SING SING ENGINEERING CO LTD v. SWEE KHENG BUILDING MATERIAL CO LTD

HCA 1694/2017

[2018] HKCFI 2508

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1694 OF 2017

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JUDGMENT

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The present application

1.  This is an appeal from the decision of Master Chow dismissing the defendant’s summons that leave be granted for the affirmation of Lin Boon Yong filed on 16 March 2018 be adduced as evidence in the plaintiff’sOrder 14 application filed on 27 December 2017.

The procedural background

2.  The Statement of Claim in this matter was filed on 19 July 2017 and the Defence filed on 1 September 2017.  Thereafter the Statement of Claim was amended on 27 December 2017 and a Summary Judgment application filed on the same day returnable on 15 January 2018.  The application was supported by the affidavits of Park Chul Soo filed the same day.

3.  Subsequently by consent Master Lai made an order dated 12 January pursuant to which the defendant was granted a 28-day extension to file its defence, the hearing fixed for 15 January 2018 was vacated and the summary judgment application was adjourned for argument with three hours reserved.

4.  The defendant issued a summons dated 8 February 2018 pursuant to which Master Johnny Ma gave directions for the filing of evidence in connection with the Order 14 summons.

5.  The defendant needed further time and by consent Master S Kwang made an Unless Order dated 2 March that the defendant file and serve its affirmation opposition by 4 pm on 16 March 2018. This is the Order which is the subject of the present application.

The background facts

6.  The material facts can be stated shortly.  The defendant who was subject to the Unless Order served the affirmation of Lin Boon Yong at 4:09 pm on 16 March.  This much is now conceded, although it was thedefendant’s case until CCTV coverage was produced showing the exact time that its clerk had arrived at the plaintiff’s solicitors that the affirmation in question had been served on time.  That is the position taken in both the first and second affirmations of Wong Shuk Wan of 30 April 2018 and 17 May 2018.  Subsequently in the affirmation of Mak Chi Kin served on 31 May 2018, there was produced a still capture from CCTV which established beyond argument that service was affected at 4:09 pm.

7.  The time since then has been consumed by consideration of whether this 9-minute failure to comply with the letter of the Unless Order is fatal to the defendant’s case in terms of its adducing the evidence in question for the purposes of resisting the plaintiff’s Order 14 summons.

The plaintiff’s position

8.  The plaintiff’s submission can be broadly stated as relying strictly on the defendant’s now admitted failure to serve the affirmation by 4 pm on 16 March.  The plaintiff relies on Order 2, rule 5 of the Rules of the High Court and specifically on the statutory requirement, as Mr Lee put it, that there must be an explanation given for any delay, and as he put it in his skeleton at paragraph 6:

“ … nothing in their affirmations provide a shred of explanation as to why they had failed to serve the affirmation on time.”

9.  The plaintiff’s also contend the defendant’s failed to make the appropriate application (pursuant to Order 2, rule 4) within 14 days of its failure to comply with the Unless Order.

10.  Mr Lee for the plaintiff goes further and suggests that Master Chow was correct in her decision in concluding that:

“ … There is simply nothing in the affirmations filed on behalf of the Defendant to demonstrate that the failure to comply with the Unless Order was unintentional.”

11.  Mr Lee says this is because the defendant’s position in their affirmations has always been that they had complied with the Unless Order; that I accept but that is also surely an explanation for their not having seen the need to explain a failure of which they say they were not aware.

12.  Mr Lee submits that the sanction of an Unless Order applies automatically on breach and an application for relief must be brought within 14 days and that was not done here; it is said that they delayed for 45 days notwithstanding that the plaintiff’s solicitors had informed them immediately that service had been effected late.

13.  Faced with this admitted failure to make a timely application for relief and the strict and automatic operation of the Unless Order, Mr Leesubmits that the defendant’s case must fail, and the court cannot justifiably exercise its discretion in the defendant’s favour.

The defendant’s position

14.  The defendant’s position is on the evidence that they thought they had complied with the terms of the Unless Order and they did not accept that the affirmation had been filed late, and this notwithstanding the terms of the plaintiff’s solicitors’ letter of 16 March which read as follows:

“ Dear Sirs,

HCA 1694/2017

We write to put on record that the affirmation of Lin Boon Yong affirmed on 13 March 2018 was only served on us at or about 4:12 pm today.

All our clients rights are expressly reserved.”

15.  Mr Wong submits that in retrospect the defendant’s lawyers should have responded to that letter to refute the position unequivocally or sought to take out an application from relief for the Unless Order, but be that as it may they did not do so and it was the defendant’s case that they believed that the affirmation had been served on time and further that they did not appreciate that the defendant’s would seek to exclude this evidence.  When they received the hearing bundles for the Order 14 hearing from the plaintiff’s solicitors on 30 April they immediately issued the present summons supported by Wong Shuk Wan’s first affirmation.  There was then some toing and froing in terms of the evidence, to which I have alluded, culminating in Mak Chi Kin’s affirmation filed on 31 May with the captured CCTV still timed at 4:09 pm on 16 March.

16.  Thus it is the defendant’s case that it was not clear to them that the plaintiff’s were serious about taking the point they have since they believed in good faith that service had been effected on time.  When the position became clear on 30 April they acted promptly to seek relief.

17.  I would only add that it is at best unfortunate that wherever thefault lay, the Order 14 proceedings, contemplated by the plaintiff as urgent, should have been delayed as long as they have and so much money and effort spent in seeking to resolve the responsibility and liability for this breach of the Unless Order.

18.  I do not believe that there is any doubt about the applicable principles where relief is sought from court imposed sanctions such as the Unless Order in this case.  The relevant principles are set out in Order 2, rules 4 and 5.

19.  It is clear that no application for relief was taken out within 14 days notwithstanding the plaintiff having first indicated that it was reserving its right on the basis that the affirmation was served at or around 4:12 pm.  Mr Wong accepted this and whilst taking the point that the defendant’s took a different view at the time concedes that the plaintiff’s solicitors should have done more.  As a result I am faced with having to decide now whether relief should be granted retrospectively taking accountof this failure and the now admitted fact that service occurred nine minutes late.

20.  I need therefore to consider the factors set out in Order 2, rule 5(1) against the background that the application for relief must be supported by evidence as required by sub-rule (2).

21.  First the interests of justice.  I have no doubt that the interest of justice so far as the plaintiff’s summary judgment application is concerned is that the court should have all the relevant evidence before it. That is the best way of securing a just resolution of the present dispute in accordance with the substantive rights of the parties.

22.  Second is the requirement that the application be made promptly.  Clearly there was a significant delay from the time the plaintiff’sfirst indicated by letter of 16 March that they reserved their rights on the basis that the application was served at 4:12 pm.  At the time, as the evidence subsequently filed shows, the defendant took the view that the affirmation had been filed on time and their clerk confirmed as much to them.  Absent anything other than the plaintiff merely reserving his rights and given the conflict of evidence I would not allow this to be the overriding factor in the exercise of my discretion notwithstanding the defendant’s having fairly conceded that in retrospect the defendant’s lawyers should have done more when faced with this letter.

23.  Thirdly, I have to consider whether the failure was intentionaland contumelious.  Mr Lee says there is no evidence on which I can reach a decision on this and that the court cannot extrapolate from the objective circumstances to do so.  I find that a difficult submission to accept.  The facts clearly show that the defendant had consented to be subject to the time limit under the Unless Order, had prepared the affirmation in time, hadgiven it to their clerk at some time around 1 pm for service and had thought it was served by 4 pm as indeed the clerk confirmed to them subsequently.  Even accepting that it was filed at 4:09 pm I do not see how I can sensiblyconclude that such delay was intentional and logic forces me therefore to theconclusion that it was unintentional.  I am, as I say, confirmed in this view by the evidence suggesting that the clerk told the defendant’s solicitors that service had been affected by 4 pm.

24.  Fourth is the question of whether there has been any adequateexplanation for the delay, and this is the nub of the plaintiff’s opposition to the defendant’s application.  The plaintiff’s say that no explanation has been given and I have considerable sympathy for this view.  The position can however be explained, as I have said, by the fact that until Mak Chi Kin’s affirmation served on 31 May, the position was unclear but Mr Lee says that even after that in Wong Shuk Wan’s third affirmation there is no explanation provided and instead he there seeks a pragmatic solution and instead takes the forensic point that the original notice of reservation of rights was itself inaccurate because of the discrepancy between its statement that service was affected at or around 4:12 pm and the irrefutable evidence of the CCTV still that it was in fact 4:09 pm.

25.  Mr Lee says that I am not in a position to exercise my discretion in relation to this because the requirement for an explanation is covered by the statutory requirement set out in Order 2, rule 5(2): “the application for relief must be supported by evidence.”

26.  Insofar as there is evidence filed by the defendant I think it amounts to this.  The affirmation was given to the clerk at around 1 pm.  The expectation/belief was that it was filed on time.  When it became clear there was an issue on timing, the clerk confirmed that it had been served on time but otherwise had no recollection of events it having been an ordinary day.  I believe that the evidence does demonstrate at least some reasons for the delay namely that the clerk failed to serve it on time but told the solicitors that he/she had done so; thus I feel I am in a position to consider this in the exercise of my overall discretion.

27.  The fifth consideration is the extent to which the party in default has complied with the other rules and court orders.  Here I do not think past failures to comply with court orders rise to the level of a history on the part of the defendant’s of failure to comply with, and persistent disregard of, court orders as Mr Lee submits and so I do not think this is material for the exercise of my discretion.

28.  Sixth in the question of whether the failure was the fault of the defendant or another person.  In relation to this Mr Wong has urged upon the court that the defendant relied on its lawyers such that any failure was theirs and should not reflect on the bona fides of his client.  I have no doubt that the defendant relied on its lawyers and I note only that this reinforces my view that the defendant’s failure to comply strictly with the deadline was unintentional.

29.  The seventh and eighth circumstances required to be considered in sub-paragraphs (g) and (h) of rule 5(1) are not relevant here.

30.  I then have to consider the effect the failure has had to date on each party.  Whilst as I have said the delay and expense to date is regrettable, much of that can be dealt with by an appropriate costs order.

31.  Finally I turn to the effect which it would have on the parties going forward.  I am satisfied that it is in the overall interest of justice that the court on the summary judgment application should have all relevant evidence before it.

32.  In all of the circumstances therefore I do not believe there was an intention to ignore or flout the Unless Order and I find the failure to comply with it was the result of genuine extraneous circumstances such that the failure to obey is not contumelious.

33.  In the exercise of my discretion I must have regard to the interest of justice and whilst I accept this cuts both ways I think that to exclude the defendant’s right to be heard on the Order 14 application outweighs the failure strictly to comply with the terms of the Unless Order given the facts which have been established.  In reaching this conclusion I am conscious of the fact that the parties are agreed that, by allowing this evidence to be filed and the plaintiff an appropriate right of reply, there will be no prejudice to the hearing date which is set for January 2019.

34.  Accordingly in the exercise of my discretion I grant the defendant’s application for relief from the strict requirements to comply with the Unless Order and from their failure to make an application in respect of this within 14 days of its date.  In all circumstances, I order costs in the cause.