CARPE DIEM PUBLICATIONS LTD AND ANOTHER v. ROYAL HONG KONG YACHT CLUB

DCCJ 12/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 12 of 2012

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D E C I S I O N

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1.  The litigation between the 1^st plaintiff (“CDP”) and the 2^nd plaintiff (“Durrant”) of one part and the defendant (“the Club”) of the other has some history. This is the appeal from the decision of Master T Chan on 30 April 2012 refusing the application for her recusal from the present case.

BACKGROUND

2.  Durrant is the shareholder and director of CDP.  On behalf of CDP, Durrant has previously authorised the Club to process auto-pay transfer from CDP’s bank account for the settlement of Durrant’s membership account with the Club.

3.  Alleging that the Club has committed theft by debiting the above membership account and obtaining auto-pay settlement from its bank account, CDP commenced action on 15 September 2011 claiming against the Club for damages representing the bank charges and damage to its reputation and credit (DCCJ 3565/2011).

4.  4 days later, Durrant filed his claim in the Small Claims Tribunal (“the Tribunal”) against the Club and its general and membership committee members for, among other things, damages for damage to reputation and various fees (SCTC 36584/2011).

5.  On 26 October 2011, DCCJ 3565/2011 came before Master T Chan, who ordered that unless CDP filed the statement of claim, the action would be dismissed.

6.  On 29 November 2011, the Tribunal struck out the claim in SCTC 36584/2011 on the ground that Durrant failed to appear at the hearing.

7.  On 8 December 2011, Master Yip dismissed the action in DCCJ 3565/2011 with costs for default in compliance with the unless order dated 26 October 2011.

8.  Less than a month later, on 3 January 2012, CDP commenced the present action against the Club.  The claim is almost identical to that in DCCJ 3565/2011.  As before, CDP is represented by Durrant.

9.  2 days later, Durrant filed another claim with the Tribunal against the members of the general committee of the Club for, among others, membership fees and theft; and demanded a written apology (SCTC 434/2012).  The basis of claim was similar to that in SCTC 36584/2011.

10.  By letter to the court dated 28 March 2012, CDP applied ex parte for the present action to be “moved to a different court” on the ground that the Master appeared to be biased.

11.  This was followed by an inter partes summons filed on 27 April 2012 whereby CDP, among other things, applied for the recusal of Master T Chan (and Registrar C Lee).

12.  On 30 April 2012, Master T Chan, among other things, dismissed CDP’s application for her recusal.

13.  By notice of appeal dated 14 May 2012, CDP appeals the decision of Master T Chan.

14.  As an appeal pursuant to O.58 of the Rules of the District Court, this is a re-hearing of CDP’s application for recusal of the Master.

THE LEGAL PRINCIPLES

15.  In Deacons v White & Case Ltd Liability Partnership & Ors (2003) 6 HKCFAR 322, the Court of Final Appeal discussed the test for recusal in the common law jurisdictions. The court must first ascertain all the circumstances which have a bearing on the suggestion that the judge was biased.  It must then ask whether those circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility that the tribunal was biased.

16.  In refusing leave to appeal in Deacons, the final court found it unnecessary to state its definitive comment on the test.  But what the court said (at §§18 to 30 of the judgment) was no less than an authoritative summary of the current state of the law applicable in the local jurisdiction.  Indeed what the final court said in Deacons was applied in the subsequent case of Chau Siu Woon v Cheung Shek Kong [2010] HKLRD 49.

17.  The 1^st plaintiff in Chau Siu Woon sought the recusal of the Master on the ground of both actual and apparent bias.  The Master dismissed the application.  On appeal, the Court of Appeal had the following to say:

(1)  The refusal by the Master to recuse himself from hearing a case was an exercise of discretion.  An appeal from the Master to the Judge was by way of rehearing anew the application for recusal. (see §7)

(2)  Bias may be actual or apparent.  Actual bias means the decision-maker was influenced by either partiality or prejudice and it has been demonstrated that he was actually prejudiced; actual bias is a conclusive vitiating factor.  But actual bias is rare, difficult to prove and largely redundant given the other grounds of bad faith, improper motive and apparent bias. (see §§9-10)

(3)  The relevant test for apparent bias has been reviewed and stated by the Court of Final Appeal in Deacons (above). (see §12)

(4)  A fair-minded observer referred to in the test is the sort of person who always reserves judgment on every point until she has seen and fully understood both sides of the argument.  She is not unduly sensitive or suspicious.  Her approach must not be confused with that of the person who has brought the complaint.  The “real possibility” test ensures that there is this measure of detachment.  The assumption that the complainant makes are not to be attributed to the observer unless they can be justified objectively.  But she is not complacent either.  She knows that fairness requires that a judge must be, and must be seen to be, unbiased.  She knows that judges, like anybody else, have their weaknesses.  She will not shrink from the conclusion, if it can be justified objectively, that things that they have said or done or associations that they have formed may make it difficult for them to judge the case before them impartially. (see §13, citing Helow v Secretary of State for the Home Department [2008] 1 WLR 2416, per Lord Hope of Craighead at p.2418)

18.  In Chau Siu Woon, the 1^st plaintiff also challenged the integrity of the Master and complained of his language and racial discrimination.  He also complained of the Master’s lack of preparation and ability.  There was also allegation of improper motive, malice and bad faith.

19.  The Court of Appeal had, among other things, the following analysis:

(1)  As to the Master’s preparation of the case and ability, the appellate court acknowledged the well-known fact that masters have an extremely heavy workload. But if the Master has adopted the wrong principles and reached an erroneous decision, the appeal system is there to correct his mistake.

(2)  As to the Master’s partiality, the appellate court considered that the Master’s invitation of the defence counsel to summarise the case of the 1^st plaintiff (who acted in person) was not an indication that he only listened to the defendant.  By stating that the 1^st plaintiff’s application (for specific discovery) might be refused if it was oppressive, the Master was not to be taken as more than outlining the applicable principles.

(3)  As to the Master’s attitude during the hearing, the appellate court accepted as a matter of fact that the Master had at times become irritated and at one time even lost temper when the 1^st plaintiff did not make a timely response to his question.  Whilst reminding the high standard that is expected from a judge, the appellate court at the same time emphasized how a fair minded and informed observer would assess the situation (citing Johnson v Johnson (2000) 201 CLR 488 at §53 per Kirby J):

“… Being reasonable and fair-minded, the bystander, before making a decision important to the parties and the community, would ordinarily be taken to have sought to be informed on at least the most basic considerations relevant to arriving at a conclusion founded on a fair understanding of all the relevant circumstances. The bystander would be taken to know commonplace things, such as the fact that adjudicators sometimes say, or do, things that they might later wish they had not, without necessarily disqualifying themselves from continuing to exercise their powers. The bystander must also now be taken to have, at least in a very general way, some knowledge of the fact that an adjudicator may properly adopt reasonable efforts to confine proceedings within appropriate limits and to ensure that time is not wasted. The fictitious bystander will also be aware of the strong professional pressures on adjudicators (reinforced by the facilities of appeal and review) to uphold traditions of integrity and impartiality. Acting reasonably, the fictitious bystander would not reach a hasty conclusion based on the appearance evoked by an isolated episode of temper or remarks to the parties or their reasonable member of the public is neither complacent nor unduly sensitive or suspicious.”

20.  With these guiding principles in mind, I turn to consider the complaint by CDP that the Master (or actually Masters) was biased.

THE PRESENT CASE

21.  CDP first made its application for recusal of the Master by way of ex parte letter dated 28 March 2009.  This was followed by the inter partes summons filed on 27 April 2012.  The applications could only be based on CDP’s observation and the Master’s conduct prior to those 2 dates.

Up to the ex parte application by letter dated 28 March 2012

22.  As mentioned, the first occasion on which the legal proceedings between CDP and the Club came before Master T Chan was not those in the present case but the earlier case of DCCJ 3565/2011.  During the hearing of that case on 26 October 2011, Master T Chan gave an unless order for CDP to file the statement of claim or the action would be dismissed.

23.  The unless order accorded with the rules and the circumstances of that case at the time.  DCCJ 3565/2011 was eventually dismissed on 8 December 2011 upon CDP’s default in complying with the order.  As mentioned, it was another Master who made that order.

24.  Less than a month later, CDP commenced the present action which effectively repeats its claim against the Club in DCCJ 3565/2011. On 2 February 2012, the Club filed a summons for striking out the statement of claim and dismissing the present action (“the Club’s Striking Out Summons”).

25.  The Club’s Striking Out Summons was heard on 16 February 2012 before Registrar C Lee, who gave directions for the filing of affidavits and adjourned the summons to 16 April 2012 for argument.

26.  On 15 March 2012, the Club filed a summons for leave to join Durrant as a plaintiff in the present action for the purpose of costs pursuant to section 53(2) of the District Court Ordinance and O.62, r.6A of the Rules of the District Court (“the Joinder Summons”).

27.  The Joinder Summons was first heard on 21 March 2012.  CDP and Durrant were absent.  Master T Chan nevertheless adjourned the Joinder Summons to 29 March 2012 for argument.

28.  CDP’s ex parte application by letter was dated the day before the hearing of the Joinder Summons resumed.  By letter to the court dated 28 March 2012, CDP requested that the present action be “moved to a different court” on the following ground:

“The current Master appears to CDP to be biased to the defendant and likes the games the defendant’s lawyer is playing to avoid having to address the facts of the case which are that the defendant committed theft and electronic fraud.”

29.  The complaint is unfounded.  So far, what the Masters, including Master T Chan, had done was adjourning the parties’ summonses to some other dates for argument.  Not only did that accord with sound case management, but that also ensured CDP and Durrant, both acting in person, would not be deprived of a reasonable opportunity to be heard as a result of their absence from the first hearing.  By then, the court had not even embarked on considering the merits of the Club’s applications by way of its 2 summonses, let alone holding anything against CDP or Durrant.

30.  By the time of the ex parte application by letter dated 28 March 2012, there was hardly any circumstance in the present case that would suggest to a fair minded and informed observer that the Master was or might be biased.

The order dated 29 March 2012

31.  Both CDP and Durrant were absent from the hearing of the Joinder Summons on 29 March 2012.  At the end of the hearing, Master T Chan allowed the application.  Hence Durrant became the 2^nd plaintiff (for the purpose of costs only) in the present action.

32.  As to whether the hearing should proceed in the absence of CDP and Durrant, the Master had considered the various affidavits of service before her.  Evidence was adduced that the summons, supporting affidavits and notice of the adjourned hearing had been served by late March on CDP and Durrant by way of email, post and actual leaving at 4 addresses of the two last known by the Club.  Whilst CDP and Durrant deny having received any of those documents, the fact was that CDP happened to decide and managed to make an ex parte application for recusal of the Master on the day just before the hearing of the Joinder Summons resumed.

33.  As to whether the Master should have allowed the application to join Durrant as the 2^nd plaintiff, section 53(1) and (2) of the District Court Ordinance as well as O.62, r.6A of the Rules of the District Court afforded the Club with the statutory basis for the application; and the Master with her discretion.  By the order, the Master never sought to decide whether Durrant should be liable for the costs of this action.  Pursuant to O.62, r.6A(1), it was exactly to enable Durrant to be heard on this question that he was joined as a party.

34.  I should perhaps make this clear: I am not drawing my conclusion on either of the above 2 questions.  I do not have to do so, because there is simply no appeal from that decision of the Master before me.  For the present purpose, it suffices for me to say that there were indeed materials before the Master that entitled her to come to her decision then.

35.  If CDP or Durrant takes the view that the Master’s decision is wrong, the venue for setting it aside or even appeal subject to the rules was open.  In any event, suggesting that the Master’s decision was wrong and liable to be set aside is one thing; suggesting that the Master was biased is quite another.

36.  According to the court record, the court did not receive CDP’s letter dated 28 March 2012 until the following day when the Joinder Summons was heard.  On the same day, Master T Chan replied that CDP had to substantiate the allegation of bias if it intended to pursue the request presumably as an application for her recusal.

Up to the order dated 30 April 2012

37.  On 14 April 2012, CDP filed a summons to striking out the defence of the Club (“CDP’s Striking Out Summons”).  Once again, CDP decided to take out such summons 2 days before hearing of the Club’s Striking Out Summons would resume on 16 April 2012.

38.  CDP was absent from the hearing on 16 April 2012.  Master T Chan adjourned the hearing to 30 April 2012.  Again, such decision cannot be criticised and was in no way adverse to CDP or Durrant.

39.  On 26 April 2012, CDP’s Striking Out Summons was first heard.  Registrar C Lee adjourned the summons to be argued together with the Club’s Striking Out Summons on 30 April 2012.  Both summonses would therefore be heard by Master T Chan.  The questions to be decided under the 2 summonses intertwined.  The decision of Registrar C Lee to have both summonses considered at the same time accorded with sensible case management.

40.  On 27 April 2012 (Friday) and prior to the resumed hearing of the Club’s Striking Out Summons and CDP’s Striking Out Summons on 30 April 2012 (the following Monday), CDP filed another summons (“CDP’s Latest Summons”) as follows:

“Motion to set aside all rulings made by Master Chan and Master Lee when both parties were not present in court.

Master Chan had already exhibited a bias to the defendant, while Master’s action clearly show that the defendant is being given favourable treatment with Master Lee standing down the case and having his clerk call the defendant to remind them to attend the court in case they forgot.

Motion to have DCCJ 12/12 moved to a different Master.  Masters Chan and Lee has both been shown by their actions to favour RHKYC.”

41.  On 30 April 2012, the Club’s Striking Out Summons and CDP’s Striking Out summons were heard.  CDP, represented by Durrant, was present.  Master T Chan took the opportunity to first deal with CDP’s application for her recusal.  Master T Chan formally refused the application contained in CDP’s letter dated 28 March 2012.

42.  CDP’s Latest Summons contained a similar application, which had been scheduled to be heard on 14 May 2012.  Master T Chan, on her own motion, brought forward the determination of the part of that summons concerning the same request for her recusal.  She dismissed that part of the summons, before further adjourning the determination of the Club’s Striking Out Summons and CDP’s Striking Out Summons at the same time to 20 June 2012.

43.  Was there circumstance by then that suggests or might suggest bias on the part of Master T Chan?  Clearly there was none.  Regarding all those hearings prior to 30 April 2012 from which CDP and Durrant were absent, CDP and Durrant could make no real observation about the Master except for the orders and decisions made.  Whether it was an order adjourning the summonses for argument or the order joining Durrant as a party, they served to preserve the reasonable opportunity of CDP and Durrant to be heard.

44.  The suggestion that Master T Chan “had already exhibited a bias” to CDP or Durrant by the time of CDP’s Latest Summons is in my view unfounded.  In my judgment, a fair-minded observer informed of the history of legal proceedings would not observe any possibility of bias.

Hearing on 30 April 2012

45.  On the hearing of this appeal, no further evidence, other than evidence as to matters which have occurred after the date on which the order was made, may be received except on special grounds: O.58, r.1(4).  Nevertheless Durrant filed an affirmation in support of the present appeal.

46.  Besides complaining about the decision of the Master at the hearing of the Joinder Summons in his absence, Durrant stated the following in the first 3 paragraphs of the affirmation:

“Tracy Chan – your actions have shown you unworthy of any title or honorific. Carpe Dien doesn’t know if your corrupt, incompetent, biased, racist … or a combination of all but it does know and understand that’s you’re not impartial.

You too know you’re not impartial, and you spent 30-45 minutes thumbing through the plaintiff motions looking for a reason to show you aren’t biased and justly staying on the case and ruling against Carpe Diem.

Do you know what it feels like every time Carpe Diem attends a hearing presided over by you Tracy Chan.  It feels like Carpe Diem is the third person on a date.  At the last hearing you and the defendant’s lawyer were so busy fawning over each other the court could have been on fire and you wouldn’t have noticed.  If you want to spend so much time pleasing YY Ho, get a room!”

47.  Durrant was apparently making his observation about the Master’s conduct at the hearing on 30 April 2012.  The language was harsh and personal.  As mentioned, the applications by CDP and Durrant had to be founded on events and matters by the time when the applications for the recusal of the Master were taken out and thus well before that hearing.  But if considered, what Durrant stated in the above paragraphs of his affirmation, in my judgment, would objectively be regrettable in the eyes of any fair-minded observer who is informed of the history of proceedings discussed above.

CONLUSION AND ORDER

48.  For the above reason, I see no justification for the complaint about bias on the part of the Master.  It follows that the application for the recusal of the Master must fail.  The appeal is therefore dismissed.  The order of the Master dated 30 April 2012 stands.

49.  As to the costs of the present appeal, I see no reason why costs should not follow the event.  The present appeal is devoid of merits.  Using the language it did in its affirmation apparently without hesitation is, in the circumstances, tantamount to an affront to the court.  That exceeded legitimate and proper conduct of legal proceedings.  The Club had to attend the hearing of the appeal and to incur costs as a result.  I consider this to be an appropriate case for the exercise of discretion in favour of an indemnity costs order.

50.  I therefore make an order that the Club shall have its costs of and occasioned by this appeal in any event.  Costs shall be taxed on an indemnity basis, if not agreed.  This order as to costs is nisi; but shall become absolute in the absence of application (by summons) within 14 days to vary.

WHAT HAPPENED AFTER 30 APRIL 2012

51.  CDP’s Latest Summons was last heard on 14 May 2012.  Master Pang had to determine the remainder of CDP’s application by that summons (given that Master T Chan has already brought forward and disposed of the part concerning her recusal).

52.  At the end of the hearing, Master Pang: (i) dismissed the application to set aside the order of Registrar C Lee dated 16 February 2012 and that for his recusal; and (ii) adjourned the application to set aside the order of Master T Chan dated 29 March 2012 (i.e., the joinder of Durrant) to be argued before Master T Chan on 20 June 2012.  As mentioned, that is the date when the Club’s Striking Out Summons and CDP’s Striking Summons will also be heard.