XCHRX TMC (INT'L) TRADING CO. LTD. v. SHYE LIAN (H.K.) MANUFACTURING CO. Ltd.

1994, No. A7666

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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REASONS FOR DECISION

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(Published with agreement of the parties)

1. On 28th April 1995, a Master ordered that the Plaintiff's Order 14 summons be adjourned to a date to be fixed "on condition that the Defendant do pay the sum of HK$750,000 into court within 28 days from the date hereof" and went on to give a timetable for the filing of further affidavits. The Defendant appealed against the condition imposed by the Master. On 16th May, I allowed the appeal and said I would put my reasons in writing. These are the reasons.

2. The Plaintiff's summons was fixed for hearing on 30th January. On that day, it was adjourned for argument to 28th April. By summons dated 18th April 1995, the Plaintiff applied to add a second plaintiff and to amend its statement of claim. That summons was also to be heard on 28th April. On 28th April, the Defendant, as I understand, did not seriously oppose the Plaintiff's application but asked for the Order 14 summons to be adjourned to enable it to grapple with the new issues raised by the Plaintiff which included a plea of an oral agreement. The Master allowed the Plaintiff's application and granted an adjournment of the Order 14 summons upon the condition which is the subject of this appeal.

3. For the Defendant, Miss Wong said that the Master's decision to make a payment into court a condition of an adjournment was wrong in principle. She accepted that, upon the hearing of an Order 14 summons, the court can inter alia grant leave to defend conditional upon a payment into court. She said that it is premature, however, for such a condition to be imposed when a defendant has not yet had an opportunity to consider what material to rely on and place before the court. The condition, she said, creates a hurdle for the Defendant before it can defend the Order 14 application.

4. Miss Wong said that, during the hearing below, the Plaintiff had drawn attention to an order of Keith J. who in Action 8631/92 adjourned a trial upon an undertaking by the defendant to pay a sum of $800,000 into court, failing which the plaintiff would be at liberty to enter judgment. She pointed out that Order 35 r. 3 permits a judge to adjourn a trial upon such terms as he thinks fit. She said that there is no such provision in relation to the adjournment of a summons. Order 32 r. 4(1) merely provides for a summons to be adjourned either generally or to a particular date as may be appropriate. Accordingly, the Master lacked power to impose such a condition which, in any event, was unfair to the Defendant.

5. For the Plaintiff, Mr. Hung made 3 points. First, he said that it is accepted that the court may impose such a condition upon the hearing of an Order 14 summons. He maintained that there is no difference in principle between an application for judgment under Order 14 and an application for an adjournment thereof. He said that, after hearing submissions upon the evidence than available, the court may find itself in the same grey area as on the hearing of the Order 14 application proper. That is to say, the court is almost satisfied that a defendant is simply playing for time or otherwise abusing the court's procedure, but feels that there might just be some merit in the application for adjournment. At the same time, the court can be of the view that the plaintiff's case, at least in part, is virtually unanswerable. In those circumstances, it would be proper in the exercise of its discretion for the court to impose a condition that a sum is paid into court.

6. Second, Mr. Hung noted that a trial judge has power to adjourn a trial on terms. Again, he said there is no distinction in principle between such an adjournment and an adjournment at an interlocutory stage. He pointed out that an interlocutory application can be just as heavy, and sometimes more so, as a trial.

7. Finally, Mr. Hung submitted that a court has an inherent jurisdiction to control its process. He referred to 37 Halsbury's Laws of England 4th Ed. para.14 and in particular:

"For the court may exercise its inherent jurisdiction even in respect of matters which are regulated by statute or rule of court ... and it may be exercised even in circumstances governed by rules of court. The inherent jurisdiction of the court enables it to exercise (1) control over process by regulating its proceedings, by preventing the abuse of process and by compelling the observance of process ..."

8. Accordingly, said Mr. Hung, a court has a wide discretion to ensure a party is not abusing the procedure of the court and may take appropriate steps to prevent abuse which go beyond anything already prescribed by rules. He said that Order 14 r. 4 and Order 35 r. 3 are essentially manifestations of the court's inherent jurisdiction.

9. I am unable to accept Mr. Hung's argument. I think it unlikely that the inherent jurisdiction of the court enables the court to impose on a party a condition which has the effect of pre-judging an issue with which a party is asking for an opportunity to grapple. No doubt that is why the rule making authority thought it proper to make provision for a condition of this nature upon the hearing of an Order 14 application. If it was felt that express provision was needed where a defendant has had full opportunity to lay his case before the court, a fortiori where the application is for the express purpose of being able to put a full case before the court. The absence of such an express provision in relation to the adjournment of a summons is, to my mind, strongly suggestive that the power to impose such a condition simply does not exist, inherently or otherwise.

10. In any event, I do not accept that there is room for the "grey area" position for which Mr. Hung argued. On an application for an adjournment, it should shortly be apparent whether the applicant is disadvantaged and needs more time or whether he is simply playing for time. It should equally shortly be possible to discern whether, in relation to Order 14 proceedings, a plaintiff has a strong case. If so, that is factor the court can weigh in deciding upon the bona fides of the applicant.

11. In my view, the court has ample powers for preventing abuse when an adjournment is sought. First, the application can be refused. If it is felt that the application ought to be granted, it can be granted on terms as to costs, those costs falling according to perceived merits. A strict timetable can be laid down, coupled where appropriate with an unless order, to ensure minimum delay.

12. In the circumstances, I allowed the appeal and set aside the condition imposed by the Master. I declined Mr. Hung's application to review the evidence in order to determine how I would have exercised my discretion in case of a successful appeal by the Plaintiff. That seemed to me to be a thoroughly sterile exercise.

13. I ordered that the Defendant should have the costs of the appeal in any event.