2008

PINE ENTERPRISES LTD v. CYBER STRATEGY LTD AND ANOTHER

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HCA1221/2006PINE ENTERPRISES LTD v. CYBER STRATEGY LTD AND ANOTHER
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64690-EN-2009-03-05

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CACV 116/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 116 of 2008

(On Appeal from HCA No. 1221 of 2006)

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

BETWEEN:

	PINE ENTERPRISES LIMITED	Plaintiff
	and
	CYBER STRATEGY LIMITED	1^st Defendant
	LECTURE KIT COMPANY LIMITED	2^nd Defendant
	and
	WOO PAK HAY EDWARD	1^st Third Party
	LAW SHIU KAI ANDREW	2^nd Third Party

Before: Hon Cheung and Yuen JJA in Court

Date of hearing and judgment: 3 March 2009

Date of reasons for judgment and decision on quantum of costs: 5 March 2009

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REASONS FOR JUDGMENT and
DECISION ON QUANTUM OF COSTS

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

Hon. Cheung JA:

1. I agree with Yuen JA.

Hon. Yuen JA:

2. The Defendants filed a Notice of Motion for leave to appeal to the Court of Final Appeal from our judgment given on 11 December 2008 dismissing the Defendants’ summons of 26 September 2008 for

(1)  leave to appeal out of time Rogers V-P’s order dismissing their application for an extension of time for payment of security for costs for their appeal against Deputy Judge To’s judgment;
(2)  setting aside that order;
(3)  leave to make the payment into court.

At the conclusion of the hearing, we dismissed the Notice of Motion. My reasons appear below.

Relevant dates

3. The history of the proceedings has been set out in our reasons for judgment handed down on 12 December 2008. It is not necessary to repeat the details here. Suffice it to note the following events:

(1)  on 18 July 2008 the Vice-President gave the Defendants 4 weeks to provide security for costs for their appeal, either in cash or by bankers draft or bank guarantee (“the Security order”);
(2)  there was no appeal from that order;
(3)  3 days before the deadline for payment, the Defendants issued a summons for an extension of 6 weeks;
(4)  on 18 August 2008 the Vice-President dismissed the summons (“the No Extension order”);
(5)  there was no appeal from that order in time (28 August 2008);
(6)  on 26 September 2008, the Defendants applied for leave to appeal the No Extension order out of time.

Reasons for judgment

4. In our reasons for judgment, we held that the Defendants had given no satisfactory explanation for the delay after the Vice-President’s No Extension order (para. 15). We also held that the Defendants had failed to show special reasons to justify extending the period for providing the Security (para. 16). The reference to “special reasons” comes from the Security order which provided that the court may “for special reasons” allow further time for providing the Security. We appreciated that the refusal to interfere with the Vice-President’s exercise of discretion in making the No Extension order would lead to the Defendants not being able to pursue their appeal and that would lead to severe prejudice but it was their own failure to provide substantial supporting evidence which led to the position in which they found themselves (para. 18). We also noted that the appeal revolves around findings of fact made by the trial judge (para. 19).

Application for leave to appeal to CFA

5. The Defendants applied for leave to appeal to the Court of Final Appeal under “both limbs” of s.22(1)(b) Hong Kong Court of Final Appeal Ordinance cap. 484, viz. that the questions involved in the intended appeal are ones which, “by reason of its great general or public importance, or otherwise”, ought to be submitted to the Court of Final Appeal for decision.

“Questions”

6. The Defendants suggested there are the following questions:

i.  whether the test for “special reasons” to be provided in an application for extension of time to pay security for costs is a subjective test or an objective test;
ii.  whether a delay of 28 days in lodging the appeal can be said to be an inordinate delay;
iii.  whether a party should be deprived of his right to appeal to the Court of Final Appeal when albeit after a short delay, the party is able to offer security for costs in the appeal and where the appeal is clearly not one which is so lacking in merit that the Court of Final Appeal would refuse leave.

7. As far as question i. is concerned, this issue never arose in the judgment either of the Vice-President or this court. Miss Gwilt accepted that this was the case. Questions ii. and iii. are clearly case-sensitive issues. I do not consider that these are questions of great general or public importance.

8. As for the “or otherwise” limb, it is well-established that this is an exceptional course . I do not see anything which justified this court taking this exceptional course.

Order

9. In the circumstances the Notice of Motion was dismissed.

Gross sum costs

10. Miss Gwilt did not object to a gross sum order for costs but made submissions on the skeleton bill put forward by the Plaintiff and 1^st Third Party. I consider that items 1, 2 and the first of the two item 3s in the skeleton bill could be reduced by $4,000, $6,000 and $2,000 respectively. As for disbursements, the fee is reasonable for counsel of Miss Chan’s experience and even if less senior counsel could have been instructed for this application, fees would have to be incurred for his reading into the case afresh and one would probably come up with the same figure. I take the view that the proper gross sum order would be $38,500 and would order accordingly.

(PETER CHEUNG)	(MARIA YUEN)
Justice of Appeal	Justice of Appeal

Miss Angela Gwilt instructed by YT Szeto & Co for the Defendants (Appellants)

Miss Linda Chan instructed by Alfred Lam Keung & Ko for the Plaintiff and 1^st Third Party (Respondents)

63655-EN-2008-12-12

PINE ENTERPRISES LTD v. CYBER STRATEGY LTD AND ANOTHER

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CACV 116/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 116 OF 2008

(On Appeal from HCA 1221 of 2006)

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

BETWEEN

	PINE ENTERPRISES LIMITED	Plaintiff
	and
	CYBER STRATEGY LIMITED	1^st Defendant
	LECTURE KIT COMPANY LIMITED	2^nd Defendant
	and
	WOO PAK HAY EDWARD	1^st Third Party
	LAW SHIU KAI ANDREW	2^nd Third Party

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

Before: Hon Cheung and Yuen JJA in Court

Date of hearing and judgment: 11 December 2008

Date of Reasons for judgment: 12 December 2008

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REASONS FOR JUDGMENT

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Hon. Yuen JA (giving the judgment of the court):

1. On 14 March 2008 Deputy Judge To gave judgment in favour of the Plaintiff and the 1^st Third Party against the Defendants with costs on an indemnity basis. (As a matter of completeness, I would mention that the Defendants abandoned their claim against the 2^nd Third Party during the trial).

2. The Defendants lodged a Notice of Appeal on 29 April 2008.

Summons for security for costs

3. By a summons filed on 20 June 2008, the Plaintiff and 1^st Third Party sought security for costs of the appeal in the sum of $2 million.

Rogers V-P’s order for security for costs (“the Security order”)

4. The summons was heard by Rogers VP on 18 July 2008. He ordered that the Defendants give security for costs of the appeal in the sum of $1.2 million on or before 15 August 2008. The security could be provided by means of cash payment or bankers draft or a bank guarantee. The Vice-President further ordered:

“in default of the 1^st and 2^nd Defendants or either of them making such lodgment as aforesaid within the time specified above or within such further time as the Court may for special reasons allow, the said Appeal do (upon the Solicitors for the Plaintiff and the 1^st Third Party certifying such default to the Registrar) stand dismissed out of this Court without further order”. (Emphasis added).

5. There was no appeal from the Security order.

Summons for extension of time to lodge security

6. On 12 August 2008, 3 days before the deadline for compliance with the Security order, the Defendants issued a summons for an extension of time for a period of 42 days from the deadline.

7. The summons was supported by an affirmation from the Defendants’ solicitors made on 12 August 2008 in which he exhibited a letter dated 7 August 2008 from Beijing Olympics Ltd, a BVI company which is the holding company of the Defendants. In this letter, it is alleged that “the standstill situation in Beijing due to the Olympic Games has created difficulties to our funding arrangement to Hong Kong”, but that it was expected that matters would return to normal in mid-September 2008.

8. The summons was listed for hearing on Monday 18 August 2008, which was after the deadline for compliance on Friday 15 August 2008. Apparently no interim stay of the Security order was obtained.

Rogers V-P’s order refusing extension of time (“the No Extension order”)

9. Be that as it may, on 18 August 2008, the Vice-President heard the summons and refused to extend the deadline for compliance. The Vice-President’s reasons were set out in his written Decision of the same day. The Vice-President also ordered the Defendants to pay gross sum costs in the amount of $30,200.

10. No appeal from that order was lodged within the time stipulated by the Rules of the High Court i.e. 28 August 2008.

Summons for leave to appeal out of time

11. It was not until 26 September 2008, nearly a month later, that the Defendants issued the present summons for:

(1)  leave to appeal the No Extension order out of time;
(2)  setting aside that order;
(3)  leave to pay into court forthwith the sum of $1.2 million for the appeal against Deputy Judge To’s judgment to be proceeded with.

12. This summons was supported by an affirmation of the Defendants’ solicitor stating first, that a cashier order in the sum of $1.2 million was made available by the Defendants on 11 September 2008; secondly, that the solicitors for the Plaintiff and the 1^st Third Party had on 12 September 2008 refused to agree to an extension of time for compliance with the Security order; and thirdly, that in the 2 weeks after that refusal, the Defendants did not apply for leave to appeal the No Extension order out of time as they “were then pre-occupied with the Plaintiff’s application for an order for sale of Union Resources shares and also wanted to seek further counsel advice on the matter”.

13. We have considered the submissions of Counsel for the Defendants Mr CY Li (who did not appear at the hearing of the application on 18 August 2008). At the conclusion of the hearing on 11 December 2008 we dismissed the Defendants’ summons with costs. Our reasons appear below.

Discussion

14. First, the delay of nearly a month (28 August 2008 - 26 September 2008) in lodging the appeal against the No Extension order is inordinate when viewed in light of the period allowed by the Rules of the High Court (10 days).

15. Also we do not accept that there has been any satisfactory explanation for the delay. There was no reason why the Defendants could not have lodged an appeal within time. If they considered that the Vice-President was wrong in refusing to accept that the Olympic Games caused difficulties in funding, the fact that the funds did not arrive before mid-September should not have stopped the Defendants’ proceeding with the appeal. More importantly there was a further 2-week delay between 11 September 2008 when the funds did arrive and 26 September 2008 when the summons was issued. The excuses proffered for that further period of delay do not bear scrutiny at all.

16. As for the merits of the application, we take the view that the Vice-President was entitled to refuse the Defendants’ application for extension. Putting to one side the Vice-President’s concerns about Beijing Olympics Ltd and whether it has any assets, the fact of the matter is that the application for extension was based, and based only, on the letter of 7 August 2008. That letter was far from sufficient to justify an extension of time “for special reasons”. The Security order had been given on 18 July 2008, a period of 3 weeks before the commencement of the Olympic Games (the date of which was well-publicized beforehand). There was no evidence of what the “difficulties” of the funding arrangement were, or when they were first encountered, nor what the “standstill situation” meant, or when it arose. If what was meant was an unforeseen problem in remittance from the Mainland to Hong Kong, one would have expected to see supporting documents from a bank or other financial institution. There were (and are) none.

17. Although the funds have been made available since the No Extension order, the fact remains that under the Security order (from which there has been no appeal), an extension would be granted only for “special reasons”. No such special reasons have been shown on the Defendants’ evidence.

18. As for prejudice, we are well aware of the fact that the refusal to extend time for lodging security means that the Defendants would have lost their opportunity of appealing Deputy Judge To’s judgment and they would suffer severe prejudice . But as we pointed out in the course of the hearing, the Defendants’ fate was in their own hands. It was for them to provide evidence of a far better quality to justify an extension “for special reasons” and they have no-one to blame but themselves for not having done so. It is well-established that the lack of prejudice to the other party is not in itself a ground for granting an extension which is otherwise unjustified.

19. Finally we have also considered the merits of the Defendants’ appeal. Having read Deputy Judge To’s judgment and the grounds of appeal, we are inclined to agree with the Vice-President that the appeal revolves around findings of fact. That impacts on the likelihood of success on appeal, as the Court of Appeal rarely interferes with a trial judge’s finding of facts.

Order

20. Taking all those matters into account, we dismissed the Defendants’ summons filed on 26 September 2008 with costs to the Plaintiff and the 1^st Third Party.

21. The Plaintiff and the 1^st Third Party have asked for gross sum costs. Mr Li did not object to that course and has left the assessment to the court. Having considered the costs statement provided at the conclusion of the hearing, we take the view that the time taken by the handling partner in considering documents and dealing with correspondence should be reduced by 4 hours, and we would round down the gross sum to $60,000 which we order to be paid by the Defendants to the Plaintiff and 1^st Third Party.

(PETER CHEUNG)	(MARIA YUEN)
Justice of Appeal	Justice of Appeal

Mr CY Li and Miss Angela Gwilt instructed by YT Szeto & Co for the Defendants (Appellants)

Miss Linda Chan instructed by Alfred Lam Keung & Ko for the Plaintiff and the 1^st Third Party (Respondents)

62306-EN-2008-08-18

PINE ENTERPRISES LTD v. CYBER STRATEGY LTD AND ANOTHER

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CACV 116/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 116 OF 2008

(ON APPEAL FROM HCA NO. 1221 OF 2006)

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

BETWEEN
	PINE ENTERPRISES LIMITED	Plaintiff
	and
	CYBER STRATEGY LIMITED	1st Defendant
	LECTURE KIT COMPANY LIMITED	2nd Defendant
	and
	WOO PAK HAY EDWARD	1st Third Party
	LAW SHIU KAI ANDREW	2nd Third Party

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

Before: Hon Rogers VP in Chambers

Date of Hearing: 18 August 2008

Date of Decision: 18 August 2008

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D E C I S I O N

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1. On 18 July, I ordered that security for costs of this appeal should be given and the order was made that the 1st and 2nd Defendants should provide the security. This morning, I am faced with an application for an extension of time for a period of 42 days from 15 August for that to be done.

2. The basis on which that application is made is that there is a “letter” from a company by the name of Beijing Olympics Limited. That document has no printed heading nor does it show any address or contact details. It says:

“I am writing in regard to the captioned issue above. We confirm that we are able, willing and determined to continue to support our subsidiaries, namely, Lecture Kit Limited and Cyber Strategy Limited, to pursue the appeal in CACV 116/2008 to the Court of Appeal.

However, the standstill situation in Beijing due to the Olympic Games has created difficulties to our funding arrangement to Hong Kong. We expect it will get back to normal in mid-September. Accordingly, we are requesting to extend the deadline to pay in the security for costs to the end of September.”

3. When inquiries were made as to what exactly this Beijing Olympics Limited is, it transpires it is neither a Hong Kong company, nor a PRC company. It is a BVI company. It has no connection with the Olympics at all. In those circumstances, it would be surprising in the extreme if it had any known assets in the PRC, given the fact that the Beijing Olympics, which happen to be on at the moment, have been the most important event in the PRC and the name of the Olympics, particularly in conjunction with Beijing, has been the subject of a great deal of publicity about the protection which is given to the official organisation in Beijing. I would be particularly surprised if this company, being a BVI company, were allowed to have any bank account or trade in the PRC.

4. Leaving that aside, there is simply nothing that has been shown to me that this company has sufficient assets. I have been told that it deals in real estate. That means nothing. There is not the slightest scrap of evidence before me that this company has any real assets. What I have been shown by Miss Chan, who appeared on behalf of the Plaintiff, from the company prospectus, that Asian Information Resources Holdings issued namely a public statement headed “Major transaction relating to the proposed disposal of the entire interest in the disposed group” would indicate that indeed this Beijing Olympics Limited has no operation and is simply an investment holding company, whatever that means, but that does not indicate to me what assets it has and whether it has sufficient ready assets.

5. In my view, even though Miss Gwilt has now changed the application and asked for another seven days in which to file further evidence, I do not consider that that is right. This order for security for costs has been now in effect for a month and if there were going to be difficulties in raising money they would have been foreseeable. This has been left to the last minute and on the basis of this piece of paper, which can hardly be dignified as a letter, I am afraid I am not prepared to grant any further extension.

(Anthony Rogers)
Vice-President

Ms Linda Chan, instructed by Messrs Alfred Lam, Keung & Ko, for the Plaintiff and 1st Third Party/Respondents

Ms Angela Gwilt, instructed by Messrs Tsui & Co, for the 1st and 2nd Defendants/Appellants

61827-EN-2008-07-18

PINE ENTERPRISES LTD v. CYBER STRATEGY LTD AND ANOTHER

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CACV116/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 116 OF 2008

(ON APPEAL FROM HCA NO. 1221 OF 2006)

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

BETWEEN
	PINE ENTERPRISES LIMITED	Plaintiff
	and
	CYBER STRATEGY LIMITED	1^st Defendant
	LECTURE KIT COMPANY LIMITED	2^nd Defendant
	and
	WOO PAK HAY EDWARD	1st Third Party
	LAW SHIU KAI ANDREW	2nd Third Party

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

Before: Hon Rogers VP in Chambers

Date of Hearing: 18 July 2008

Date of Decision: 18 July 2008

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D E C I S I O N

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1. This is an application for security for costs in respect of an appeal.

2. The action in the court below took 23 days. The judgment is extensive.

3. It suffices to say that the grounds of the appeal appear to me to really revolve around questions of fact, apart from one matter, to which I will refer in a moment.

4. They are dressed up as questions of law, but they really amount to questions of fact, and in that respect I have to refer to what the judge said when he was dealing with the question of costs between the plaintiff and the 1st and 3rd parties’ costs, because at paragraph 164 he said:

“It was not until the twelfth day of the trial when the conduct of the defence was taken over by leading counsel that the defence progressed more regularly. Despite that, there is really no defence for the plaintiff’s action. Defences raised by the defendants are concocted. They are based on concocted evidence which the defendants’ then controlling mind and principal witness, Gary Ho, knew full well were false. The defence was conducted in a most scandalous and vexatious manner, with the principal witness lying all the way for nine days in the witness box. One of the defences raised was non-disclosure arising out of fiduciary duties of partners to the joint venture. That defence must now boomerang. The parties were in a fiduciary relationship. I do feel a strong sense of indignation at the defendants’ conduct. This is a case which cries out for costs to be awarded on indemnity basis.”

5. Well, those are very strong words and, when it is considered that the appeal is now sought to be brought against the findings of fact, one can only say that it does not start off on a very optimistic note.

6. One matter which has been raised during the course of argument this morning is the question as to whether the 51 per cent of the shareholding in UR Limited was, in effect, charged equitably. The short answer to that, as was pointed out by Ms Chan on behalf of the plaintiff and the 1st Third Party, was that were the defendants to succeed on their main case or on their main defence, they would end up without any shares anyway, so this particular defence, or this particular point, cannot really affect the total outcome of the case.

7. In my view, the main question to be decided this morning is whether the defendants should be required to give security on the basis that they are impecunious, and it does seem to me that, on what little I have seen of this case, there are grounds for it to be considered that the defendants have no ready assets available for the payment of costs. It is said that the land in question, which is in Beijing, may be very valuable. Well, that may be the case; but, on the other hand, that is a question of satisfaction of the judgment, and Ms Chan challenges the allegation on the basis that there are many other debts which also have to be paid out of that amount or the proceeds of sale of any land.

8. But in any event, that does not indicate that the defendants would be in a position to pay the costs. What would have to happen is there would have to be some sort of liquidation or sale.

9. In my view, this case therefore is one where security should be required from the defendants, and the question is how much.

10. I have looked at the estimate of the costs, and I approach this case really on two bases. If the matter were in this court, I consider that probably, on the basis of the notice of appeal, I doubt that it would go more than about two days. It is possible that the case could go longer, and therefore I approach it on that basis. I have looked at the scale of fees which are charged, and what I have to do is not to consider the particular counsel who are involved or particular legal representatives who are involved, and I make no criticism of their fees whatever. What I have to consider is what representation the plaintiffs might be able to obtain and the cost of it.

11. All in all, based on a two-day hearing in this case or a longer hearing, I consider an appropriate amount of security would be about $1.2 million in this case, and I propose to make an order that security for that amount should be provided.

12. The order that I will make is that:

“the 1st and 2nd defendants do on or before 15 August give security to answer costs in case any should be awarded to be paid by the 1st and/or 2nd defendants to the plaintiff or the 1st third party by making lodgement in court of a sum of $1.2 million by cash or bankers draft or by the provision of a bank guarantee of the like amount which guarantee shall have been approved by the Registrar; and until such lodgement be made and notice thereof given to the Registrar and to the solicitors for the plaintiff and the 1st third party, such notice to be given on the same day as the lodgement is made, all proceedings in the said appeal are to be stayed.

In default of the 1st and 2nd defendants or either of them making such lodgement as aforesaid within the time specified above or within such further time as the court may for special reasons allow, the said appeal do, upon the solicitors for the plaintiff and the 1st Third Party certifying such default to the Registrar, stand dismissed out of this court without further order.

In the event that the appeal is dismissed in the circumstances provided for above the 1st and the 2nd defendants do pay to the plaintiff and the 1st Third Party their costs occasioned by the said appeal, such costs to be taxed and the costs of this application be costs in the appeal.”

		(Anthony Rogers) Vice-President

Ms Linda Chan, instructed by Messrs Alfred Lam, Keung & Ko, for the Plaintiff and 1st Third Party/Respondents

Ms Angela Gwilt, instructed by Messrs Tsui & Co, for the 1st and 2nd Defendants/Appellants