CHAN HON, THE ADMINISTRATOR OF THE ESTATE OF POON LAI MING, DECEASED v. BAYER HEALTHCARE LTD formerly known as BAYER DIAGNOSTICS LTD and formerly known as BAYER DIAGNOSTICS LTD and formerly known as CHIRON LTD and formerly known as CIBA CORNING DIAGNOSTICS (H.K.) LTD AND OTHERS

CACV 53/2020

[2020] HKCA 1090

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 53 OF 2020

(ON APPEAL FROM HCPI NO. 32 OF 2016)

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J U D G M E N T

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Hon Cheung JA (giving the Judgment of the Court) :

I. The parties

1.1  The plaintiff is the widower and administrator of the estate of Poon Lai Ming, deceased (‘the Deceased’). 

1.2  The 1^st defendant is a Hong Kong company and is the authorized distributor of a contraceptive pills called ‘Yasmin’ (‘the Pills’) in Hong Kong. 

1.3  Both the 2^nd and 3^rd defendants are German companies.  The 2^nd defendant is the contract manufacturer of the Pills, using active ingredients provided to it by the 3^rd defendant.  The 2^nd defendant then sold the finished product to the 3^rd defendant.  The 1^st defendant purchased the Pills from the 3^rd defendant and imported them into Hong Kong for sale on its own account.

II.  Background

2.1  The Deceased consumed the Pills.  She died on 27 January 2013 at 45 years of age.  The cause of death as recorded in the autopsy report was massive pulmonary embolism resulting from thrombosis in the inferior vena cava.  In layman terms it means blockage of an artery in the lungs by blood clot that had moved from the large vein of the lower body. 

2.2  The 3‑year limitation period for bringing an action for damages for negligence or breach of duty in respect of personal injuries or death was due to expire on 26 January 2016.  On 13 January 2016, the plaintiff issued a general endorsed writ claiming against the defendants for negligence, breach of statutory duties in manufacturing, distributing and causing to be distributed in Hong Kong the Pills.  The writ was served on the 1^st defendant on 6 December 2016.  

2.3  The validity of the writ was for one year expiring on 12 January 2017.  On 16 December 2016, Master Roy Yu ordered that the validity of the writ be extended for three months from the date of its expiry i.e. until 12 April 2017 (‘the 1^st Extension Order’). 

2.4  On 29 December 2016, Master Leong granted the plaintiff leave to serve the writ out of the jurisdiction on the 2^nd and 3^rd defendants (‘the Service Out Order’). 

2.5  On 20 March 2017, Master Roy Yu granted a further extension of the validity of the writ for six months from the date of its expiry until 12 October 2017 (‘the 2^nd Extension Order’). 

2.6  The concurrent writ and its translation were sent to the High Court Registry for service out of jurisdiction on the 2^nd and 3^rd defendants on 14 March 2017.  The actual service of the writ was carried out by the Central Authorities appointed under the Hague Conference on Private International Law.  The concurrent writ was served on the 2^nd and 3^rd defendants on 9 August 2017.  They filed their acknowledgement of service on 28 August 2017.

2.7  On 3 January 2018, the 2^nd and 3^rd defendants filed the summons to discharge the 1^st Extension Order, the 2^nd Extension Order and the Service Out Order, and to set aside the service of the concurrent writ on them.  The application was made pursuant to Order 12, rule 8(1)(c) and (d) of the Rules of the High Court (Cap. 4A) (‘RHC’).

2.8  Master Roy Yu dismissed the 2^nd and 3^rd defendants’ application.  Amongst other things, he found the 2^nd and 3^rd defendants had submitted to jurisdiction.  They appealed to Bharwaney J (‘the Judge’) who, as he was entitled to do, conducted the appeal as a rehearing de novo.  The Judge dismissed the appeal.  The 2^nd and 3^rd defendants now appeal to this Court.  

III.  The Judge’s decision

3.1  The Judge found that the plaintiff had established the two gateway requirements for service out of jurisdiction under Order 11, rule 1 of the RHC namely,

1)  rule 1(1)(c) that ‘the claim is brought against a person duly served within or out of the jurisdiction and a person out of the jurisdiction is a necessary or proper party thereto’; and

2)  rule 1(1)(f) that ‘the claim is founded on a tort and the damage was sustained, or resulted from an act committed, within the jurisdiction’.

3.2  The Judge also found (notwithstanding the challenge by the 2^nd and 3^rd defendants) that the plaintiff had demonstrated a serious issue to be tried.  He, however, accepted the 2^nd and 3^rd defendants’ submission and held that there was a material non‑disclosure in the ex parte application by the plaintiff before Master Leong, namely, the caution contained in the Packing Insert of the Pills which stated that ‘while you are receiving this medication, you should see a doctor at least once a year for advice on suitability of continued use’ (‘the Caution’).  The Judge held that he would set aside the leave granted to serve outside the jurisdiction on the 2^nd and 3^rd defendants and he would consider whether he would recall the parties to address him on regranting leave.  The Judge then went on to hold that the 2^nd and 3^rd defendants had in fact submitted to jurisdiction and had waived any irregularities concerning the Service Out Order.   As a result he dismissed the appeal brought by the 2^nd and 3^rd defendants.   Accordingly, he did not need to recall the parties to address him further on regranting leave to serve out of the jurisdiction. 

3.3  The Judge went on to consider the validity of the two extension orders.  He held that if he had not concluded that the 2^nd and 3^rd defendants had waived any prior irregularities, he would have allowed the appeal by setting aside the 2^nd Extension Order.  He held that the plaintiff had not demonstrated any good reason for the 2^nd Extension Order to be granted, thus the discretion to extend the writ did not even arise.

IV.  The appeal

1)  Submission to jurisdiction

(1)  Order 12, rule 8 and inherent jurisdiction

4.1  The plaintiff is entitled to sue as of right against the 1^st defendant who is a Hong Kong company.  The position of the 2^nd and 3^rd defendants is different.  As they are not Hong Kong companies, the plaintiff must obtain an order for the service of the writ out of jurisdiction on them under Order 11, rule 1 of the RHC.  The 2^nd and 3^rd defendants’ challenge to the validity of the Service Out Order was brought under Order 12, rule 8 of the RHC and the inherent jurisdiction of the Court.  The relevant parts of Order 12, rule 8(1) of the RHC provides that,

‘ Dispute as to jurisdiction (O. 12, r. 8)

(1) A defendant who wishes to dispute the jurisdiction of the court in the proceedings by reasons of any such irregularity as is mentioned in rule 7 or on any other ground shall give notice of intention to defend the proceedings and shall, within the time limited for service of a defence, apply to the Court for ―

......

 (c)   the discharge of any order giving leave to serve the writ on him out of the jurisdiction, or

 (d)   the discharge of any order extending the validity of the writ for the purpose of service, or’

4.2  This is a challenge to the jurisdiction of the Hong Kong Court.  However, a party may be precluded from objecting to the Hong Kong Court’s jurisdiction by conduct deemed to amount to a voluntary submission to that jurisdiction or a waiver of the challenge. 

(2)  The principles

4.3  In Miruvor Ltd v Panama‑Globe Steamer Lines SA [2007] 1 HKLRD 804, this Court (Rogers VP and Le Pichon JA) adopted the principles identified in the line of cases which began with Astro Exito Navagacion SA v WT Hsu, The Messiniaki Tolmi [1984] 1 Lloyds Rep 266; Sage v Double A Hydraulics Ltd; Chambers v Starking [1992] Times Law Reports 165; Spargos Mining NL v Atlantic Capital Corp (unrep., The Times, 11 December 1995) and SMAY Investments Ltd & Another v Sachdev & Others [2003] 1 WLR 1973.  The principles to be gathered from these authorities are that whether a party submits to the jurisdiction is to be gathered from the circumstances of the case and a useful guide is whether a third party with knowledge of the case would have regarded the acts of the defendant or his lawyers as inconsistent with his challenge to the jurisdiction.  The acts of the defendant in order to constitute submission to jurisdiction must be wholly unequivocal.

4.4  In Astro Exito Navagacion SA, Goff LJ (as he then was) at p.270 held :

‘ Now a person voluntarily submits to the jurisdiction of the Court if he voluntarily recognizes, or has voluntarily recognized, that the Court has jurisdiction to hear and determine the claim which is the subject matter of the relevant proceedings. In particular, he makes a voluntary submission to the jurisdiction if he takes a step in the proceedings which in all the circumstances amounts to a recognition of the Court’s jurisdiction in respect of the claim which is the subject matter of those proceedings. The effect of a party’s submission to the jurisdiction is that he is precluded thereafter from objecting to the Court exercising its jurisdiction in respect of such claim. Whether any particular matter, for example an application to the Court, amounts to a voluntary submission to the jurisdiction must depend upon the circumstances of the particular case.’

4.5  In Sage, Farquharson LJ said :

‘ A useful test was whether a disinterested bystander with knowledge of the case would have regarded the acts of the defendant, or his solicitors, as inconsistent with the making and maintaining of his challenge.’

4.6  Coleman J in SpargosMining NL after referring to these two cases, stated that :

‘ In arriving at the view to be imputed to the disinterested bystander, it seems to me that one has to bear in mind that there will be an effective waiver, or a submission to the jurisdiction, only where the step relied upon as a waiver, or a submission to the jurisdiction, cannot be explained, except on the assumption that the party in question accepts that the court should be given the acceptance of jurisdiction, is a step which can be explained also because it was necessary or useful for some purpose other than acceptance of the jurisdiction, there will, on the authorities, be no submission...If the well-informed bystander had been left in doubt because what the defendants had done was equivocal, in the sense that it was explicable on other grounds in addition to agreement to accept the jurisdiction of the court, then the conclusion must be, on the authorities, that there would have been no submission to the jurisdiction. The representation derived from the conduct of the party said to have submitted must be capable of only one meaning.’

4.7  Patten J in SMAY Investments Ltd held :

‘ [41] ... then any conduct on his part said to amount to a submission to jurisdiction, and therefore a waiver of that right of challenge, must be wholly unequivocal.’

4.8  Rogers VP in Miruvor Ltd stated :

‘ [9] The relevant question is whether looked at fairly and sensibly as what the defendant has done constituted a submission to jurisdiction.’

4.9  There is a ruling in Sage which requires discussion.  Sage was heard together with the case of Chambers.  Farquharson LJ referred to Sage as the first action where the validity of the writ had expired before service on the defendants. Their solicitors issued a summons to set it aside, but failed to attend the hearing so that the summons was dismissed.  Since no agreement was reached with the plaintiff for an extension of time within which to serve their defence, they issued a time summons and later a further summons to reinstate their application to set aside the writ.  Farquharson LJ held that :

‘ ...what was conclusive against the defendants was the issue of the time summons which was done before the application was made to reinstate the summons to set aside. Objectively regarded, they had taken a step in the action inconsistent with their challenge and thus waived their right to object to the writ.’

4.10  Stuart-Smith LJ in Lawson v Midland Travellers Ltd and Ano [1993] 1 WLR 735 at 742 D commented on this ruling in Sage,

‘ ... it is no authority for the proposition that if the defendant merely applies for an extension of time for service of the defence, which automatically carries with it the extension of time in which to apply under Ord. 12, r. 8(1), that this is to be taken as a waiver.’

4.11  In Binning Bros Ltd (in liq) v Thomas Eggar Verrall Bowles (a firm) [1998] 1 All ER 409, Hutchison LJ agreed with Stuart‑Smith LJ.  We also agree.

(3)  Steps taken in the proceedings

4.12  The 2^nd and 3^rd defendants were then represented by their former solicitors Orrick, Herrington & Sutcliffe (‘Orrick’).  On 29 August 2017, Orrick wrote to the plaintiff’s solicitors Cheng, Yeung & Co. (‘Cheng Yeung’) asking for copies of all documents that the plaintiff had filed in support of his application for the Service Out Order and the two extension orders.

4.13  The present action is a personal injury action and is governed by Practice Direction 18.1 ‘The Personal Injuries List’.  Under the Practice Direction, the plaintiff was required to serve a pre-action letter on the defendants.  On 5 September 2017, Cheng Yeung wrote to Orrick referring to the acknowledgement of service filed by the 2^nd and 3^rd defendants on 28 August 2017 :

‘ Pursuant to the Order made by Master Roy Yu dated 24^th March 2017, the Plaintiff shall serve a copy of the pre-action letter dated 7^th April 2017 on the 2^nd and 3^rd Defendants within 14 days when the Writ has been served on the 2^nd and 3^rd Defendants. Please take instructions from the 2^nd and 3^rd Defendants and confirm when the Writ was served on them respectively.’

4.14  On 6 September 2017, Orrick wrote back, stating

‘ We make no admissions as to whether the Writ has been properly served on the Second and Third Defendants, and if so when.

As to the service of the pre-action letter on the Second and Third Defendants, it is a matter for you to decide on how to deal with this.’

4.15  In the meantime, Orrick applied directly to the Court to obtain documents that they had previously sought from Cheng Yeung. 

4.16  On 8 September 2017, Cheng Yeung repeated their request for information concerning the manner of service of the writ of summons on the 2^nd and 3^rd defendants. 

4.17  Pursuant to the Practice Direction, the parties were also required to file questionnaires dealing with such matters as settlement, pleading, evidence, expert evidence, interlocutory applications, case management, conference/pre-trial review and other matters.  The plaintiff filed his questionnaire on 12 September 2017 and the 2^nd and 3^rd defendants filed theirs on 13 September 2017.  In the 2^nd and 3^rd defendants’ questionnaire Orrick stated that there was no outstanding interlocutory application, it was inappropriate to set the case down for trial and the plaintiff had still not filed his statement of claim. 

4.18  Also under the Practice Direction, the parties were required to attend a Check List Review Hearing.  On 13 September 2017, Cheng Yeung wrote to Orrick seeking their consent to adjourn the Check List Review Hearing scheduled for 26 September 2017 to a date to be fixed in mid 2017.  Orrick did not respond to the request for adjournment. 

4.19  On 22 September 2017, Cheng Yeung replied to Orrick’s 6 September 2017 request for documents :

‘ With respect, you have failed to provide us with any justification for asking copy of the ex-parte summons and affidavits in support of our application for extension of the validity of the Writ of Summons and service outside the jurisdiction. We see the request as fishing expedition.’

4.20  On the same day, the plaintiff issued a summons for extension of time to file the statement of claim on 31 October 2017. 

4.21  On 25 September 2017, Orrick replied to Cheng Yeung’s letter of 22 September 2017, stating

‘ We disagree with most of what you say, but please make such submissions to the court as you see fit.

We have obtained copies of your client’s evidence directly from the registry, with the court’s leave, and we are in the course of considering the same with our clients.  Their rights are reserved.’  (emphasis added)

4.22  On 26 September 2017, the parties attended before Master Roy Yu at the Check List Review Hearing.  The Master made the following orders :

i)  The time for the plaintiff to file and serve the statement of claim and the statement of damages be extended for 35 days, i.e. on or before 31 October 2017.

ii)  The defendants do file and serve their defence within 70 days after service of the statement of claim, i.e. on or before 9 January 2018.

iii)  The plaintiff may file and serve his reply, if any, within 28 days thereafter, i.e. on or before 6 February 2018.

iv)  Within 28 days from the service of the statement of claim, i.e. on or before 28 November 2017, the plaintiff shall notify the defendants of the experts on liability that they are to rely on and which they shall seek leave in due course.  If the reports are available, the plaintiff shall serve a copy to the defendants together with a list of issues to be addressed or which has been addressed by the experts.

v)  The issues whether leave should be granted to the plaintiff’s experts to give evidence on liability and what are the expert evidence required for in this case shall be considered at the next Check List Review Hearing.

4.23  The Check List Review Hearing is adjourned to 21 February 2018 at 11:30 a.m. for further directions.

4.24  On 3 January 2018, the 2^nd and 3^rd defendants issued their application for setting aside the various orders.

(4)  The Judge’s reasons

4.25  The Judge held that the statement in the 2^nd and 3^rd defendants’ questionnaire that ‘I confirm that I do not presently intend to take out other interlocutory applications’ was   misleading because after receipt of the documents filed in support of the two extension orders and Service Out Order on 11 September 2017, Orrick and the 2^nd and 3^rd defendants were considering making an application to set aside these orders.

4.26  The Judge referred to Orrick’s letter dated 25 September 2017, namely, that ‘we are in the course of considering the same with our clients.  Their rights are reserved’.  The Judge held that Orrick ought to have made an express reservation.  At the very least Orrick ought to have made an express reservation, at the hearing of the Check List Review on 26 September 2017, that, whilst they were not, at the time of Check List Review Hearing, making any application, they were considering whether or not they would make an application in due course to set aside the orders.  By not making this express reservation, the Judge held that Orrick had misled Master Yu into believing that the proceedings ought to be case managed in the usual manner and wasted the Court’s valuable resource and time.

4.27  The Judge held :

‘ 59. I also accept Mr Leung’s submission that Orrick did not invoke the court’s jurisdiction by pressing the court to give directions on expert evidence or other case management directions. Orrick was consistent in its stance that these ought to be dealt with after pleadings had been exchanged. However, by participating in the proceedings without making an express reservation at the hearing of the CLR on 26 September 2017, in the terms set out in §49 above, which resulted in the court’s utilisation of its time and resources to give directions in respect of expert evidence which required the plaintiff to notify “the defendant” of the liability experts the plaintiff relied on, and to serve copies of the same on “the defendants”, if ready, together with a list of issues of the experts, the 2^nd and 3^rd defendants submitted to the jurisdiction of the court and took a further step in the action thereby waiving any irregularities that might have occurred before then.’ (emphasis added)

4.28  The Judge referred to Order 1A of the RHC which deals with the underlying objectives of the Civil Justice Reform and specifically to Order 1A, rule 3 which imposes the duty on the parties and their representatives to assist the Court to further the underlying objectives including cost‑effectiveness, expedition, reasonable proportion and procedural economy, and active case management so as to ensure the Court’s resources are distributed fairly.

4.29  The Judge held that the 2^nd and 3^rd defendants did not comply with that duty.  Orrick did not inform Master Yu of the possible challenge to jurisdiction in order to facilitate the negotiation of a longer period to serve their defence ‒ 70 days.  Had Orrick made an express reservation, Cheng Yeung might not have agreed to such a long extension.  The Judge held :

‘ 60. In my judgment, the disinterested bystander, looking objectively at what transpired that day before the learned Master, in the context of the defendants’ questionnaire that they were not presently intending to make any applications, would conclude that the 2nd and 3rd defendantswere submitting to the jurisdiction and waiving any irregularities that might have occurred before then. The learned Master rightly so concluded, stating in his judgment being appealed against:

“Would a disinterested bystander with knowledge of the case have regarded acts of the defendants or the solicitor as inconsistent with making and maintaining of the challenge? The answer must be yes. The defendants would have no difficulty to reserve the position at the hearing before me, or even better, to set it out in the questionnaire.” ’

(5)  Our view on setting aside

4.30  Mr Leung SC and Ms Chow for the 2^nd and 3^rd defendants submitted that the Judge’s decision on submission to jurisdiction was wrong and no or insufficient weight had been placed by the Judge on the communication between the parties with an express reservation of rights.

4.31  The question arises as to what was the nature of the reservation expressed by Orrick.  Some assistance on this issue may be gained from Dennis v Tag Group Ltd. [2017] EWHC 919.  In that case the petitioner’s solicitors had asked the respondents who were companies outside the jurisdiction of England and Wales if they ‘could provide details of solicitors in London who were authorised to accept service on their behalves’.  Two of the respondents were represented by different solicitors.  One of them wrote back as follows :

‘ As we have not had sight of a claim form or any other documents, we are not presently instructed to accept service. We will take instructions on service once we have had an opportunity to consider your client’s claim form, application and papers in support.’

4.32  The letter ended ‘all our client’s rights, including as to jurisdiction and costs, are reserved.’  The other firm of solicitors also wrote back in similar terms. 

4.33  The petitioner then applied for injunctive relief against the respondents, which they took part in and opposed successfully against the granting of the injunction.  The issue then arose as to whether the respondents had submitted to the jurisdiction by their conduct in the injunction proceedings.

4.34  It was argued by the petitioner there that the use of the term ‘reservation’ in correspondence is meaningless.  In context, the term used merely informs the reader that the respondents may contest jurisdiction at some point in the future.  It is an equivocal statement but in any event was superseded by conduct waiving the right to contest jurisdiction. It is not possible to reserve a right to contest something that has been waived.

4.35  It was conceded by counsel for the respondents that the language used did not protect the respondents’ position.

4.36  Mr Registrar Briggs held :

‘ 27. ...In my judgment the concession was rightly made. To reserve is not the same as informing the Court or other party that “we are not properly here” (Boyle v Sacker); or jurisdiction is in dispute (Williams & Glyn’s Bank Ltd v Astro Dinamico Compania Naviera S.A); nor does the language used inform the Court that the Respondents intend to challenge jurisdiction (Esal (Commodities) v Pujara); or leave little doubt that jurisdiction is in issue (Global Multimedia v ARA Media [2007] 1 All ER (Comm) 1160, 1168). The language used by the Respondents is insufficient.’

4.37  In our view, the reservation in the letter dated 25 September 2017 expressed by Orrick was also equivocal in nature.  They did not state expressly that jurisdiction was to be challenged.  One then turns to examine their summons and what happened at the hearing before Master Yu.

4.38  The summons to set aside the service of the writ on the 2^nd and 3^rd defendants was issued on 3 January 2018 which was within the extended time to serve the defence.  In Lawson, where the English Court of Appeal was dealing with the same rules, Stuart‑Smith LJ held at 741 F

‘ (3) In my judgment there has been a deliberate change of policy to enable the defendant to see the nature of the claim properly pleaded in the statement of claim before he has to decide whether to challenge the jurisdiction or deal with the case on the merits.’

4.39  In this case, the plaintiff had not served its statement of claim and had asked for extension of time to do so.  At the hearing, the 2^nd and 3^rd defendants agreed to the extension of time to serve pleadings.  By this, they could not possibly be treated as having waived their objection to jurisdiction : Lawson.  As the Judge observed :

‘ A mere application for extension of time to file the defence does not constitute a submission to jurisdiction. It merely preserves the status quo pending launch of the summons: see Hong Kong Civil Procedure 2019 [12/8/3]; Hwoo Huang Linda v Fu Being San & others [2013] 1 HKLRD 259 per DHCJ Reyes SC (as he then was) at §§36-37.’

4.40  Master Yu then pressed the parties to deal with the expert evidence.  Orrick expressly informed Master Yu that it was pre‑mature to deal with this issue before the service of the statement of claim.  In our view this was a legitimate statement by Orrick.  It would be extremely odd to ask the parties to agree on matters concerning expert evidence when the issues of the case had not even been identified by way of pleadings.  Eventually the order on the expert was made by Master Yu and not with the consent of Orrick.  Again this cannot be treated as a submission to jurisdiction by the 2^nd and 3^rd defendants.

4.41  Then it was said that Master Yu was ‘misled’ by the lack of express reservation on the part of Orrick and this led him to make the orders of case management which he would otherwise not make had he known the true intention of Orrick.  Mr Ramanathan SC (together with Ms Remedios) for the plaintiff supported the Judge’s view that Master Yu had been misled.  He submitted that the judgment is an important decision on the duty of a party to assist the Court in case management.  He submitted that the Order 1A objectives would not be of much value if the Court accepts the behaviour of the 2^nd and 3^rd defendants at the hearing.  Mr Ramanathan also relied on two additional grounds to affirm the Judge’s decision.  First, in expressly stating in the questionnaire dated 13 September 2017 that they did not intend to take out any interlocutory application, declining to adjourn the Check List Review Hearing and thereby causing it to proceed, and thereafter remaining silent without express reservation of their intention to challenge jurisdiction, the 2^nd and 3^rd defendants were seeking and securing an advantage, namely forensic detriment by forcing the plaintiff to show his hand early, not putting their cards on the table, obtaining more time in which to seek advice and take instructions and formulate strategy, causing delay and increasing costs, which was an act of offence, within the meaning of the guidance on submission to jurisdiction given in Hwoo Huang Linda v Fu Being San & Others [2013] 1 HKLRD 259 per DHCJ Reyes SC (as he then was) at [24] and [26].  Second, the Judge could have taken into account the cumulative effect of the circumstances justifying the disinterested bystander concluding as he did, including the 2^nd and 3^rd defendants’ participation in the Check List Review Hearing despite the plaintiff’s invitation to adjourn the Check List Review Hearing.

4.42  DHCJ Reyes SC in Hwoo Huang Linda referred to Roussel-Uclaf v GD Searle & Co Ltd [1978] 1 Lloyd’s Rep 225 where counsel argued that in order to contend that the defendants in that case had submitted to jurisdiction, the plaintiff had to point to ‘some positive act by way of offence’ rather than a mere defensive response on the part of the defendants. 

4.43  We do not consider the 2^nd and 3^rd defendants’ statement in the questionnaire that they did not have the intention to make interlocutory applications and their refusal to adjourn the hearing would impact on the issue of submission to jurisdiction.  One must also consider the context of this case that one day before the hearing the 2^nd and 3^rd defendants had stated in correspondence that their rights were reserved.  Further, Orrick also represented the 1^st defendant and attended the checklist review on its behalf.  These factors are at most equivocal in nature.

4.44  The more fundamental question is whether the objectives introduced by the Civil Justice Reform as now embedded in Order 1A which require the parties and their legal representatives to assist the Court with case management, render the lack of an express reservation by the 2^nd and 3^rd defendants at the hearing of their intention to challenge jurisdiction to be treated as a submission to jurisdiction. 

4.45  In our view the objectives set out in Order 1A are practical and laudable and it would not be difficult for Orrick to inform Master Yu that they were still reserving their position on jurisdiction.  However, ultimately the issue has to be guided by the established principles and the crux of the matter is whether the conduct of Orrick at the hearing was ‘wholly unequivocal’ that the disinterested third party would conclude that the 2^nd and 3^rd defendants were submitting to jurisdiction.  In our view the answer is a clear no.  The conduct was equivocal having regard to what the 2^nd and 3^rd defendants had actually agreed in respect of the procedural directions that were given by Master Yu.  A common sense approach must be adopted.  As DHCJ Reyes SC (as he then was) stated in Hwoo Huang Linda at [26(6)] :

‘ The Court should adopt a common sense approach. It must not be overly subtle or astute to find that a party has submitted to the jurisdiction. Otherwise the question of submission could easily become a technicality trap for the unwary. The real question is whether a party’s conduct is so inconsistent with maintaining an option to challenge forum that the party should be assumed to have waived such option. In the case of any doubt, the party proposing to challenge forum should probably be given the benefit of that doubt.’

4.46  We held that the Judge was wrong on the issue of submission to jurisdiction.

4.47  We would suggest for the consideration of the Judge and Master in charge of the Personal Injuries List to ask the parties to indicate in the questionnaire that in cases involving foreign parties whether challenge to jurisdiction is being contemplated.

V.  Respondent’s Notice

5.1  The plaintiff has filed a respondent’s notice seeking to affirm the judgment below.  He also applied by summons dated 2 December 2020 for leave to cross-appeal out of time in the event that the 2^nd and 3^rd defendants succeed in their appeal on the issues of material non‑disclosure in applying for the Service Out Order and the validity of the 2^nd Extension Order.  The leave application was already identified and sought for in the Respondent’s Notice.  Ms Remedios addressed the Court on these two issues.

1)  Material non‑disclosure

(1)  The Caution and Warning

5.2  The non‑disclosure relied upon by the 2^nd and 3^rd defendants is in respect of a matter not covered in the plaintiff’s expert report of Professor Tomlinson dated 25 November 2016.  The report was on causation and it stated, among other things, that the use of the Pills increased the Deceased’s risk of venous thrombosis by about two‑fold compared to a second generation oral contraceptive containing levonorgestrel [32].  There was a chance of up to 83% that use of the Pills caused venous thrombosis and pulmonary embolism in the Deceased [33].

5.3  The Pills were sold with an outer package box and packing insert.  It is the 2^nd and 3^rd defendants’ case that Professor Tomlinson failed to refer to or discuss the Caution and the relevant excerpt from the packing insert regarding the risk of venous thromboembolism.

5.4  The packing insert stated that epidemiological studies have shown that the risk of venous thromboembolism for combined oral contraceptives that contain drosperinone [ie. the Pills] is higher than the risk for levonorgestrel containing second generation of [combined oral contraceptives] and may be similar to the risk for desogestrel containing or gestodene containing third generation [combined oral contraceptives] (‘the Warning’).

5.5  The 2^nd and 3^rd defendants argued that although Professor Tomlinson suggested that the increased risk of venous thrombosis with the Pills was not made clear to a lay person or the general public, that precise risk had been expressly made known in the Warning as approved by Hong Kong regulatory authorities which Professor Tomlinson failed to address in any detail.

5.6  The matters concerning the Caution and Warning were advanced both under the limb of ‘serious issue to be tried’ and ‘material non‑disclosure’.  The Judge held that there was a serious issue to be tried as to whether the 2^nd and 3^rd defendants owe a duty of care to the Deceased.  The Judge held that :

‘ 27. The plaintiff did inform the court that the Pills are sold as an “over the counter” pharmaceutical product, which is to say that they are sold as “non-poisons” and do not need a prescription before they could be sold.

 28.  The incidence and standard of duty of care may be informed by the statutory requirement set out in ss.36 & 37 of Pharmacy and Poisons Regulations, Cap.138A, however, it is the court that defines the duty and standard of care in any particular relationship.

29.  Contributory negligence is only a partial, and not a complete defence, ever since the enactment of section 1(1) of the Law Reform (Contributory Negligence) Act 1945, which we can find in section 21 of our Law Amendment and Reform (Consolidation) Ordinance, Cap.23.’

5.7  Mr Leung had not challenged the Judge’s decision on the ‘serious issue to be tried’. 

5.8  In respect of material non‑disclosure the Judge did not accept there was material non‑disclosure of the Warning :

‘ 23. Although Professor Tomlinson did not quote the Warning verbatim from the Packing Insert, he did state that the prescribing information for Yasmin was updated in [November 2011] to include more details on “this increased risk of venous thrombosis”. More importantly, it was his opinion that a lay person would find it difficult to follow the information regarding the risk of venous thrombosis from the revised prescribing information.’

5.9  The Judge, however, held that the non‑disclosure of the Caution was material because

‘ ...it was relevant to the exercise of the court’s discretion to serve out of the jurisdiction, even though it is likely that, after due consideration of the same, the court’s decision to grant leave to serve out of the jurisdiction would have been the same.’

(2) Non‑disclosure in different contexts

5.10  The Judge referred to and adopted the principles regarding the need for full and frank disclosure at ex parte applications as summarized by Deputy High Court Judge Au Yeung (now Au Yeung J) in Velatel Global Communications Inc & Another v Chinacomm Ltd & Others [2012] HKCFI 1655 [25] to [31].

5.11  The plaintiff argued that what the Judge had overlooked was the context in which these principles were to be applied.  Specifically there is a difference in approach in respect of ex parte application for, on the one hand, Mareva injunction and, on the other hand, service out of jurisdiction.  MRG (Japan) Ltd v Engelhard Metals Japan [2004] 1 Lloyd’s Rep 731 is concerned with material non‑disclosure in a service out of jurisdiction application.  Toulson J held at [25] and [26] that materiality depends in every case on the nature of the application and the matters relevant to be known by the judge when hearing it.  In respect of freezing injunctions, the Court is being asked to make an order of an exceptional kind, prohibiting or restricting a defendant’s use of its own assets before any adjudication has been made against it.  Because of its draconian nature, it is a jurisdiction which requires great caution and a wide range of factors may have a bearing on the Court’s decision.  In an application for permission to serve out of the jurisdiction, while the general principles on non‑disclosure still apply, the focus of the inquiry is different in that the Court is concerned with whether it should assume jurisdiction over a dispute.   Toulson J explained :

‘ 26. ...The Court needs to be satisfied that there is a dispute properly to be heard (i.e. that there is a serious issue to be tried); that there is a good arguable case that the Court has jurisdiction to hear it; and that England is clearly the appropriate forum. Beyond that, the Court is not concerned with the merits of the case.’

5.12  Toulson J at [31] emphasised that the judge is at this stage concerned with the question whether the Court should assume jurisdiction, rather than with the question who is likely to win.

5.13  The plaintiff further argued that another aspect of non-disclosure in cases of service out of jurisdiction is that the setting aside by reason of non‑disclosure would only be on the basis that there is an intention to deceive.  In Ellinger v Guinness, Mahon & Co [1939] 4 All ER 16, Morton J declined to set aside an ex parte order for leave to serve a writ out of the jurisdiction obtained on a material non-disclosure but without any intention to deceive.  He stated :

‘ In the absence of any attempt to deceive the court I do not think it would be right for a judge to take this course. The only result would be to put the applicant to the expense of making a further application under R.S.C. Ord. 11, r.1, which would be bound to succeed.’

5.14  Liu J (as he then was) followed Ellinger in Siy Ramon & another v BPI International Finance Ltd [1987] 3 HKC 317 at 330 C.  Mr Recorder B Yu, SC in Ren Yun Liang v China Merchants Bank Co. Ltd (HCA 1456/2005, 29 January 2007) summarised these principles.  Ren Yun Liang was followed in Hartanto Hady v Radnaabazar Bazar HCA 89/2008by Deputy High Court Judge Peter Ng SC (now Ng J).

5.15  Mr Leung did not challenge these authorities.  Our view is that in considering these cases on material non-disclosure one must not adopt a mechanistic approach by trying to divide ex parte applications into different categories.  After all the duty to make full and frank disclosure is present in all ex parte applications and as the Appeal Committee of the Court of Final Appeal observed recently in China Medical Technologies, Inc (In Liquidation) v Bank of China (Hong Kong) Limited, FAMV No 239 of 2019, [2020] HKCFA 28:

‘36. The apparent merits and viability of a proposed action are obviously important considerations in exercising discretions of the sort under discussion.’

5.16  What the authorities really say is that the failure to refer to matters relating to the merits of the plaintiff’s claim should not generally be characterized as a failure to make full and frank disclosure unless they are of such weight that their omission may mislead the Court in the exercise of its discretion.  Thus in BP Exploration Co (Libya) Ltd v Hunt, [1976] 3 All ER 879 (which concerned an application for leave to serve out of the jurisdiction) Kerr J held at 893:

‘In my view, a failure to refer to arguments on the merits which the defendant may seek to raise in answer to the plaintiffs claim at the trial should not generally be characterised as a failure to make a full and fair disclosure, unless they are of such weight that their omission may mislead the court in exercising its jurisdiction under the rule and its discretion whether or not to grant leave.’

5.17  Toulson J in MRG (Japan) Ltd expressly relied on this judgment in support of his view at [25] and [26].  An example of an issue on merits which carried so much weight that its omission would constitute material non-disclosure is found in China Medical Technologies, Inc (in Liquidation) where the applicant’s affidavit in an ex parte application for an extension of the validity of the writ gave the impression that the limitation period for all the claims had not expired when the writ was issued, when in fact six of the payments under the claim were made more than six years before the date of the issue of the writ and were therefore prima facie already time-barred at that date.

5.18  In the present case, the relevance of the Caution and whether the Deceased had read the Caution or had ignored it were clearly matters that go into the merits of the plaintiff’s claim against the defendants and not whether the grounds for service out of jurisdiction had been established.  They are concerned with the liability of the defendants and the contributory negligence of the Deceased, if any, by not heeding the advice contained in the Caution.  The fact that the defendants may raise such defences serves only to show a serious issue to be tried on the merits and an omission to refer to the Caution does not constitute material non-disclosure. 

5.19  As to the authorities dealing with the intention to deceive, again one must not adopt a mechanistic approach by saying categorically that an omission is not material if the intention to deceive is not established.  As Ralph Gibson LJ observed in Brink’s Mat Ltd v Elcombe and Others [1988] 1 WLR 1350 at 1357:

‘(6) Whether the fact not disclosed is of sufficient materiality to justify or require immediate discharge of the order without examination of the merits depends on the importance of the fact to the issues which were to be decided by the judge on the application. The answer to the question whether the non-disclosure was innocent, in the sense that the fact was not known to the applicant or that its relevance was not perceived, is an important consideration but not decisive by reason of the duty on the applicant to make all proper inquiries and to give careful consideration to the case being presented.’ (emphasis added)

This approach was followed by Kwan J (now Kwan VP) in Re A HCMA 1407/2007; [2007] HKEC 2266 at [41].  In the present case it is not necessary for us to consider the issue of intention to deceive in light of our view that there was no material non-disclosure in the first place.  In our view the order for service out of jurisdiction was properly made and should not have been set aside by reason of material non‑disclosure.  In any event, as the Judge commented, this issue is unlikely to affect a regrant, if necessary, of the Service Out Order.

2)  Validity of the 2^nd Extension Order

(1)  Order 12, rule 8(1)(d)

5.20  The application to set aside the 2^nd Extension Order was also made pursuant to Order 12, rule 8(1)(d) and the inherent jurisdiction of the Court.  I have referred to rule 8(1)(d) at [4.1].

(2)  The Judge’s decision

5.21  The Judge held that if he had not concluded the 2^nd and 3^rd defendants had waived any prior irregularities, he would have allowed the appeal by setting aside the 2^nd Extension Order.  

(3)  The principle

5.22  Order 6, rule 8(2) of the RHC governs the renewal of the writ :

‘ (2) Where a writ has not been served on a defendant, the Court may by order extend the validity of the writ from time to time for such period, not exceeding twelve months at any one time, beginning with the day next following that on which it would otherwise expire, as may be specified in the order, if an application for extension is made to the Court before that day or such later day (if any) as the Court may allow.’

5.23  Bokhary JA (as he then was) in Chow Ching Man v Sun Wah Ornament Manufactory Ltd [1996] 2 HKLR 338 at 344 B stated the principle on the extension of the validity of a writ :

‘ It is clear from the decisions of the House of Lords in Kleinwort Benson Ltd. v. Barbrak Ltd. [1987] AC 597, Waddon v. Whitecroft Scovell Ltd. [1988] 1 WLR 309 and Baly v. Barrett [1988] NI 368 that

    (i) Order 6, r 8(2) is to be construed so that the discretion to extend the validity of a writ does not arise unless the plaintiff first establishes matters amounting to good reason for extension or at least capable of so amounting; and that

  (ii) matters such as the balance of hardship only fall to be considered if the discretion to extend arises in the first place.’

5.24  He held at 344 C :

‘ Where the failure to serve a writ within its normal validity period is the result of a choice, then it is necessary to decide whether the choice was made for a good reason, meaning one which supports a deliberate failure to comply with the time limit involved. And no discretion to extend the writ would arise unless the choice was made for a reason which is at least capable of amounting to a good reason.’

5.25  The principle was further followed by this Court in China Medical Technologies Inc (In Liq) v Bank of China (Hong Kong) Ltd [2019] 2 HKLRD 710 [40].

5.26  Mr Leung does not dispute the principle.  However, he relied on the case of Krohn & Co Import/Export GmbH & Co KG v Oak Steamship Co Ltd & Ano [1982] HKC 353 which in turn referred to the case of Heaven v Road and Rail Wagons Ltd [1965] 2 QB 355 at 635 where Megaw J (as he then was) stated that exceptional circumstances must be shown before the writ can be validly extended.  Both of these two cases are old cases.  Exceptional circumstances was the old test which was disapproved by Kleinwort Benson Ltd [622 G]. 

(4)  Reasons for the application for extension

5.27  Two reasons were advanced by the plaintiff for the second extension.  First, the statement of claim was required to be translated into German for the purpose of service out and the approval of the Director of Legal Aid was required before this task could be undertaken.  Second, it would take time to serve the statement of claim outside jurisdiction.  The estimated time for this process was four to five months. 

(5)  Reasons of the Judge

5.28  The plaintiff summarised the grounds given by the Judge for his view that no good reason was shown for the second extension :

i)  The plaintiff should have sought legal aid approval for translation of the concurrent writ much earlier than on 14 December 2016.

ii)  Administrative delay on the part of the Legal Aid Department does not afford ‘good reason’.

iii)  Failure to obtain a timely translation is not a good reason and resulted in the need to apply for a 2^nd extension.

iv)  Cheng Yeung’s estimate that it would take at least four to five months for service out and no explanation was given as to why Cheng Yeung could not have made the same estimation earlier and if necessary, sought a longer extension when applying for the 1^st Extension Order.

(6)  Our view

5.29  In our view, this is not a simple, run-of-the-mill personal injury action.  This is a complicated case which requires investigation and enquiry by the plaintiff’s legal advisers and the assistance of experts in their specialised fields before the plaintiff could properly formulate a claim against the defendants.  

5.30  Apart from identifying the proper parties to sue, Cheng Yeung, the solicitors had been making enquiries and trying to gather information on the Warning with the health organisations such as the Drug Office of the Department of Health and the Pharmacy and Poisons Board of Hong Kong and also with the defendants’ then solicitors on matters concerning the case.  They all refused to provide information.  

5.31  Two expert reports have to be obtained, one by Professor Tomlinson on liability and another one by Dr Feldschreiber who is described as the plaintiff’s product liability expert.

5.32  The procedural timeframe of this case must be considered in such a context.  Even if, for the purpose of argument, the translation of the statement of claim should be obtained earlier and the concurrent writ with the statement of claim and the translation could be supplied to the High Court Registry shortly after the Service Out Order was obtained on 29 December 2016, the stark fact is that an extension of time is still required in order to complete the service out process which is handled by the Central Authorities as the 1^st Extension Order would expire on 12 April 2017.  That alone must be a good reason for the second extension.  As Master Roy Yu observed, the extension was to ensure that the writ was effective when the writ was actually served on the 2^nd and 3^rd defendants.  The Judge said that a longer extension period should have been applied for in the first extension.  With hindsight, one may say the first extension was too short but that was not an answer to the question whether good reason had been shown for the second extension.  The statement of Lord Brandon of Oakbrook in Kleinwort Benson Ltd is apposite :

‘ Put shortly the good reason was the saving of unnecessary proceedings and costs achieved without any prejudice to the respondents.’

5.33  Ms Remedios submitted this is not a case where there had been a deliberate decision not to serve the writ within its initial validity and an application for further delay ‒ on the contrary, the decision had already been made to serve the writ, the 1^st defendant had been served and the extension was sought in order to serve on the other defendants.  We agree.

5.34  It is also of note that in personal injury matters the limitation period can be extended beyond the primary limitation period of three years. 

5.35  As Ms Remedios submitted the 2^nd Extension Order of six months and the 1^st Extension Order of three months, making a total nine months was within the discretion of the Master.  In Kleinwort there were two extensions for 15 months in total.  All in all we do not regard the second extension granted by the Master can be said to be plainly wrong.  

5.36  In the course of his arguments Mr Leung seemed to submit that the 1^st Extension Order was wrong as well.  The Judge said that he did not need to consider whether or not a good reason was demonstrated in relation to the 1^st Extension Order.  If Mr Leung was of the view that the Judge ought to have found the 1^st Extension Order to be invalid, then he should have expressly raised this point in his notice of appeal and in his written submissions.  He had not done so.  This Court can only proceed on the basis that the 1^st Extension Order was validly made.  

5.37  As we have reversed the Judge’s decision on material non‑disclosure and the validity of the 2^nd Extension Order, this means that the Service Out Order and the 2^nd Extension Order were validly made in the first place.  It is not necessary for us, in the circumstances, to regrant these two orders which is an alternative relief sought by the plaintiff. Accordingly we grant leave to the plaintiff to cross‑appeal out of time against the Judge’s decision on material non‑disclosure and the 2^nd Extension Order and we allow the cross‑appeal.

V.  Conclusion

6.  The appeal by the 2^nd and 3^rd defendants is dismissed.  

VI.  Costs

7.  We will make an order nisi that the plaintiff is to have the costs of the appeal (including the costs of the Respondent’s Notice and the summons dated 2 December 2020 with certificate for two counsel.  The plaintiff’s own costs are to be taxed according to the Legal Aid Regulations.