TANG KIM KWAN PATRICK ALSO KNOWN AS PATRICK TANG v. LEE CHI TING KAREN ALSO KNOWN AS KAREN LEE

HCA920/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 920 OF 2009

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D E C I S I O N

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1.  The defendant seeks extension of time to file her witness statements and relief from sanction under an unless order.

The Facts

2.  The relevant CMC took place on 13 April 2011 (“the CMC”).  The defendant was represented by counsel. She explained her failure to comply with the Court’s directions on limited financial means but her counsel informed the Court that the defendant had just “confirmed” that her family was willing to provide financial support to fund her case.  The plaintiff’s side was ready for the exchange of witness statements.  Registrar Lung directed the parties as follows:

“1b. By consent, unless the Defendant exchange the witness statements with the Plaintiff by 4:00 p.m. on 12 June 2011, the Defendant be debarred from adducing such evidence without special leave of the trial judge …

    1e.  Any party who is unable to comply with any of the directions herein shall take out an application for leave for extension of time within 7 days after the due date for compliance.”

The deadline for exchange of witness statements was 12 June 2011. 

3.  There was a dispute as to whether or not the plaintiff’s solicitors had called the defendant’s to arrange a time for the exchange.  Having regard to the fact that the plaintiff’s witness statement being dated 9 June, I am satisfied that it was more likely than not that the plaintiff’s solicitors did. 

4.  Without notifying her former solicitor (Ms Chan), the defendant applied for legal aid on 10 June 2011.  As a result of an automatic 42-day stay, the time for exchange of witness statement was deferred to 25 July 2011.  Upon learning about the defendant’s application for legal aid, Ms Chan notified the defendant, correctly, that the deadline was extended to 25 July 2011 (“the revised deadline”). 

5.  The defendant failed to comply with both directions of the Registrar even with the revised deadline.

6.  On 8 August 2011, the defendant’s solicitor received notice that the application for legal aid has failed.  Four days later, Ms Chan wrote to the plaintiff’s solicitors proposing exchange of witness statements but was told that by reason of the unless order that would not be possible without leave. 

7.  On 15 August 2011 (about 3 weeks after the revised deadline), the defendant’s solicitors unilaterally served the witness statements on the plaintiff’s solicitors and faxed them over as well.   

8.  On 17 August 2011, the defendant issued a summons for filing the witness statements out of time. On the same day, the plaintiff’s solicitors returned the witness statements to the defendant’s solicitors.  On 18 August, the plaintiff served his witness statement. 

9.  On 23 August the defendant filed her (2^nd) affirmation in support of the time summons.  Ms Chan’s affirmation was filed on 2 September.

10.  It was only on 15 September (about 7 weeks after the revised deadline) that the defendant filed her summons for relief from the sanctions imposed by the unless order, way beyond the time imposed   under Order 2, rule 4 of the Rules of the High Court. 

11.  On 27 October 2011, the plaintiff applied for setting down for trial.  The trial dates are now fixed for 16-20 April 2012. 

The Grounds for Application and Opposition

12.  The defendant claims that she and her brother were originally to sign witness statements on 9 June.  She fell ill and the signing was postponed to the 10^th, on which day she applied for legal aid. She admitted, through her counsel Ms Lau, that Ms Chan had explained to her the unless order but not the dire consequences of not complying with it. The defendant’s grounds for application can be summarized as follows:

(i)   that the unless order was not made with her consent; 

(ii)  that she did not receive timely communication from her former solicitors to enable her to have the witness statements signed; by the time she did, the revised deadline had passed;

(iii)   that she was prevented by contagious illness from attending the office of Ms Chan by about 2 weeks; and

(iv)   that the defendant has not made any meaningful discovery.

13.  Mr Li, counsel for the plaintiff, submits that the unless order should be strictly complied with and special leave should be obtained from the trial judge.  He challenged the grounds put forth by the defendant as not credible and delaying tactics.

Power of the Court

14.  The Court has jurisdiction to entertain this matter notwithstanding the Registrar’s directions.  A party’s effort to sort things at pre-trial review instead of leaving it to the last minute before the trial judge should not be brushed aside.  This is particularly so with late service of witness statements which might trigger the need for amendments to pleadings, further discovery or a witness statements in reply. 

15.  The relevant question to ask is whether the failure of the defendant was intentional and contumelious.  If a party can demonstrate that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances, such failure to obey was not to be treated as contumelious and therefore will not disentitle the litigant to rights which he would otherwise have enjoyed.  The exercise of the discretion to refuse an extension to time to comply with a peremptory order was not limited to cases of intentional and contumelious default.  As directed by Order 2, rule 5 of the Rules of the High Court, the Court should consider all the individual circumstances including those listed in rule 5(1). Depending on the circumstances, failure to comply with one or a number of orders through negligence, incompetence or sheer indolence may be such as to lead the Court to conclude there was an existence and degree of fault which warranted a refusal of an extension of time, so that relief from a sanction for non-compliance specified in a peremptory order should not be granted.  Top One International (China) Property Group Co Ltd v. Top One Property Group Ltd,[2011] 1 HKLRD 606, Fok J (as he then was). 

Analyses of the Grounds for Application

16.  The Court does not just look at the circumstances of the delay since the unless order was breached but all the circumstances.  As early as May 2010, Master Hui has laid down a timetable for all steps leading up to the first CMC including the time for filing witness statements and obtaining of counsel’s advice.  Registrar Lung’s order essentially repeated that part of Master Hui’s order.  It is up to a party to budget her time and financial arrangements to meet the timetable.  A party who leaves it till the last minute to seek legal aid has only herself to blame.  Likewise for a party who leaves it till almost expiry of a deadline to have a witness statement signed.  Equally, if a party does not give clear and proper instructions to her solicitor pending the grant/refusal of legal aid, she has to take the consequences.  With these observations in mind, I proceed to analyze each of the grounds put forth by the defendant. 

Unless Order Not Made by Consent

17.  Whether the unless order was made by consent or not is irrelevant.  Even if it was not with Ms Chan’s consent, it was an order of the Court which had to be complied with.  The learned Registrar gave the same time frame as Master Hui for the preparation of witness statements.  The defendant cannot have any valid complaint.

Lack of Timely Advice from the Former Solicitor

18.  Effectively, the defendant is shifting all the blame on Ms Chan.  She is saying that Ms Chan should not have done nothing during the 42-day stay.  When she asked the defendant to come and sign the witness statements, the revised deadline had already passed.  Ms Chan did not impress upon her the importance of compliance.  Even if the defendant is to be believed, that was no excuse.  Her solicitor’s incompetence will be attributed to her and would not prevent the Court from upholding the sanction.   Further, the plaintiff’s solicitors had, as early as 3 August, by letter pointed out to the defendant’s former solicitors the failure to comply with the unless order. That letter clearly referred to the revised deadline.  Despite that, the defendant has not promptly made the present applications.

19.  More fundamentally, the defendant’s 2^nd and 3^rd affirmations and Ms Chan’s affirmation filed in support were full of contradictions. 

20.  The 2^nd affirmation suggested that in the week of 18 July, Ms Chan had called the defendant a number of times to enquire if she would continue to engage her firm.  The defendant claimed that she could not afford the legal fees.  She told Ms Chan to withhold taking action pending the results of the application for legal aid. On about 25 July the defendant was suffering from serious headache.  She told Ms Chan that she was unable to attend despite the revised deadline.  She promised to contact Ms Chan once she got better but did not do so until about 11 August when her family members agreed to fund her case.  If this version were believed, there seemed to be no problem in the conduct of Ms Chan.  Illness prevented the defendant from compliance with the unless order but there was no medical proof.  Her suggestion that the family members only then agreed to provide funding was inconsistent with what her counsel told the Court at the CMC before the Registrar. 

21.  To one’s astonishment, after changing to the present firm of solicitors, the defendant disavowed (through her 3^rd affirmation) her 2^nd affirmation and challenged Ms Chan’s affirmation filed in support.  She said that Ms Chan kept her in the dark about the plaintiff’s accusation of her delay in service of the witness statements.  She said that Ms Chan did not tell her about the unless order and that it was made by consent.  She refuted Ms Chan’s suggestion that she had instructed Ms Chan to withhold taking action pending the result of the legal aid application.  Rather, it was Ms Chan who had mistaken the meaning and operation of the legal aid stay and told her not to go for signing of the witness statements due to the legal aid stay and that she would call the defendant in due course.  Nothing happened from after 10 June until about 29 July when Ms Chan asked her to attend the office to sign the witness statements.

22.  The 2^nd affirmation of the defendant was signed after Ms Chan had interpreted the contents to her.  The defendant claimed that Ms Chan did not interpret the contents fully and exactly to her and the defendant did not pay much attention to the contents and did not read before signing.  She oscillated between whether Ms Chan had or had not informed her about the unless order.  It was during the hearing that she admitted through her counsel that she had been so informed but not the dire consequences.  Such oscillation could not lend the defendant credence. Further, the defendant adduced the transcript of her conversation with Ms Chan to show that the latter had lied about various important matters, such as when she told the defendant to sign the witness statements after she had applied for legal aid.  The transcript was never given to Ms Chan for comment.  The defendant’s case against Ms Chan simply lacks credibility.  This ground cannot stand. 

Illness of the Defendant

23.  The defendant claimed that she was prevented by contagious illness from attending Ms Chan’s office for the signing of the witness statements.  However, the medical certificates that she produced showed medical consultations on 1 and 3 August, in any case beyond the extended deadline.  This ground is entirely unsustainable. 

Plaintiff Failed to Make Meaningful Discovery

24.  It is irrelevant that the plaintiff has not made any meaningful discovery.  The fact was that there had been no attempt by the defendant to seek specific discovery.  Ms Lau confirms that that further discovery (which was on 22 August) had no impact on the preparation of the defendant’s witness statements.  The defendant’s reliance on this ground for her application only shows how desperate her case was. 

Discretion to Extend Time

25.  I have considered all the factors listed out in Order 2, rule 5(1), except factor (g) which is inapplicable.

“(1) On an application for relief from any sanction imposed for a failure to comply with any rule or court order, the Court shall consider all the circumstances including-

(a) the interests of the administration of justice;

(b) whether the application for relief has been made promptly;

(c) whether the failure to comply was intentional;

(d) whether there is a good explanation for the failure to comply;

(e) the extent to which the party in default has complied with other rules and court orders;

(f) whether the failure to comply was caused by the party in default or his legal representative;

(g) in the case where the party in default is not legally represented, whether he was unaware of the rule or court order, or if he was aware of it, whether he was able to comply with it without legal assistance;

(h) whether the trial date or the likely trial date can still be met if relief is granted;

(i) the effect which the failure to comply had on each party; and

(j)  the effect which the granting of relief would have on each party.”

26.  The defendant did not make the present applications promptly.  She did not give a good explanation for the failure to comply.  The failure to comply was her own or (at best) that of her former solicitor which was not excusable.  She fails under factors (b), (d) and (f). 

27.  She has failed to meet the order of Master Hui in the past but the holding of reins since was, by consent, to attempt mediation.  There was no other act of default which the plaintiff could point to. 

28.  Ms Chan apparently had been doing proper work for the defendant up to 10 June 2011.  Judging from the substance of the witness statements, they could not, in my view, have been drafted over only a matter of 4 days since the date of receipt of notice of refusal of legal aid.  Mostly probably, they had been ready for signing had the defendant turned up on 10 June. 

29.  The defendant’s witness statements were purportedly served about 10½ weeks before the plaintiff’s application to set the case down for trial and 8 months before the trial.  Parties are agreed that the trial dates will not be affected if relief is granted to the defendant nor will the length of trial be, since the estimation of time was on the basis that the witness statements would be admitted. 

30.  To preclude the defendant from relying on her witness statement will effectively deprive her of a proper defence as the plaintiff is relying on the presumption of resulting trust.  The primary aim of the Court in exercising its powers is to secure the just resolution of disputes in accordance with the substantive rights of the parties and not technical failure.  It will not be conducive to the administration of justice to bar the defendant entirely from adducing witness statements. 

31.  There was, of course, prejudice to the plaintiff.  Having an unless order in hand, the plaintiff was entitled to assume that there was no further witness statements from the defendant’s side and proceed to fix trial dates in accordance with the materials he had to hand. If the Court does not enforce the unless order, an innocent party will be left in the uncertainty of not knowing when the party in the wrong can come in to ask for an extension of time solely on the ground that the trial date is still months away and he was willing to pay the usual $800 costs for the time extension.  The sanction of an unless order will be much reduced.  On the other hand, if he does not agree to a time extension, he may have to face the argument made by Ms Lau – that he did not agree to extension of a “non-milestone event” and therefore need to bear the costs of a contested hearing.  (With respect to Ms Lau, an unless order cannot be treated just like a non-milestone event because the sanctions have the express blessing of Order 2, rule 4.)  If the court grants extension, he may have to take further steps under time pressure to respond to the late compliance. 

32.  Having considered all the factors, I am not satisfied that there had been deliberate flouting of the unless order.  I therefore exercise my discretion to grant the relief against sanction in the interests of justice. 

33.  Such leave is granted on condition that the defendant should bear all costs arising out of such late service.  The witness statements to be served will necessitate further costs which the plaintiff would not have to incur if no relief against sanction were granted.  Accordingly, the defendant should also bear all costs arising out of the need to serve supplemental witness statements in answer to the defendant’s witness statements as a condition for leave. 

34.  Ms Lau submits that after exchange of witness statements, further points arising should be dealt with in the oral evidence rather than a supplemental witness statement: Hong Kong Civil Procedure 2012, para 38/2A/10, page 758.  If the plaintiff wants to file a supplemental witness statement, he can apply at a later date. 

35.  In my view, it is appropriate for the plaintiff to file a witness statement in reply now particularly since Mr Li indicates that there might be further discovery.  The costs to be borne by the defendant is limited to only those to answer the points raised in the defendant’s witness statements. 

Conclusion

36.  Although the defendant has no valid explanation for her default, the circumstances are such that I am satisfied that the defendant (and Ms Chan) had been making effort to get the witness statements in order.  It will not be conducive to the just resolution of a dispute in accordance with the substantive rights of the parties to deny relief to the defendant when there is still time to remedy the situation. 

37.  On costs, I do not regard the stance taken by the plaintiff to be unreasonable.  An unless order cannot be compared to any non-milestone event because the effect of a sanction is expressly recognized by Order 2, rule 4. The defendant has to seek indulgence of the Court.  She changed her version. She resiled from her version on affirmation.  She only purported to correct her version by her 3^rd affirmation and adducing the transcript of telephone conversation with Ms Chan without ever giving a chance for Ms Chan to explain.  How could she expect the plaintiff to take her word at face value?  Moreover, all of the grounds relied on by the defendant in her affirmations have been rejected by me. 

38.  I order as follows:

(i)   There be leave to the defendant to serve her witness statements by 4:00 pm on 13 January 2011, failing which she shall be barred from doing so. 

(ii)  There be leave to the plaintiff to serve his witness statement in reply and make further discovery within 21 days thereafter. 

(iii)   No further witness statement shall be served by either party without leave. 

(iv)   The defendant shall, on a nisi basis, bear all costs of and incidental to her 2 summonses, including the costs of this hearing.  For the avoidance of doubt, the costs of the plaintiff for preparation of a witness statement and further discovery in answer to the defendant’s witness statements shall form such costs.

(v)  There shall be summary assessment of costs on the papers on 20 February 2012 at 9:30 am.  No attendance is required. The plaintiff shall file and serve his statement of costs by 10 February 2012.  The defendant shall file and serve her grounds in opposition by 17 February 2012. 

39.  I thank counsel for their assistance.