CHEN SHUN ZHONG v. SUCCESS CIVIL & FOUNDATION CO. LTD. AND ANOTHER

CACV 300/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 300 OF 1999

(ON APPEAL FROM DCCJ 17041, 17042, 17043, 17044,
17045 AND 17046/1996 (CONSOLIDATED))

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J U D G M E N T

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Hon Rogers JA (giving the judgment of the court) :

Introduction

1. This is a judgment in appeals in six different actions which are all very similar. The actions have been consolidated and hence this matter comes before this court as a consolidated appeal. On this appeal, Mr Chan Yau Chi appears by leave on behalf of the 2nd defendant.

The facts

2. Each of the six actions were brought by a worker who had been recruited in Shanmei city in the Mainland to work as a construction worker at the site for the New Airport at Chek Lap Kok. The nature of the plaintiffs' cases is that they were recruited by the 1st and/or 2nd defendant under a scheme for the import of labour into Hong Kong. As part of their recruitment, the plaintiffs were required to pay substantial sums to the 2nd defendant, for example, $22,000 as a "service charge", this would not only include a fee to the 2nd defendant but a deposit and an accommodation fee. In addition, the plaintiffs were required to pay substantial sums in the Mainland to a company by the name of Shanmei Co. The plaintiffs say that they were induced to pay the sums by a promise that they would be employed for an initial period of eight months and a further period of 16 months in addition at a wage of HK$380 per day with overtime at the rate of HK$50-60 per hour. The plaintiffs say that their employments which commenced on different dates in the latter half of 1995 were terminated on 11 January 1996. As a result, they were unable to recoup the expenditure let alone earn the amounts which had been promised.

3. The facts of the action brought by Chen Shun Zhong, DCCJ 17041 of 1996 will form the focus of this judgment. The remaining actions involved similar claims with slightly differing dates and in some cases, slightly differing figures.

4. The defences filed in each of the actions were in similar form. They were on Heng Lee Construction Company Limited's note paper. They were dated 13 August 1996. They read as follows :-

"I dispute the plaintiff's claim for the following reasons :

1. We (Heng Lee Construction Company Limited) have never received any money from the plaintiff.

2. The plaintiff was under the employment of Success Civil and Foundation Company only.

3. We have never guaranteed employment for any given period to the workers.

And I counterclaim against the plaintiff as follows :

1. We would like the workers to return back the money lent to them through Heng Lee.

All the points made above are backed up by written evidence and witnesses."

It was then signed by Chan Yau Chi as a Director of Heng Lee Construction Co. Ltd.

5. Not surprisingly, insofar as that can be termed a pleading, the matter cried out for clarification.

6. On 5 September 1996, solicitors for the plaintiffs wrote identical letters in the following terms :-

"We take the view that our client is entitled to the following discovery and further and better particulars thereof :-

1. Paragraph 1 of the Counterclaim

Of the allegation that 'We would like the workers to return back the money lent to them through Heng Lee', please

(i) state which workers you are referring to;

(ii) state the respective amounts of money allegedly lent to the workers;

(iii) state when, where, how and under what circumstances the money was allegedly lent to the workers; and

(iv) state whether you have entered into any agreement with the workers for the lending of money to the workers. If so, state whether the agreement was made orally or in writing. If it was the former case, state when and where the same was made and the full terms and conditions thereof. If it was the latter case, identify and produce the document(s)."

A reply was requested within seven days.

7. The reply to that letter was by a letter of 10 September 1996. Again, this was signed by Chan Yau Chi and written on Heng Lee Construction Co. Ltd's paper. The important part of that is :-

"The 'Money' referred to, lent to the workers was done so through the workers Team Leaders details of whom are shown below. With regards to which particular workers the money was lent to, as far as we can recall, it was every worker working under our supervision.

The circumstances under which the money was lent, came from a request by the workers and their request was put forward to us by their representatives namely their Team Leaders. An agreement to lend the money was made, however documentation's of this along with all details regarding this particular case were kept by the representatives. As mentioned, below is a list of the representatives :"

Then there are listed the names of four representatives, three of whom are described as being Mainland Chinese (Team Leader) and the fourth as Hong Kong Chinese (Foreman).

8. This document, similarly obscure to that dated 13 August 1996, met with a further request by a letter dated 26 September 1996. That requested three things :-

"(i) Please state the respective amounts of money allegedly lent to the workers and the names of the workers;

(ii) You have alleged that the agreement to lend money with all details regarding this case was kept by the representatives/Team Leaders. Please produce the alleged agreement and state by whom and when the agreement was made and disclose all the terms and conditions thereof.

(iii) Please provide us with the respective contacting telephone numbers and addresses of the representatives/Team Leaders as stated in your said letter."

9. That request was met with an unsigned letter dated 30 September 1996 again, on Heng Lee Construction Co. Ltd's note paper saying that the Director, Mr Chan Yau Chi was currently out of the country but would respond on his return.

10. Since no further particulars were forthcoming, applications were made for the particulars and orders were made on 31 October 1996 by H.H. Judge Muttrie ordering the 2nd defendant to provide the particulars requested in the letter of 26 September within seven days.

11. The 2nd defendant then took out a time summons. The summons was signed by Mr Chan's son and we are told that he was entitled to do so. That came to be heard on 5 December at the same time as an application for an unless order for the provision of the particulars. Prior to issuing that summons, the 2nd defendant had made a similar request in very similar form to the summons. That had apparently been sent to the court and the plaintiff's solicitors.

12. On 5 December 1996, H.H. Judge Muttrie made the following order :-

"UPON HEARING Solicitors for the Plaintiff, and the 2nd Defendant being in person, it is ordered that :-

1. Unless the 2nd Defendant do file and serve on the Plaintiff the Further and Better Particulars of the Defence and Counterclaim dated 13th August 1996 as per letter of request dated 26th September 1996 as ordered by His Honour Judge Muttrie dated 31st October 1996 within 7 days from the date hereof, the Defence and Counterclaim of the 2nd Defendant be struck out and Judgment be entered accordingly;"

13. The court record shows that the 2nd defendant was represented, on that occasion, by Ms. Chan Sau Ling Noel, whom we are told by Mr Chan was his daughter.

14. The only response to that order was a letter, this time signed by Chan Sau Choy on 11 December in which it is stated :-

"I herewith enclose the requested information on 'the further and [better] particulars of defence and counter claim'."

Then there are listed underneath that the four names together with the addresses and telephone numbers.

15. Clearly, that document was wholly insufficient to answer the request for further and better particulars in the letter of 26 September. Not only had the 2nd defendant not complied with the unless order but there had been no attempt, on any footing, to reply to paragraphs (i) and (ii) of the request. Looking at the terms of H.H. Judge Muttrie's order of 5 December 1996, the defence and counterclaim of the 2nd defendant was automatically struck out and the plaintiff was entitled to judgment without any further order. If the plaintiff wished to enforce that order, he would, in the ordinary course of things, need to have the order drawn up and formally approved, but there was no need to make any further application.

16. It is said on behalf of the 2nd defendant that the action was not "dead" even after a failure to comply with the "unless" order. Reliance in this regard is placed upon the notes in the Supreme Court Practice 1999 under rubric 3/5/9. That is a misconstruction of what is said there. What is indicated there is that it is possible for a party in default under an "unless" order to apply to have time extended to comply. It does not say that judgment is not automatic on a failure to comply.

17. It is also said that the terms of the order of 5 December 1996 went too far in making an order striking out the defence when the particulars sought only related to the counterclaim. In our view, it was in any event within the court's power to make such an order and the powers of the District Court under Rule 38A(4)(c) of the Rules are sufficient to comprehend such an order. Moreover, in this case, the allegation in the counterclaim appears to be so connected with the claim and defence that the demand for the particulars and the consequential order, if they were not supplied, seems to us to be amply justified.

18. The proceedings thereafter became bedevilled because application was made by summons for judgment to be entered. That, as has been said already, was unnecessary. The plaintiff's application was ex parte. In relation to all the actions : three of the applications were directed by H.H. Judge Whaley to be heard inter partes and the other three came before Judge Muttrie. Judge Muttrie entered judgment for the plaintiffs with damages to be assessed. The other applications were heard in the absence of the 2nd defendant on 13 February and likewise judgment was entered with damages to be assessed.

19. Application was first made on 15 September 1998 to set aside the judgments. Those came for hearing before H.H. Judge Yung on 13 July 1999 and in a judgment of 13 September 1999, H.H. Judge Yung held that the judgments which had been entered had been irregular but he refused to set them aside on the basis that the 2nd defendant had failed to make out a meritorious defence.

20. If the judgments had been entered irregularly, they would have been nullities. The 2nd defendant would have been entitled to have them set aside as of right. However, in our view, as has already been indicated, the judgments against the 2nd defendant were automatic on the 2nd defendant's failure to comply with the orders of 5 December 1996. There was no need for any further applications thereafter.

21. The only question is whether the court should exercise its discretion to extend time for the defendant to comply with the peremptory order which has been disobeyed. In relation to this, Ward L.J. in Hytec Ltd. v. Coventry City Council [1997] 1W.L.R. 1666 said at page 1675 :-

"(1) An unless order is an order of last resort. It is not made unless there is a history of failure to comply with other orders. It is the party's last chance to put his case in order. (2) Because that was his last chance, a failure to comply will ordinarily result in the sanction being imposed. (3) This sanction is a necessary forensic weapon which the broader interests of the administration of justice require to be deployed unless the most compelling reason is advanced to exempt his failure. (4) It seems axiomatic that if a party intentionally or deliberately (if the synonym is preferred) flouts the order then he can expect no mercy. (5) A sufficient exoneration will almost inevitably require that he satisfies the court that something beyond his control has caused his failure to comply with the order. (6) The judge exercises his judicial discretion in deciding whether or not to excuse. A discretion judicially exercised on the facts and circumstances of each case on its own merits depends on the circumstances of that case; at the core is service to justice. (7) The interests of justice require that justice be shown to the injured party for the procedural inefficiencies caused by the twin scourges of delay and wasted costs. The public interest in the administration of justice to contain those two blights upon it also weighs very heavily. Any injustice to the defaulting party, though never to be ignored, comes a long way behind the other two."

22. In our view, the 2nd defendant is not entitled to have the judgment set aside for a number of reasons. In the first place, the failure to comply with the order for Further and Better Particulars has not been adequately explained. Even today, the document which is dated 6 July 1998 which purports to give those particulars is, in our view, wholly inadequate. Hence even today, more than 31/2 years after the "unless" order, the 2nd defendant's particulars read :-

"1(i) Please state the respective amounts of money allegedly lent to the workers and the names of the workers.

Answer

(i) The following amounts were lent to each worker, including the Plaintiff herein if he was proved to be a worker for the relevant construction project :

(a) Rmb6,400.00 which the 2nd Defendant paid to Shanwei City Labour Services Company as management fees payable by each worker.

(b) Amounts advanced to worker for the worker's expenses for accommodation and dining and for depositing into and opening bank accounts. (Since various amounts were lent to different workers, the amounts are being calculated.)

2(ii) You have alleged that the agreement to lend money with all details regarding this case was kept by the representatives/Team Leaders. Please produce the alleged agreement and state by whom and when the agreement was made and disclose all the terms and conditions thereof.

Answer

(ii) (a) It was at the outset that each worker knew he needed to pay Shanwei City Labour Services Company Rmb800.00 management fee each month.

(b) Various amounts of money lent were evidenced by vouchers and receipts or by record books kept by Team Leaders/Group Representatives/Workers' Representatives or by bank account passbook of each worker.

3(iii) Please provide us with the respective contacting telephone numbers and addresses of the representatives/Team Leaders as stated in your said letter.

Answer

(iii) The 2nd Defendant has not at present in hand the contact telephone numbers and addresses of the Team Leaders/Group Representatives/Workers' Representatives."

These particulars are clearly hopeless and manifestly insufficient. They do not even disclose what sums are said to have been lent to the plaintiffs let alone the other workers.

23. Secondly, the delay in making the applications to have the judgments set aside has been far too lengthy and the 2nd defendant's explanation for such delay is not adequate in the circumstances.

24. As the judge below, we regret we do not perceive any reasonable defence.

25. This appeal must be dismissed.