LAI CHEUNG TEXTILES LTD v. CHINA PROFIT ENTERPRISES LTD

HCA 2346/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2346 OF 2003

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J U D G M E N T

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1. The parties appeared before me in a 3-minute summons hearing. The Defendant applied for an extension of time to file and serve a Defence and Counterclaim. Mr. Kwok for the Defendant told me that the Defence was ready but needed some final polishing before filing. He asked for 7 days instead of 14 days as stated in the summons.

2. I understood from the parties' submissions that the Plaintiff did not have strong objection to the extension of time but it was a matter of costs that they wanted to obtain my ruling. Accordingly I granted an order for three days' extension as the Defendant was ready within a short time. I must say it is not right for the Defendant to ask for a time more than enough. When Mr. Kwok applied to the other side he asked for 7 days only, I do not see why he asked for 14 days in the Summons. Was it for the mere fact that he had to apply to court he was entitled to more? This is definitely a wrong attitude. The case has to proceed according to the time-table laid down in the Rules. The Defendant is asking for indulgence. The Court must exercise its discretion reasonably. It should not be used as a way to delay the proceeding. Accordingly I make the order above mentioned. As to costs I reserved my decision and indicated that I would give a ruling later which I do now.

3. The parties were well prepared for argument on the subject. They produced correspondences as evidence. The hearing lasted for about half an hour. Mr. Yuen for the Plaintiff explained to me that the statement of claim was a simple one: it was for an outstanding balance of the price of goods sold and delivered for the period from 20 November 2002 to 27 March 2003 amounting to $1,201,339.80. Master Jack Wong had on the previous occasion granted an extension of 21 days. Mr. Yuen submitted that the present application was a second extension. He had by letter agreed to the extension subject to costs but the solicitors for the Defendant failed to respond within time and it led to further costs being incurred which the Defendant refused to pay.

4. As shown in the chronology prepared by Mr. Yuen, on 12 August 2003 when the time granted by Master Wong was about to expire Mr. Kwok for the Defendant telephoned Mr. Yuen to ask for consent for a further extension of 7 days from 13 August 2003, i.e. the last day given by Master Wong for filing of the defence. In response to such request, on 13 August 2003 Mr. Yuen for the Plaintiff wrote to the Defendant upon the following terms:

" Your proposal for extension of time to file your client's Defence for 7 days with no order as to costs is not acceptable.

We reiterate that we are prepared to grant extension of time to your client to file its Defence for 7 days from today provided that your client shall pay our client costs in the sum of HK$800.00 forthwith. If you agree, please let us have your draft Consent Summons for consideration.

If we do not hear from you by 5:00 p.m. today, the above offer will lapse automatically."

5. From the above quoted passage, I understand that the Defendant did not offer payment of any costs to the Plaintiff. The Defendant should have known the difficulty that the Plaintiff solicitor had to face. On 18 July 2003, i.e. the 27th day after service of the Writ, Mr. Yuen was instructed to serve 2 clear days' notice pursuant to Order 19 Rule 8A of the Rules of High Court. This indicated that the Plaintiff was very anxious to press ahead with its claim. Mr. Yuen being very reasonable instead of serving a 2 days' notice gave time until 24th July 2003 for filing. This I regard as the 1st extension, though a short one, as the time he gave was beyond the statutory prescribed period. Master Wong's extension of 21 days should be the 2nd extension.

6. The Defendant's request for 7 more days after Master Wong's is the 3rd extension. No matter how reasonable the request for the 3rd extension might have been and in fact, Mr. Yuen was prepared to grant the extension, he had to take instruction thereon.

7. Who should bear the costs for this extra work? The Defendant requested for the other side's indulgence and should have paid such costs. In my judgment the Plaintiff would have refused the request as the Defendant did not intend to bear any costs at all.

8. Mr. Yuen had taken instruction from his client and agreed to an extension of 7 days. According to the letter, Mr. Yuen imposed three conditions for the extension:

Consent Summons

9. It is the practice of this court that extension of time can be given by endorsement of the consent at the back of the document for filing. No formal consent summons or order is required.

Costs for the consent

10. It is not difficult to assess how much it may require for taking instructions and giving consent. Occasionally one may have a very difficult and unreasonable client; this factor should be disregarded. One should consider costs and work performed under the normal circumstances. For the purpose of taxation the work may cover the following items:

In my judgment $400 is a reasonable amount for giving consent under the normal circumstances described above. I find the Plaintiff's demand for $800 is high.

Time limit for reply

11. Mr. Yuen imposed a time limit for reply i.e. by 5:00 p.m. on the day of the letter. I was told that Mr. Kwok for the Defendant had been engaged elsewhere and the letter did not come to his attention until about 7:00 p.m. He immediately accepted the terms and faxed a letter to Mr. Yuen.

12. On the next day, Mr. Yuen replied that the acceptance was too late and he had drafted the papers for application for judgment in default of defence. However, he agreed to give the extension provided that the Defendant paid the costs of $1,500 instead of $800.

13. I find that it was unreasonable for the Plaintiff to take such step in the circumstances of the case. The Plaintiff knew full well that the Defendant had a defence and considered it reasonable to give an extension of time for its filing but yet proceeded to draft papers for default judgment: I regard this as a waste of client's costs and solicitor's time. I will not allow the costs spent thereon.

Service of document

14. Mr. Yuen also explained why he had to impose a time in dealing with the solicitors for the Defendant in this case. He had very bad experience in dealing with the Defendant's solicitors. As stated in paragraph 5 above Mr. Yuen gave a 6-day notice instead of 2 clear days' warning pursuant to Order 19 rule 8A. The Defendant's solicitors did not appreciate this and suddenly in the evening of 22nd July 2003 at 6:30 p.m. served a summons requesting for extension of time returnable at 9:30 a.m. the next day. Mr. Yuen had left the office. Fortunately the partner of his firm was able to contact him; otherwise, he would have missed the attendance.

15. In my view the measures that the Defendant should have taken under such circumstances are:

16. The principle is that the Defendant should not take any unfair advantage because of the other side's absence due to short notice. The Defendant solicitor had not taken any of (a) to (d) measures to ensure that the other side was aware of the application. Mr. Yuen submitted that having such bad experience he had to be very careful about time to avoid another 11th hour application by the Defendant, he imposed a time limit. This is understandable.

Conclusion

17. Since my letter of 15 April 2003 to the President of the Law Society for circulation urging parties to agree as far as possible without resorting to application to Court, the High Court Registry has seen a reduction in the number of applications for extension of time. The letter has left a number of questions open, for example, what is a reasonable sum to offer? I hope that this decision will serve as some guidance.

18. As to the costs for the application for extension, the Plaintiff should have been entitled to $400 as stated in paragraph 9 above. The Defendant had agreed to pay $800 but because of the unreasonable demand by the Plaintiff he had to take out the summons and attend court. Having considered all the circumstances of this case I find it right that each party should pay its own costs for the summons. Accordingly I make the order.

19. I am considering whether I should make an order that the respective solicitors should be responsible for the costs personally. If I have decided to invoke Order 62 rule 8(2), I shall give the solicitors concerned an opportunity to appear before me and show cause why such orders should not be made.