation (to which Mr Chiu did not refer) where it is stated:

"... it is the immediate effect of the judgment which must be regarded, as the right of appeal arises as soon as it is pronounced."

It is this latter statement that was applied by Blair-Kerr J. The immediate effect of the decision of this court was that the charging order remained absolute and was not discharged. The charging order thus affected, directly or indirectly, the property subject to the charge, namely the applicant's beneficial interest therein.

10. I am inclined to agree with counsel for the respondent that on the facts of this case, it is the value of the applicant's beneficial interest in the property rather than taxed costs which is "the matter in dispute" for the purposes of section 22(1)(a). This is an additional reason why the applicant's case on his having an automatic right of appeal cannot succeed.

A matter of great general or public importance

11. The issue for consideration by the Court of Final Appeal is said to be:

"Whether or not the judgment of the Court of Appeal in CACV No. 141 of 1998 did decide that in law no such person or office exists as the Chief Bailiff of the High Court."

12. The point raised here is no more than the interpretation of the 1999 judgment. How a particular judgment is to be interpreted cannot, it seems to me, involve a question of great general or public importance. Whether the applicant's interpretation of the 1999 judgment is arguable is beside the point: what must be shown is that the appeal raises a matter of great general or public importance. I can discern none. Since this threshold has not been met, I do not propose to address the specific matters raised which only arise should the applicant's interpretation prove to be correct. In any event, these arguments are not new, they have no merit and have been fully addressed by this court in its judgment of 10 December 2002.

"Or otherwise"

13. The applicant also relies on the "or otherwise" limb. Leave under that limb is "is an exceptional course." See per Bokhary PJ in Hui Yiu Wing v The Regional Council FAMV No. 16 of 2002. Only exceptional circumstances would warrant such leave. See, for example, Hui Yiu Wing (where the court below had applied the wrong test) Cheng Lai Kwan v Nan Fung Textiles Ltd (1997-98) 1 HKCFAR 204 (where as a matter of utmost probability unliquidated damages ultimately awarded would reach or exceed $1 million) and Syed Haider Yahya Hussain v The Registrar of Births and Deaths, unreported, CACV 77/2000 (issues involving a matter of immigration which was, at least at that time, a developing branch of the law). In my judgment, no exceptional circumstances exist in the present case to warrant leave under this limb of section 22(1)(b).

Hon Stone J:

14. I agree with the reasons given in the judgment of Le Pichon JA.

Representation:

Mr Simon Chiu, instructed by Messrs Henry Wan & Yeung, for the Plaintiff

Mr Johnny Mok, instructed by the Department of Justice, for the Defendant

CACV 290/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 290 OF 2002

(ON APPEAL FROM HCA NO. 11796 OF 1996)

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J U D G M E N T

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Hon Rogers VP:

1. I agree with the judgment of Le Pichon JA.

Hon Le Pichon JA:

2. This is an appeal from the order of Burrell J dated 6 June 2002 making absolute a charging order to enforce the payment of costs by the plaintiff in the trial of HCA 11796 of 1996 (the High Court Action) and awarding costs against the plaintiff in favour of the office of the bailiff of the High Court.

Background

3. The High Court Action was brought against the "Chief Bailiff of the High Court" for wrongful conversion and detinue of the plaintiff's property. In that action, the plaintiff sought to make the Chief Bailiff vicariously liable for what were allegedly wrongful acts on the part of the executing bailiff, one Stephen Tsui Tung Sing. The writ had been served personally on a Wong Ying Toa, who, at the time, was the "Chief Bailiff (Operations)" and an appearance on behalf of "the Chief Bailiff of the Supreme Court" had been entered. Suffiad J found that the plaintiff was suing the office of the Chief Bailiff of the High Court rather than any particular individual holding that office at any particular time. The evidence showed that at all times there were two Chief Bailiffs, one of Operations and the other of Administration. Suffiad J held (at p. 16 of his judgment) that the action (brought against the office of bailiff) could not succeed: where a Crown servant commits a tort in the course of his employment, in addition to his own liability, the Crown as employer is vicariously liable. But a minister, department head or other superior servant is not liable for the tort of a subordinate Crown servant since the superior is a fellow servant and not the master - the master being the Crown. Suffiad J also referred to the immunity given to the Crown by section 4(5) of the Crown Proceedings Ordinance, Cap. 300, in respect of acts or omissions connected to execution of judicial process. He therefore dismissed the plaintiff's claim "with costs to the defendant", having determined that the usual costs order, namely that costs should follow the event, should be made.

4. On appeal, the Court of Appeal dismissed the appeal and made an order nisi that the costs "be paid by the plaintiff to the defendant, to be taxed if not agreed." The Court of Appeal agreed with Suffiad J that proceedings could not be brought against the "office" of the Chief Bailiff for the reasons advanced by Suffiad J which the plaintiff did not seek to challenge. It also held that section 4(5) of the Crown Proceedings Ordinance, Cap. 300, was a bar to proceedings being brought against the Attorney General in respect of any act committed by a bailiff when executing a writ of Fi. Fa. Given those difficulties, counsel for the plaintiff changed tack and sought relief against the person who had been given the title "Chief Bailiff" in his personal capacity. He proceeded to apply to amend the proceedings to bring them against Mr Wong personally.

5. The Court of Appeal unanimously refused that application. As explained by Rogers JA (with whose judgment Mortimer VP concurred), the designation as Chief Bailiff was effected without statutory authority. Section 38A of the High Court Ordinance provides that there shall be a bailiff and for the appointment of "assistant bailiffs". It did not provide that there should be a Chief Bailiff. There was therefore no such person or office recognised in law as the Chief Bailiff. Rogers JA noted that even on the 10th day of the hearing below (the last day), counsel for the defendant submitted to Suffiad J that the proceedings must be taken to have been brought against the office. The plaintiff did not demur. Rogers JA went on to say this (at p.9 G-J):

"In those circumstances, it seemed to us impossible to allow an amendment to the title of these proceedings which would, in effect, bring a potential liability to a person who had not hitherto appreciated the fact that he would be personally liable." (emphasis added)

Godfrey JA also rejected the application on the basis that the writ had failed to identify the defendant which was a fatal defect, incapable of being rectified by amendment. It is to be noted that whilst Godfrey JA was prepared to assume that the plaintiff had a substantial grievance arising out of the sale of his goods, effectively at an undervalue, the majority of the Court of Appeal as well as Suffiad J concluded that, in any event, the plaintiff's claim for damages had no merit.

6. Whilst the costs of the appeal have been paid by Legal Aid on behalf of the plaintiff, the costs at first instance which were eventually taxed at $845,721 have not been paid. The plaintiff's application for a review of taxation was refused and this was affirmed on appeal by Cheung J. Subsequently, the defendant applied for a charging order against the property of the plaintiff in respect of the unpaid taxed costs at first instance. Master de Souza discharged the charging order nisi but, on appeal, Burrell J allowed the appeal and made the order described earlier which is the subject matter of this appeal.

This appeal

7. The issue before this court is to whom the costs ordered by Suffiad J should be paid. For my part, I do not see that this gives rise to any difficulty. But counsel for the plaintiff professed that his client, whilst 'anxious' to comply with Suffiad J's order as to costs, has been put in a difficult position by reason of the Court of Appeal's judgment. He submitted that its effect was that the defendant was a non-existent party. There was accordingly no person in whose favour the costs order of Suffiad J could have been made and it followed that the charging order intended to give effect to that costs order was a nullity. The net effect of such submission is that the plaintiff should be relieved of any obligation to comply with Suffiad J's costs order. If correct, this would be quite remarkable.

8. It is common ground that the writ had been served on Mr Wong personally and an appearance entered on behalf of the Chief Bailiff of the Supreme Court. Quite properly (and it would have been irresponsible had it been otherwise) the Department of Justice defended the proceedings on behalf of the "Chief Bailiff", who is a civil servant. For one thing, the Department of Justice could not have predicted in advance, much less have been certain, that the court would not allow an amendment which conceivably could have resulted in a default judgment. That was plainly not a risk it could or should have taken.

9. The plaintiff submitted otherwise. Counsel for the plaintiff submitted that the person served should have applied for a strike out. I do not see that the law imposes any such burden on the recipient of a writ, although it is open to him to do so should he so wish. In any event, no authority was cited for the proposition advanced. Nor do I see that the same costs question would not have arisen had such an application been successful. On the plaintiff's reasoning, the applicant would equally have been 'non-existent'.

10. Mr Chiu referred to Daimler Company, Limited v Continental Tyre And Rubber Company (Great Britain) Limited [1916] 2 AC 307 where (at 348) Lord Parker of Waddington observed:

"But there is no one before the House who can be made liable for costs or who can be ordered to replace in Court the moneys paid out to the secretary. There can therefore be no order as to costs, and the appellants must be left to pursue any remedy they may have against the secretary personally in respect of the money which was erroneously paid to him."

The Daimler case was an action for payment of a trade debt commenced by a company incorporated in England but the bulk of whose shares were held by a German company. In answer to an Order XIV summons for judgment, the defence raised the question of trading with an alien enemy under wartime legislation. The plaintiff obtained leave to sign judgment under Order XIV. The House of Lords held that the action was altogether irregular and should be struck out. It is to be noted that the Daimler case was not about a non-existent party: it was about the authority of an English company to sue in the context of wartime legislation, and whether the company had assumed "an enemy character". Little assistance is to be derived from that case.

11. Mr Chiu then prayed in aid the decision of the Court of Appeal in Lazard Brothers and Company v Banque Industrielle de Moscou [1932] 1 KB 617 where an English firm sued the Moscow Industrial Bank ("the bank") claiming payment of a large sum of money. The plaintiff obtained leave under Order XI, rule 2 to serve notice of the writ by posting it by registered letter to the bank in Moscow, where its head office had been, on the strength of an affidavit stating that the bank was domiciled in Russia and that there was no way of effecting personal service. After judgment by default had been signed, a letter was received from the London Embassy of the Soviet Republic stating that the bank went out of existence in 1917, long before the action was commenced. Upon a garnishee order against the Midland Bank being made absolute, the bank appealed. The Court of Appeal set aside the judgment, holding (at 660) that "where a company is non-existent, the proceedings against it are entirely abortive", citing Simmons v Liberal Opinion Limited [1911] 1 KB 966.

12. Counsel for the plaintiff submitted that the effect of Court of Appeal's judgment in holding that the plaintiff had failed to identify the defendant to the present action meant that the defendant was non-existent, that therefore no costs order made in his favour could take effect and that no charging order could be sustained. Mr Chiu further submitted that Burrell J's conclusion that both the Court of First Instance and the Court of Appeal had determined that it was the office of the bailiff which had been sued was in fact inconsistent with the Court of Appeal's judgment. At first blush, certain passages from the Court of Appeal's judgment might appear to support that contention:

"There is no such person and no such office recognised in law as the Chief Bailiff."

per Rogers JA at p.8 F-G, and

"... the writ ... does not identify the individual (if it was an individual) who was being sued. A failure adequately to identify, as distinct from a mere failure correctly to name, the defendant to an action is a fatal defect. It cannot be cured by amendment."

per Godfrey JA at p.20 L-N. However, when read in context, it is clear that those passages were directed at the plaintiff's application to amend so as to sue Mr Wong personally, and that the observations made were confined to that application. That one of the matters before the Court of Appeal was a suit against the "office" is brought out in the following passage from the judgment of Godfrey JA, at p.18 M-S:

" Against whom then was this present action brought, if not against Mr. Tsui? It was brought, says the plaintiff, against the 'Chief Bailiff of Supreme Court'; and indeed that is the description of the defendant to be found in the writ of summons ...

But that gives rise to the question : Was the action an action brought against the Crown for a tort committed by the Chief, or any, bailiff; in his official capacity; or was it an action brought against the Chief, or any, bailiff as an individual in his personal capacity?"

Godfrey JA then proceeded to rule on the two aspects of the question. I do not therefore agree that the Court of Appeal did not decide the appeal, inter alia, on the basis that it was the "office" that was being sued. The Lazard case is thus distinguishable.

13. It is clear from the judgments of Suffiad J and the Court of Appeal that the action proceeded on the basis that it was a suit against the office and was treated as such. Indeed, the writ had been served on Mr Wong as holder or representative of the office of the bailiff. As a suit against the office of the bailiff of the High Court, there was a misnomer inasmuch as section 38A Cap. 4 provides that there shall be a bailiff and not a Chief Bailiff, but any application to amend the description of the defendant to "Bailiff of the High Court" by deleting the word "Chief" from the name of the defendant would have been futile since any claim against that office was bound to fail.

14. In the present case, for the purposes of the High Court Ordinance, Cap. 4, the office of the bailiff was a "defendant". That expression is defined in section 2 as including "any persons served with any writ of summons or process, or served with notice of, or entitled to attend, any proceedings". It was thus the duty of the holder of that office to appear and contest the action. So when Suffiad J made the costs order, the "defendant" he meant could only have been the "office of the bailiff". As noted above, Suffiad J's judgment was upheld by the Court of Appeal. The observations of the Court of Appeal relating to the application to amend to render Mr Wong personally liable could not have affected its decision that, as a claim against the office of the bailiff, the action must fail.

15. Notwithstanding the somewhat unusual background to this appeal, the unavoidable bottom line is that the plaintiff has initiated proceedings which caused the person on whom the writ had been served to appear and put him to expense. I can see no basis why the plaintiff should not have to pay for the costs of the litigation rendered abortive by reason of his own error or that of his advisers. There is no merit in this appeal.

16. I would dismiss this appeal with an order nisi for costs against the plaintiff in favour of the office of the bailiff of the High Court.

Hon Stone J:

17. I agree with the judgment of Le Pichon JA.

18. In my view Mr Chiu's attempt on behalf of his client to sidestep an extant costs obligation via an asserted consequence of the 1999 Court of Appeal judgment is both ambitious and unmeritorious.

19. This appeal must be dismissed with costs. For my part I would make an order nisi that such costs be taxed and paid on a common fund basis.

Hon Rogers VP:

20. The appeal will therefore be dismissed with an order nisi that the plaintiff bear the costs.

Representation:

Mr Simon Chiu, instructed by Messrs Henry Wan & Yeung, for the Plaintiff/Appellant

Mr Johnny S L Mok, instructed by the Department of Justice, for the Defendant/Respondent

Remarks:
Application for Leave to appeal by Plaintiff to Court of Final Appeal. Application dismissed. Please refer to appeal judgment of FAMV000016/2003.