XCHRX CHARTER VIEW HOLDINGS (B.V.I.) LTD. v. CORONA INVESTMENTS LTD. and Another

1995 No. A8190

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

_______________

_______________

_______________

J U D G M E N T

_______________

1. On 10th September, I ordered the Plaintiff to provide further security for the Defendants' costs in the sum of $1.1m. I directed that it be provided within 28 days, and I ordered that the action be stayed in the meantime. The security was not provided, and on 24th October Master Kwan ordered that unless the security was provided within 7 days the Plaintiff's action would be dismissed. The security was still not provided, and on 14th November the Plaintiff's action against the Defendants was dismissed with costs.

2. In the meantime, the Plaintiff had on 29th October filed a Notice of Appeal from the "unless" order of 24th October. It had also, on 1st November, filed a summons asking for its time for the provision of security to be extended until after the determination of the appeal. The summons of 1st November was dismissed, but the appeal filed on 29th October is before me today.

3. A director of the Plaintiff, Pang Kwok Sum, and an employee of the Plaintiff, Chan Hung Kong, apply today for the hearing of the appeal to be adjourned. The reason is because the Plaintiff is without solicitors. The reason for that is that on 25th November Mr. Registrar Betts made an order declaring that the Plaintiff's solicitors had ceased to be the solicitor acting for the Plaintiff in the action. Mr. Pang and Mr. Chan tell me that they have been in touch with other solicitors, but so far no decision has been made as to whether those solicitors are prepared to accept instructions to represent the Plaintiff on terms which are acceptable to the Plaintiff.

4. Technically, the Plaintiff's solicitors are still on the record. That is because Ord. 67 r. 6(1) provides that

"unless and until the solicitor

(a) serves on every party to the cause or matter... a copy of the order, and

(b) procures the order to be entered in the Registry, and

(c) leaves at the Registry a copy of the order and a certificate signed by him that the order has been duly served as aforesaid,

he shall...be considered the solicitor of the party till the final conclusion of the cause or matter whether in the Court of First Instance or Court of Appeal."

An inspection of the court file reveals that none of these three conditions have been fulfilled. [Since delivering this judgment, it has been drawn to my attention that the order had been duly served, and that the appropriate certificate had been filed in the Registry on 8th December. However, that certificate had not reached the court file by the time I inspected the file on the date when judgment was delivered.]

5. The fact of the matter, though, is that the Plaintiff is today without the benefit of legal representation because the Plaintiff has not yet managed to retain new solicitors. Should in those circumstances the appeal be adjourned? In my opinion, it should, but only if the appeal has an arguable chance of success.

6. On that question, it is to be noted that there is no appeal from the order of 10th September requiring the Plaintiff to provide further security for the Defendants' costs. The appeal is only in relation to the "unless" order. There can be no complaint about the dismissal of the action if the security is not provided. Accordingly, the only question on the appeal relates to the time which the Plaintiff should have to provide security. On that issue, no evidence has ever been filed by the Plaintiff as to why it had not provided the further security by 24th October or by when it would be in a position to provide the further security. In those circumstances, and having regard to the Plaintiff's previous delays in prosecuting the action (which included the making of two previous "unless" orders), Master Kwan cannot be faulted for making the order which she did.

7. Accordingly, although this appeal is in the form of an appeal from the "unless" order, it is in substance an application to permit the Plaintiff to have more time to provide the security despite the "unless" order. When I asked Mr. Pang and Mr. Chan how much extra time the Plaintiff needed, I was told that the Plaintiff has cash flow problems, it has other financial commitments, and it is doubted whether the Plaintiff will be able to fund the provision of security until after the Lunar New Year, unless its bankers agree to provide the Plaintiff with additional finance.

8. In the recent case of Lessy S.A.R.L. v. Pacific Star Development Ltd. (CA 157/97), the Court of Appeal referred to the guidance given by the Court of Appeal in England in relation to "unless" orders in Hytec Information Systems Ltd. v. Coventry City Council, "The Times", 31st December 1996. The guidance which the Court gave in the Hytec case was as follows:

" 1. An 'unless' order is an order of last resort, not made unless there is a history of failure to comply with other orders. It is the party's last chance to put its case in order.

2. Because it is the last chance, a failure to comply will ordinarily result in the sanction being imposed.

3. The sanction is a necessary forensic weapon which the broader interests of the administration of justice requires to be deployed unless the most compelling arguments are advanced to exonerate the failure.

4. It seems axiomatic that if a party intentionally flouts the order he can expect no mercy.

5. A sufficient exoneration will almost invariably require that he satisfies the court that something beyond his control has caused the failure.

6. T he judge will exercise his judicial discretion whether to excuse the failure in the circumstances of each case on its own merits, at the core of which is service to justice.

7. The interests of justice require that justice be shown to the injured party for procedural inefficiencies causing the twin scourges of delay and wasted costs. The need for the public administration of justice to contain those blights also weighs heavily. Any injustice to the defaulting party, though never to be ignored, comes a long way behind the other two."

The Court of Appeal concluded that no such guidance had been given by the Court of Appeal in Hong Kong. It was hoped that consideration would be given to the possibility of giving such guidance, but in the meantime practitioners were suggested to bear in mind the guidance given in the Hytec case.

9. Having considered all the circumstances of the case, and having giving due weight to what Mr. Pang and Mr. Chan have told me today, I have not discerned any circumstances which would justify the court in not permitting the "unless" order to take its course. In those circumstances, the Plaintiff's appeal has, in my view, no realistic chance of success. Since there is no point in adjourning the hearing of an appeal which has no realistic chance of success, I decline to adjourn the hearing, and it follows that the Plaintiff's appeal must be dismissed.