MERTON GROUP (CYPRUS) LTD v. SOLEADO HOLDINGS PTE LTD

HCA 629/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 629 OF 2014

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1. This is the plaintiff’s appeal against the decision of Master K Lo made on 28 July 2014 ordering that the defendant’s summons dated 22 July 2014 be withdrawn with no order as to costs.

2. The master’s decision came about in the following circumstances.  By a letter dated 14 July 2014 from the defendant’s solicitors (Sidley Austin) to the plaintiff’s solicitors (Haley & Co), the defendant requested the plaintiff to provide copies of various documents which the defendant said were referred to in the Statement of Claim, pursuant to Order 24, rules 10 and 11A of the Rules of the High Court.

3. The letter was, it is not disputed, served on the plaintiff’s solicitors at about 5:20 pm on 14 July 2014 (Monday).

4. On 22 July 2014 (Tuesday), the defendant took out the summons, returnable on 28 July 2014, seeking the supply of copies of the documents referred to in the said letter within seven days from the date of the order to be made. 

5. By a letter dated 23 July 2014 (Wednesday) from Haley & Co to Sidley Austin, the former pointed out that the defendant’s summons was issued prematurely by two days, and suggested that the summons be dismissed with costs to the plaintiff.  On behalf of the plaintiff, Haley & Co also responded substantively to the defendant’s request for copies of documents, enclosing copies of some documents which they considered the defendant was entitled to have.

6. Sidley Austin responded by a letter dated 25 July 2014.  They did not accept that the summons was issued prematurely and contended that in any event there was no prejudice caused to the plaintiff.  They further contended that the plaintiff had failed to provide some of the documents sought in breach of Order 24, rule 10 without any reasonable excuse.  However, in the same letter, Sidley Austin also said that their client was prepared to take a pragmatic approach and have the summons dismissed with no order as to costs.  This proposal was not accepted by the plaintiff.

7. The matter came before Master K Lo on 28 July 2014.  At that hearing, the defendant did not press the argument that the plaintiff had failed to supply some of the documents which the defendant was entitled to.  Instead, the defendant’s main argument was that the plaintiff ought to have accepted the defendant’s proposal made in Sidley Austin’s letter of 25 July 2014 and thus the hearing before the master was a waste of time.  On that basis, the defendant asked for the costs of the hearing.  On the other hand, the plaintiff maintained that the summons was issued prematurely and it had fully complied with the defendant’s request for documents and hence the plaintiff should have the costs of the summons.  The master, after hearing arguments from the parties, ordered that the summons be withdrawn with no order as to costs.

8. By a Notice of Appeal dated 7 August 2014, the plaintiff appealed against the said order of the master, contending that it should have the costs of the summons.

9. In view of the fact that Sidley Austin’s letter of 14 July 2014 was served on Haley & Co after 4:00 pm on that day, by virtue of Order 65, rule 7, the letter was deemed to have been served on 15 July 2014.

10. Under Order 24, rule 11A(2), the plaintiff was required to supply copies of the documents sought within seven days after receipt of the request.

11. The period of seven days began immediately after 15 July 2014 by virtue of Order 3, rule 2(2) and expired on 23 July 2014.  In reckoning the time allowed for the plaintiff to supply the documents sought, the Sunday falling on 20 July 2014 was to be excluded by virtue Order 3, rule 2(5).

12. It is thus clear that the defendant’s summons was issued prematurely.  In this regard, it is of note that under Order 24, rule 11A(3), the court may make an order against a party as to the supply of any document only where “a party fails to supply to another party a copy of any document under paragraph (2)”, ie within seven days after receipt of the request for the document.

13. The defendant argues that the plaintiff suffered no prejudice as a result of the premature issue of the summons.  However, once the defendant decided not to pursue the documents which it contended the plaintiff had failed to supply, the only outstanding issue was the costs of the summons. Unless the defendant agreed to pay costs or the plaintiff was prepared not to seek costs occasioned by the summons from the defendant, the plaintiff practically had no choice but to attend the hearing fixed on 28 July 2014.

14. I bear in mind that in an appeal against a master’s decision on costs only, a judge at first instance should not disturb the master’s exercise of discretion unless “it can be shown that the order made by the master was unreasonable or erred in law, ie if he either failed to take into account proper matters or took into account matters that should not have been taken into account” (see Hong Kong Civil Procedure 2014, paragraph 58/1/6).  There is no dispute about this principle. 

15. The master gave no reason for the decision regarding costs, and I cannot see any reasonable basis for depriving the plaintiff of the costs of the summons.  It seems to me that the defendant ought to have conceded the costs of the summons to the plaintiff and the hearing before the master on 28 July 2014 could have been avoided.

16. In the circumstances, I allow the plaintiff’s appeal, set aside the master’s order that there be no order as to the costs of the defendant’s summons.  I further order the defendant to pay the plaintiff’s costs occasioned by the defendant’s summons, including the costs of the hearing before the master on 28 July 2014.  I shall hear the parties on the costs of the appeal.