SZETO YUK LIN v. KANTON LTD AND OTHERS

HCMP 251/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 251 OF 2016

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RULING

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INTRODUCTION

1.  This is about the application of the plaintiff (“P”) for leave to appeal against the Judgment of this court handed down on 6 October 2017 (“the Judgment”) ordering that the proceedings of P’s Originating Summons[1] (“the OS”) be continued as if it had been begun by writ.[2]

2.  The background of the case has already been given in the Judgment which I will not repeat.  Unless otherwise stated, in this document the same abbreviations are adopted as those used in the Judgment.

RELEVANT LEGAL PRINCIPLES

3.  The test for granting leave to appeal from interlocutory matters is well-settled and not in dispute.  Leave to appeal shall not be granted unless (a) the appeal has a reasonable prospect of success; or (b) there is some other reason in the interests of justice why the appeal should be heard: s 14AA(4), the High Court Ordinance (Cap 4).  It is also well‑established that reasonable prospect for this purpose involves the notion that the prospects of succeeding must be reasonable, and therefore more than fanciful, without having to be probable: Wynn Resorts (Macau) SA v Mong Henry.[3]

4.  In case a ground of appeal is levelled at the exercise of the court’s discretion, the well‑known principles in Hadmor Productions Ltd v Hamilton[4] would apply in that the appellate court is not to exercise an independent discretion of its own.  It must defer to the judge's exercise of his discretion and must not interfere with it merely upon the ground that the members of the appellate court would have exercised the discretion differently.  The function of the appellate court is initially one of review only: Wong Luen Hang & Anor v Chan Yuk Lung & Ors.[5]

5.  An appeal against the case management decision of the court is a type of an appeal against its exercise of discretion.  Case management is pre-eminently within the province of the trial judge.  The appellate court would only interfere with a trial judge’s case management decision if it was plainly wrong, and had caused significant injustice or prevented a fair trial of the issues: Wong Kar Gee Mimi v. Severn Villa Ltd[6]and generally Hong Kong Civil Procedure 2018, Volume 1, at §59/0/55.

PROPOSED GROUNDS OF APPEAL

6.  In short, P’s proposed grounds of appeal boil down to the following complaints:

(1)  this court erred in holding that the factual disputes raised by D2 to D5 “would preclude or prevent” it from determining any of the questions raised in the OS without first having resolved those factual issues;

(2)  this court erred in holding that the factual disputes are substantial and would affect the determination of the existence or otherwise of the privity of interest/estate in the land amongst the owners of the 29 car parking spaces;

(3)  this court erred to reject P’s contention that the factual disputes raised by the defendants are irrelevant to the determination of the questions posed in the OS;

(4)  as regards the question about the existence of otherwise of the privity of interest/estate in land,[7] this court erred in failing to appreciate that (i) the OS is essentially a construction summons; (ii) for the purpose of determining the questions posed the scope of evidence admissible is restricted; and (iii) all the relevant evidence had already been before the court, so that this court ought to have held that none of the factual disputes raised by the defendants would be relevant;

(5)  as regards the enforceability or otherwise of the privity of interest/estate in land,[8] this court ought to have held that the defendants’ contention of “wavier” and “estoppel”, being defences in equity operate in personam, do not constitute a defence to P’s enforcement of her rights under an expressed covenant;

(6)  alternative to (5) above, since the parties have already filed their respective affirmation evidence and that no further evidence should be allowed, this court ought to have, without further ado, ordered that the OS be set down for a hearing with a direction that the deponents of the affirmations be cross-examined;

(7)  this court erred in holding that the factual disputes raised by the defendants were issues of fact rather than issues of law, so that the directions for filing of pleadings would not assist in the determination of those issues;

(8)  as regards P’s claim in relation to the creation of 6 additional car parking spaces by D6 in the common area, this court erred in holding that P’s questions about the alleged breach of the DMC and the entitlement and duty of D6 to enforce the DMC[9] were lacking in clarity and particulars and would cause embarrassment to the defence;

(9)  upon this court refusing D6’s application for leave to file and serve further affirmation out of time, the questions of whether the DMC contains any terms to enable P to enforce against D6 and whether P has any common law right to enforce her right are matters of law which should not and need not be specified in P’s affirmation.  Further, instead of ordering pleadings to be filed, this court should have either dealt with the relevant questions[10] in the Originating Summons pursuant to O 28 r 4(1) of RHC or directed a shorting hearing to deal with those; and

(10)  this court erred in holding that the assessment of damages would involve issues of fact and even if it does, it would not preclude the termination of the questions posed in the OS.  Furthermore, the order made by Master K Lo granting leave to P to amend the relief sought has the effect of ordering a split trial on liability and quantum.

CONSIDERATION

7.  I am grateful for the written submissions from the parties as well as their oral submissions in court, all of which I have carefully considered. 

8.  As a general remark, with the greatest respect I am unable to see any prospect, not to say a reasonable prospect, of success in any of the proposed grounds of appeal.  The fallacy of the proposed grounds of appeal lies in the fact that the OS is not just a construction summons as P portrays it to be in the draft notice of appeal.  As already pointed out in the Judgment, P’s causes of action against the defendants include those which are based on common law, breach of DMC and breach of statutory duties, all of which are fact-sensitive. In the present application for leave to appeal, Mr Chong conveniently ignores those aspects of P’s claim as if they were not there.  Some of proposed grounds of appeal also entail a misreading or even distortion of the Judgment.  It also needs to be pointed out that the hearing which led to the Judgment was only about the defendants’ application for “converting” the OS proceedings into a writ action.[11]  That hearing was simply not occasion for the determination of the merits of the defendants’ proposed defences or to resolve any factual disputes.  Lastly, P’s proposed appeal is in reality a challenge to the discretion of this court in making a case management decision. 

9.  Having made the general remarks about, I now turn to each of the proposed grounds of appeal. 

As to Ground 1

10.  This ground in the draft Notice of Appeal is a bare complaint with no argument advanced in support.  With respect, Mr Chong’s submissions go no further than the mere assertion that:

“Having regard to the contents of the draft Notice of Appeal, it is submitted that P’s proposed appeal has an arguable case with a reasonable prospects of success, with good reasons in the interest of justice for her proposed appeal to be heard.”

11.  With respect, there is simply nothing to show, even remotely, how this court has erred as P asserts.

12.  Besides, it has to be pointed out the ground entails a distortion of what in fact was said in the Judgment.  It was not a holding of this court that the factual disputes raised by D2 to D5 “would preclude or prevent” it from determining any of the questions raised in the OS without first having resolved those factual issues. 

13.  At §15 of the Judgment, this court said that one of the major issues raised by the defence application was whether there could be shown on the available evidence genuine or substantial issues of facts between the parties”. Reference was made to the Hong Kong Civil Procedure 2017 at §28/8/2 where the learned editor says,

“Order 28, r.8 confers a flexible case management power on the court. It is a discretionary power and does not specify or limit the possible reasons for the court to exercise its discretion … although the usual reason … is that there can be shown on the available evidence genuine or substantial issues of facts which require to be adjudicated …”

14.  Clearly, the presence of substantial factual disputes is a factor to be taken into account when exercising the court’s discretion.  However, there is no requirement that the factual disputes must go to the extent of either “precluding or preventing” the court from determining the dispute between the parties before it could properly exercise its discretion.  At §12 of the Judgment, this court cited Anna Dorothea Erna Lungershausen & Another v Thomas Joseph Dillon, Jr^[12] where DHCJ Muttrie pointed out that the onus is on the applicant to show that it will be “just and convenient” to make the order.  It has never been Mr Chong’s submission that the latter case is wrongly decided.  

15.  In the present case, this court found, at §16 of the Judgment, that the case did entail a number of factual disputes and some of them were even raised by P herself. At §17, this Court agreed with D3 that the factual disputes between the parties were substantial.  This court took the factual disputes into account.  Then at §18 of the Judgment, this court explained why it rejected Mr Chong’s submissions that the factual disputes were irrelevant.  Having put everything into the balancing scale, this court decided to exercise its discretion in favour of the defence by ordering conversion. 

16.  In all the circumstances, this court is unable to see how it can be said that it is plainly wrong for this court to exercise its discretion in the way it did.

As to Ground 2

17.  This is again a bare complaint without giving any details or any arguments advanced to enlighten this court as to why it is said that this court erred.

18.  In the circumstances, I am unable to see any merits in this ground.

As to Ground 3

19.  This is again a bare complaint with no details or arguments.  Nothing further of substance has been given in the written and oral submissions made on P’s behalf.

As to Ground 4

20.  This ground is based on the false premise that the OS is a “construction summons” and it also totally ignores the other aspects of P’s claims in the OS which are based on common law, the alleged breach of DMC and the alleged breach of statutory duties.

21.  I can see no merits in this ground.

As to Ground 5

22.  This ground fails to appreciate that the hearing before this Court was only about the defence application concerning a procedural aspect rather than for determination of the substantive rights of the parties. As such, this Court had not been invited by any party to rule on the availability of the defences of “wavier” and “estoppel” to the defendants and had heard no submissions on that issue.  This ground also fails to take into account the aspects of P’s claim which are based on the common law and the alleged breaches of DMC and statutory duties.

23.  In any event, Mr Chong has not referred this Court to any case authorities to the effect that “wavier” and “estoppel” could not in law amount to any defence to a right based on a covenant contained in an assignment.  On the other hand, there appears to be case authorities to the contrary including Attorney General of Hong Kong v Fairfax Ltd[13] and Jumbo Gold Investment Ltd v Yuen Cheong Leung & Another.[14] For the present purpose, in the absence of the benefit of any submissions from the parties, it is neither necessary nor desirable for this court to express any firm view on this matter.  The point is that the non-availability or otherwise of the proposed defences is not as cut and dry as Mr Chong now seems to contend.  It also suffices for me to say that the point is simply not yet ripe for determination whether by this court or the Court of Appeal. 

As to Ground 6

24.  With respect, this ground is based on a number of highly questionable premises and none of them can be valid, namely that:

  (a)   the defendants had already filed all the evidence they have got to file support their defence for “wavier” and “estoppel”;

  (b)  there would have been a bar to the defendants filing further evidence, whether of fact or of expert opinion, for the proceedings, had the matter not been converted to a writ action; and

  (c)   the fact that this court had disallowed a belated application from D6 for an extension of time to file an affirmation for the defence application for conversion should logically lead this court to also refuse the conversion application. 

25.  This ground also conveniently ignores the other reasons given in the Judgment for ordering conversion, namely that the factual disputes between the parties could not be resolved solely on the affirmation evidence which had already been filed, that cross-examination of the deponents alone (as suggested by P) would not be satisfactory in the circumstances and that P’s claim was lacking in clarity and particulars and would cause embarrassment to the defence.

26.  As regards Mr Chong’s reliance on the CJR principles which encourage expeditious resolution of disputes, with respect he fails to take into account the fact that P herself had not taken any action between 2012 and 2016. Moreover, the time factor should also be balanced against the need for P to provide sufficient particulars for her claim in order to limit the scope and to facilitate the conduct of the trial. 

27.  In short, this ground has no prospect of success at all.

As to Ground 7

28.  With the greatest respect, I can see how it can be said that this court erred in characterizing the matters identified and listed out in §§16 & 17 as dispute of facts. 

29.  This ground is misconceived.

As to Ground 8

30.  It has to be pointed out that it was not the holding of this court that Questions (d) and (e) of the OS would cause embarrassment to the defendants as this ground seems to suggest.  Instead, what this court said at §21 of the Judgment was that,

“With respect, I agree with the submissions of D3 and D6 that P’s claims, in particular those based on the alleged breach of implied terms of the DMC and common law, are ill-defined and lack sufficient particulars so that they would cause embarrassment to the defendants in preparing the defence” (Emphasis supplied)

31.  The difference is significant.  In view of the ambiguous way in which the OS is drafted, coupled with the confusing information given in P’s affirmation, P’s claim in relation to the 6 additional car parking spaces are apparently not restricted to an action under the DMC and the Building Management Ordinance, but is also based on common law. The confusion is further illustrated by Question (f) of the OS where P asks:

“(f) If answer (c) above is in the negative, whether the creation and use of the said car parking spaces constitute trespass upon that part of the said land lots on which the said new car parking spaces have been parked and used and that the Plaintiff, as a co-owner of the said land lot, is entitled to purge the said trespass by herself in irrespective s.16 of the Buildings Management Ordinance.” (Emphasis supplied)

Let it be reminded that Question (c) is couched in the following terms:

“(c) If answer to (a) is in the negative, whether the plaintiff, as the owner of the said 4 car parking spaces, has the right against the remaining owners of the 25 car parking spaces for ingress and egress from the said 4 car parking spaces as a right: —

(i) implied under the Deed of Mutual Covenant of 23.5.1960; and/or

(ii) under common law.” (Emphasis supplied)

32.  Furthermore, with respect, not only has Mr Chong conveniently ignored what was said in the Judgment, but that he has also failed to advance any arguments to show how any of the following reasons which this court gave at §21 (a)-(d) of the Judgment are incorrect:

“(a) there is no clear identification of the term that, P said, is implied in the DMC;

(b) the nebulous common law right is left opaque and similarly the alleged easement right;

(c) it is ambiguous and obscure, from a reading of the Amended Originating Summons and P’s affirmations, as to whether D6 is only sued in relation to the creation of the 6 additional car parking spaces or whether it is also sued in relation to P’s alleged access right to Nos 1 – 4. The confusion arises from, among other things, the following paragraph in P’s 1^st affirmation:

“33. The IO, as the incorporated owners performed its role as the person managing, inter alia, the 29 car parking spaces by causing and allowing free ingress from the said 4 car parking spaces.  There was a Caretaker’s Office on the Lower Ground Floor through which the IO managed, inter alia, the use and enjoyment of the 29 car parking spaces and the position is the same as now-a-days.”

The paragraph quoted above seems to suggest that D6 should has a role to play in the enforcement of the covenant or in assisting P to access her car parking spaces. D6 should not be required to engage in guesswork but is entitled to know with certainty as to what case it is asked to meet; and

(d) as to the claim of damages:

(i) there is no plea or clarity in the Amended Originating Summons as to the cause of action or basis supporting the claimed damages or as to the breaches giving rise to the damages;

(ii) it is entirely unclear whether the claim for damages is based on contract and/or tort; and

(iii)   no particulars have been given about the claimed damages apart from a bland description.”

33.  In short, this ground has no merits.

As to Ground 9

34.  On the hearing on 7 September 2017, this court refused a belated application from D6 for an extension of time to file an affirmation which was way out of time.[15]   

35.  As to this, I agree with the submission of D3 that:

(1)  the decision to refuse leave to D6 to file and serve its affirmation out of time formed part of the overall decision made by this case on the various case management matters before the court on that day and should be seen in that context and not viewed in isolation by P.  Thus, the decision to convert to writ means that D6 is not by reason of that refusal shut out from providing a witness statement in due course and defending the case against it; and

(2)  Mr Chong’s present submission that the case against D6 was so simple that it might be decided summarily at the call over hearing has never been previously advanced on P’s behalf before, is contradicted by the content of P’s own proposed Directions[16] and cannot be taken seriously; and

(3)  P had never before raised the possibility that this Court should have directed a summary determination of the claim against D6 at a separate short hearing from the main OS. On the contrary, when this court asked on whether P saw the claims against D1-5 and D6 as linked, Mr Chong specifically stated that P did not want to separate the two claims.

36.  In view of the above, this ground is devoid of merits.

As to Ground 10

37.  It is difficult to decipher what P means in this ground.  It appears that she is asserting that this court was precluded from relying upon the issue of damages as a ground for the conversion in that no factual dispute arises in respect of the claim for damages because either the damages aspect is purely a matter of law or, if it involves matters of fact, those factual matters are already directed to be dealt with by a Master.

38.  In the Amended OS,[17] P simply posed the question:

“(g) If answer to any of the questions (a) to (f) above be in favour of the Plaintiff’s contentions, whether the Plaintiff would be entitled to damages to be assessed by a Master in Chambers for loss of use of Car Parking Spaces Nos. 1 to 4;”

39.  However, this ground utterly fails to address this court’s finding on the “lack of clarity and particularity” regarding the damages claim at §21(d) of the Judgment (reproduced at §32 above) as one of the reasons for ordering conversion.

40.  Secondly, as pointed out by D3, it is fundamentally wrong for P to suggest that determining issues such as the entitlement to unspecified damages or the existence of loss or the quantum of the same will be purely a matter of law entailing no factual considerations.

41.  Thirdly, according to D3, in granting P leave to amend Master Lo specifically stated in oral reasons that any actual issue as to whether there should be a split trial would be a matter for case management in due course, ie, no substantive decision was made by the Master on that aspect.  Thus the Master’s Order self-evidently does not (nor could it in the circumstances) grant any relief for split trial.  The above has been referred to in D3’s Skeleton filed for the purpose of the hearing before this court on 7 September 2017 which led to the Judgment.  In the Reply Skeleton filed on P’s behalf on that occasion,[18] P did not seek to contradict the state of affairs set out by D3 or to assert that the split trial aspect had already been determined by the Master. 

42.  In the circumstances, there is simply no substance in the assertion that “the very nature of Master K Lo’s order was to ensure that there would be a split trial on liability and quantum under Order 33 rule 3 and 4 RHC”.  This ground not only has failed to address fully (if at all) this Court’s reasons for ordering conversion, but it also entails a distortion of the Master’s Order and is most regrettable.    

CONCLUSION

43.  Based on the above, the grounds of appeal, whether taken as a whole or individually, do not give rise to any prospect of success, not to say a reasonable prospect of success.  Besides, this court can see no reasons for exercising its discretion to grant P leave to appeal. 

44.  Therefore, P’s application is dismissed.

APPLICATION FOR EXTENSION

45.  In the Judgment, it was ordered, among other things, that P was to file and serve her Statement of Claim within 28 days from the date of the Judgment (which was 6 October 2017).  P is yet to comply with the Order and the original time limit for her to do so had expired.   

46.  At the hearing of the present application, Mr Chong asked for indulgence.  This court has granted an extension for P to file her Statement of Claim by 5 pm on 15 December 2017. P, through Mr Chong, has agreed to pay the opposing defendants’ costs for the extension.

COSTS

47.  I make an order P is to pay the costs of the opposing defendants, with certificates of counsel (if applicable), for the leave application as well as the costs of the extension, to be assessed summarily. 

48.  For that purpose, I direct that for those of the opposing defendants who are to yet to submit their statements of costs,[19] they are to do so within 7 days from the date of this Judgment.  P is to respond in writing to court, copied to the opposing defendants, within 10 days thereafter.  The Court will then make a summary assessment of the opposing defendants’ costs and handed down its decision.