PRIMECREDIT LTD v. HON WAI KAN

DCMP2179/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGSNO.2179 OF 2015

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REASONS FOR DECISION

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1.  Originally, I have to hear a notice of appeal dated 16 Aug 2016 (“the appeal”), one summons for time extension for the appeal dated 16 Aug 2016 (“the time summons”), and another summons for adducing fresh evidence on the appeal dated 30 Sept 2016 (“the evidence summons”) all taken out by the intended intervener (“the intervener”).

2.  In the middle of submissions of Mr Ken To (“Mr To”) appearing for the intervener, and after hearing Mr Jose d’ Almada Remedios (“Mr Remedios”) for the plaintiff, I ordered that the appeal, the time summons and the evidence summons be all adjourned sine die with liberty to restore for fresh hearing for all 3 of them.

3.  I further ordered that all outstanding summonses filed in the captioned proceedings and in DCCJ No.2251 of 2011 (“the 2011 DC action”) are to be fixed to be dealt with at the same time together with the appeal, the time summons and the evidence summons by the same judge.

4.  And I ordered the intervener to pay forthwith plaintiff’s costs of the hearing before me in respect of the appeal, the time summons and the evidence summons on a common fund basis (with certificate for counsel), to be taxed if not agreed.

5.  I now give my reasons.

Background

6.  The appeal was directed against order of Master M. Lam given on 25 Feb 2016 whereby she refused to allow the joinder of the intervener to the captioned proceedings and refused stay of execution of writ of possession issued against the property.

7.  The intervener is sister of the defendant, who was and is the registered owner of the property. The intervener, however, claimed to have beneficial interest in the property and also claimed to reside at the property.

8.  In the 2011 DC action, the plaintiff obtained judgment against the defendant. The charging order was also obtained against the property in 2011.

9.  In 2015, plaintiff took out originating summons (“the OS”) at the Court of First Instance for, inter alia, sale of the property to enforce the charging order and it was, on 16 Jun 2015, transferred by Master R. Lai to District Court to become the captioned proceedings. At the hearing before Master R. Lai, the intervener appeared in person and filed an affirmation claiming her alleged beneficial interest.

10.  The OS was first heard at District Court on 22 Sep 2015 by Master D. To. The intervener did not turn up and the OS was adjourned to 13 Oct 2015 for, inter alia, updated valuation report of the property.

11.  On 13 Oct 2015, absent again intervener’s attendance, Master D. To made an order for sale of the property.

12.  On 1 Feb 2016, the writ of possession was issued.

13.  On 19 Feb 2016, the intervener in person filed another affirmation claiming her alleged beneficial interest and took out a summons for her joinder and stay of execution of the writ of possession, which summons was dismissed by Master M. Lam after hearing the intervener in person on 25 Feb 2016. That becomes the subject matter of the appeal.

14.  The notice of the appeal, the time summons and the evidence summons were all filed on intervener’s behalf by her solicitors (“intervener’s solicitors”) and, on all 3 documents, the defendant was a party to be served at an address other than the property in Tuen Mun (“the other TM address”).

15.  At today’s hearing, defendant did not turn up by 0950 hours. I enquired Mr To if defendant had been served with the papers and was told that he had been served and was offered undertaking to file necessary affidavit of service within 14 days.

16.  On the basis that defendant had been served, Mr Remedios made no objection for the hearing to proceed in defendant’s absence as Mr To suggested. And I decided accordingly but required intervener’s solicitors to double-check to get the details of service by close of 1300 hours.

17.  In the middle of Mr To’s oral submissions, his instructing solicitors returned with the information that service of the notice of the appeal, the time summons, the evidence summons and affirmations concerned on defendant at the other TM address had all been returned through the post.

Submissions

18.  In view of such failure of service on defendant, Mr To submitted that the hearing today can be adjourned pending service on the defendant.

19.  In the alternative, Mr To suggested an “unconventional” approach of continuing the hearing in defendant’s absence with certain undertakings to be given by intervener to avoid possible prejudice to defendant (as defendant never bothered to appear in the 2011 DC action and the captioned proceedings so far).

20.  Mr Remedios objected to continuation in defendant’s absence and submitted that the 2 summonses and the appeal should all be dismissed as plaintiff’s realization of its fruit of judgment against defendant had been delayed due to intervener’s opposition for a long period of time and plaintiff would be further prejudiced if the matter was adjourned.

21.  Mr To objected to dismissal and explained that the matter arose from oversight on the part of his instructing solicitors. He emphasized that the judgment debt was 114K odd by way of principal. Even with interest accruing daily at prevailing judgment rate, the total amount due to plaintiff could not, he submitted, be more than 300K now, which is relatively small compared to 1.6M valuation of the property, whose mortgage had entirely been paid off.

22.  Both counsels in their submission also referred me to the history of the captioned proceedings some of which I have highlighted in background section above. Let me say I took full account of all such matters I am directed to but, as they are to be considered again in future when the appeal, the time summons and the evidence summons are to be heard afresh, I say no more of them here.

Discussion

23.  All things considered and balanced, I do not find it appropriate to proceed further in defendant’s absence. As a matter of natural justice, he is entitled to notice of today’s hearing and to be heard as he sees fit. The fact that he might likely elect not to is, I think, neither here nor there. I reject Mr To’s unconventional approach. Indeed, no authority was cited by him for such approach.

24.  As for dismissal of the 2 summonses and the appeal before me, I agreed with Mr To that the plaintiff is sufficiently protected against downturn, if any, of the property market by the unencumbered equity of the property and by continuing interest accruing at favorable judgment rate of 8% p.a. against any further delay in sale. In this respect, the plaintiff saw fit to take no action for 4 years to enforce its judgment in the 2011 DC action until 2015.

25.  For such costs incurred by plaintiff for today’s hearing, that can, of course, be compensated by appropriate costs order in plaintiff’s favor.

26.  Even if I were to dismiss the 2 summonses and the appeal, the dispute between the intervener and the plaintiff over the property would not, I think, end completely today. As I have ascertained and confirmed with counsels before me, there are outstanding summonses filed by the interveners in the 2011 DC actions for joinder and discharge of the charging order, which had not been fixed to be heard before me at the same time. In the meantime, there was also an interim stay of execution of the writ of possession until further order granted by Master D. Ho on 13 May 2016.

27.  Lastly, I accept from Mr To that the matter arose from oversight of his instructing solicitors and, as such, the blame should not be put on the intervener.

28.  I do bear in mind the underlying objectives in O.1A r.1 of Rules of District Court, Cap.336H (“RDC”) but, at the same time, in giving effect to them, our primary aim remains to secure just resolution of parties’ dispute in accordance with their substantive rights: see O.1A r.2(2) of RDC. Dismissal of the 2 summonses and the appeal without going into their merits fails, I think, this very aim.

29.  Accordingly, I made the adjournment and case management orders as I did in para 2 & 3 above.

Submissions on costs

30.  Mr Remedios applied for costs of today’s hearing be paid by intervener on an indemnity basis. Mr To agreed to pay such costs but disputed the standard sought.

31.  Mr Remedios referred me to para 62/App/12 at p.1251 of Vol.1 of Hong Kong Civil Procedure, 2017 Edition that the court’s discretion to order indemnity costs is not fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be “appropriate”.

32.  He submitted that what the intervener’s solicitors had done was an “affront to the court” as they failed to disclose the non-service until it was “caught out” by this court. That was sufficiently culpable to attract the punishment of indemnity costs. If not, costs should at least be awarded on a common fund basis.

33.  Mr To replied that the failure of those instructing him had not gone that far to become an affront to the court as suggested. It was at worst a very careless mistake of not following the rules properly.

Discussion

34.  I agree with Mr To that the matter did not amount to an affront of court as suggested by plaintiff. There was no suggestion that plaintiff had deliberately flouted any order made by the court. All her solicitors did was overlooking the non-service and proceeding ahead nonetheless not following proper procedures.

35.  It was nevertheless, I think, a serious oversight with grave consequence for all concerned. Efforts of all for today’s hearing had been wasted and the matter would be further delayed. While indemnity costs is not appropriate in all the circumstances, a taxation on common fund basis is, I think, warranted.

36.  Accordingly, I made the costs order as I did in para 4 above.