HONG KONG HOUSING SOCIETY v. THE PERSONAL REPRESENTATIVE(S) OF THE ESTATE OF TONG KWONG WAH, DECEASED AND ANOTHER

DCCJ 3074/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3074 OF 2015

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DECISION

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1.  By her notice of appeal dated 31 May 2017 (“the notice of appeal”), the 2^nd defendant (“SK”) lodges an appeal (“the appeal”) against the order made by Master Rita So on 10 March 2016 (“the decision”), by which the master dismissed SK’s application (“the setting aside application”) for an order setting aside the default judgment obtained by the plaintiff (“HKHS”) on 14 October 2015 (“the default judgment”).

Appeal out of time

2.  In respect of an appeal against a master’s decision, Rules of the District Court (“RDC”), Order 58 rule 1(3) requires:

“Unless the Court otherwise orders, the notice must be issued within 14 days after the judgment, order or decision appealed against was given or made and must be served within 5 days after issue and an appeal to which this rule applies shall not be heard sooner than 2 clear days after such service.” (Emphasis added)

3.  SK’s appeal is an appeal out of time.  The notice of appeal was issued more than 14 months after the decision made by the master.  This clearly contravenes RDC Order 58 rule 1(3).  Unless obtaining extension of time from this court, the appeal is incompetent and cannot be heard.  As said by Lam VP in Chee Fei Ming v Director of Food and Environment Hygiene [2015] 2 HKLRD 906 at [1]:

“Appeals which are brought out of time without first obtaining extension of time are incompetent and such appeals could be struck out on this ground alone.”

Background

4.  On 4 July 2015, HKHS commenced these proceedings against the 1^st defendant (“KW’s Estate”) and SK. HKHS pleaded the following in the statement of claim:-

(a)  At all material times, HKHS is the registered owner of the premises known as Flat F, 25th Floor, Block 7, Broadview Garden, 1 Tsing Luk Street, Tsing Yi, New Territories, Hong Kong (“the Premises”).

(b)  By a tenancy agreement dated 10 December 2001 (“the TA”) entered into between HKHS as the landlord of one part and Mr Tong Kwong Wah (“KW”) as the tenant on the other part, HKHS let the Premises to KW.

(c)  SK’s name was on the schedule to the TA.  Pursuant to clause 4(h) of the TA, SK was permitted to occupy the Premises.

(d)  Pursuant to clause 6(a) of the TA, if the tenant shall fail personally to live at the Premises for a continuous period of more than one month, it shall be lawful for HKHS at any time thereafter to re-enter upon the Premises and thereupon the TA shall be terminated, and a written notice served by HKHS on the tenant or left at the Premises to the effect that HKHS thereby exercises the power of re-entry shall be a full and sufficient exercise of such power.

(e)  KW passed away on 22 April 2010.

(f)  By a notice to quit dated 25 February 2015 addressed (i) to KW’s Estate by both leaving the same at the Premises and sending the same to the Premises by post, and (ii) to the Official Administrator by posting at the Official Administrator’s office, HKHS required KW’s Estate to quit and deliver up vacant possession of the Premises to HKHS on or before 31 March 2015.

(g)  By the service of the writ, HKHS has terminated the TA and re-entered the Premises.

(h)  Despite repeated demands, KW’s Estate and/or SK has failed to deliver vacant possession of the Premises to HKHS.

5.  HKHS claims against KW’s Estate and SK for possession of the Premises and mesne profits.

6.  On 17 July 2015, SK filed a notice of intention to defend.

7.  Subsequently, no defence has ever been filed by SK.

8.  On 14 October 2015, HKHS obtained the default judgment.

9.  On 10 December 2015, HKHS also obtained a default judgment against KW’s Estate.

10.  On 17 December 2015, SK made the setting aside application.  In the call-over hearing on 22 December 2015 (SK was present in that hearing), the court made it clear to the parties that the substantive hearing would be held on 10 March 2016.  On 10 March 2016, SK did not attend the substantive hearing.  Having considered HKHS’ submissions, Master Rita So dismissed the setting aside application with costs to HKHS.

The principles

11.  The principles concerning the exercise of discretion in granting leave to appeal out of time have been set out in Secretary for Justice v Hong Kong & Yaumatei Ferry Co Ltd [2001] 1 HKC 125, per Le Pichon JA at 127D-128C:

“A convenient summary of the guiding principles which govern how the court should exercise its discretion to extend time may be found in the judgment of Keith J (as he then was) in Chiu Sin Chung v Yu Yan Yan Angela [1993] 1 HKLR 225 at 227 line 37 to 228 line 29:

(i) ‘The rules of court must prima facie be obeyed, and in order to justify a court in extending the time during which some steps in procedure were required to be taken there must be some material upon which the court can exercise its discretion. If the law were otherwise, a party in breach would have an unqualified right to an extension of time which would defeat the purpose of the rules, which is to provide a time table for the conduct of litigation’: Thamboo Ratnam v Thamboo Cumarasamy & Cumarasamy Ariamany [1965] 1 WLR 8 at p 12A-B, applied in Revici v Prentice Hall Inc. [1969] 1 WLR 157 and in Re Adhiguna Meranti [1988] 1 HKLR 410.

(ii) Accordingly, the prerequisite of an application to extend time is a clear statement as to the reasons for the time limits not having been observed and for any delay in then applying for an extension.

(iii) ‘Once the time for appealing has elapsed, the respondent who was successful in the court below is entitled to regard the judgment in his favour as being final. If he is to be deprived of this entitlement, it can only be on the basis of a discretionary balancing exercise, however blameless may be the delay on the part of the would-be appellant’: Norwich & Peterborough Building Society v Steed [1991] 1 WLR 449 at p 454G.

(iv) The factors which are normally to be taken into account in that balancing exercise are (a) the length of the delay, (b) the reasons for the delay, (c) the chances of the appeal succeeding if an extension of time for appealing is granted, and (d) the degree of prejudice to the would-be respondent if the application for an extension is granted: Steed, p 454H.

(v) As for the reasons for the delay, ‘the fact that the omission to appeal in due time was due to a mistake on the part of the legal adviser, may be a sufficient cause to justify the court in exercising its discretion’: Gatti v Shoosmith [1939] 3 All ER 916 at p. 919G. Indeed, in that case, the Court of Appeal extended the time without consideration of the merits at all: the period involved was only a matter of a few days, the appellant’s solicitors had informed the respondent’s solicitors within time of the appellant’s intention to appeal, and the mistake was one ‘which, to anyone who was reading the rule without having the authorities in mind, might very well have arisen’.

(vi) Although the existence of prejudice to a would-be respondent is a ground for refusing an extension of time, the absence of prejudice to a would-be respondent is not a ground for extending the time: Re Adhiguna Meranti, p 411H.

(vii) As for the merits, they will play little part in the balancing exercise if the delay is short and is wholly excusable, but where the delay is substantial and is not wholly excusable, much more merit is required to overcome it: Steed, p 455G-H, distinguishing Palata Investments Ltd v Burt & Sinfield Ltd. [1985] 1 WLR 942 from Rawasdeh v Lane (Court of Appeal (Civil Division) Transcript No 327 of 1988).”

Cited with approval by the Court of Appeal in Chee Fei Ming (supra).

12.  Bearing these principles in mind, I turn to consider whether leave to appeal out of time should be granted to SK.

Length of the delay

13.  The decision was made by the master on 10 March 2016.  Accordingly, in accordance with RDC, Order 58 rule 1, an appeal against the decision has to be made on or before 24 March 2016. However, the notice of appeal was issued on 31 May 2017, more than 14 months after the decision was made by the master.  The delay is substantial.

Reasons for the delay

14.  SK claims that she did not know anything after the hearing on 10 March 2016, and hence she only lodged this appeal in 2017.

15.  HKHS has filed an affirmation of service, in which the server said that he did on 7 April 2016 serve on SK a sealed copy of the order made by the master as a result of the decision by ordinary post.  I have no reason to doubt this deposition.

16.  Even assuming that the envelope contained the sealed copy of the order fails to reach SK, SK still has no satisfactory explanation for the delay.  The setting aside application was made by SK.  In the call-over hearing on 22 December 2015, the court clearly told the parties that the substantive hearing would be held on 10 March 2016.  SK knew the date of the substantive hearing as she was present in the call-over hearing.  However, SK did not attend the substantive hearing on 10 March 2016. SK must also know that the court would have made a decision on the setting aside application on 10 March 2016.  However, she did not make any enquiry to find out the outcome of the substantive hearing shortly after 10 March 2016, and only issued the notice of appeal on 31 May 2017.

17.  In my judgment, SK has not offered any satisfactory reason explaining the delay.  There is no good reason excusing the delay.

Merits of the appeal

18.  The notice of intention to defend filed by SK on 17 July 2015 is clear evidence showing that the writ had been validly served on SK by that date.  The default judgment was entered against SK on 14 October 2015.  There is no doubt that the default judgment is a regular judgment.

19.  The principles concerning setting aside a regular default judgment are well-known, which have been succinctly summarized by DDJ D Ho in Welltech Construction Materials Ltd v Yeung Ka Wing t/a Hop Lee Vegtable Trading Co. (DCCJ 2993/2014, 29 January 2016) at [8]:

“Where a default judgment has been entered regularly, the power to set aside the same is discretionary and such power is unconditional. The defendant carries the burden to show that he has a real prospect of success. To do so, he must satisfy the court that his case and the evidence that he adduces in support of it is potentially credible and carries some degree of conviction. That is not to say that a defendant who is able to demonstrate a defence which has a real prospect of success has an automatic entitlement to the default judgment set aside. In exercising its discretion, the court will have regard to all relevant circumstances. See: Hong Kong Civil Procedure 2016, §§13/9/12-14.” (Emphasis added)

20.  SK made a statutory declaration on 25 January 2016 with a statement annexed thereto.  As per that statement, SK is putting forward 2 contentions:-

(a)   “Misuse of administration power” and “mismanagement” by HKHS in many situations (“the 1^st contention”); and

(b)   HKHS broke its promise that SK would be entitled as the new occupier of the Premises by going through a simple re-application process (“the 2^nd contention”)

21.  There is no merit in the 1^st contention.  By reason of the matters pleaded in the statement of claim and set out in paragraph 4 above, HKHS is entitled to bring the TA to an end.  HKHS cannot be said of having misused of any administration power or having any mismanagement when it is only exercising its entitlement under the TA to bring the TA to an end.

22.  There is also no merit in the 2^nd contention.  SK has not adduced any evidence showing when and how the promise was made by HKHS to her.  SK has not adduced any document in support of the alleged promise.  On the other hand, HKHS has filed an affirmation opposing the setting aside application, by which HKHS produced the correspondence between HKHS and SK.  From the correspondence, it is clear that no such promise has ever been made by HKHS.

23.  SK refers to an application form dated 13 November 2014, by which SK applied to HKHS for allowing her to be the tenant of the Premises.  Although SK has made this application, there is no evidence showing that HKHS has ever approved the application.  SK cannot derive any assistance from the application form in resisting HKHS’ claim.

24.  In my judgment, SK does not have an arguable defence to HKHS’ claim, let alone a real prospect of success.

Prejudice to HKHS

25.  Once the time for appealing has elapsed, HKHS is entitled to regard the decision as final.  Giving SK’s leave to appeal out of time would deprive HKHS of this entitlement.  This is a prejudice to HKHS.

26.  Further, while existence of prejudice to the respondent is a ground for refusing leave to appeal out of time, absence of such prejudice is not a ground for granting leave.  Even if there is no prejudice to HKHS, this factor itself cannot be a reason justifying leave to appeal out of time.

Refusing leave

27.  Taking all the aforesaid into account, there is no reason justifying an extension of time to SK to allow her to bring this appeal out of time.  Leave to appeal out of time must be refused.

Service of the notice of appeal

28.  Mr Kwok for HKHS submits that the notice of appeal has never been served on his firm by SK, and they only managed to obtain a copy of the notice of appeal by searching the court file themselves.  SK claims that after issuing the notice of appeal, she has sent a copy of the notice of appeal to HKHS’ solicitors by ordinary post.  Mr Kwok says that his firm has not received the mail.  It would not be appropriate for me to make any factual finding on the service issue in the absence of any live evidence and cross-examination.  For the sake of completeness, I record that there is no ruling on whether SK has served the notice of appeal on HKHS. However, this point would not affect the outcome of this hearing.

Disposition

29.  I refuse to give leave to SK to lodge the appeal out of time.  Accordingly, the appeal is incompetent.  I order that the appeal be struck out.

30.  I have heard submissions on costs.  In my judgment, costs should follow the event.  I order that costs of and occasioned by SK’s notice of appeal be to HKHS.  I summarily assess those costs at HK$9,266.

31.  SK was acting in person in the hearing of the appeal and hence the hearing was conducted in punti.  During the hearing, I have explained to SK that this decision would be written in English, as almost all the documents in this case are in English.  If necessary, after seeing this decision, SK may contact my clerk for arranging interpretation of this decision to her by a court interpreter.

32.  I thank Mr Kwok for the assistance provided to the court.