FAR EAST DRUG (BVI) CO LTD v. FIRST PACIFIC CO LTD

CACV 166/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 166 OF 2004

(ON APPEAL FROM HCCL NO. 41 OF 2003)

____________________________

BETWEEN

FAR EAST DRUG (BVI) CO. LTD. Plaintiff
and
FIRST PACIFIC COMPANY LTD. Defendant

____________________________

Before : Hon Woo VP, Yeung JA and Barma J in Court

Date of Hearing : 10 June 2005

Date of Decision : 10 June 2005

Date of Reasons for Decision : 15 June 2005

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REASONS FOR DECISION

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Hon Woo VP (giving the reasons for decision of the Court):

1. This is an application by the plaintiff for leave to appeal to the Court of Final Appeal from our judgment given on 20 January 2005. At the conclusion of the hearing, we dismissed the application with costs. We set out our reasons below.

2. The application is made under section 22(1) of the Hong Kong Court of Final Appeal Ordinance, Cap 484, which provides:-

(1) An appeal shall lie to the Court –
(a) as of right, from any final judgment of the Court of Appeal in any civil cause or matter, where the matter in dispute on the appealamounts to or is of the value of $1,000,000 or more, or where the appeal involves, directly or indirectly, some claim or questionto or respecting property or some civil right amounting to or of the value of $1,000,000 or more;
(b) at the discretion of the Court of Appeal or the Court, from any other judgment of the Court of Appeal in any civil cause or matter,whether final or interlocutory, if, in the opinion of the Court of Appeal or the Court, as the case may be, the question involvedin the appeal is one which, by reason of its great general or public importance, or otherwise, ought to be submitted to the Courtfor decision; ….”

3. At the commencement of the hearing, Mr Manzoni, for the plaintiff, informed us that he no longer relied on section 22(1)(a) since he conceded that the claim in this case is one for unliquidated damages.

4. That was a correct approach to take, because it has been well settled that the proper construction of section 22(1)(a) only admits of a claim for liquidated damages as opposed to unliquidated damages. See Zuliani v Veira [1994] 1 WLR 1149, Cheng Lai Kwan v Nan Fung Textiles Ltd (1997-98) 1 HKCFAR 204, Shum Kam Fai v Lam Chi Wai, FAMV No. 38 of 2002 (16 December 2002, unreported) and Wong Hoi Chung v LKK Trans Ltd, CACV 116/2004 (8 February 2005, unreported), Chao Keh Lung v Don Xia [2004] 3 HKLRD 353 and Man Fong Hang & Anor v Man Ping Nam & Ors, CACV 104/2004 (2 June 2005, unreported).

5. Mr Manzoni urged us that this case comes within section 22(1)(b) in that the questions involved in the appeal are, by reason of their great general or public importance or otherwise, ought to besubmitted to the Court of Final Appeal for decision.

6. He referred us to the Nan Fung Textiles case where Bokhary PJ cited the following passage in the Privy Council decision in Zuliani v Veira at p 1155D-F:

“In providing that the automatic right of appeal should arise only where the mater in dispute was of the value of (or inexcess of) a precise figure the legislature has chosen not to include an award of unliqudiated damages. In the view of their Lordshipsthis provision should be strictly construed. No doubt there will be many cases, of which the present is one, where is can be saidas a matter of the utmost probability, or even of virtual certainty, that the damages ultimately awarded will be in excess of EC$5,000,and in such cases the Court of Appeal may very well think it right, as a general rule, to grant leave in the exercise of its discretion. Equally, however, there may be cases – and again the present case may serve as an example – where the likely amount of damagesis at or above the statutory threshold, but which are so lacking in merit that the Court of Appeal in its discretion would refuseleave.”

Bokhary PJ continued:

“We agree with that approach. In Hong Kong the equivalent discretion is contained in the ‘or otherwise’ limb of s. 22(1)(b) of the Ordinance, which provides …”

7. Mr Manzoni argued that the size of the claim would most probably exceed the $1,000,000 threshold, and that there was merit in thetwo legal issues proposed to be raised before the Court of Final Appeal, both of which involved questions of great general or publicimportance.

8. Even assuming that the claim, if successful, would certainly result in an award of damages exceeding the threshold, we do not considerthis a proper case for the exercise of our discretion under section 22(1)(b).

9. The two legal issues are (1) whether the “corresponding date rule” applied by us in identifying the date after a period of timein the time-bar provision of the contract between the parties was justifiably applied as a matter of law in the light of that contractualprovision, and (2) whether the operation of the contra preferentem rule should alter the proper construction of the contractual provision.

10. We are not satisfied that the two points mentioned are points of great general or public importance.

11. The contractual provision with which our judgment was concerned was

“before the date which falls 18 months after the date of [the agreement]”.

This is a very specific contractual provision, which is quite unusual, as borne out by the fact that it had not been raised in themany authorities cited by the parties before us at the hearing of the appeal, and is not commonly used. We are not persuaded thatthe applicability of the “corresponding date rule” or otherwise in the context of such an unusual contractual provision is amatter of great general or public importance.

12. The contra preferentem rule is well settled and we do not consider that the rule has the effect of displacing the proper construction of a contractual provisionwhich is quite unambiguous. Nor does Mr Manzoni’s submission, reliant on In re North Ex p Hasluck [1895] 2 QB 264, that the court should construe a provision so as to give the party against whom it operates as much time as the language will allow,assist the plaintiff in the circumstances.

13. We are not satisfied that there is sufficient merit in these two proposed issues to warrant our exercising the discretion under the“or otherwise” limb of section 22(1)(b).

14. For the above reasons, the application for leave was refused with costs.

(K H Woo)
Vice-President
(W Yeung)
Justice of Appeal
(Aarif Barma)
Judge of the Court of First Instance

Mr Charles Manzoni, instructed by Messrs Holman Fenwick & Willan, for the Plaintiff

Mr Roger Beresford, instructed by Messrs Richards Butler, for the Defendant