ABLE ENGINEERING CO LTD v. WELMETAL RESOURCES GROUP LTD

HCA 51/2022

[2023] HKCFI 1172

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 51 OF 2022

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DECISION

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Introduction

1.  The seemingly inordinate delay in dealing with this application calls for an explanation. Although the parties’ written submissions were lodged by 15 December 2022, I was not made aware of this outstanding matter until 26 April 2023 due to several changes in judicial clerk since 12 December 2022. Regrettably, that resulted in the matter falling through the cracks, causing the delay.

2.  This is the Plaintiff’s application for an extension of time to file a draft notice of appeal from my Decision rendered on 22 September 2022 on the Plaintiff’s application under RHC O.14 and O.14A for summary judgment against the Defendant on the 3 questions of law set out in its summons dated 22 April 2022 (“Summons”).

3.  The Reasons for the Decision (“Reasons”) were handed down on 26 September 2022 to which reference should be made.

Key dates

4.  The Plaintiff had 28 days from 22 September 2022 to serve a notice of appeal. That period expired on 20 October 2022.

5.  Subsequent to the Decision, the following events occurred:

(a)  Chan Sze Hung (“Chan”), a consultant of the firm of solicitors representing the Plaintiff filed an affirmation (“Chan 1^st”) exhibiting a draft notice of appeal (CSH 3). Although dated 21 October 2022, Chan 1^st (with the summons seeking a 7-day time extension) was only filed on 24 October 2022, being 4 days out of time.

(b)  Later the same day, Chan filed a supplemental affirmation (“Chan 2^nd”) exhibiting a draft notice of appeal (CSH 4) settled by Mr John McDonnell KC, effectively recasting the grounds of appeal.

(c)  On 7 November 2022, Chan filed a further supplemental affirmation (“Chan 3^rd”) exhibiting a further revised draft notice of appeal (CSH 5), 18 days out of time.

6.  If leave is granted to file CSH 5 out of time, it is the Plaintiff’s intention to file the notice of appeal exhibited as CSH 5 for the intended appeal. The grounds of appeal set out in CSH 5 are materially different from those initially set out in CSH 3.

Applicable legal principles

7.  It is common ground that in exercising its discretion to grant or refuse an extension of time to serve a notice of appeal, the court will take into account the length of the delay, the reasons for the delay, the chances of the appeal succeeding if time for appealing is extended, and the degree of prejudice to the other party if the application is granted: per Lam VP (as he then was) in Tang Chai On v Tang Sing Ki [2016] 5 HKLRD 104 at §9.

8.  As regards the merits of the appeal, the following cases offer useful guidance:

(a)  the court will not grant an extension of time for an hopeless appeal to be pursued: Re Adumekwe Roland Ejike [2019] HKCA 702 at §19;

(b)  where the delay is short and there is an acceptable excuse for it an extension of time will not be refused on the basis of the merits of the intended appeal, unless the appeal is hopeless: Ho Yin Fai v Wah Fung Decoration & Insulation Co, HCMP 948/2009, 5 August 2009, §17;

(c)  if the delay was inexcusable (even if insubstantial), the intended appellant must show a real prospect of success on the merits: Ho Yin Fai, §18; Secretary for Justice v Hong Kong & Yaumati Ferry Co Ltd [2001] 1 HKC 125, 129; and

(d)  if an informed assessment of the prospects of success of an appeal can only be made at the hearing equivalent to the hearing of the appeal itself, the overall interests of justice require the would-be appellant’s time to be extended without any further consideration of the merits: Unison Knitwear Limited v Rich Easy Limited [2001] 1 HKLRD 856, 858I-859B citing Tridant Engineering Co Ltd v Mansion Holdings Limited & Another [2001] 1 HKLRD 783, 790F-H.

The delay

9.  Mr Li Pak Hei, counsel for the Plaintiff, submitted that the delay in the present case was short, being one day[1] and the delay is excusable in that

(a)  on 5 October 2022, the Plaintiff’s solicitors sought advice from Mr McDonnell on the merits of an appeal who intimated that he hoped to be able to deal with the matter by “next Sunday”, i.e. 16 October 2022;

(b)  at 8:32 hours (Hong Kong time) on 20 October 2022, the last day for filing a notice of appeal, the Plaintiff’s solicitors sent Mr McDonnell a chaser;

(c)  they received a positive reply[2] (but which did not reach Hong Kong until well after the close of business on 20 October 2022) with the recommendation that as it is “the last date for appealing”, a notice of appeal in accordance with the draft the Plaintiff had provided be filed including an additional ground in the same terms as §8 of the Plaintiff’s statement of claim.

10.  There was no misunderstanding or misinterpretation by either counsel or solicitor of the period available for filing a notice of appeal. In his written submissions, Mr Li Pak Hei, counsel for the Plaintiff, attributed the delay to “Counsel’s belated response”.

11.  That Hong Kong and London are in different time zones is a matter that the Plaintiff’s legal representatives should have taken into consideration in determining when the advice/draft needed to be in hand in order for the filing to be done timeously.

12.  The chaser sent on 20 October 2022 was far too late given the different time zones and could not have enabled timely compliance. It should have been sent much earlier that week.

13.  Even after receipt of Counsel’s reply the same day (admittedly, shortly before midnight), Chan 1^st was not filed the following day, 21 October, with no explanation as to why that could not have been done. It is indicative of a less than conscientious approach to timeous compliance.

14.  So far as the length of delay is concerned, in reality it was a delay of 18 days. As will become apparent, the gravamen of the intended appeal is encapsulated in the final ground of CSH 5 which was not introduced until 7 November 2022.

15.  For those reasons, I do not consider the delay (albeit insubstantial) excusable.

Merits of the intended appeal

16.  §§7-8 of the Amended Statement of Claim raised “waiver” as one of several defences to any exercise by the Plaintiff of its contractual right under clause 12 to terminate the contract.

17.  At the hearing on 22 September 2022, the Plaintiff did not pursue the “waiver” point.

18.  Mr Jiang Zixin, counsel for Defendant, submitted that, in any event, the waiver point has no merit for the following reasons:

(a)  acceptance by a seller of late payments on earlier occasions does not preclude the seller from insisting that time should continue to be of the essence[3]: Chitty on Contracts, 34^th ed at §27-057[4];

(b)  it is incumbent on the Plaintiff to show a clear and unequivocal representation on the Defendant’s part, by words or conduct, that the Defendant will not exercise its strict legal rights to terminate the contract[5]; mere acceptance of the late payments without more is insufficient;

(c)  prior to 27 May 2021, the Plaintiff was repeatedly told that the Defendant may have to terminate the contract if the Plaintiff continued to delay payment which contradicts the Plaintiff’s case of waiver.

19.  §5 of CSH 5 reads:

“5. The Plaintiff did not rely on waiver in support of the Order 14 Summons because it depended on factual issues which could not be determined under Order 14; but the judge was aware of the issue because it was pleaded and in accordance with the ordinary practice and Order 14 she should have left the action to proceed to Trial on the issues which remained outstanding and which were not affected by the reasoning in her Judgment.”

20.  But the Defendant’s submissions were based on such facts as the Plaintiff had pleaded in its waiver defence.

21.  The written submissions[6] of the Defendant at the September hearing made it clear that its case was that the Defendant was entitled to exercise its right under clause 12 to terminate the Contract with immediate effect on 27 May 2021 and sought dismissal of the Action.

22.  It is not apparent why it is said that the Plaintiff’s case on waiver is not susceptible to summary determination based on the matters pleaded.

23.  Given the manner in which the Summons was drafted, had the Plaintiff wished to reserve the issue of waiver for determination at trial, it should not have posed §1 (c) for determination or, at least, without expressly reserving its right at the hearing to raise the waiver issue at trial.

24.  Applying the principles set out in §§7 and 8 (c) above, an extension of time should not be granted unless the Plaintiff has shown a real prospect of success on the merits. In my view, that has not been shown.

Order

25.  As the delay was inexcusable and as the Plaintiff has not shown a real prospect of success on the merits, it follows that the Plaintiff’s application should be dismissed.

26.  Accordingly, the Plaintiff’s application for an extension of time to appeal is dismissed with an order nisi costs in favour of the Defendant with certificate for counsel, such costs to be summarily assessed.

27.  As the Defendant’s statement of costs accompanied its written skeleton, the Plaintiff is directed file its list of objections within 14 days of this Order and the Defendant file any reply within 7 days thereafter. The assessment will take place in Chambers.