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HCMP 1593/2014
[2021] HKCFI 441
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
MISCELLANEOUS PROCEEDINGS NO 1593 OF 2014
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IN THE ESTATE of CHIU KEUNG, deceased
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and
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IN THE MATTER of the net sale proceeds of No 4 Derby Road, Kowloon Tong, Hong Kong
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and
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IN THE MATTER of Order 85 of the Rules of the High Court (Cap 4A)
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BETWEEN
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DARACH E. HAUGHEY and LAI KAR YAN (DEREK)
(the Joint and Several Administrators
of the Estate of the deceased) |
Plaintiffs |
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and
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LAM MUI
(in her own capacity and in the capacity as the Administratrix of CHIU SHUET LAN) |
1st Defendant |
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CHIU HIU HUNG
(as the Administratrix of CHIU SINN KEI) |
2nd Defendant |
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CHIU SIN KUEN |
3rd Defendant |
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CHIU ANTHONY SIN KA
(in his own capacity and in the capacity as the Administrator of CHIU SHUET LAN) |
4th Defendant |
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CHIU HING SHEUNG |
5th Defendant |
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CHIU SHUET FEI |
6th Defendant |
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Before: Hon Au-Yeung J in Chambers
Date of Hearing: 10 February 2021
Date of Decision: 22 February 2021
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D E C I S I O N
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A. INTRODUCTION
1. On 8 June 2017, this Court gave judgment ordering, amongst others, that the cash of about HK$39 million in the hands of the Administrators should be distributed to D2 (“Hiu Hung”) solely (“the Judgment”). There were also orders on costs and directions on distribution of the estate. D4-6 appealed to the Court of Appeal but the appeal was dismissed in 2018. Over 3 years since the Judgment, the Plaintiffs (“Trustees”) have not distributed the money to Hiu Hung.
2. On 30 June 2020, Hiu Hung issued a summons for distribution of monies out of the estate subject to payment of costs to the beneficiaries and the Trustees pursuant to the Judgment (“1st Summons”). She later issued a summons for amendment to the 1st Summons on 21 August 2020 (“2nd Summons”). These shall collectively be called (“the 2 Summonses”).
3. The parties filed a consent summons on directions for disposal of the 2 Summonses. On 31 August 2020, this Court directed the Trustees to file and serve an affirmation in opposition within 28 days, with the rest of the directions adjourned until the Court has read the Trustees’ affirmation.
4. After 2 time extensions to the Trustees (twice over 5 months), Master Kot directed that unless the Trustees do file and serve an affirmation in opposition to the 2 Summonses by 4:00 pm on 7 December 2020 (“unless order”), the Trustees would be barred from adducing affidavit evidence.
5. On 7 December, Sit, Fung, Kwong & Shum (“SFKS”), solicitors acting for the Trustees, filed 2 affidavits, namely the 4th and 5th affidavits of Darach E Haughey (“DEH-4th” and “DEH-5th” respectively). Only DEH-5th, which was filed at around 4:40 pm and served on D2’s solicitors at 5:07 pm, was in breach of the unless order.
6. Before me is a summons by the Trustees for relief against sanction in respect of DEH-5th (“Relief Summons”), supported by DEH-6th.
7. The Trustees did little to go through the checklist in Order 2, rule 5 of the Rules of the High Court in DEH-6th or in SFKS’s submission but rely on the following grounds to seek relief:
(1) The breach of the unless order was not intentional. (ground 1)
(2) The delay would not have significantly prejudiced the interests of D2. (ground 2)
(3) The Trustees were required to file and serve 2 affidavits in opposition to 2 sets of summonses taken out by Hiu Hung and it involved a significant workload. The Trustees had to revise and finalize the draft DEH-5th in the afternoon of 7 December 2020, which led to delay in execution, filing and service of that affidavit. (ground 3)
(4) The Trustees had to locate documents dated over 10 years ago and it took longer time than originally expected. The relevant staff had resigned. (ground 4)
8. D2 did not take a contentious stance but has drawn to the Court’s attention the procedural defaults of the Trustees in this application and their lack of explanation.
B. LEGAL PRINCIPLES
9. Under Order 2, rule 4,
“Where a party has failed to comply with a … court order, any sanction for failure to comply imposed by … the court order has effect unless the party in default applies to the Court for and obtains relief from sanction within 14 days of the failure.”
10. Under Order 2, rule 5(2), an application for relief from sanction must be supported by evidence. Under Order 32, rule 1, “… every application in chambers not made ex parte must be made by summons, and where, under the provisions of these rules, such summons must be supported by affidavit, such affidavit shall be filed at the same time as the summons.”
11. The relevant circumstances for the Court’s consideration are set out in Order 2, rule 5(1).
12. Non-compliance with the rules shall be treated as an irregularity, which the Court has the discretion to cure on terms of costs or otherwise as it thinks fit: Order 2, rule 1.
13. Once a court order is disobeyed, the imposition of a sanction is almost always inevitable if court orders are to continue to enjoy the respect which they ought to have: Global Torch Ltd v Apex Global Management Ltd (No.2) [2014] 1 WLR 4495, §23, Lord Neuberger.
14. It is difficult to have much sympathy with a litigant who has failed to comply with an unless order when the original order was in standard terms, when the litigant has been given every opportunity to comply with it but has failed to come up with a convincing explanation as to why he has not done so: Global Torch, at §24.
15. Refusal of relief from sanction is not limited to intentional and contumelious defaults. Depending on the circumstances, failure to comply through negligence, incompetence or sheer indolence may be such as to lead the court to conclude there is an existence and degree of fault which warrants a refusal of an extension of time, so as to decline relief. Any other conclusion would be to ignore the positive duty placed on parties to assist the court to further the underlying objectives of Order 1A, rule 3 and on the court to do so by actively managing cases Order 1A rule 4(1). See Top One International (China) Property Group Co Ltd v Top One Property Group Ltd [2011] 1 HKLRD 606, §41, Fok J (as he then was).
C. APPLICATION OF THE LEGAL PRINCIPLES
C1. Procedural default of the Trustees in seeking relief
16. It was only on 21 December 2020 that the Trustees took out the Relief Summons, after reminders from Chan, Lau & Wai (“CLW”), solicitors for Hiu Hung. Although it was within 14 days of the non-compliance, it was not accompanied by any evidence. The supporting affidavit (DEH‑6th) was only filed and served 7 days later.
17. The Trustees asserted that CLW had misled them into believing that CLW would consent to the grant of relief. The Trustees thus focused on preparation of the consent summons only to find that CLW had changed their stance when the draft consent summons was delivered to CLW.
18. In the correspondence, CLW appeared to suggest that the Trustees must take out a summons and file an affidavit to get relief instead of filing a consent summons. In my view, as for all interlocutory applications, there is nothing to prevent an opponent from waiving the default by entering into a consent summons with the party in default. Such waiver carries weight. Of course, it is always up to the Court to raise requisitions as to the reasons for breach of the unless order and decline to grant relief despite consent of all the relevant parties.
19. Even so, in the present case, although CLW stated that they might give consent, one could understand why had not, because the Trustees never explained their delay in the correspondence. Even the explanations now in DEH-6th are hardly acceptable. (See under section C2 below.) The draft consent summons only spared the estate from having to bear costs but did not deal with the costs of D2. The Trustees had not even joined with CLW in writing to court for further directions regarding the rest of the directions referred to in paragraph 3 above.
20. Further, DEH-6th was in simple terms. Even if CLW had changed their stance, there was still time for SFKS to file and serve DEH-6th with the Relief Summons. It should not have taken them another 7 days.
21. Accordingly, there was procedural default on the part of the Trustees/SFKS in taking out the Relief Summons.
C2. Merits of the application for relief
22. With regard to ground (1) in paragraph 7 above, I accept that the failure to comply was unintentional because the Trustees managed to file and serve another affidavit, DEH-4th, on time.
23. With regard to ground (2), I do not accept that there was no prejudice to Hiu Hung. As stated in my directions letter dated 20 January 2021, the administration of this estate has taken woefully long (about 18 years, from 2003 when the present Trustees were first appointed). The Relief Summons stood in the way of disposal of the 2 Summonses and put Hiu Hung in a position of uncertainty as to whether or not relief would be granted and whether she should go about preparing an affirmation in reply.
24. In DEH-6th, the Trustees pointed out that no milestone date has been fixed. That was a lame excuse. It was precisely because the Court had wanted to first read the Trustees’ affidavit in opposition before deciding the appropriate timeframe for Hiu Hung’s affirmation in reply and the hearing. The delay of the Trustees had delayed the whole process.
25. Further, distribution of estate does not carry interest. Hiu Hung has waited for over 3 years from the Judgment for distribution. The longer the wait, the more she will suffer from loss of use of the money.
26. With regard to ground (3), it is not a valid explanation. It is the responsibility of every legal representative to make proper estimates of time to enable the Court to set a realistic timetable for preparation of affidavits and bind the party toit. The Trustees had been given 3 extensions and over 5 months to prepare DEH-5th. There was no reason for them to leave “finalization” to the last day of filing.
27. With regard to ground (4), the Trustees were talking about the breakdown of their fees and an 03 Letter which set out the bases of their fees. As pointed out by CLW, CLW had been asking for a copy of the 03 letter by letters dated 11 July 2019 and 25 May 2020, well before the 2 Summonses. The 03 Letter was an important document and should have been kept at a convenient place and should not have required any great length of time to locate. Further, at least a Kevin Ho, who has been working for the Trustees since at least September 2009, is still working for the Trustees.
28. In my view, save for ground (1), the Trustees have not provided valid explanations for the delay.
29. Additionally, the Trustees and SFKS were evasive as to who were responsible for the delay. DEH-6th claimed that the “related logistics” were such as to have caused delay in filing and service. However, what the related logistics were and who was responsible have not made clear.
30. It was after the hearing, upon further requisitions by the Court, that SFKS informed the Court by letter that they and the Trustees each agreed to bear the costs of Hiu Hung personally and equally.
31. Despite the unsatisfactory explanations from the Trustees, the Court has to consider the circumstances in the round. The 2 Summonses ask for distribution of the estate to Hiu Hung in accordance with the Judgment. The Judgment contemplated costs of other beneficiaries and the Trustees to be borne out of the estate. If the Court were to accede to Hiu Hung’s request without considering DEH-5th, it may affect the rights of other beneficiaries.
32. Hiu Hung has not taken a contentious stance and that is a weighty factor. In the interests of the administration of justice under Order 2, rule 5(1)(a), I exercise my discretion to grant relief against sanction. The filing and service already done shall stand.
33. Consequent upon this order, Hiu Hung shall have 28 days to file and serve her affirmation in reply, if so advised. The 2 Summonses shall be fixed for hearing with 3 hours reserved.
D. ORDERS
34. I order as follows:
(1) There be relief from the sanction imposed by Master Kot’s Order dated 16 November 2020 such that the time for the Plaintiffs to file and serve the affidavit evidence in opposition to the 2 Summonses shall be extended to 4:40 pm and 5:07 pm, respectively, on 7 December 2020. The filing and service of DEH-5th shall stand.
(2) There be leave to D2 to file and serve an affirmation in reply in respect of the 2 Summonses within 28 days from the handing down of this decision.
(3) No further evidence shall be filed without leave of the Court.
(4) The 2 Summonses shall be set down for hearing with 3 hours reserved.
(5) The Trustees personally and SFKS personally do each bear 50% of the costs of D2 on the Relief Summons on indemnity basis, summarily assessed at $96,425.
(6) Neither the Trustees nor SFKS shall recover costs from the estate in respect of the Relief Summons.
35. I thank Mr Sousa and Mr Lee for their assistance.
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(Queeny Au-Yeung) |
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Judge of the Court of First Instance |
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High Court |
Mr Trevor Lee, of Sit, Fung, Kwong & Shum, for the Plaintiffs
Mr Richard A Sousa, of Chan, Lau & Wai, for the 2nd Defendant
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