鄧錦祥 v. 鄭鄧錦容

CACV 370/2019

[2020] HKCA 194

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 370 OF 2019

(ON APPEAL FROM HCSD 20/2019)

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

1.  This is a late application by the respondent for security for costs in respect of an appeal which has been scheduled to be heard on 13 May 2020. The application was only made after the hearing date had been fixed. The summons was taken out on 20 January 2020 whilst the appeal was brought by a notice of appeal served on 9 August 2019.

2.  The appeal is brought against a decision (by Deputy High Court Judge MK Liu) on 16 July 2019 refusing to set aside a statutory demand.  The statutory demand itself was based on taxed costs awarded in favour of the respondent in a set of administration proceedings HCMP 147/2008.  The final judgment in those proceedings (by Deputy High Court Judge S Leung on 26 August 2013) had been upheld on appeal in CACV 185/2013 on 23 December 2015. 

3.  The statutory demand was issued on 15 April 2019.  In refusing to set aside the statutory demand, DHCJ Liu also made an order authorizing the respondent to present a bankruptcy petition. 

4.  The applicant acted in person.  The appeal was set down on the same date, viz 9 August 2019, when the Notice of Appeal was served and filed.  Since then, the progress of the appeal has been monitored by the Court and directions were issued from time to time for the proper preparation of the appeal.

5.  He issued a summons for leave to adduce fresh evidence on 23 October 2019.  By a letter of 31 October 2019, solicitors for the respondent indicated that they had no objection to the admission of fresh evidence).  Permission was therefore given by the Registrar of Civil Appeals (“RCA”) on 5 November 2019 to include the so-called new evidence in the appeal bundle.

6.  Appeal bundle was approved by the RCA on 2 December 2019. 

7.  Pursuant to the direction of the RCA, the applicant made an application to fix date for the hearing of the appeal on 11 December 2019.

8.  Solicitors for the respondent wrote to the RCA on 12 December 2019 giving comments on the applicant’s estimate length of the appeal, listing of the appeal before bilingual judges and setting out the dates which were not convenient to the respondent for the hearing of the appeal (the dates are in December 2019, January and February 2020).

9.  Notably, there was no indication in the letter of 12 December 2019 that the respondent intended to apply for security for costs.

10.  The RCA gave directions for lodging of appeal bundles on 13 December 2019.  On 23 December 2019, the applicant lodged 3 sets of appeal bundles in accordance with the directions of the RCA.

11.  On 24 December 2019, the RCA directed a date be fixed for the hearing of the appeal before three bilingual judges.  The hearing date was fixed accordingly by the Listing Officer on 9 January 2020.  Notice of hearing was issued to the parties on 10 January 2020.

12.  Thus, by 24 December 2019, the applicant has done most of the preparation works for the hearing of the appeal.  The only outstanding work would be the lodging of skeleton submissions and list of authorities in accordance with Practice Direction 4.1.  That should take place 28 days before the hearing, viz 15 April 2020. 

13.  It is against the above background that the late application for security for costs is to be considered. 

14.  The solicitors for the respondent first raised the question of security for costs in a letter dated 7 January 2020 sent to the applicant.  In the letter, security in the sum of $100,000 was sought.

15.  There was no positive response to the request. The summons was taken out on 20 January 2020, supported by an affidavit made by the solicitor and a draft bill in the total sum of $247,812.

16.  Practice Direction 4.1 paragraph 33 reminds practitioners and litigants that interlocutory applications in an appeal should be made promptly after an appeal has been brought.  There are good reasons for this requirement of promptitude. 

17.  In this jurisdiction, since the Civil Justice Reforms and the implementation of Practice Direction 4.1 in December 2016, the Court of Appeal and the RCA proactively engage in the case management of our civil appeals.  One of the aims of such efforts is to procure the fair and expeditious determination of an appeal in this court. 

18.  With most of the interlocutory applications being processed on the papers, we are now able to have a first available hearing date[1] for a civil appeal within 6 months from the listing appointment.  In the present appeal, the date was fixed on 9 January 2020, and a hearing date of 13 May 2020 was assigned to the case. 

19.  Practice Direction 4.1 set out at Section E the usual procedure for the processing of interlocutory applications in the Court of Appeal.  The automatic directions in para 36 prescribe the steps to be followed.  The timeline provides in that paragraph is as follows:

(a)  Evidence in support should be filed together with the summons; and then there is 14 days for the opposition evidence to be filed and another 7 days for evidence in reply.  Thus 21 days is required before evidence is closed;

(b)  After close of evidence, an applicant would have 14 days to lodge bundle and submissions.  An opposing party would have another 14 days to lodge submissions in opposition.  The applicant has 7 days to lodge submissions in reply.  Thus altogether 35 days for these rounds of submissions;

(c)  Hence, there is a lead time of 56 days for all the papers in respect of an interlocutory application to be lodged so that the court can start work on it.  

20.  The court usually decides the application on the papers.  However, there are still occasional instances where the court will direct oral hearing pursuant to para 36(12). 

21.  It must also be mentioned that the caseload in our Court of Appeal is extremely heavy and the number of judges who processed paper applications are limited.  A substantial portion of the works of our appellate judges is the processing of applications on the papers.  Thus, it would be unrealistic to expect our judges to process an interlocutory application immediately upon the filing of all the papers.

22.  The requirement in paragraph 33 of PD 4.1 aside, our case law also mandated that application for security for costs in an appeal should be made as soon as possible after an appeal has been brought.  The court may exercise its discretion to dismiss late applications on the ground of delay only: see Lily Cheung v Cheung Wai Kwok CACV 154 and 156/2015, 23 September 2016; Pangma Dambar Dhoj v Dragages Hong Kong Ltd [2018] HKCA 130. 

23.  The timing of an application for security for the costs of appeal is important because:

(a)  The appellant may have already incurred time and costs in the preparation of an appeal which could have been avoided if the security for costs application is made at an early stage;

(b) The appellant should be given reasonable time to come up with the security and a late application would likely to cause disruption if the date of hearing of an appeal has been fixed.

24.  These considerations are engaged in the present instance.  As mentioned, substantial preparation has been done by the applicant for the appeal. 

25.  Further, given the time frame for the processing of the security for costs application, it is almost inevitable that the hearing date of the appeal have to be re-fixed.  As mentioned, skeleton submissions should be lodged by the applicant by 15 April 2020. 

26.  As it happened, the last round of submissions in this application was lodged on 3 April 2020. 

27.  Though we processed the application with exceptional expedition in this particular instance, there is simply inadequate time to allow for the provision of security before the deadline for lodging skeleton submissions for the substantive appeal.

28.  This is implicitly acknowledged by solicitors for the Respondent in their skeleton submissions in which they sought to have the hearing date of the appeal vacated. 

29.  Hearing date of an appeal is a milestone date and the court would not vacate the same lightly.  A late application for security for costs is not a proper reason for doing so. 

30.  Solicitors for the respondent put forward several excuses for the delay in the application.  Having considered them, we are of the view that they do not provide justification for the late application.  In light of the history on the progress in the management of the appeal and the directions given by the RCA mentioned above, there is no reasonable basis for the alleged expectation of any further preliminary hearing under paragraph 78 of PD 4.1.  The application for the lodging of fresh evidence had been resolved in November 2019.  The dealing with another appeal in HCA 795/2019 could not provide a valid reason for not taking out this application earlier. 

31.  At the very least, solicitors for the respondent should alert the RCA that they intended to mount an application for security for costs when they were asked to comment on the application to fix a date for the hearing of this appeal.  They did not do so and no explanation has been given for such glaring omission.

32.  Whilst the time taken for the filing of evidence in respect of the application has been prolonged by virtue of the General Adjournment Period of the court occasioned by the COVID-19 situation in Hong Kong[2], it could not give rise to a justification for the late application.  Had the respondent made the application soon after the commencement of the appeal in August 2019, the court would not have fixed a date for the hearing of the appeal before the determination of the application.  The unfortunate prolongation of the process due to GAP is incidental to the late application, the responsibility for which must lie with the respondent.

33.  For these reasons, we dismiss the summons of 20 January 2020 and order the respondent to pay the costs of the applicant in the application.  Such costs are to be taxed after the determination of the appeal.

34.  The appeal will be heard as scheduled on 13 May 2020.  If GAP is continued beyond 13 May 2020, the appeal will be processed in a mode as the Court shall further direct.    

35.  In light of this judgment, litigants and their legal representatives should bear in mind the duty to proceed with promptitude in making interlocutory applications in an appeal.  Failure in such regards can be a ground for exercising the relevant discretion against entertaining such application, particularly in cases where the hearing date of an appeal will be disrupted or where the progress of the substantive appeal will be unreasonably delayed.  As a general guidance, it will be advisable for all interlocutory applications to be made (and preferably determined) before application is made to fix a date for hearing of the appeal.

36.  We also wish to reiterate that solicitors and litigants owe a duty to the court to provide information on outstanding or intended interlocutory applications when applications are made for fixing date or when asked to comment on such applications.  RCA will be more robust in procuring such information from the parties for effective case management of civil appeals.  Parties are obliged under Order 1A Rule 3 to assist the court in such case management exercise.