HANTON DEVELOPMENT LTD v. SECRETARY FOR JUSTICE

HCMP 5973/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 5973 OF 2000

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D E C I S I O N

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The Application

1.  By a summons dated 7 November 2005, the Defendant seeks an order striking out §§19 to 27 and Prayers (2), (3), (4) and (6) of the Plaintiff’s Points of Claim on the bases that they:

(1)     are not part of the claim made or relief or remedy required as set out in the Originating Summons dated 17 November 2000 contrary to O. 6 r. 2 of the Rules of the High Court, Cap. 4;

(2)     do not disclose any reasonable cause of action;

(3)     are scandalous, frivolous or vexatious;

(4)     may prejudice, embarrass or delay the fair trial of the action; or

(5)     are otherwise an abuse of the process of the Court.

2.  The summons also seeks (i) an extension of time for the filing and service of the Defendant’s Points of Defence until 28 days after the disposal of the summons and (ii) costs.

Factual and procedural background

3.  This action was commenced by Originating Summons dated 17 November 2000.  The dispute concerns an access road or track which lies across Government land designated as Lot No. 1588 in Demarcation District No. 243, Nam Tau Sha, Sai Kung, New Territories.  The Originating Summons claimed the following substantive relief, namely:

“A declaration that the Plaintiff is entitled to a right appurtenant to its property known as Lot No. 901 Section A and Remaining Portion in Demarcation District No. 243, Nam Tau Sha, Sai Kung, New Territories, Hong Kong (“the Plaintiff’s Property”) for itself and those authorized by it to pass and repass with or without vehicles over and along an unnamed road located on Lot No. 1588 in Demarcation District No. 243, Nam Tau Sha, Sai Kung, New Territories, Hong Kong which said unnamed road branches off from Pik Sha Road at its junction with Sapphire Path and leads to the eastern end of Bayside Beach linked up with the Plaintiff’s Property for the purpose of access to and egress from the Plaintiff’s Property.”

4.  On 12 September 2005, Chu J made an order by consent that the proceedings continue as if the cause and matter had been begun by writ.  The Plaintiff was at the same time ordered to file and serve its Points of Claim within 28 days from the date of that order.

5.  When the matter was before Chu J on 12 September 2005, counsel for the Plaintiff then appearing indicated that the Plaintiff might be minded to plead matters additional to the Originating Summons.  Mr Michael Yin, counsel for the Defendant at this hearing and on 12 September 2005, indicated to Chu J at that hearing that, should the Plaintiff seek to raise matters in its Points of Claim that went beyond the Originating Summons, the Defendant would object.

6.  On 10 October 2005, the Plaintiff duly filed and served its Points of Claim.  The Defendant took the view that certain parts of the Points of Claim were objectionable and hence issued the summons that is before me on this hearing.

7.  On 29 November 2005, the Defendant served its skeleton argument in support of the strike out application. 

8.  On 30 November 2005, the Plaintiff in turn served its skeleton submission in relation to the summons.  In that skeleton, the Plaintiff indicated, amongst other things, that “[t]he Plaintiff is not contesting the Defendant’s application to strike out as it has decided not to proceed any further with the action.”

9.  This indication is reflective of certain inter-partes correspondence to which my attention has been drawn, namely:

(1)     A letter dated 22 November 2005 from the Plaintiff’s solicitors, Shaw & Ng, to the Department of Justice indicating “our client is prepared to consent to [the strike out summons] … provided that there be no order as to costs”.

(2)     A 2nd letter of same date in which Shaw & Ng stated “our client is prepared to discontinue the proceedings on the condition that” (i) the Government grant a pedestrian right of way for the Plaintiff on two routes from its property (the subject of this action) to Bayside Beach, and (ii) the Government pay the Plaintiff’s costs of the proceedings.

(3)     On 23 November 2005, the Department of Justice reverted to Shaw & Ng’s 1st letter of 22 November 2005 to say that it could not agree that there should be no order as to costs of the strike out summons and enclosed a draft consent summons for the disposal of the strike out summons which included a provision for the costs of the summons to be paid by the Plaintiff to the Defendant.  The letter went on to warn that counsel would be briefed if the consent summons was not signed by 4pm on 24 November 2005.

(4)     On 24 November 2005, Shaw & Ng wrote to indicate “our client is prepared to discontinue the proceedings and one of the main issues will be question of costs of the entire proceedings” and also stated that “[s]ince the matter in dispute for 2nd December hearing is on the question of costs, we propose that the costs of and incidental to your said summons be reserved for arguments at the hearing to be fixed on our client’s intended application for costs against the Defendant for the entire proceedings”.  They returned the draft consent summons duly amended to reflect its proposal to reserve the costs of the strike out summons.

(5)     On 24 November 2005, the Department of Justice wrote stating “our position that the incident of costs of the [strike out summons] turns solely on the merits of the [summons] which in our view are meritorious and therefore we fail to see why your client should not bear our costs of and incidental to the [summons] up to the date of the consent summons and the costs of the consent summons”.  The letter extended the deadline for endorsement of the Department of Justice’s draft consent summons to 12 pm on 25 November 2005 at which time it would brief counsel for this hearing.

(6)     On 25 November 2005, Shaw & Ng indicated they would inform the Court of various matters at this hearing, including the fact that (i) “[o]ur client will apply to court for leave to discontinue the proceedings and to claim for costs against the Defendant for the entire proceedings” and (ii) “[o]ur client has indicated its consent to the said summons as per our amended consent summons under cover of our letter of 24th instant, save that we are to claim for the costs for the hearing on 2nd December 2005”.  They invited the Department of Justice to adjourn the strike out summons “to the hearing of our client’s intended application for leave to discontinue the proceedings”.

(7)     On 25 November 2005, the Department of Justice wrote to Shaw & Ng to “suggest that you should forthwith issue a Summons seeking leave for discontinuance with condition that no future proceedings on the same or similar subject matter shall be brought by your client without leave of the Court, which can be made returnable on 2nd December 2005 at 10:00 a.m.  Alternatively, an application can be made by consent for leave to discontinue the proceedings forthwith upon the said condition whilst still reserving the matter of costs for argument at a later date.  Upon discontinuance of the present proceedings, our Summons dated 7th November 2005 will be superseded and the question of costs of that Summons will be subsumed under the argument on costs of the entire action”.  The letter went on to say, “In the absence of any application for discontinuance, our said Summons must be proceeded with”, and “We also reiterate that the costs issue of our said Summons is independent of the incident of costs of the entire proceedings”.

(8)     On 25 November 2005, by a 2nd letter, the Department of Justice indicated to Shaw & Ng that “[the Plaintiff’s] conditional offer to discontinue these proceedings … is unacceptable to the Defendant”.

10.  Paragraph 7 of the Plaintiff’s skeleton for this hearing reads, “Given the circumstances, the issues still alive are costs issues – costs in respect of the discontinuance application and the Defendant’s application for striking out.”

11.  However, it remains the fact that to date no application has been made by the Plaintiff under O. 21 for leave to discontinue this action.  Such an application would have to be made because the circumstances of the case are such that the Plaintiff could not discontinue without leave pursuant to O. 21 r. 2: see O. 21 r. 2(3A).

12.  An application for discontinuance with leave may be made by summons or motion or by notice under O. 25 r. 7: see O. 21 r. 3(2) and see Note 21/5/10 in Hong Kong Civil Procedure 2004, Vol. 1 at p. 370.  No such summons or motion or notice has yet been issued: if and when such summons, motion or notice is served I anticipate the questions of (i) the terms on which leave to discontinue might be granted, and (ii) the costs of the action, will be hotly contested by the parties.

The Plaintiff’s position on the strike out summons

13.  Ms Winnie Chan, counsel for the Plaintiff, confirmed that the Plaintiff’s stance on the strike out summons was that it did not oppose an order in terms of paragraphs 1 and 2 of that summons, i.e. the order for striking out and the extension of time for the filing and service of the Points of Defence.

14.  However, the Plaintiff’s position is that this hearing should have been vacated so that the costs of the strike out summons could be dealt with at same time the costs of the action are dealt with in Plaintiff’s proposed application to discontinue.  Paragraph 9 of the Plaintiff’s skeleton puts the point thus: “The proposal is sensible as costs in respect of both applications will require investigation of the merit of the plaintiff’s case.”

15.  The Plaintiff submits (paragraph 10 of its skeleton) that the Defendant’s insistence on proceeding with this strike out application at this hearing in light of the Plaintiff’s indicated intention resulted in “totally unnecessary” costs being incurred.

16.  Accordingly, Ms Chan asked that the costs of the strike out summons and of this hearing be adjourned to a date to be fixed.  However, she submitted in the alternative that if I was minded to make an order as to costs, the costs of this hearing should be paid by the Defendant to the Plaintiff and the costs of the summons should be adjourned.

The basis of the Defendant’s application to strike out

17.  Before proceeding to the discussion of the appropriate order to be made in respect of the costs of the strike out summons and of this hearing, it is convenient to summarise the basis of the strike out application.

18.  The Plaintiff contends that the objectionable parts of the Points of Claim introduce new claims that are not covered by the Originating Summons, contrary to O. 6 r. 2.  As no application has been made to amend the Originating Summons, an order striking out the objectionable paragraphs should follow.

19.  The Plaintiff further contends that, insofar as the Defendant might suggest that it could apply to amend the Originating Summons to broaden its scope to include the matters raised in the objectionable parts of the Points of Claim, such application to amend should be refused because (i) the new claims are in reality an attempt to bring a public law challenge without complying with O. 53, and (ii) not all the necessary parties are before the Court and, as the amendment would necessarily involve the joinder of an additional party and delay to the trial, the Defendant would be prejudiced by the amendment in a way that could not be compensated for by an award of costs.

The strike out summons is procedurally discrete from any application that might be made for leave to discontinue

20.  When the summons was taken out, the action was on foot and the Defendant had real concerns as to the propriety of parts of the Plaintiff’s pleading in its Points of Claim as indicated by the issue of this summons, foreshadowed by Mr Yin’s objection noted at the 12 September 2005 hearing.

21.  No application has yet been made for leave to discontinue this action.  It is quite possible that circumstances may change and the Plaintiff might change its mind.  As Ms Chan submitted at this hearing, the Plaintiff has not yet determined how it might go about terminating the proceedings.  She identified the options available to the Plaintiff as being an application for leave to discontinue or a continuation of the action to trial simply to argue the issue of costs.  In the circumstances, it seems to me that I must determine the Defendant’s strike out summons on the basis that the action is still alive.

22.  Although the Plaintiff indicated in correspondence that it was intending to discontinue the action, it has still not applied to do so.  At the same time, the Plaintiff’s legal advisers appear to take the position that if the costs of action are awarded to the Plaintiff on a discontinuance, then the costs of this strike out summons will or should also fall to be paid to it.  This assumes, in effect, that the costs of strike out summons should be costs in the cause or at least that the costs of the strike out summons should only be dealt with at the time the costs of the action are determined.  This attitude underlies the Plaintiff’s stance that the Defendant was unreasonable in having proceeded with this hearing, so that the costs of this hearing should be paid to by the Defendant to the Plaintiff.

23.  In my view, there is no basis for thinking that the costs of the strike out summons should stand or fall together with the determination of the issue of the costs of the action as a whole, or that these separate costs issues need be dealt with together.  The striking out of a portion of a pleading on the ground that it is defective is a separate and distinct matter to the action itself.  It is a discrete interlocutory application, the costs of which should be determined separately from the discrete question of the costs of the action as a whole.

24.  So, even assuming in the Plaintiff’s favour that the discontinuance of this action might be ordered on terms that the Defendant pay the Plaintiff’s costs, it seems to me plain that I must look at the strike out application separately and distinctly from any possible discontinuance application.

Disposition of the strike out summons

25.  As noted above, Ms Chan confirmed that the Plaintiff’s stance was that it did not oppose the grant of an order in terms of paragraphs (1) and (2) of the Defendant’s strike out summons and so, an order must be made in accordance with those paragraphs.  That simply leaves paragraph (3) of the summons which concerns the question of the costs of the strike out summons including the costs of this hearing.

26.  It is obviously somewhat artificial and unsatisfactory to determine a strike out application which is not in fact contested as if it were being contested.  It would be odd, to say the least, for the Court to conclude that the strike out should fail and yet to make a striking out order on an unopposed basis.

27.  Having said that, I am satisfied that the Defendant’s strike out summons ought, even if opposed, to succeed on the basis of the Defendant’s argument that the disputed paragraphs in the body and prayer of the Points of Claim plead a case which (as I find to be the case) departs from the claim made or relief or remedy required as set out in the Originating Summons contrary to O. 6 r. 2.  Although that particular rule applies to writs of summons, this action was ordered to continue as if commenced by writ so that the Originating Summons is to be treated as the writ by which this action was commenced.

28.  On that footing, the strike out summons itself was properly brought.  If an application had been made to amend the Originating Summons, the costs of the issue of the strike out summons would inevitably have been payable by the Plaintiff to the Defendant quite independently of the outcome of any amendment application.

29.  Accordingly, both now and on 23 November 2005 when the Department of Justice proposed its draft consent order to dispose of the strike out summons, the appropriate costs order was that the Plaintiff should pay the Defendant’s costs of and incidental to that summons, such costs to be taxed, if not agreed.  It is a matter of regret that the Plaintiff did not accede to the invitation to sign that draft consent order when it was sent to its solicitors, as that refusal has led to the expenditure of further costs.  Had it done so, the costs of today would have been avoided and, in the circumstances, I see no reason why the costs of this hearing should not also be paid by the Plaintiff to the Defendant, such costs to be taxed if not agreed.

30.  At this hearing, both counsel addressed me on the wider question of whether, if an application for leave to amend had been made (which was not the case), leave to amend should have been granted to permit the pleading of the parts of the Points of Claim to which the Defendant objected.  I do not consider it necessary or appropriate to determine that wider question in the light of the conclusion I have reached as regards the appropriate order as to costs of the strike out summons and of this hearing.  Anything I would say on that question would be strictly obiter to my decision on the limited costs issue before me.  Furthermore, some of the matters covered in the submissions of both counsel (particularly relating to the issues of disclosure and delay) are likely to be argued again in the event that the Plaintiff does proceed to issue an application for leave to discontinue the action and to seek such an order on terms that the Defendant pay the Plaintiff’s costs of the action, at which point they will then need to be determined.

Conclusion

31.  In the circumstances, I make the following orders on the Defendant’s summons dated 7 November 2005, namely that:

(1)     Paragraphs 19 to 27 and prayers (2), (3), (4) and (6) of the Plaintiff’s Points of Claim dated 10 October 2005 be struck out;

(2)     The time for filing and service of the Defendant’s Points of Defence be extended to 28 days from the date of the Order to be made herein;

(3)     The Plaintiff do pay the Defendant’s costs of and incidental to the summons, including the costs of this hearing, such costs to be taxed if not agreed.