RAND CO LTD v. CHRISTIAN ANTHONY BULLEN

DCCJ1488/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1488 OF 2013

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REASONS FOR DECISION

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1.  On 14 March 2014, at the end of the hearing for an application for leave to appeal by the defendant against a decision made by me on 7 February 2014, I dismissed the defendant’s application with costs. I said I would provide my reasons for the decision in due course. Here are the reasons.

Introduction

2.  Before the Court was the defendant’s summons dated 20 February 2014 to apply for leave to appeal against a decision made by me on 7 February 2014 whereby I had dismissed the defendant’s appeal against Master Lai’s decision made on 26 November 2013, refusing the defendant’s application to set aside a final and interlocutory judgment dated 26 August 2013 (“the Decision”).

3.  The defendant filed an affidavit sworn on 20 February 2014 in support of his present application.

The Law

4.  The law in this area is well settled and has been summarized succinctly by the plaintiff’s counsel, Mr Vod Chan, in his written submission.  I can do no better than to re-produce his summary of the law in here.

5.  The test for granting leave to appeal is set out in s 63A of the District Court Ordinance, Cap 336 that leave will be granted if:-

(a)  the appeal has a reasonable prospect of success; or

(b)  there is some other reason in the interests of justice why the appeal should be heard.

6.  In KNM v HTF, unrep, HCMP 288/2011 (Court of Appeal; 7 September 2011) per Hartmann and Fok JJA (as they then were) at §9, it has been confirmed that:-

“The relevant test of whether an appeal has a reasonable prospect of success under s 63A, is whether the applicant for leave can shown that he has an arguable case with reasonable chances of success on appear. A reasonable prospect of success therefore means an appeal with prospects that are more than ‘fanciful’ but which do not need to be shown to be ‘probable’. [emphasis added]

7.  In Ho Yuen Ki Winnie v Ho Hung Sun Stanley, unrep., HCMP 1009/2009; 24 August 2009, the Court of Appeal considered an application for leave to appeal under section 14AA(4) of the High Court Ordinance (Cap 4), which contains basically the same wording as that of section 63A(2) of the District Court Ordinance, Le Pichon JA stated at §16 that:-

“…For leave to be granted, this court must be satisfied that the appeal has ‘reasonable prospect of success’. Merely showing that the appeal is ‘arguable’ and not fanciful would not be sufficient. In my view ‘reasonable prospects’ requires something more and, in that regard, some assistance may be derived from the test applied when setting aside a default judgment”. [emphasis added]

8.  Where the intended appeal is an appeal against the exercise of discretion of the judge below, the applicant would have to show that he has an arguable case with reasonable chance of success that the relevant decision exceeds the generous ambit within which reasonable disagreement is possible, and is in fact plainly wrong, and not merely the appellate court would prefer a solution which the judge had not chosen: see RK v YS, unrep, HCMP 1969/2012 (Court of Appeal; 1 November 2012) at §6.

9.  Even if the court takes the view that there is a reasonable prospect of success, it still retains a discretion as to whether to grant leave: see Hong Kong Civil Procedure, ¶59/2A/4.

The Decision

10.  The hearing which resulted in my Decision was an application by the defendant to set aside a default judgment against him.  The background of the case was set out by me at §§3-12 of the Decision.  I shall not repeat them here.

11.  The Judgment originally was entered due to the fact that the defendant had, within the time limit, filed an acknowledgement of service of the Writ stating that he did not intend to contest the proceedings and indicating his intention to admit the amount of the monetary claim: (See O.13, r 5 and r 6A of the Rules of the District Court, Cap 336H (“RDC”)).

12.  The defendant never challenged the regularity of the Judgement and as I have pointed out in my Decision the test for setting aside such regular judgment is that “the defendant must show that he has a ‘real prospect of success’ and this requires him to satisfy the court that his case and the evidence that he adduces in support of it is potentially credible and carries some degree of conviction”.

13.  In other words, the burden lies on the defendant to show a meritorious defence with a real prospect of success that the plaintiff was not entitled to vacant possession of the property, interest in the sum of HK$635.16, and damages and costs.  However, the defendant’s two affidavits dated 3 September 2013 and 19 November 2013 respectively do not disclose any meritorious ground upon which the judgment could be set aside in law.  Instead, the defendant acknowledged his failure to pay rent in question in time.

14.  I have dealt with each of those issues in my Decision and concluded that the defendant had failed to show that he has any “real prospect of success” in any of the issues raised by him by way of possible defence in this case.

Grounds of appeal

15.  The defendant’s intended grounds of appeal as shown in his supporting affidavit seem to be as follows:-

(a)   that the court had erred in applying the law of common law tenancy and in concluding that there was none in force;

(b)   the court had erred in interpreting/applying section 69 of the District Court Ordinance;

(c)   the court had erred at law in applying the principles and test in concluding that there was no want of prosecution; and

(d)   the court had erred at law in applying the principles of estoppel.

Common law tenancy/estoppel

16.  The defendant argued that further payments were made and rent receipts were issued by the plaintiff on 4 occasions after the Writ was issued and this gave rise to a common law tenancy.

17.  I do not agree. 

18.  It should be noted that by the time of filing the Writ, two months’ rent was still outstanding (ie those in March 2013 and April 2013).  Two occasions of payment were made to repay such outstanding rents.  Another two occasions of payment were actually covered by the plaintiff’s claim as pleaded in the statement of claim as “rent and/or mesne profits in respect of the property at the rate of HK$16,100.00 per month from the 1 May 2013 to the 31 July 2013 and thereafter at open market rent to the date when vacant possession of the property is delivered up to the plaintiff”.

19.  The plaintiff had no intention to continue the tenancy agreement, and indeed no intention to create a monthly tenancy could be implied where the plaintiff had made it abundantly clear that the tenancy was terminated on 26 April 2013 by issuing the Writ and serving the statement of claim on the defendant which clearly pleaded their claim.

20.  I decided that acceptance of such payment is not conclusive evidence for proving the existence of the alleged common law tenancy.  The circumstances of the case must be scrutinised closely.  The plaintiff would be entitled to a payment as long as the defendant was still in possession of the property.

21.  For the same reason, there was no representation made by the plaintiff that the tenancy would continue on a monthly basis.  The defendant’s case that the plaintiff took no action until the end of August to inform him the tenancy had ended is fragrantly contrary to available evidence. Further, there is no reliance by the defendant on any alleged representation made by the plaintiff, as he already on 10 May 2013 filed the acknowledgement of service and indicated his intention to admit the claim.

22.  For the above reasons, the defendant’s grounds of appeal insofar as they rely on the alleged common law tenancy and/or estoppel are in my view without any basis and are unmeritorious.

Section 69 of the District Court Ordinance

23.  I agree with Mr Chan that Section 69 is not applicable in the present case as at the time the judgment was entered, the term of the tenancy agreement had already expired and no rent had been in arrear which needed to be paid by the defendant in order to gain relief against forfeiture.

24.  It is not the intention of the legislature to give a new right to the tenant when the term of the original lease lapsed and the parties had no intention to create a new one.  Section 69(A) expressly states that “(T)he lease holds the land according to the lease without any new lease”. (emphasis added).

25.  Further, section 69 only provides a statutory relief against forfeiture.  It does not provide a valid defence to the plaintiff’s claim for vacant possession: (See Tindixs Services Ltd v Cheng Wing Chun [1998] 4 HKC 194, at 200 E-G per Rogers JA (as he then was)).

Want of prosecution

26.  This does not give the defendant a valid defence either.  I agree with Mr Chan that want of prosecution is a foundation for striking out a claim if abuse of process can be shown, mere delay per se would not suffice: (See Liquidators of Wing Fai Construction Co Ltd v Yip Kwong Robert (2011) 14 HKCFAR 935).

27.  Order 13, rule 5 of the RDC does not set out a time frame within which the plaintiff should enter judgment against the defendant.  Notwithstanding such, the plaintiff obtained judgment within 3 months after the defendant acknowledged the service of Writ.  In the circumstances of the present case, in my judgment, there is no evidence to support an allegation of undue delay on the part of the plaintiff or at all.

28.  Further, no prejudice was caused to the defendant as he could have made use of the relief, as set out by section 69(2) of the District Court Ordinance, to “pay into court all the rent in arrear and the costs of the action within the time prescribed by rules of court for acknowledging service of the writ”.  Had he done so, the action would have ceased and he would have held “the land according to the lease without any new lease”.  Instead, he filed the acknowledgement of service without contesting the proceedings.

Conclusion

29.  I agree with Mr Chan’s submission that the defendant could not even get off the ground that the Decision is “plainly wrong”: (see RK v YS, supra).  In my view, there is simply no reasonable prospect of success in the intended appeal and that there is no other reason in the interests of justice that the appeal should be heard.

30.  Lastly, I would like to say that I am quite certain that the present application for leave to appeal, as was the appeal against the master’s decision in the first place, was taken out with a view to delay the delivery of vacant possession of the premises and the payment of the outstanding interest and costs owed by the defendant to the plaintiff. 

31.  At the beginning of the hearing for the present application, the defendant tried to seek an adjournment of the hearing on the ground that he had recently engaged a firm of solicitors to represent him for the application for leave to appeal.  He further complained that the hard copies of the hearing bundle and the skeleton arguments of the plaintiff were only served on him in the morning just prior to the commencement of the hearing and therefore he did not have sufficient time to read them.  I refused the application to adjourn the matter as in my view the defendant had had plenty of time to engage lawyers to represent him and for them to file the necessary notice to act if he wished to.  However, that was not done until the very last minute and no notice to act by his solicitors was ever filed up to the time of the hearing.  Further, I was told that the defendant had recently moved out the premises in question but without so much as a forwarding address.  Thus, the hearing bundle and the skeleton submissions could only be served on him by emails the day prior to the hearing.  It was only upon the plaintiff counsel’s request during the hearing and at the court’s direction that the defendant provided his current address to the plaintiff’s solicitors.  Thus, his failure in receiving the hard copies of the hearing bundle and skeleton submissions is in my view self-making.

32.  By reason of those aforesaid, the defendant’s application for leave to appeal was dismissed with costs in favour of the plaintiff, the costs of which had been summarily assessed by me at HK$41,614.50, to be paid forthwith by the defendant.