CACV 75/2000

IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
CIVIL APPEAL NO. 175 OF 2000
(ON APPEAL FROM CoURT OF FIRST INSTANCE ACTION No. HCA 11533 of 1996)
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BETWEEN

Dr Paul KI Ping-ki			1st Plaintiff
Hong Kong Washington Company		2nd Plaintiff	

				and

Next Magazine Publishing Ltd		1st Defendant 
CHEUNG Kim-hung 			2nd Defendant
Toppan Printing Co (HK) Ltd		3rd Defendant
YEUNG Wai-hong			4th Defendant
LEE Kwong-fung			5th Defendant

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Before: Hon Leong and Woo JJA in Court
Date of hearing: 6 July 2000
Date of delivery of judgment: 13 July 2000


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J U D G M E N T
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Woo JA (giving the judgment of the Court) :
	This is an appeal by the 1st plaintiff, Dr Paul Ki, against Yuen J’s decision made on 2 May 2000.  The decision was made in respect of an application for leave to appeal out of time from an order made on 30 May 1999 by Registrar Chu.  The Registrar’s order was to the effect that the 1st defendant was entitled to set off the debt owed to it by Dr Ki against a judgment sum of $200,100 awarded to the plaintiffs in the action entitled HCA 11533 of 1996.  Despite the fact that the Registrar’s order was made on 30 May 1999, Dr Ki only made an application for leave to appeal against that order out of time on 15 March 2000.
	The factual background of this matter was set out in pages 2-4 of Yuen J’s judgment, which we do not propose to repeat except the following significant dates and events :
A defamation action brought by Dr Ki against Next Magazine Publishing Limited (“Next”, the 1st defendant herein), being HCA No. 8071 of 1994, was dismissed in June 1996 with costs to be paid by Dr Ki to Next.
In October 1996, Dr Ki brought another defamation against Next and four other defendants, being HCA No. 11533 of 1996 (this action), in respect of an article published by Next on 3 November 1995.
In May 1997, the costs payable by Dr Ki to Next in HCA No. 8071 of 1994 were taxed, amounting to $906,185.40 (“the taxed costs”).
In July 1997, Dr Ki not having made payment of the taxed costs, Next served a Bankruptcy Notice on him; in September 1997, a petition was presented for Dr Ki’s bankruptcy; in December 1997, a receiving order was made against Dr Ki; and in April 1998, Next filed its proof of debt.
In December 1998, the jury in HCA No. 111533 of 1996 awarded damages for defamation in the sum of $200,100 in favour of the plaintiffs (“the damages”).  
Next had submitted a proof of debt in the sum of $1,060,882.66 to the trustee in bankruptcy (being the taxed costs payable by Dr Ki to Next plus interest).  On the other hand, Next was also indebted to Dr Ki in the sum of $200,100 being the damages.
	By a letter of 20 January 1999 addressed to the solicitors for Next, the Official Receiver stated that as the damages of $200,100 were exclusively to compensate the damage done to the personal reputation to Dr Ki, the sum did not form part of the property vested in the Official Receiver and trustee in bankruptcy in Dr Ki’s bankruptcy.
	On 19 March 1999, Dr Ki took out a summons in HCA No. 11533 of 1996 to seek payment of the damages against the defendants.  Registrar Chu who heard the summons, ordered that the 1st defendant do within seven days amend the proof of debt filed with the Official Receiver by deducting therefrom the sum of $200,100 together with interest thereon at judgment rate from 3 December 1998 until the date of the amended proof of debt.  Regarding the effect of this order, Yuen J said :
“Although couched in mandatory terms requiring Next to amend its proof of debt, the effect of the order was that Next could set-off its liability to pay Dr Ki’s damages in the 2nd defamation action against its entitlement to costs from Dr Ki in the 1st defamation action.”
	In his notice of appeal against Yuen J’s decision, Dr Ki raises three grounds of appeal, as follows :
the defendants did not obey the order of the Official Receiver made on 20 January 1999 (ie, the statement of the Official Receiver made in the letter of 20 January 1999 referred to above) and were therefore in contempt of court.
Dr Ki had made the mistake of applying to the Registrar instead of the Bailiff’s Office to execute the judgment in his favour in the sum of $200,100.  The Registrar did not have the right to overturn the Official Receiver’s order.
The reason for the late appeal against Registrar Chu’s order was that Dr Ki had never received the written order which was made on 13 May 1999 and that the sealed copy of the order was not filed until 5August 1999.
	Yuen J in her judgment identified, and we are of the view correctly, four factors to be considered whether the court should grant extension of time to Dr Ki to appeal the Registrar’s decision, namely,
the length of the delay;
the explanation for the delay; 
the extent of prejudice to the respondent; and
the merit of the appeal.
	The Judge held that the length of the delay, from the time limit of 5 days after the Registrar’s order for lodging the appeal, to 15 March 2000, a total of 10 months, was a most substantial delay.  Even where the Registrar’s order was sealed on 5 August 1999, as Dr Ki now points out, there was a delay of over 7 months before Dr Ki lodged his application for time to appeal against the Registrar’s order.  In our view, that is still a very substantial delay.
	It is interesting to note that the reason for the delay now raised as ground (3) of appeal, referred to above, is very different from the reasons that were mentioned to Yuen J.  Before the Judge, Dr Ki said that he was confused by the Registrar’s order which he told the Judge was inconsistent with the judgment in HCA No. 11553 of 1996 in his favour and the position of the trustee in bankruptcy as expressed in the Official Receiver’s letter of 20 January 1999.  He also told the Judge that he had been distracted by another action in which he was involved sometime in May 1999.  All these reasons were rejected by the Judge as amounting to no reasonable excuse for his lengthy delay.  We agree with the Judge.  Before us, Dr Ki points out that the Registrar’s order was difficult for him to understand.  It was sometime in June 1999 when he went to the Bailiff’s Office trying to pursue the enforcement of the damages award that he was told that the Registrar’s order obstructed the enforcement.  It is therefore clear that even if he was “confused” by the Registrar’s order, his confusion must have been cleared up as early as June 1999.
	In the present notice of appeal, Dr Ki states that he had never received the written order which was made by the Registrar on 13 May 1999 and that the sealed copy of the order was not filed until 5 August 1999 as a reason for his delay in proposing to appeal against the Registrar’s order.  He elaborates by telling us that it was not until sometime in February 2000 (and counsel for Next confirms that it was 8 February 2000) that the defendants’ solicitors sent him a copy of the sealed order.  First, this reason for making his application for leave to appeal the Registrar’s order out of time is unbelievable because if it were true, it would have been made known to Yuen J.  Secondly, even where Dr Ki was only supplied with a copy of the sealed order on 8 February 2000, there is not, nor can there be, any reasonable explanation why he did not lodge his appeal within the time allowed, instead of only making an application for leave out of time on 15 March 2000.  
	Neither the sealing of the order on 5 August 1999 nor the supply of a copy of the sealed order to him in February 2000 affects the time for lodging the appeal.  Order 58, rule 1 of the Rules of the High Court relevant to the appeal against the Registrar’s order provides:
“Unless the Court otherwise orders, the notice [of appeal] must be issued within 5 days after the judgment, order or decision appealed against was given or made and must be served within 5 days after issue …” [emphasis added]
This differs from the terms of Order 59, rule 4 of the Rules of the High Court applicable to appeals to the Court of Appeal.  Order 59, rule 4 provides:
“(1)	Except as otherwise provided by these rules, every notice of appeal must be served under rule 3(5) not later than the expiration of the following period beginning on the date immediately following the date on which the judgment or order of the court below was sealed or otherwise perfected, that is to say – [the various periods are then set out]” [emphasis added]
	From the difference in terms as emphasised above in the two rules, it is clear that regarding an appeal from a master’s or a Registrar’s order, the time starts to run from the date when the order or decision was given or made, whereas regarding an appeal to the Court of Appeal, the time starts to run from the date when the order appealed against was sealed or perfected.  The sealing of the Registrar’s order in August 1999 and Dr Ki’s receipt of a copy of the sealed order in February 2000 therefore do not assist Dr Ki.  Despite Dr Ki’s submissions and elaboration to us, the position remains almost the same that Dr Ki has advanced no reason or reasonable explanation for his delay, at least since June 1999, in taking any step to appeal against the Registrar’s order.  The delay was inordinate and without any reasonable excuse.
	While Yuen J held that there was no substantial prejudice suffered by Next or anyone else as Next was the only proving creditor in the bankruptcy of Dr Ki, she held that there was no merit in Dr Ki’s proposed appeal against the Registrar’s order.  Section 35 of the Bankruptcy Ordinance, Cap 6 governs set-offs in bankruptcy.  After citing that section, the Judge referred to authorities on the meaning of “mutual dealings” provided in the section.  She came to the view, and we think correctly, that Next was entitled to set-off the taxed costs against the damages awarded in favour of Dr Ki.  She therefore concluded, again correctly, that Dr Ki had failed to show a “real prospect of success on the merit” of the appeal in order for the court to exercise its discretion to extend time for him to appeal against the Registrar’s order, particularly in the light of such a lengthy delay.
	The first ground of appeal raised by Dr Ki is premised on his assertion that the letter of the Official Receiver dated 20 January 1999 was an order made by the Official Receiver that the damages of $200,100 awarded to him were not to form part of the property vested in the Official Receiver and trustee in bankruptcy and that the defendants committed a contempt of court in failing to obey that order.  In fact, the statement made by the Official Receiver in that letter could not be said to be an order.  It was rather an opinion held by the Official Receiver and the letter was an expression of that opinion.  It was just a matter for the court’s consideration in deciding how the judgment carrying the damages of $200,100 should be enforced.  It is not a court order the disobedience of which may amount to a contempt of court.
	Linked with this ground (1) of appeal, ground (2) also states that the Registrar did not have the right to overturn the Official Receiver’s so-called order.  Dr Ki tries to reinforce this ground (2) by saying that he had made a mistake of making an application to the Registrar instead of to the Bailliff’s Office to enforce the judgment in the sum of $200,100 against Next.  His application to the court on 19 March 1999 was by way of a summons for an order that Next pay him the damages of $200,100.  As Yuen J said in her judgment, “in effect, the Registrar was being asked to determine whether Next could set off the damages, or whether Dr Ki could enforce the judgment giving him that award.”  The Registrar had the jurisdiction to decide whether the judgment sum could be enforced against Next, and her decision was sought by Dr Ki.  There was no mistake as alleged by Dr Ki that he had made. 
	In our view, the Judge had carefully decided the matter and considered all the four relevant factors regarding the exercise of her discretion whether to grant an extension of time for Dr Ki to appeal against the Registrar’s order.  She also decided correctly on all those four factors.  In our judgment, the Judge was fully justified in refusing to exercise her discretion to grant leave to Dr Ki.  Dr Ki has not shown us any basis for our interfering with the Judge’s decision.  We therefore dismiss the appeal with costs.
    
    

     (Arthur Leong)        				(K H WOO)
Justice of Appeal          		   Justice of Appeal

1st Plaintiff : Dr Paul KI Ping-ki, in person
Mr Richard Khaw, instructed by T.S. Tong & Co., for the 1st – 5th Defendant