BEHRENS NG MO CHEE CINDY ANOTHER v. CREDIT WORLD LTD.

CACV 173/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 173 OF 1999

(ON APPEAL FROM HCA 4404 OF 1999)

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J U D G M E N T

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Mayo, J.A.:

1. This is an interlocutory appeal against an order made by Deputy Judge Z. E. Li.

2. He was hearing an application for the Plaintiffs' statement of claim to be struck out pursuant to Order 18 rule 19 of the Rules of the High Court, Cap. 4. Order 15 rule 5(1) was alternatively being invoked as it is the Defendant's contention that the Plaintiffs' respective causes of action should be prosecuted separately.

3. Put very simply the claim being made by the eighteen Plaintiffs who are respectively the owners of eleven ground floor flats in one of the Defendant's developments is that gardens adjoining their flats should be exclusive to their flats. They all claimed that representations to this effect were made when they purchased their flats and that when the Assignments and Deeds of Mutual Covenant were prepared the gardens were included in the common areas of the development as a whole.

4. Instead of making a determination of the issues raised by the Defendant's summons the Judge contrary to the wishes of all parties to the litigation made an order that there should be a trial of four preliminary issues which were framed by him. These issues were:

"(i) the legal effect of the alleged representation made in the newspapers and the remedy or relief that should follow on such effect;

(ii) the legal effect of the alleged representation made by the display of the model at the sales office of the Defendant and the remedy or relief that should follow on such effect;

(iii) the legal effect of the alleged oral representation that the podium flat owners would have the exclusive use of the 'garden' annexed thereto and the remedy or relief that should follow on such effect; and

(iv) the legal effect of the alleged oral representation that the 'garden' annexed to a podium flat would be included in the building plan for the flat but not in the title deed for the flat and the remedy or relief that should follow on such effect (collectively called 'the Framed Issues')."

5. One matter upon which counsel on both sides are unanimous is that they do not wish to follow the path ordered by the Judge. They both give different reasons. It does not seem to me to be a profitable exercise to weigh and consider the submissions which have been advanced if it is universally accepted that there should not be a trial of preliminary issues as ordered by the Judge.

6. While it is commendable that Judges should take an initiative in case management there clearly has to be a limit to which this can obtain.

7. Perhaps the most compelling factor to be weighed in the present case is that the issues in the litigation have not yet been framed as no defence has yet been filed. Clearly the framing of preliminary issues must be premature. It has to also be said that there would appear to be no assurance whatever that the main issues between the parties would be resolved by the preliminary issues which are framed by the Judge.

8. What is required at the present time is that there must be an adjudication on the issues raised in the summons which was before the Judge.

9. The question which then arises is whether we should as prayed for in the Notice of Appeal remit the summons back to a Judge of the Court of First Instance or as is prayed for in the Respondent's Notice ourselves adjudicate upon the issues.

10. We heard helpful submissions from both Mr. Wong for the Defendant and Mr. Yau for the Plaintiffs.

11. Mr. Wong referred us to the cases of Mohamed Yaqub Khan v. AG [1987] HKLR 250 and Ch'ng Poh v. Cheng Yeung & Co. [1998] 3 HKC 643 where similar questions had arisen for consideration. In particular we were referred to two passages in Mohamed Yaqub Khan from the judgment of Cons, V.-P. at p.252:

"This Court will on occasion exercise for itself the discretion of the judge below. Most commonly this occurs where the judge has already exercised a discretion but on a wrong principle, or where he has refused to exercise it. It might be thought undesirable that in those circumstances he should be asked to make a second attempt. But the position is different where it is merely that the judge has not exercised his discretion at all. There is no reason why he should not be asked then to do so. Indeed, where there are factors which make it more appropriate that he, rather than this Court should do so, it seems to me that this Court is under a duty to send it back."

and then he went on to say:

"Another consideration which leads me to the same conclusion is that the exercise of the discretion in the present instance will not be a simple matter. We have been referred briefly to Wade on Administrative Law, 5th ed., at p.475. Undoubtedly there will be considerable argument and references to authority as to what principles ought to be applied and what approach should be adopted. It is better that the judge below should make his own decision and give his reasons. If it is thought necessary to question those reasons the matter may be brought back to this Court. Mr. Mills-Owens suggests that this would be an unnecessary proliferation of proceedings. With respect I do not agree. These are questions which normally would have been decided in the lower court, with the possibility of an appeal thereafter. What we are being asked to do now is to miss out one step of the normal process. Without good reason I do not think we should do that."

12. This approach to the matter was also followed by Nazareth, V.-P., at p.649 of Ch'ng Poh v. Cheng Yeung & Co.:

"... The matter of costs will accordingly have to be determined afresh. That, in my view, would be more appropriately done by the Court of First Instance, for which purpose in my view, the matter should now be remitted. None of Mr Yu's other points, I am satisfied, undermine that conclusion. And having regard to it, I do not think it appropriate to express further views upon the matter."

13. The main point raised by Mr. Yau in response to this was that delay will occur if we decline to resolve the matter. In my view the Defendant is entitled to have its applications dealt with in the usual manner including a built in right to appeal if the order which is eventually made is contrary to its wishes. I consider that the summons should be remitted to a Judge of the Court of First Instance for hearing. It should be listed before some Judge other than Deputy Judge Li. We will hear the parties on costs.

Keith, J.A.:

14. I agree that this appeal should be allowed, and that the judge's order, presumably made under Ord. 33 r. 3, that various "preliminary issues be framed for hearing" be set aside. I preface my remarks by complimenting the judge for wishing to find the most cost-efficient way for the differences between the parties to be resolved. However, in my view, the judge's order was an inappropriate one for three reasons apart from its prematurity.

15. First, the issues framed by the judge focus on whether the Defendant's acts relied upon by the Plaintiffs in the Amended Statement of Claim did indeed amount to the representations alleged. However, if those acts are disputed by the Defendant, they will have to be proved. The judge thought that the preliminary issues could be determined on the assumption that the acts relied on would be proved. However, since the nature of the representations alleged, particularly the oral representations, depend so much on what facts are in fact proved, it was in my opinion inappropriate for the judge to order the determination of preliminary issues on what would necessarily have been hypothetical facts.

16. Secondly, the issues framed by the judge also focus on "the remedy or relief" which the representations warranted. In his judgment, the judge said that this was intended to elicit a finding as to whether the Plaintiffs should be entitled to rescission of the sale and purchase agreements and the assignments, or whether they should be left with their claim for damages. The difficulty with that approach is that the nature of the Plaintiffs' remedy is dependent not merely on the nature of the representations, but also on facts which are relevant to the individual Plaintiffs - for example, the degree of importance which they attach to the podium gardens, and the extent to which they might have lost the right to rescind by affirming the agreements or making restitution impossible or creating rights in third parties.

17. Thirdly, the judge's order was only capable of achieving the purpose which it was intended to achieve if it rendered a subsequent trial of the action either unnecessary or less complex. The only way it would have done that is if, on the facts pleaded by the Plaintiffs, the representations relied on could not have amounted to actionable representations in law. That is not alleged by the Defendant. Otherwise, the Defendant would have sought to have the Amended Statement of Claim struck out as disclosing no reasonable cause of action.

18. In view of the course which the judge took, he did not consider what orders should be made on the issues raised in the Defendant's summons. I can see the force of the argument of Mr. Albert Yau for the Plaintiffs that we should decide these issues here and now. True, the parties would be denied one tier of appeal if we decided the issues ourselves, but the other side of the coin is that the parties get the benefit of the issues being addressed for the first time by a court of greater authority. This court has all the material on which to decide these issues, and remitting the summons to be heard in the Court of First Instance would involve a delay for a month or so and additional costs. However, the fact remains that this was a case in which the issues raised by the summons have not been considered at all at first instance, and I do not feel so strongly on the issue that I should dissent from the clear view expressed by Mayo, J.A. I therefore agree with him that the summons should be remitted to the Court of First Instance, to be heard by a judge other than Deputy Judge Li, on a date to be fixed.

Mayo, J.A.:

19. No order for costs on the appeal. Also no order for costs for the hearing below save for the costs of preparing for the summons. These costs will be costs in the cause of the summons.