AMERITAX PLUS LTD v. DENICE Y FOSTER-HARRIS AND ANOTHER

DCCJ 3001/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3001 OF 2007

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BETWEEN

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D E C I S I O N

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1.  In enforcement of a monetary judgment, Ameritax Plus Limited (“APL”) and Dirk H Rommeswinkel (“DR”) obtained against Denice Y Foster-Harris (“FH”) an order for cross examination of her as the judgment debtor; and an order prohibiting her from leaving the jurisdiction without satisfying the judgment debt.  FH has applied to set aside the orders.

2.  This is the hearing of FH’s appeal against the Master’s direction on 19 April 2011 for FH’s personal attendance at the hearing of her application to set aside the order for her cross examination then to be held on 21 April 2011.

Background

3.  In 2007, APL commenced the present action against FH, both in her own capacity and in her capacity as the personal representative of her late husband’s estate, for outstanding tax consultancy service charges.  FH counterclaimed against APL and DR, its principal director.  The trial of the case took place in May 2010.  On 20 July 2010, the court gave judgment in favour of APL and dismissed FH’s counterclaim (“the Judgment”).

4.  Pursuant to the Judgment, APL shall recover US$7,500 from FH in her own capacity and US$72,500 from FH in her capacity as the personal representative of the estate of her late husband.  Interest ran from the date of writ until payment at the judgment rate.  FH was ordered to pay the costs of this action to be taxed, if not agreed, with certificate for counsel.

5.  The judgment debt was unsatisfied.  On 6 December 2010, APL and DR (together as “the Judgment Creditors”) applied ex parte and obtained the order for cross examination of her as the judgment debtor (“the O.48 Order”) as well as an order prohibiting her from leaving the jurisdiction without satisfying the judgment debt (“the O.44A Order”).

The O.44A Order

6.  The O.44A Order was in its usual terms, i.e. to last for a period of 1 month unless extended or renewed; and would have no effect if FH makes payment; or provide security or bail in respect of the sum by a surety or sureties.  The order has since been extended and renewed upon the Judgment Creditors’ ex parte applications.

7.  By summons filed on 25 March 2011, FH applied to set aside the O.44A Order last renewed on 2 March 2011.  This summons was dismissed with costs on 30 March 2011.

8.  On 31 March 2011, the Master extended the O.44A Order for 1 month.  It provided that for the order to have no effect, FH should make payment of the judgment sums owed by her in her own capacity and by her as the personal representative of her late husband’s estate respectively with interest pursuant to the Judgment; or alternatively, should provide security or bail by a surety or sureties for such sums.

9.  Since 31 March 2011, FH has made payment into court as security the amount of the judgment sum owed by her in her own capacity together with interest.

10.  On 1 April 2011, FH took out another summons applying to set aside the O.44A Order just extended.  On 8 April 2011, this other summons to set aside the O.44A Order too was dismissed with costs.

11.  The O.44A Order was last extended on 29 April 2011 for 1 month, and shall have no effect if the amount of judgment sum and interest owed by FH in her capacity as the personal representative of her late husband’s estate is paid or security or surety is provided in respect of the amount.

The O.48 Order

12.  As to the O.48 Order, FH was to first appear for cross examination before the Master on 25 January 2011.  She was absent.  The hearing was adjourned to 22 February 2011 and further to 19 April 2011.  By summons filed on 31 March 2011, FH through her solicitors applied to set aside the O.48 Order.

13.  The O.48 hearing was resumed on 19 April 2011 together with the hearing of FH’s summons to set aside the O.48 Order.  FH was absent from the hearing.  The Master adjourned the hearing of the summons to set aside to 21 April 2011; and the actual O.48 hearing (that is, if the order survives the application to set aside) to 21 June 2011.  She also directed with penal notice that the personal attendance of FH in court on both dates would be required.

14.  On 21 April 2011, the hearing of the summons to set aside the O.48 Order resumed.  FH was absent; but instead instructed her solicitors to take out a notice of appeal against the Master’s order made on 19 April 2011.  In view of the absence of FH and the appeal, the Master further adjourned the hearing of the summons to 11 May 2011.

The appeal

15.  As an appeal from the Master under O.58 of the Rules of the District Court, this is supposed to be a rehearing of the application before the Master.  However, what is being challenged is the direction that the Master gave for the further conduct of the proceedings in the application to be heard.  That was a matter of case management.  For her present purpose, FH needs to show that the Master has no power to give the direction or she has exercised the power erroneously in giving such direction.

16.  FH takes no issue about the direction for her personal attendance at the actual O.48 hearing.  She clearly could not take such issue.  Her present appeal concerns only the direction for her personal attendance at the hearing of her application to set aside the O.48 Order then to be held on 21 April 2011.

17.  The following arguments are advanced on behalf of FH:

(1) The application to set aside an ex parte order is an inherent right of any person who was subject to the order made in his or her absence.

(2) The application to set aside is made pursuant to O.32, r.6 of the Rules that contains no specific requirement for the personal attendance of a litigant who is legally represented.

(3) The discretion should be exercised in favour of not requiring the personal attendance of FH at the hearing of the application to set aside.

18.  Before considering the above arguments, I should mention a few things.

19.  First, an order or a direction, once made by the court and unless and until it is stayed or overturned, remains such that the party subject to it has to comply with.  That was the situation as at 21 April 2011.  Filing an appeal on that day did not change that.  Nevertheless, FH was absent.  With doubt, that was non-compliance with the subsisting order of the court.

20.  Second, as I understand from the court’s record, and confirmed by the parties today, the solicitor for FH invited the Master to proceed to hear and to determine the application to set aside on 21 April 2011, notwithstanding the absence of FH.  If allowed to proceed, FH would have effectively been excused from complying with the previous order of the Master, even without having to determine the appeal just lodged and now before this court.  Obviously and, I say, rightly, the Master refused to do so.

21.  Third, the Master’s direction with penal notice was for FH’s personal attendance at the hearing on 21 April 2011, not generally.  FH defaulted.  The outcome of the present appeal in respect of that direction cannot undo what was in the past.  This renders the present appeal academic at least partly.

22.  Turning to the arguments advanced in this hearing, I do not think there is any dispute as to the right of the party subject to an order obtained ex parte to apply to have it set aside.  It is also true that there is no specific requirement under O.32, r.6 or generally for the personal attendance of a party who is legally represented at a hearing.

23.  But the fact that a litigant may appear by legal representatives does not render the court powerless in making direction for the personal attendance of the litigant in a hearing if necessary.

24.  FH has been absent from the court on a number of occasions, contrary to the order of the court.  According to the affirmations, FH blames it on (i) the service of court orders and documents by the opposite party; (ii) impairment of personal judgment due to confusion upon her arrest for alleged assault to the person serving documents on her; (iii) mere inadvertence; and (iv) bereavement delaying her travel arrangement to the court.

25.  In view of the above background notwithstanding the fact that FH was legally represented, I would not be surprised if the Master saw fit to require the personal attendance of FH to enable any message or direction of the court to get across to her face-to-face.  In the event that the Master decides against FH on her application to set aside the O.48 Order, the Master may well take the opportunity to consider whether any further directions should be given, again in the presence of FH, for the O.48 hearing to be held and which she must attend.  These, I think, were what the Master was entitled to do.

26.  For the above purpose, and unlike the actual O.48 hearing, the direction for penal notice to be served for securing the personal attendance of FH at the hearing of the application to set aside might be one step further.  In view of the history of this matter, I can understand why the Master decided to take that step.

27.  The court is empowered to specify the consequence of non-compliance with the court’s order made during interlocutory application pursuant to O.32, r.16B.  It is difficult to see why the court somehow lacks the power to specify the consequence of non-compliance when giving directions for the further conduct of proceedings in an interlocutory application.  However this normally would not take the form of a penal notice.

28.  The solicitor for FH drew my attention to the fact that FH has since the end of March 2011 made payment into court of sums sufficient to satisfy the judgment debt owed in her own capacity together with interest.  There is said to be no basis for the O.48 Order against her in her capacity as the personal representative of her late husband’s estate.

29.  The merits of the application will be argued and heard by the Master on 11 May 2011; and I do not intend to comment on the argument.  It suffices for me to say that they are not relevant to whether the Master was right in directing for FH’s personal attendance at the last hearing of the application to set aside.

Conclusion and order

30.  I see no fault in the Master’s exercise of the discretion in requiring FH to personally attend the last hearing of the application to set aside on 21 April 2011; but would allow the appeal to the extent that the penal notice for securing such attendance of FH on that date is set aside.

[Parties submit on costs]

Costs

31.  FH could hardly be considered as the successful party in the appeal. The fact was that she defaulted in complying with a subsisting direction of the court.  The appeal is academic at least partly.  Indeed the penal notice to secure her personal attendance at the hearing on 21 April 2011 was set aside.  But the point is that no lesser compliance would have been expected of FH, whether she had been subject to a penal notice or not.

32.  FH is to pay APL’s costs of and occasioned by this appeal, summarily assessed at HK$10,000 and payable within 14 days.