IP YIN PING AND OTHERS v. IP ANNE

HCMP 1840/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1840 OF 2002

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J U D G M E N T

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1. This is an appeal against the decision of Master Brock refusing to grant leave to the Plaintiffs to rely on an affirmation of Yeung Ying Lai affirmed on 26 November 2002. The Plaintiffs wished to use that affirmation to resist an application for security for costs made by the Defendant. That application first came before Master Kwang on 30 September 2002. Master Kwang gave directions for filing of evidence including that the Plaintiffs have leave to file their affirmation within 21 days. Master Kwang also ordered that no further evidence to be filed without leave. The substantive hearing of the security for costs application was to take place on 27 November 2002.

2. The Plaintiffs did not file any evidence in accordance with the directions of Master Kwang. On 23 October 2002, solicitors for the Defendant noted that the Plaintiffs failed to file any evidence and wrote to suggest to have the application dealt with on a direction hearing on 29 October 2002. On 26 October 2002, the Plaintiffs' solicitors wrote as follows,

"Since we are unable to contact our clients and obtain their instruction, we are unable to file an affirmation in reply. We therefore propose that hearing on 27 November 2002 be vacated."

Not surprisingly, the proposal was turned down by the Defendant.

3. On 14 November 2002, solicitors for the Defendant wrote to solicitors for the Plaintiff enquiring whether the application for security for costs was still being opposed. On 15 November 2002, solicitors for the Plaintiffs wrote back informing the Defendant that one of the Plaintiffs was in poor health and could not stand the pressure arising from proceedings. The Plaintiffs proposed to have the action stayed. By a letter dated 19 November 2002, the Defendant rejected the proposal and asked for the Plaintiffs' claim be dismissed whilst the Defendant would continue to pursue her counterclaim.

4. On 26 November 2002, one day before the scheduled hearing of the substantive application, the Plaintiffs took out a summons asking for leave to file affirmation out of time. As mentioned, the Master dismissed this application on 27 November 2002. He proceeded to hear the substantive application and ordered security for costs against the Plaintiffs. There is a pending appeal against the order for security for costs. Pursuant to directions granted on 9 January 2003, I am only concerned with the appeal regarding the leave to file evidence at this stage. The appeal against the order for security for costs shall be heard later, if necessary.

5. As pointed out by Ma J (as he then was) in Wong Hung Yu Richard v Wu Ming Fat [2002] 2 HKC 687, quite often judges hearing appeals against the decisions of Masters would allow further evidence to be relied upon as such appeals are by way of rehearing. However, such reception of evidence is not automatic and the court has a discretion to refuse leave for further evidence to be relied upon. On the facts of that case, Ma J granted leave although the plaintiff did not apply for such evidence to be used at the hearing before the Master and the affirmation was available at that stage.

6. On the other hand, in Core Resources v Sky Finders [1992] 1 HKLR 193, Kaplan J refused leave where the party sought to place before the court evidence of a completely different case from the one advanced before the Master and it was common ground that the original case was a hopeless one.

7. In those two cases, the party applying for leave had not made the same application before the Master. Jindal Exports v Waco Trading Co Ltd [2000] 2 HKC 46 was a case where such an application had been made before the Master and the Master refused leave. Deputy Judge Chu (as she then was) held that in such circumstances, the proper course was to lodge an appeal against the Master's decision on admission of further evidence rather than making a fresh application before the judge in chambers. At p. 48 E to F, the learned judge said,

"While there is no doubt that the court has power to admit new or fresh evidence under O.58 r.1 RHC, the court cannot invoke the power when the Master had already exercised his discretion on the same matter, short of an appeal."

8. The Plaintiffs followed the suggestion of Deputy Judge Chu and lodged this appeal. However, at the hearing, Mr Chong argued on behalf of the Plaintiffs that the decision of the learned judge was wrong in that appeal was not the only way to secure further evidence to be admitted. He submitted that in any event, there was no difference in the approach that the court should adopt in considering whether leave should be given for such evidence to be adduced, the crucial issue is still whether the other party would suffer prejudice which cannot be compensated by an award of costs. In advancing that argument, he relied on Para. 3/5/2 of Hong Kong Civil Procedures 2002.

9. On the other hand, Mr Cook appearing for the Defendant argued that whilst he accepted the matter should be dealt with by way of rehearing, the discretion of this court must be exercised in the light of the circumstances prevailing at the time when the matter was dealt with by the Master. Further, the court should have regard to the fact that the discretion has been exercised by the Master on the same material. He submitted that the decision of Deputy Judge Chu was correct.

10. My view as to the proper approach to adopt in a case where similar application has been made before the Master on the same material is as follows,

(a) whether the matter comes before the court by way of appeal or a fresh / renewed application, the court have to exercise its discretion unfettered by the decision of the Master;

(b) at the same time, the court is entitled to give whatever weight it deems appropriate to the decision of the Master;

(c) if the court deems fit, it could even adopt the reasoning of the Master, see Rae v Yorkshire Bank, 16 Oct.1989 The Times, cited in Para. 58/1/2 of Hong Kong Civil Procedures 2002 and R v The Supreme Court Taxing Officer ex p John Singh, unreported 31 July 1996, both are decisions of the English Court of Appeal;

(d) it follows from (a) above that the court should exercise its discretion by reference to all relevant facts and circumstances of the case as it is rather than confining itself to facts and circumstances of the case as it was before the Master. In this connection, I reject the submission of Mr Cook to the contrary and I derive some support, albeit not direct support, from the approach adopted by the Court of Appeal in Po Kwong Marble Factory v Wah Yee Decoration [1997] HKLRD 1341 at 1346J to 1347C;

(e) bearing in mind (b) and (c) above, I agree with Deputy Judge Chu that it would be more appropriate to lodge an appeal against the decision of the Master rather than making a fresh application.

11. I am also satisfied that in dealing with the present appeal, the relevant considerations are those set out in The Mortgage Corporation v Sandoes [1997] PNLR 263 and Costellow v Somerset County Council [1993] 1 WLR 256. Whilst I attach great importance to adherence to timetable laid down in directions for the filing of evidence, it is necessary to strike a balance between two principles as admirably summarized by the Master of the Rolls in Costellow at p. 263-4,

"As so often happens, this problem arises at the intersection of two principles, each in itself salutary. The first principle is that the rules of court and the associated rules of practice, devised in the public interest to promote the expeditious dispatch of litigation, must be observed. The prescribed time limits are not targets to be aimed at or expressions of pious hope but requirements to be met. ...

The second principle is that a plaintiff should not in the ordinary way be denied an adjudication of his claim on its merits because of procedural default, unless the default causes prejudice to his opponent for which an award of costs cannot compensate. ...

Neither of these principles is absolute. If the first principle were rigidly enforced, procedural default would lead to dismissal of actions without any consideration of whether the plaintiff's default had caused prejudice to the defendant. But the court's practice has been to treat the existence of such prejudice as a crucial, and often a decisive, matter. If the second principle were followed without exception, a well-to-do plaintiff willing and able to meet orders for costs made against him could flout the rules with impunity, confident that he would suffer no penalty unless or until the defendant could demonstrate prejudice. ...

The resolution of problems such as the present cannot in my view be governed by a single universally applicable rule of thumb. A rigid, mechanistic approach is inappropriate." (my emphasis)

12. Guided by this approach, I do not think the lack of good explanation from the Plaintiffs about the delay as emphasized by Mr Cook is determinative (see also Hong Kong Housing Society v Tang Kar Hung, CACV 153 of 1999, 9 Nov. 1999, where Keith JA held that failure to advance any reasons for the delay could not by itself justify refusal of extension of time) although I tend to agree with him that the explanations advanced on behalf of the Plaintiffs are not very satisfactory. Nor is the lack of prejudice to the Defendant as pinpointed by Mr Chong conclusive. In this regard, I agree with him that the circumstances of Birkenhead Properties & Investment v Leung Yiu [1998] 1 HKLRD 527, a case relied on by Mr Cook, are very different from the situation before me. Although explanation for delay and prejudice to the other side are relevant factors, I still have to look at all the circumstances surrounding the application.

13. In my judgment, another factor is the relevance of the intended evidence to the substantive application. If the evidence has no or little relevance, the court is unlikely to delay the substantive application by granting leave. Mr Cook submitted that the Affirmation of Mr Yeung did not assist the Plaintiffs. It is conceded by Mr Chong that the Affirmation could not take the Plaintiffs' case as to their claims being stifled any further. However, he argued that the Affirmation contained evidence showing clearly that the Plaintiffs have interests in the property in question which could be utilized to meet any liabilities as to costs which they may incur and that the Plaintiffs have a very high probability of success in their claims. I do not think it is appropriate for me to go into details at this stage, bearing in mind that I may have to deal with the substantive appeal. I am just convinced that Mr Chong's points might be arguable and it would not be right for me to deal with the present application on the basis that the Affirmation of Mr Yeung would not assist the Plaintiffs in resisting an order for security for costs.

14. Mr Cook also relied on other matters to argue that this court should adopt the Master's decision on admission of evidence. He referred to the lack of attempt on the part of the Plaintiffs to agree a new time limit for filing of evidence, the failure to make prompt application for further directions when the original deadline could not be met, prejudice to the Defendant in terms of having the matter hanging over her head and the general public interest in the efficient administration of justice. I take these matters into account but I have to balance those against other factors. I bear in mind that it is the Plaintiffs' case (and I put it no higher than that these points might be arguable) that without the evidence in the Affirmation of Mr Yeung, they do not have a realistic chance to oppose the order for security for costs and such order may have the practical effect of terminating the action. Although the explanations as to the delay are not very satisfactory, there are some evidence of ill-health on the part of the Plaintiffs.

15. Looking the matter in the round and having regard to all the relevant circumstances of the present case, I am of the view that it would be just to give the Plaintiffs a chance to rely on the Affirmation of Mr Yeung in the substantive appeal. I therefore allow the appeal in respect of the decision of Master Brock on the summons of 26 November 2002. In so doing, I am not saying that the learned Master was incorrect in his decision. Having regard to the circumstances in which the matter came before him and the arguments advanced before him (as shown in the transcript which is placed before me), I would not criticize the Master as to his decision.

16. All I am saying is that having regard to the material before me and the circumstances of the case as it is, in particular that the hearing date of the substantive appeal is yet to be fixed, I would exercise my discretion by granting further indulgence to the Plaintiffs. However, as indicated during the hearing, I think it is appropriate to impose conditions for leave to be granted to the Plaintiffs to rely on the affirmation of Mr Yeung to ensure that the Defendant would not suffer prejudice in terms of recovery of wasted costs since the Plaintiffs are residing overseas. The total costs of the hearing before Master Brock was fixed at $42,000. In addition, I have ordered costs against the Plaintiffs at the hearing of 9 January 2003 and fixed such costs at $14,000. Mr Chong has no quarrel with a condition that such costs be paid to the Defendant within 2 weeks.

17. Since the Plaintiffs are asking for indulgence and in the light of my observations in Paragraph 15, I think the Plaintiffs should also bear the costs of this appeal. Notwithstanding Mr Chong's submissions, I am of the view that the costs of this appeal should form part of the price of the indulgence and as such, should be included in the condition outlined above. Mr Cook has submitted a schedule of costs for my consideration and Mr Chong has made submissions on the same. Mr Cook asked for a total sum of $57,570 based on a hearing of three hours. As it turned out the appeal only lasted for about one and a half hour. I agree with Mr Chong that there are items in the schedule which appears to be excessive and some items are duplication of what I have already ordered on 9 January. I shall fix the costs of the Defendant for this appeal at $32,000 pursuant to O. 62 r. 9(4).

18. Hence, I order that leave be given to the Plaintiffs to rely on the Affirmation of Mr Yeung on condition that the Plaintiffs shall pay to the Defendant within 14 days the sum of $88,000 by way of costs of the hearing before Master Brock and the hearing before me on 9 and 14 January 2003. The Defendant would have 21 days from the payment of such sum by the Plaintiffs to file her affirmation in reply. I also direct that no further evidence to be filed for the substantive appeal without leave of the court. The Defendant's own costs shall be taxed in accordance with Legal Aid Regulations.

19. Lastly, pursuant to PD 25.1, I invite comments from parties within 5 days from the handing down of this judgment as to publication thereof.