LLB 2016-2017

CIVIL PROCEDURE (CODE 3097)

Seminar Ten:
Appeals

Date: 5 April 2017

Lecturer: Eric TM Cheung

OBJECTIVES

To introduce to students the rules and principles governing appeals

PREPARATION BEFORE CLASS

Read:

(1) A Guide to Civil Procedure in Hong Kong (5th edn LexisNexis 2015), Chapter 21;
(2) Orders 58 and 59; and
(3) This Outline

OUTLINE

1. Introduction

The right to appeal is created by statutes, and there is no common law right or inherent
jurisdiction to entertain an appeal (see e.g. A Solicitor v Law Society of Hong Kong and
Secretary for Justice (2003) 6 HKCFAR 570, [2004] 1 HKLRD 214.)

The main objectives for appeal are: (1) to prevent injustice to individual litigants by correcting
wrong decisions and (2) to ensure the proper administration of justice by clarifying and
developing the law, practice and procedure and setting precedents.

In the design of an appeal system, one needs to bear in mind other public interests: maintaining
certainty and finality of a judicial decision and preventing unnecessary costs and delay in legal
proceedings. As a result, certain restrictions are usually introduced to an appeal system: (1)
prescribing a short time period for instituting an appeal; and (2) requiring that in some types of
appeal leave (i.e. permission) from the court must first be obtained so as to enable the court to
sift out unmeritorious appeals at an early stage.

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2. Appeals from Master to Judge in Chamber

An appeal from the decision of a Master on interlocutory matters generally goes to the Judge in
chambers of the same court (DC or CFI) as of right with an appeal period of 14 days from the
decision (O 58 r 1).

The appeal takes the form of a hearing de novo, i.e. by way of an actual rehearing of the
application as if it came before him for the first time.

As Lord Atkin said in Evans v Bartlam: [1937] AC 473, 478, [1937] 2 All ER 646 at 648H
649A: where there is a discretionary jurisdiction given to the court or a judge the judge in
chambers is in no way fettered by the previous exercise of the masters discretion. His own
discretion is intended by the rules to determine the parties rights: and he is entitled to exercise it
as though the matter came before him for the first time. He will, of course, give the weight it
deserves to the previous decision of the master: but he is in no way bound by it.

3. Appeals to the Court of Appeal

An appeal from the decision of a Judge (whether of the DC or CFI, whether on interlocutory or
final matters) generally goes to the Court of Appeal.

3.1 Right to Appeal

Under the rules before the Civil Justice Reform, subject to certain exceptions, an appeal lied as
of right to the Court of Appeal from every judgment or order of the Court of First Instance in any
civil cause or matter (whether final or interlocutory): s 14(1) HCO. The main exception is that
leave is required for an appeal purely against a costs order (s 14(e) HCO).

However, under the Civil Justice Reform, for decisions made after 2 April 2009, leave will be
required for appeal against the Court of First Instances decisions on interlocutory matters.
Exempted from the leave requirement are cases where the interlocutory decision is decisive of a
partys substantive rights (e.g. summary judgment, order striking out an action, an order refusing
to set aside a default judgment) and also specifically exempted cases (e.g. orders for
imprisonment or contempt, refusals of habeas corpus): revised O 59 r 21.

On the other hand, under the old rules as well as the new rules, leave is generally required for an
appeal to the Court of Appeal from a judgment or order made in the District Court (whether final
or interlocutory): s 63 DCO, note also the exceptions under s 63(3).

3.2 Application for Leave to Appeal

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Leave should as far as practicable first be sought from the Judge whose decision is being
appealed. The time period for seeking leave is (a) 14 days for decisions on interlocutory matters
(not involving a determination of a party's substantive rights) and (b) 28 days for final decisions
or interlocutory decisions determining a party's substantive rights. If leave is refused by the

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Judge, the party may further seek leave from the Court of Appeal within 14 days of the refusal
(see revised O 59 rr 2A-C, 4 and 21 RHC and revised O 58 rr 2 and 4 RDC).

3.3 Nature of the Appeal

The hearing of an appeal to the Court of Appeal is by way of rehearing. These words do not
mean that the Court of Appeal rehears the case afresh. It is only a rehearing on the documents.
As described in Powell v Streatham Manor Nursing Home [1935] AC 243 at 249, [1935] All
ER 58, at 60, HL:
It is perfectly true that an appeal is by way of rehearing, but it must not be forgotten that the
Court of Appeal does not rehear the witnesses. It only reads the evidence and rehears the
counsel. Neither is it a reseeing Court.
Rehearing however means that the Court of Appeal re-determines the issues raised as at the date
of the rehearing. Hence it has power to consider facts and changes in law which have occurred
since the decision of the court below. If appropriate, the Court of Appeal may grant leave to
admit fresh evidence not put before the court below or allow new points to be taken on appeal.

3.4 Approaches of the Court of Appeal

(a) Appeal against the exercise of a discretion

In many circumstances a judge has a discretion as to whether, and in what manner, to exercise his
powers. The Court of Appeal must defer to the judges exercise of his discretion and must not
interfere with a judges discretion merely because it might have taken a different view. It will
interfere normally only if the judges exercise of discretion is based upon a misunderstanding of
the law or of the evidence before the court or if the judges decision is plainly wrong (see e.g.
Hadmor Productions Ltd v Hamilton [1983] 1 AC 191, [1982] 1 All ER 1042, [1982] 2 WLR
322 (HL), applied in e.g. PCCW-HKT International Ltd v New World Telephone Ltd [2001] 2
HKC 416, CA)

(b) Appeal against a finding of fact

Since the appeal is by way of rehearing, the Court of Appeal has jurisdiction to reconsider the
facts and to come to an opposite conclusion from that arrived at in the court below.
However, this does not mean that the Court of Appeal will re-try the case. The rehearing is a
rehearing on the papers and the Court of Appeal does not rehear witnesses. The appellate court
therefore suffers from an obvious disadvantage of not seeing the trial witnesses and observing
their demeanour. Hence, if the decision depends upon a conflict of oral evidence and the
evaluation of the evidence and demeanour of witnesses, the Court of Appeal should generally
defer to the opinion of the trial judge, unless it can be clearly shown that he has fallen into error.

Read Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336, [2002] 3 HKLRD 1, [2002] 1
HKC 601 for an authoritative discussion as to the guiding principles on the approach that the
Court of Appeal should adopt when faced with a challenge to a judges finding of fact and the
distinction between a primary finding of fact and a finding of fact by a process of inference.

(c) Appeal on a point of law

As can be seen above, the Court of Appeal is generally reluctant to interfere with the exercise of

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discretion or the finding of facts by the court below. Most successful appeals to the Court of
Appeal are therefore based on a point of law.

(d) Taking fresh points on appeal

There is also a general rule that a party cannot take on appeal a point which he did not take in the
court below. As explained by Lord Herschell in The Tasmania (1890) 15 App Cas 223, 225
(followed by the Court of Final Appeal in Bank of East Asia Ltd v Tsien Wui Marble Factory
Ltd (1999) 2 HKCFAR 349, [2000] 1 HKLRD 268, [2000] 1 HKC 1):
a point not taken at the trial, and presented for the first time in the Court of Appeal, ought to
be most jealously scrutinised. The Court of Appeal ought only to decide in favour of an appellant
on a ground there put forward for the first time, if it be satisfied beyond doubt, first, that it has
before it all the facts bearing upon the new contention, as completely as would have been the
case if the controversy had arisen at the trial; and next, that no satisfactory explanation could
have been offered by those whose conduct is impugned if an opportunity for explanation had
been afforded them when in the witness-box.

4 Appeals to the Court of Final Appeal

4.1 Introduction
An appeal from the Court of Appeals decision goes to the Court of Final Appeal. No appeal will
be admitted unless leave has been granted either by the Court of Appeal or the Court of Final
Appeal (s 23(1) HKCFA Ord). The time period for application for leave is 28 days from the
judgment below (s 24).

4.2 Appeal as of right recently abolished by legislation

For over 17 years since the establishment of the Court of Final Appeal on 1 July 1997, leave to
appeal was granted as of right for an appeal from any final judgment of the Court of Appeal,
where the matter in dispute on the appeal amounts to or is of the value of $1,000,000 or more,
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 $1,000,000 or more... (the old s
22(1)(a) HKCFA Ord.)

This as of right appeal mechanism has been considered objectionable as a matter of principle,
because linking a right of appeal by reference to an arbitrary financial limit means that litigants
involved in litigation with a claim of monetary value of or beyond the threshold limit in effect
have more rights than other litigants with smaller claims, regardless of the merits of their cases.
As a result, the Administration of Justice (Miscellaneous Provisions) Bill 2014 was introduced
into Legislative Council on 25 April 2014 to amend the law so that all appeals in civil causes or
matters to the Court of Final Appeal become subject to discretionary leave of the Court of Appeal
or the Court of Final Appeal. The Bill was passed into law and became effective on 24 December
2014 so that all the earlier case law on the as of right appeal mechanism under the repealed
section 22(1)(a) would no longer be relevant.

4.3 Appeal by discretion

In respect of any final or interlocutory judgment, an appeal lies at the discretion of the Court of

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Appeal or the Court of Final Appeal if, in its opinion, 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 the Court of Final Appeal for decision (s 22(1)(b) HKCFA Ord).

It should be noted that the Court of Final Appeal has emphasised that its function is primarily to
consider points of law of great general or public importance, and so granting leave to appeal
under the or otherwise limb is an exceptional course and invoked only in rare and exceptional
circumstances: see e.g. Chinachem Charitable Foundation Ltd v Chan Chun Chuen (2011) 14
HKCFAR 798, at para [57]; and C G Lighting Ltd v Commissioner of Inland Revenue (2011) 14
HKCFAR 750, at para [3].

There are two main situations where leave to appeal has been granted under the or otherwise
limb.. First, it is reasonably arguable that the lower court made a legal error or errors causing
grave injustice and the result would have been different had the error(s) not been made. Second,
the subject matter of the appeal is of considerable importance: see the Judiciarys papers to the
Legislative Council Bills Committee on Administration of Justice (Miscellaneous Provisions)
Bill 2014 dated October 2014 (LC Paper No. CB(4)13/14-15(02), accessible at
http://www.legco.gov.hk/yr13-14/english/bc/bc104/papers/bc1041015cb4-13-2-e.pdf.

4.4 Nature of hearing and approaches in determining appeals

The appeal hearing is by way of a rehearing on the papers. The approaches adopted by the Court
of Final Appeal are similar to those adopted by the Court of Appeal (see above). Moreover, if
there are concurrent findings of fact by the lower courts, the Court of Final Appeals usual
practice is to decline to review the evidence for a third time in the absence of special
circumstances and will not disturb such findings merely on the ground that the courts below did
not accord appropriate weight to the evidence (see e.g. Sky Heart v Lee Hysan (199798) 1
HKCFAR 318, [1999] 1 HKLRD 100, [1999] 1 HKC 18)

5. Extension of Time for Appeal

Time limits set out in the statutory provision for appeal are set to facilitate finality in litigation
and so in general have to be complied with. The Court however has a discretionary power to
extend time to suit the overall justice of an individual case (see O 3 r 5 and s 24(5) of the
HKCFA Ord.)

In the exercise of its discretion, it is necessary for the court to consider all relevant circumstances
of an individual case. The normal factors to be considered by the court are: (a) the length of the
delay, (b) the reasons for the delay, (c) the chances of the appeal succeeding if an extension is
granted, and (d) the degree of prejudice to the would-be respondent if extension is granted: see
e.g. Postwell Ltd v Cheng Kap Sang [2004] 2 HKLRD 355 and Menno Leendert Vos v Global
Fair Industrial Ltd & Ors HCMP 796/2010, 21 June 2010. It is important to note that the
discretion to be exercised is unfettered, and should be exercised flexibly with regard to the facts
of the particular case, instead of adopting a too rigid or mechanical consideration of the above-
mentioned factors.

In particular, in the post-Civil Justice Reform era, it is incumbent on the court to give effect to
the underlying objectives under the Rules when exercising any of its powers, but the court must
always recognise that the primary aim in exercising the powers of the court is to secure the just
resolution of disputes in accordance with the substantive rights of the parties: see Hartanto Hady
v Radnaabazar Bazar [2012] 3 HKLRD 29 at 41 per Deputy Judge Peter Ng SC. In that case,
Deputy Judge Peter Ng SC held that the explanation given for the delay was wholly
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unsatisfactory, but he acknowledged that the delay was a mere 8 days and there was no
conceivable prejudice to the respondent as a result. In these circumstances, he considered the
primary consideration in the exercise of his discretion was to secure the just resolution of the
disputes between the parties in the appeal, and granted leave to appeal out of time as he
considered the appeal being meritorious.

Out of time application as a result of a change in the law:

Read Birkenhead Properties & Investments Ltd v Leung Yiu [1998] 1 HKLRD 527, [1998] 1
HKC 561, CA for a summary of the principles and an illustration of how the court assesses the
balancing factors in this context.

More recent authorities affirm that in general, time should not be extended only on the ground
that an authoritative judgment subsequent to the decision in question has held the previous
understanding of the law to be incorrect. While there could be exceptional circumstances which
would justify an extension of time and a departure from the principle of finality, the court has
emphasised that the circumstances must be so exceptional that the occasions when they would be
held to exist would be very rare (see e.g. HKSAR v Hung Chan Wa (2006) 9 HKCFAR 614;
Lau Luen Hung Thomas v Insider Dealing Tribunal (2009) 12 HKCFAR 955.)

6. Stay of Execution Pending Appeal

6.1 General principles

A party who has obtained a judgment in his favour should generally be entitled to immediately
enforce the judgment, notwithstanding any pending appeal. An appeal is not to operate as a stay
of execution of the judgment of the court below, unless the court exercises a discretion to order a
stay (RHC Ord 58 r 1(4) and Ord 59 r 13; RDC Ord 58 r 3).

In the exercise of its discretion, it is necessary for the court to consider all relevant circumstances
of an individual case, with the guiding principle that unless a stay can be justified by good
reasons, one will not be ordered. In a normal case, one generally needs to satisfy the court firstly,
that there is a reasonable prospect of success in the appeal; and secondly, that the failure to grant
the stay would result in the appeal, if successful, being nugatory.

Read Wendon Engineering Services Co Ltd v. Lee Shing Yue Construction Co Ltd HCCT 90 of
1999, 17 July 2002 for a summary of the principles governing stay of execution pending appeal
and an illustration of how the court assesses the balancing factors.

6.2 Conditions

When the court makes an order to stay proceedings pending an appeal, it may put the appellant
on terms (e.g. upon payment of a certain sum into court as security and/or to prosecute the appeal
upon a set timetable): see Jebson & Co Ltd v Watfiled Technology Ltd CACV 117 of 2007, 21
August 2007, Le Pichon JA for an illustration.

6.3 Liability of the appellant if appeal unsuccessful

It should be noted that successfully obtaining a stay of execution pending appeal will subject the
appellant to the risk of paying interest at the judgment rate in the case of a monetary judgment
(see RHC O 59 r 13(2)) or in other cases compensating the respondent for the loss suffered as a

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result of the stay in case the appeal is unsuccessful: see Chen & Another v Lord Energy Ltd
[2002] 1 HKLRD 495, CFA for an illustration.

On the other hand, if there is no stay of execution of a monetary judgment and the judgment
award has been paid by the appellant, upon the reversal of the judgment in a successful appeal, in
order to do complete justice between the parties, the appellate court should normally upon
request of the appellant order the respondent to repay the judgment sum received with interest
thereon as from the date of payment: see Central Electricity Board of Mauritius v Bata Shoe
Co (Mauritius) Ltd [1983] 1 AC 105, cited with approval in Man Ping Nam And Another v
Man Fong Hang [2007] 1 HKLRD 763; (2007) 10 HKCFAR 140. The Court of Final Appeal
further held that the applicable interest rate should be the normal discretionary pre-judgment rate
(normally at 1% above the HSBC best lending rate) before the appeal is allowed and thereafter at
the judgment rate.

Hence, when acting for the appellant, one should not take it for granted that obtaining a stay of
execution pending appeal is always in the interest of the appellant.

7. Security for Costs of an Appeal

7.1 The court has no inherent jurisdiction to order security for costs of an appeal. Any power
to order security for costs must derive from statutes.

7.2 The court has no jurisdiction to order security for costs of an appeal from a masters
decision to a judge in chambers: Perennial Cable (HK) Ltd v Popbridge Industrial Ltd
[2000] 1 HKC 564, CFI.

7.3 For appeals to the Court of Appeal, O 59 r 10(5) provides that: The Court of Appeal
may, in special circumstances, order that such security shall be given for the costs of an
appeal as may be just.

7.4 The most commonly recognised special circumstances for granting security for costs of
an appeal are where an appellant is impecunious or where he is resident out of the
jurisdiction, because a respondent would have difficulty enforcing an order for costs of
the appeal in either situation. See Chung Kau v Hong Kong Housing Authority & Ors
[2004] 2 HKLRD 650 (CA) for a summary of the principles.

8. Admission of Fresh Evidence on Appeal

8.1 The special grounds requirement

The appellate court has a discretionary power to receive further evidence. In the case of an
appeal to the Court of Appeal from a judgment after trial or hearing of any cause or matter on the
merits, no such further evidence (other than evidence as to matters which have occurred after the
trial or hearing) may be admitted except on special grounds (O 59 r 10(2)).

The classic statement of what amounts to special grounds comes from the judgment of
Denning LJ (as he then was) in Ladd v Marshall [1954] 3 All ER 745, at 748, [1954] 1 WLR
1489 at 1491
first, it must be shown that the evidence could not have been obtained with reasonable
diligence for use at the trial; secondly, the evidence must be such that, if given, it would
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 probably have an important influence on the result of the case, though it need not be decisive;
thirdly, the evidence must be such which is presumably to be believed, or in other words it
must be apparently credible, though it need not be incontrovertible.

One needs to note however that Sir John Donaldson MR in R. v. Home Secretary, ex p. Momin
Ali [1984] 1 WLR 663 at p.670 referred to the Ladd v Marshall principles being subject always
to the discretion of the court to depart from them if the wider interests of justice so require.

8.2 Applicability to appeals from Masters decisions and interlocutory decisions of

Judges

Under the old rules, this special grounds requirement does not apply to an appeal from a
Masters decsion to the Judge in chambers or to an appeal to the Court of Appeal against an
interlocutory order (other than one made after a hearing on the merits). Indeed, the judge in
chambers used to commonly exercise his discretion to allow additional evidence to be adduced
for the appeal subject to any costs compensation, unless there were special reasons to exclude it
(see e.g. Wong Hung Yu Richard v Wu Ming Fat [2002] 2 HKC 687).

However, under the new CJR rules, this special grounds requirement will apply across the
board. It is however not fully settled whether the Ladd v Marshall conditions will be applied
with the full rigour in appeals against interlocutory orders. As recognised by Lord Bridge in
Langdale v Danby [1982] 1 WLR 1123 (HL):
In the situation arising on an appeal to the Court of Appeal from a summary judgment, the
application of these conditions [in Ladd v Marshall] and perhaps the conditions themselves will
require some modification. It may well be that the standard of diligence required of a defendant
preparing his case in opposition to a summons for summary judgment, especially if under
pressure of time, will not be so high as that required in preparing for trial. The second and third
conditions will no doubt be satisfied if the further evidence tendered is sufficient, according to
the ordinary principles applied on applications for summary judgment, to raise a triable issue.
But I can see no injustice at all in requiring a defendant to use such diligence as is reasonable in
the circumstances to put before the judge on the hearing of the summons, albeit in summary
form, all the evidence he relies on in defence, whereas it would be a great injustice to the
plaintiff to allow the defendant to introduce for the first time on appeal evidence which was
readily available at the hearing of the summons but was not produced.

See also Hong Kong and Shanghai Banking Corp Ltd v Leung Chi Kit (t/a Leung Pui Form
Mould Works) CACV 261 of 1999, 6 January 2000 (Rogers and Keith JJA) and Chan Yau v
Chan Calvin and Another HCA 666/2007, 11 May 2009 (Sakhrani J).

In a post Civil Justice Reform case in Bank of China (Hong Kong) Ltd v. Certain Aim Limited
[2011] 1 HKC 135; HCMP1272/2007, Deputy Judge Au-Yeung at para 17 emphasized that:

Order 58, rule 1(5) was introduced to curb the undesirable practice before the Civil Justice
Reform when parties sought to adduce a further round(s) of evidence on appeal after an
unfavourable decision from a Master. Rule 1(5) aims at effecting a change of culture so that
parties should prepare their application properly at the earliest possible opportunity and lay all
cards on the table prior to the hearing before a Master. The spirit of this rule will be defeated if a
party is allowed to revert to the pre-CJR practice.

Accordingly, the Deputy Judge favoured the approach of applying the Ladd v Marshall

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conditions in the ordinary way even in an appeal from a masters decision refusing to set aside a
default judgment, though she seemed to have left the question open as to whether in some cases a
lesser standard of diligence is acceptable. The Deputy Judge highlighted that Lord Bridge does
not go so far as to say that a lesser standard of diligence would be acceptable but only that it
may well be acceptable, especially under pressure of time (see para 15). See also Falcon
Insurance Co (Hong Kong) Ltd v Flagship Underwriting Management Ltd [2011] 1 HKLRD
489; HCA312/2010, Sakhrani J, 22 December 2010.

Note however that in another post Civil Justice Reform case, Kwan JA continued to cite Lord
Bridges explanation in Langdale v Danly and adopt it as the proper approach in the context of a
summary judgment application (see Fortis Insurance Company (Asia) Ltd v Lam Hau Wah
Inneo CACV 86/2010, 28 October 2010, unreported at para 18). A recent Court of Appeal
decision in Johnson Electric International Ltd v Bel Global Resources Holdings Ltd CACV
36/2013, 8 May 2014 has affirmed Lord Bridges guidance in Langdale v Danby as the proper
approach for an appeal against a summary judgment granted by a first instance judge. However,
in the latest Court of Appeal decision in The Bank Of New York Mellon v Sun Jiangrong
[2016] 1 HKC 137 (CACV 166/2015, 25 November 2015), Poon JA (whose views are concurred
by Yuen JA) said:

25. In our view, when considering the first condition of the Ladd v Marshall test, the context in
which the application for leave to adduce fresh evidence arose is crucial. For the degree of
reasonable diligence which the court expects the defendant to have exercised in his effort to
obtain the evidence in question must be assessed against the overall circumstances of the case.
The court will take into account all relevant factors, such as the time available to the defendant
to gather the evidence, the nature of the evidence, the difficulty encountered in obtaining the
evidence, the effort that the defendant had used in gathering the evidence. (The list is of course
not exhaustive.)

26. We do not think that merely because it is an appeal from a summary judgment or proceedings
not amounting to a trial, the requirement of reasonable diligence will be automatically
relaxed.

END