AU SHUI LAM v. WONG CHEUNG TAI

DCCJ 4734/2015

[2018] HKDC 275

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4734 OF 2015

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DECISION

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1.  This is an appeal by the plaintiff against the order made by Master David Chan on 30 October 2017, by which the master dismissed an application made by the plaintiff for relief from sanction imposed by Master D To in her order dated 19 May 2017.

2.  I would first set out the background facts.

Background

3.  In this case, the plaintiff claims that he has acquired a possessory title to a piece of land known as Lot No 2170 in Demarcation Distrcit No 116 in Sheung Yau Tin Tsuen, Shap Pat Heung, Yuen Long, New Territories (“the Land”) by adverse possession.   The defendant is the registered owner of the Land. The defendant denies the plaintiff’s claim and counterclaims for vacant possession of the Land and mesne profits.

4.  On 22 February 2017, upon the joint application made by the plaintiff’s solicitors and the defendant’s solicitors, Master D To ordered, inter alia, that unless the parties do exchange witness statements as to facts by 4 pm on 10 April 2017, the party in default shall be debarred from adducing evidence from factual witnesses at trial and the party not in default shall immediately thereupon serve his witness statements as to facts on the party in default (“the 1^st Unless Order”).

5.  On 7 April 2017, the parties filed a consent summons (“the Consent Summons”) seeking, inter alia, that the time for filing and exchanging witness statements be extended to 5 June 2017.

6.  On 10 April 2017, the defendant’s solicitors served the defendant’s witness statement on the plaintiff’s solicitors.

7.  On 18 April 2017, the plaintiff’s solicitors received a requisition from this court, stating that in breach of the 1^st Unless Order, a proper application for relief from sanction ought to be made as opposed to merely seeking an extension for time for filing the plaintiff’s witness statement.

8.  On 25 April 2017, the plaintiff’s solicitors filed a summons for relief from sanction in the 1^st Unless Order, and for time extension to file and serve the plaintiff’s witness statement until 5 June 2017.  The summons was supported by the 1^st Affirmation of Cheng Kin Pong (“Cheng”), the solicitor having the conduct of these proceedings on the plaintiff’s behalf.

9.  In his 1^st Affirmation, Cheng said that after filing the Consent Summons, while the parties were waiting for the court’s directions, the defendant’s solicitors neglected the agreement between the parties on the proposed directions set out in the Consent Summons and served the defendant’s witness statement on the plaintiff’s solicitors.  Cheng said that it was the mutual intention of the parties to extend the time for filing witness statements to 5 June 2017, and the subsequent change of mind on the part of the defendant’s solicitors should not deprive the plaintiff of the opportunity to file his witness statement on or before the new deadline as agreed.

10.  On 19 May 2017, Master D To granted the relief from sanction sought by the plaintiff and made a second unless order (“the 2^nd Unless Order”), requiring the plaintiff to file and serve his witness statement by 4 pm on 5 June 2017, otherwise the plaintiff would be debarred from adducing evidence from factual witness(es) at trial.

11.  On 2 June 2017 (Friday), the plaintiff signed his witness statement.

12.  On 5 June 2017 (Monday), at about 3:55 pm, the plaintiff’s solicitors filed the plaintiff’s witness statement in court.  At about 6 pm, the plaintiff’s solicitors sent a copy of the plaintiff’s witness statement to the defendant’s solicitors by fax.

13.  On 7 June 2017, the defendant’s solicitors received a copy of the plaintiff’s witness statement through ordinary post.

14.  On 9 June 2017, the defendant’s solicitors wrote to the plaintiff’s solicitors and made the point that the plaintiff had failed to comply with the 2^nd Unless Order by failing to serve the plaintiff’s witness statement on or before 4 pm on 5 June 2017.  The defendant’s solicitors pointed out the sanction in the 2^nd Unless Order and returned the plaintiff’s witness statement to the plaintiff’s solicitors.

15.  On 13 June 2017, the plaintiff’s solicitors took out a summons (“the Summons”) for relief from sanction in the 2^nd Unless Order.  The Summons was supported by the 2^nd Affirmation of Cheng.   In his 2^nd Affirmation, Cheng said:-

“4. I was informed by our firm’s clerk that he intended and in fact tried to serve the Plaintiff’s witness statement on the Defendant’s solicitors in Yuen Long after filing the same into Court. However, due to his poor time management, and misunderstanding of requirement of service and the deadline stipulated in [the 2^nd Unless Order], the Plaintiff’s witness statement was sent by fax and by ordinary post after the filing of the Plaintiff’s witness statement on the same date.”

16.  Subsequently, the defendant has filed an affirmation in opposition and the plaintiff has filed an affirmation in reply.

17.  On 30 October 2017, after hearing the parties, Master David Chan dismissed the Summons with costs.

18.  On 10 November 2017, the plaintiff lodged this appeal against the master’s decision.

The principles

19.  Rules of the District Court (“RDC”), Order 2 rule 5 provides:-

“(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.

(2)…An application for relief must be supported by evidence.”

20.  The principles concerning reliefs from sanctions of unless orders have been succinctly summarized by Registrar KW Lung in Goh Soo Siah v Au Yeung Tin Wah[1]. With these principles in mind, I turn to consider whether relief from sanction should be given to the plaintiff.

Analysis

21.  Mr Russell Coleman SC (leading Mr James Wong), counsel for the plaintiff, submits that:-

(a)   Cheng has frankly taken full responsibility on behalf of his firm and explained that the late service of the plaintiff’s witness statement is due to the fault of his firm instead of the plaintiff personally.

(b)   Although the witness statement has not been served on the defendant’s solicitors by 4 pm on 5 June 2017, a copy of which was sent to the defendant’s solicitors by fax at about 6 pm on 5 June 2017.

(c)   There is no reason to suggest that the late service of the witness statement is intentional or calculated to obtain any tactical advantages.

(d)   The delay in serving the witness statement is minimal and has not caused any real prejudice to the defendant.

(e)   That the plaintiff would have the opportunity of perusing the defendant’s witness statement before signing his own witness statement is the consequence of the Order made by Master D To on 19 May 2017, and is unrelated to the relief from sanction now being sought by the plaintiff.

(f)   The drastic effect of not granting relief to the plaintiff would be disproportionate to the unintentional, non-contumelious and rather minimal delay in serving the plaintiff’s witness statement which was not caused by the plaintiff personally.

(g)   No trial date has been fixed yet.  Granting the relief from sanction sought by the plaintiff would not cause any substantial delay in these proceedings.

(h)   Any prejudice to the defendant can be compensated by costs.

(i)   Being in mind that the primary aim in exercising the powers of the court is to secure the just resolution of disputes in accordance with the substantive rights of the parties[2], taking all the aforesaid into account, the discretion should be exercised in favour of granting relief from sanction to the plaintiff.

22.  Mr Patrick Szeto, counsel for the defendant, submits that no relief should be given to the plaintiff:-

(a)   Previously, the plaintiff has breached the 1^st Unless Order. It is expressly provided in the 1^st Unless Order that the parties have to exchange witness statements by 4 pm on 10 April 2017, and sanction is imposed.  Notwithstanding the Consent Summons, in the absence of any order varying the 1^st Unless Order, the 1^st Unless Order has to be observed and to be complied with.  The defendant has duly complied with the 1^st Unless Order but the plaintiff has breached the same.

(b)   The court has given indulgence to the plaintiff once by granting relief from sanction in the 1^st Unless Order to the plaintiff.  This is the second breach of an unless order by the plaintiff in these proceedings.

(c)   Allowing the plaintiff to file a witness statement after seeing the witness statement filed by the defendant would cause irreversible prejudice to the defendant.

(d)   Further, the defendant has incurred substantial costs as a result of the hearing here and below.

(e)   As to why the plaintiff’s solicitors has failed to comply with the 2^nd Unless Order, the explanation offered by Cheng in his 2^nd Affirmation is not convincing at all.  There is no evidence showing what has been done by the plaintiff himself or by the handling solicitor to ensure compliance with the 2^nd Unless Order.  Further, the filing clerk is not forthcoming.  The dealing for service of the plaintiff’s witness statement has been clearly and unequivocally set out in the 2^nd Unless Order.  Further, the plaintiff’s witness statement was only filed in court at about 3:55 pm on 5 June 2017.  The credibility and reliability of the explanation offered by the filing clerk should be assessed in the light of these indisputable facts.

(f)   Mr Szeto refers me to Hytec Information Systems Ltd. v Coventry City Council[3], in which Ward LJ said:-

“Ordinarily this court should not distinguish between the litigant himself and his advisers. There are good reasons why the court should not: first, if anyone is to suffer for the failure of the solicitor it is better that it be the client than another party to the litigation; secondly, the disgruntled client may in appropriate cases have his remedies in damages or in respect of the wasted costs; thirdly, it seems to me that it would become a charter for the incompetent …… were this court to allow almost impossible investigations in apportioning blame between solicitor and counsel on the one hand, or between themselves and their client on the other. The basis of the rule is that orders of the court must be observed and the court is entitled to expect that its officers and counsel who appear before it are more observant of that duty even than the litigant himself.”

(g)   Not granting relief from sanction to the plaintiff is not draconian.  No judgment would be entered against the plaintiff.  The plaintiff can still cross-examine the defendant’s witnesses, and the plaintiff can still adduce expert evidence in the trial.

23.  In my view, there is no doubt that the plaintiff’s witness statement has not been served on the defendant’s solicitors on 5 June 2017.  The witness statement has to be served by leaving the same at or sending the same to the proper address for service, which would be the address of the defendant’s solicitors[4]. Sending the witness statement to the defendant’s solicitors by fax is not valid service.  In my judgment, the plaintiff’s witness statement was only served on the defendant’s solicitors on 7 June 2017.  The defendant’s solicitors only received a copy of the plaintiff’s witness statement through ordinary post on 7 June 2017.  However, that is after the deadline stated in the 2^nd Unless Order.  The plaintiff has failed to comply with the 2^nd Unless Order by serving the plaintiff’s witness statement by the deadline as stipulated in the order.

24.  Mr Coleman SC has said everything which can be said for the plaintiff. However, the following remains as matters against the plaintiff and the court has to take these into account:-

(a)   This is the second breach by the plaintiff of an unless order made in these proceedings.

(b)   As submitted by Mr Szeto, the explanation offered by Cheng in his 2^nd Affirmation is completely unconvincing at all.  Cheng has not mentioned what attempts have been made by the filing clerk in trying to serve the plaintiff’s witness statement on the defendant’s solicitors in Yuen Long after filing the same in court on 5 June 2017.  Further, the deadline stated in the 2^nd Unless Order is clear and unequivocal, which is “by 4 pm on 5 June 2017”.  It is difficult to imagine in what way the deadline could be misunderstood.

25.  Some of the criticism made by Mr Szeto are valid criticism.  However, I am unable to agree with Mr Szeto on the following points:-

(a)   Mr Szeto submits that not granting relief from sanction to the plaintiff is not draconian.  I do not agree.  In an adverse possession case, the person claiming adverse possession has the burden of adducing compelling evidence to prove his claim[5]. So if no relief from sanction is given to the plaintiff and the plaintiff is debarred from adducing evidence from any factual witness in the trial, that would tantamount to striking out the plaintiff’s claim and giving judgment to the defendant on the counterclaim for possession of the Land.  No doubt these would be draconian consequences.

(b)   Relying upon the Hytec case, Mr Szeto submits that ordinarily the court should not distinguish the litigant’s fault and his solicitor’s fault in considering whether relief from sanction should be granted.  In my view, in accordance with RDC Order 2 rule 5(f), I have to make this distinction in considering how to exercise my discretion.

(c)   I agree with Mr Coleman SC that allowing the plaintiff to file a witness statement after seeing the defendant’s witness statement is the consequence of the Order of Master D To made on 19 May 2017 and is not related to the relief from sanction now sought by the plaintiff.  Further, I am of the view that if there is any prejudice to the defendant as a result of this, the prejudice is certainly not irreversible, as the defendant may seek leave to put in a supplemental witness statement to refute the matters said in the plaintiff’s witness statement if necessary.

(d)   The substantial costs incurred by the defendant as a result of the hearing here and below can be compensated by an appropriate costs order made by this court.  This is not a valid reason for exercising the discretion against the plaintiff.

26.  Having considered the parties’ submissions carefully, I am prepared to exercise my discretion to grant the relief from sanction sought by the plaintiff upon the condition that the plaintiff shall pay the costs of this hearing and below (including all costs reserved, if any, and with a certificate for counsel) to the defendant forthwith.  I would summarily assess those costs and the plaintiff has to pay the same to the defendant within 14 days.

(a)   I accept the points made by Mr Coleman SC as set out in paragraph 21 above.

(b)   Although there is no convincing explanation for the breach, I accept that the delay is minimal and the fault is entirely on the plaintiff’s solicitors.

(c)   The plaintiff has signed his witness statement on 2 June 2017.  The plaintiff is entitled to entrust the filing and service of the same to his solicitors.  Failing to serve the witness statement on the defendant by 4pm on 5 June 2017 is the fault of the plaintiff’s solicitors and not the fault of the plaintiff personally.

(d)   I am fully aware of the fact that this is the second time of breaching an unless order by the plaintiff in these proceedings.  However, I have to also bear in mind that this second breach is entirely due to the fault of the plaintiff’s solicitors.

(e)   The plaintiff has partially performed the 2^nd Unless Order, ie by filing the plaintiff’s witness statement in court before 4 pm on 5 June 2017.  In other words, the plaintiff has only partially breached the 2^nd Unless Order by failing to serve the plaintiff’s witness statement by the deadline set out in the order.

(f)   Giving the relief from sanction claimed by the plaintiff would not cause any substantial delay in these proceedings.

(g)   Refusing the claim for relief from sanction claimed by the plaintiff would be equivalent to entering final judgment against the plaintiff here and now.  While the delay is minimal and is not caused by the plaintiff personally, in my view, this drastic outcome would be disproportionate to the fault on the plaintiff’s side.

(h)   Although I am minded to grant the relief from sanction to the plaintiff, it is undeniable that this is the second time in which the plaintiff has to seek relief from sanction in these proceedings.  The plaintiff has breached the unless orders made by this court twice.  The plaintiff has to pay a price for this.  In my judgment, the plaintiff comes to this court to seek an indulgence, and he should pay costs to the defendant as a result of his application.  I would only grant the relief from sanction to the plaintiff upon the payment of the costs of this appeal hearing and below by the plaintiff forthwith.

27.  I have heard submissions on costs.  I have also considered the “without prejudice save as to costs” offer made by the defendant’s solicitors on 23 October 2017.  Having considered all these, I am of the view that costs of this appeal hearing and below (including all costs reserved, if any, with a certificate for counsel) should be to the defendant, costs of this appeal hearing would be on party and party basis, but costs of the hearing below would be on indemnity basis.  I summarily assess the total of these costs at HK$180,000.

28.  The form of the relief would be extending the time in the 2^nd Unless Order from “4 pm on 5 June 2017” to “7 June 2017”.  Since the plaintiff’s witness statement was received by the defendant’s solicitors on 7 June 2017 through ordinary post, giving the plaintiff this time extension would be relieving him from the sanction in the 2^nd Unless Order.  However, I have to emphasize that this relief is conditional upon the full payment of the aforesaid costs by the plaintiff to the defendant within 14 days, and shall be immediately revoked if the plaintiff fails to make the full payment.  

29.  Lastly, I have to mention RDC Order 62 rule 8(2), which provides:-

“A wasted costs order may—

(a) disallow the costs as between the legal representative and his client; and

(b) direct the legal representative to—

(i) repay to his client costs which the client has been ordered to pay to other parties to the proceedings; or

(ii) indemnify other parties against costs incurred by them.”

30.  As said in the above, the non-compliance with the 2^nd Unless Order is caused by the fault of the plaintiff’s solicitors.  If there is any application against the plaintiff’s solicitors for a wasted costs order, the court will hear and determine the application in due course.

Disposition

31.  For the reasons above, I allow the appeal and make the following order:-

(a)   the Order of Master David Chan made on 30 October 2017 be set aside;

(b)   upon the condition that the plaintiff do pay the costs specified in (d) below to the defendant in full within 14 days, ie on or before 28 March 2018, the plaintiff be granted relief from sanction in the Order of Master D To made on 19 May 2017 by (i) extending the time in paragraph 1 thereof from “5 June 2017” to “7 June 2017”; and (ii) extending the time “4:00 pm on 5 June 2017” in paragraph 2 thereof to “7 June 2017”;

(c)   the relief from sanction shall be immediately revoked in the event that the plaintiff fails to perform the aforesaid condition;

(d)   costs of this appeal hearing and costs of the Summons (including all costs reserved, if any) be to the defendant forthwith, with a certificate for counsel, and costs of this appeal hearing be paid on party and party basis, costs of the Summons be paid on indemnity basis, and the total of all these costs is summarily assessed at HK$180,000.

32.  I thank Mr Coleman SC, Mr Wong and Mr Szeto for the assistance provided to the court.