CHOW SING YUET ELTON v. CARRY EXPRESS INVESTMENT LTD

CACV 5/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 5 OF 2011

(ON APPEAL FROM HCCT NO. 18 OF 2007)

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BETWEEN

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JUDGMENT

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Hon Tang VP:

1.  The Plaintiff (Mr Chow) is an architect and structural engineer, and an Authorised Person. He sued the Defendant, Carry Express Investment Limited ("Carry Express"), for professional fees under a formal written agreement dated 5 March 1991 as follows:

"1. a sum of $10,000 as a retainer fee pursuant to clause 5(ii) of the contract;

2. a sum of $26,500 being a processing fee paid by Mr. Chow on behalf of Carry Express, to the Buildings Department on about 7 November 1991;

3. the sum of $2,402,852.50 being as a total professional fees that would have been earned, had the building being constructed as designed by Mr. Chow, and the sum of $81.20 said to be the balance due of the GFA bonus.  A schedule was attached to the writ demonstrating a calculation of the construction cost of a gross floor area of 51,615.102 ft.², by applying an appropriate price index provided by Levett & Bailey Quantity Surveyors Ltd of Hong Kong."

2.  On 20 December 2010, after a trial which had lasted several days, Saunders J dismissed the Plaintiff's claim, essentially on the basis that the Plaintiff's claim had become statute-barred because of the effuxion of time.

3.  On 14 January 2011, the Plaintiff filed a Notice of Appeal.  On 31 March 2011, the Defendant's solicitors wrote, asking for security for costs of the appeal in the sum of $773,000.  On 20 April 2011, an application for security for costs was taken out by the Defendant.

4.  That was heard by Fok JA on 26 May 2011 and the Plaintiff was ordered to furnish security for the Defendant's costs of the appeal in the sum of $475,000 within 28 days of the service of the order, failing which the appeal would be dismissed.  In his judgment, Fok JA said the Plaintiff accepted that he was impecunious, but was unable to satisfy the court not only that he was unable to furnish security of the costs from his own resources, but also that he was unable to raise the money elsewhere. 

5.  Before Fok JA, it was argued on his behalf that the appeal had a strong chance of success.

6.  This is what Fok JA said:

"15. Whilst I do not say that the appeal is devoid of merit, I am not persuaded that the merits of the appeal are so strong that this provides a decisive factor in the exercise of my discretion on the issue of security for costs.  I note that in paragraph 6 of the judgment, the Judge summarised the contractual provisions for payment, which included a condition that the first tranche of the professional fees would be paid on the date of the approval for building plans.  In paragraph 61 of the judgment, the Judge noted that by 10 February 1996, the building plans, RC structural plans and foundation plans had been approved by the Buildings Authority and that approval comprised the condition precedent to the entitlement of the appellant to the first of the five tranches of payment of his professional fees under the contract.  When the appellant submitted his invoice for payment on that date, he sought payment of only two thirds of the sum that was due."

7.  The sealed order was served on the Plaintiff's solicitors on 1 June 2011.  Therefore the security had to be provided by 29 June 2011.

8.  On 22 June 2011, the Plaintiff applied for legal aid.  The statutory stay of 42 days, expired on 10 August 2011.  On 11 August 2011, the Defendant reported to the court that the Plaintiff had defaulted in giving the security as ordered.  On 19 August 2011, Fok JA dismissed the Plaintiff's appeal.  As a consequence, the hearing of the appeal which was scheduled to be heard on 22 September 2011 was vacated.

9.  On 14 September 2011, legal aid was offered to the Plaintiff, limited to obtaining leave to appeal at the Court of Appeal against the dismissal of the appeal.  We proceed on the basis that legal aid would be extended to cover consequential proceedings.

10.  The Plaintiff accepted the offer of legal aid by document dated 14 October which was received by the Director of Legal Aid ("DLA") on 19 October 2011.  On 20 October 2011, legal aid was granted.  On 1 November 2011, counsel was assigned by DLA.  On 9 November 2011, the Plaintiff's solicitors sought consent from the Defendant's solicitors for leave to proceed with the appeal.  That was refused on 15 November 2011.  On 19 December 2011, the Plaintiff applied for leave to appeal against the dismissal order out of time.

11.  Mr K M Chong appeared on behalf of the Plaintiff.  He contended that since the Plaintiff has been granted legal aid and the DLA would be responsible for the costs of the appeal, it was no longer right to require the Plaintiff to provide security for costs.  That being so, failure to provide security should no longer be an obstacle to the appeal proceeding.  Mr Chong has also informed us, legal aid has been granted to the Plaintiff after leading counsel's advice has been obtained on the merit of the appeal, presumably under section 9 of the Legal Aid Ordinance.

12.  Ms Gekko Lan, for the Defendant, relied on the chronology that I have set out above to show that the Plaintiff has been guilty of an undue and inexcusable delay.  In her written submission, she said:

"(1) He only applied for legal aid in respect of his appeal (against the judgment of Saunders J) on 22 June 2011, which was 5 months after he lodged his appeal, and almost 1 month after he was ordered to furnish security for costs of the appeal, and just 7 days before he was required to furnish such security failing which his appeal would be dismissed.

(2) While DLA was considering his application, he took no step to prevent the Court of Appeal from making the Dismissal Order.

(3) When DLA offered to grant legal aid to him, he took 1 month before it was accepted.

(4) After legal aid was granted and counsel assigned on 1 November 2011, being the same counsel and the same handling solicitor, the Appellant took another 1 ½ month before taking out the present application."

13.  When we asked Mr Chong whether the Plaintiff has any explanation over any of the delay, Mr Chong was unable to say that there is any reasonable explanation. 

14.  In deciding whether or not to grant or refuse an extension of time, the court would normally take into account the following factors:

(1) the length of the delay;

(2) the reasons for the delay;

(3) the chances of the appeal succeeding if time for appealing is extended; and

(4) the degree of prejudice to the potential respondent if the application is granted. (59/4/9 Hong Kong Civil Procedure 2012) 

15.  However, as the notes in the Hong Kong Civil Procedure 2012 went on to say: the modern authorities disapprove of a rigid and mechanistic approach which focuses on the reasons for and length of the delay. Instead the court must consider all the circumstances and decide whether the overall justice of the case requires the exercise of the discretion to extend time. 

16.  Mr Chong submitted that it was not the Plaintiff's fault that legal aid was not granted within the statutory stay period of 42 days.  But the DLA had to seek counsel's advice on the merit of the Plaintiff's claim before granting legal aid, and DLA cannot be said to be guilty of any undue delay.  More importantly, there was no explanation why the application for legal aid was made so late.  Given the Plaintiff's admission that he was impecunious, it is difficult to understand why he had not applied for legal aid earlier.  There was also the unexplained delay in accepting legal aid when it was offered.

17.  Now, Mr Chong has rightly not submitted that the appeal has a strong chance of success.  Notwithstanding that leading counsel has advised that the appeal has merit, with respect, like Fok JA, I am only prepared to say that the appeal may not be devoid of merits.

18.  In para 9 of Saunders J's judgment, he said:

"9. Pursuant to clause 6 of the contract, Carry Express had the right at any time prior to the completion of the project to terminate the contract by notice in writing.  In those circumstances provision was made for reduced fees to be paid to Mr. Chow. Although the project was never completed, it is common ground that Carry Express did not exercise its rights under that clause."

19.  Damages are assessed on the basis that the contract-breaker would have performed the contract in a way which would have benefited him most, eg at the least cost to himself.  See para 26-048 Chitty on Contracts (30 ed), "General Principles".  In other words, since Carry Express could terminate the contract, damages would be assessed on the basis that it had done so.  So even if it turns out that Saunders J was wrong on the limitation point, in relation to which I am prepared, for present purposes only, to proceed on the basis that the Plaintiff's contention is arguable, the damages recoverable by Mr Chow are likely to be substantially lower than the amount claimed by him.

20.  The Plaintiff's claim is at best, a stale one, as is evident from the section in Saunder J's judgment under the heading of "The events between January 1998 and August 2005".  It is clear from the facts that the project for which the Plaintiff had been engaged by the Defendant in March 1991 would not proceed by 2001-2002 at the latest.  Yet the writ was only issued in 2007.

21.  In all the circumstances, I do not believe there is a case where extension of time should be granted and I would refuse an extension of time to appeal with costs.

22.  The Plaintiff's costs are to be taxed under the Legal Aid Regulations (Cap 91A).

Hon Kwan JA:

23.  I agree with the judgment of the Vice President.  The Plaintiff has failed to explain the various periods of delay pointed out by the Defendant.  It is for him to show real prospects of success on the merits of his appeal.  As he has not done so for the reasons given by the Vice President, I would decline to grant an extension of time to appeal.