MUTUTAL BRILLIANT LTD v. SHIN HO CABLE (HOLDINGS) COMPANY LTD AND ANOTHER

CAMP 551/2021 and CACV 170/2023, [2024] HKCA 519

On Appeal From [2023] HKDC 694

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 551 OF 2021

(ON AN INTENDED APPEAL FROM HCA NO 2361 OF 2017)

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AND

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 170 OF 2023

(ON APPEAL FROM HCA NO 2361 OF 2017)

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_______________

(Heard together)

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REASONS FOR JUDGMENT
AND
DECISION ON COSTS

____________________________________

Hon Au JA (giving the Reasons for Judgment and Decision on Costs of the Court):

A.  INTRODUCTION

1.  This is the rolled-up hearing of the defendants’ application for leave to appeal against the order of B Chu J (“the Judge”) dated 30 July 2021 (“the Judge’s Order”), dismissing the defendants’ appeal with indemnity costs against the order of Master Norman Nip dated 26 February 2021 (“the Master’s Order”).  By way of the Master’s Order, Master Nip dismissed the defendants’ summons dated 27 November 2020 (“the Relief Summons”) with indemnity costs.  The Judge has set out her reasons in making the Judge’s Order in her detailed written Judgment of the same date (“the Judgment”).

2.  Under the Relief Summons, the defendants sought (a) extension of time to apply for relief against sanction from the unless order dated 22 June 2020 (“the Unless Order”) made by Master Dick Ho which prohibited the defendants from making applications to respectively re-amend their Re-Amended Defence and for expert directions after 6 July 2020; (b) leave to re-amend the Re‑Amended Defence in the form of the draft attached to the Relief Summons; and (c) leave to issue summons for expert directions.

3.  At the end of the rolled-up hearing, we gave leave to the defendants to appeal, allowed the appeal (which was subsequently assigned the appeal number CACV 170/2023), and set aside respectively the Judge’s and Master’s Orders.  We further granted (a) relief from sanction imposed under the Unless Order, and (b) leave to the defendants to file and serve a fresh Re‑Re‑Amended Defence, and issue a summons for expert directions (collectively “the CA Order”).  We indicated that we would hand down our reasons for judgment and decision on costs in due course.  This is what we do now.

B.  BACKGROUND

4.  To properly understand the issues and arguments raised in this appeal, it is necessary to set out in some details the relevant background relating to the claim and the procedure leading to the Relief Summons as below.

B1.  The parties’ dispute

5.  According to the Amended Statement of Claim (“ASOC”) and the Re-Amended Defence (“RAD”), the materials before the court and the Judgment, the parties’ respective pleaded cases are as follows.

6.  The plaintiff is a limited company in Hong Kong engaging in property development and the purchaser of the defendants’ interests in the Nan Shan Project (as defined at [10] below)[1].

7.  The 1^st defendant is a limited company incorporated in Hong Kong and a 90% shareholder of the 2^nd defendant[2].  The 2^nd defendant is also a limited company incorporated in Hong Kong and a subsidiary of the 1^st defendant.  The 2^nd defendant is wholly owned parent company of a Mainland Chinese company 信電實業(深圳)有限公司 (“Shin Din Shenzhen”)[3].

8.  The directors of the defendants at all material times were: Mr Jonathan Ka Ming Chan and his mother, Madam Chen Shau Enig, Liza (“Madam Chen”).  Madam Chen was the legal representative of the defendants and authorized signatory for the defendants in Mainland China. Prior to January 2015, Mr Chan’s late father Mr Peter Chan Wing Hon was the legal representative and authorized signatory for the defendants in PRC.

9.  In 1990s, the Shin Ho Group purchased land rights to use and occupy various collective land in Shenzhen’s Nan Shan District, covering an area of approximately 160,160 square meters (“Nan Shan Land”).  The land was owned by a Shenzhen-based company, 深圳市百旺實業股份有限公司 (“Baiwang”)^[4].

10.  On or around 5 January 2012, Shin Din Shenzhen and Baiwang entered into two cooperative development agreements.  According to the plaintiff, that was for the purpose of the urban renewal project to turn the Nan Shan Land from collective land into residential and commercial land and to develop residential and commercial properties thereon (“Nan Shan Project”) and that pursuant to the two cooperative development agreements, Shin Din Shenzhen holds the defendants’ substantive interests in the Nan Shan Project[5].

11.  On 24 July 2014, the 1^st defendant and one Shenzhen company 深圳市大世界集團有限公司 (formerly深圳市大世界投資集團有限公司) (“Dashijie”) entered into an agreement (“Compensation Agreement”)[6].  By the Compensation Agreement, the 1^st defendant agreed to hand over 深圳市南山區西麗街道辦百旺工業片區“Baiwang Industrial Site” to Dashijie for it to proceed to demolition and rebuilding, and to pay the 1^st defendant compensation.  The compensation agreed was RMB600m to be paid by six instalments as set out in the agreement with the first instalment to be paid within 10 working days upon signing of the agreement[7].

12.  According to the plaintiff, Dashijie made a partial payment of around RMB110.36m as of January 2016.  This is disputed by the defendants, who say the partial payment made by Dashijie to 1^st defendant was only RMB107.2m[8].

13.  It is the plaintiff’s case that upon Dashijie’s default under the Compensation Agreement, the defendants invited the plaintiff to acquire Shin Ho Group’s interests in the Nan Shan Project in lieu of Dashijie.  However, the defendants say it was Mr Xu Jingui (“Mr Xu”), a director of Dashijie, who was seeking out investors to perform Dashijie’s obligations under the Compensation Agreement and that for this purpose Mr Chan was invited by Dashijie to attend several meetings with various potential investors including the Polytec Group[9].

14.  Then, it was said by the plaintiff, in around January 2016, the plaintiff, the Shin Ho Group and Dashijie reached an understanding that the plaintiff would pay RMB600m to the 1^st defendant to replace Dashijie as purchaser of Shin Ho Group’s interests in the Nan Shan Project, and that out of the total consideration of RMB600m, RMB110m would be paid by the plaintiff to Dashijie (representing the partly paid sum by Dashijie to the 1^st defendant under the Compensation Agreement) and that the remaining RMB490m would be paid to the 1^st defendant to acquire Shin Ho Group’s interests in the Nan Shan Project (“Tripartite Understanding”)[10].

15.  In reliance on the Tripartite Understanding, and at the request of Mr Chan on behalf of the plaintiff, the plaintiff said it had, on 14 January 2016, advanced a loan of RMB6m (“the Loan”), via the plaintiff’s agent Mr Feng Mao (“Mr Feng”), to Shin Din Shenzhen under a loan agreement for a term of one month from that date to 13 February 2016 (“Loan Agreement”) and that the Loan was provided to Shin Din Shenzhen to settle fees and expenses (including government fees) associated with the Nan Shan Project[11].  Until full repayment, Mr Feng or his nominated third party had a priority right over the transfer of interests in the Nan Shan Project (“the Priority Right”).

16.  The plaintiff says that the Tripartite Understanding was recorded and documented by a number of documents[12]:

(1)  First, by a draft tripartite agreement to be signed between the plaintiff, the defendants and Dashijie sent by the plaintiff to the defendants and Dashijie on or around 15 January 2016 (“Tripartite Agreement”), the plaintiff alleges that it confirmed with 1^st defendant and Dashijie that the parties agreed for Dashijie’s rights and interests under the Compensation Agreement to be transferred to the plaintiff for RMB600m[13].

(2)  Thereafter, on 26 January 2016, the plaintiff and Dashijie signed a cooperation development agreement (“Bilateral Agreement”)[14].

(3)  Then, there were three drafts of a transfer agreement sent by Mr Chan to the plaintiff stating that the 1^st defendant and Dashijie agreed to transfer to the plaintiff 100% shareholding in Shin Din Shenzhen and the land use and property rights of the Nan Shan Land (“Transfer Agreement”), one on around 2 February 2016, a revised draft on 16 April 2016, and a further revised draft on or around 25 April 2016.  Thereafter, the plaintiff sent an email to the 1^st defendant on 20 May 2016 with a further revised draft Tripartite Agreement[15].

17.  However, the plaintiff accepts that the Tripartite Agreement was never executed between the plaintiff, the 1^st defendant and Dashijie in the end[16].  In the meantime, the Loan failed to be repaid on the due date.

18.  According to the defendants, as a result of Dashijie’s default, on 10 March 2016, the 1^st defendant terminated the Compensation Agreement with Dashijie[17].  The defendants deny that there was any Tripartite Understanding as alleged by the plaintiff[18].

19.  On about 4 August 2016, Mr Feng commenced an action in the Foshan Intermediate People’s Court in Guangdong (“Foshan Court”) against Shin Din Shenzhen, Mr Xu and Mr Chan to claim repayment of the Loan plus penalties, compound interest and for a confirmation of the Priority Right[19].

20.  It is the plaintiff’s pleaded case that on or around 2 September 2016, Mr Chan contacted a Mr Zou Xuebing of the plaintiff (“Mr Zou”) by telephone and suggested that the defendants were willing to sell their interests in the Nan Shan Project to the plaintiff without the involvement of Dashijie under similar terms as the draft Tripartite Agreement, that the plaintiff agreed in good faith at Mr Chan’s invitation to purchase the defendants’ interests in the Nan Shan Project and that the plaintiff and the defendants entered into a cooperation agreement on or around 26 September 2016 (“Cooperation Agreement”) whereby the plaintiff agreed to buy and the defendants agreed to sell all of the defendants’ interests in the Nan Shan Project and the defendants’ entire shareholding in Shin Din Shenzhen for a consideration of RMB489.64m subject to warranties and due diligence[20].

21.  The Cooperation Agreement was alleged by the plaintiff to be partly orally and partly evidenced in writing[21]:

(1)  The oral terms were agreed at a meeting on 26 September 2016, the particulars of those terms are defined as the essential terms (“Essential Terms”) and set out at paragraph 20(1) ‑ (5) of the ASOC.

(2)  As for the part of the Cooperation Agreement which was evidenced in writing, the plaintiff relies on a draft written agreement “深圳市南山區西麗街道百旺工業區城市更新項目合作協議” prepared by Jianwei (Shenzhen) Law Firm on or about 6 October 2016 (“Written Agreement”)[22]. This included a provision that Hong Kong law would apply.  It is the plaintiff’s case that Mr Chan affirmed that he had read the terms of the draft Written Agreement and the defendants agreed to them[23].

22.  The plaintiff also says it was ready and willing to fulfil its obligations under the Cooperation Agreement at all times, but despite repeated requests and demands, the defendants failed and continued to fail to execute the draft Written Agreement and/or to perform the Cooperation Agreement.

23.  The plaintiff seeks in its claim against the defendants for specific performance of the Cooperation Agreement, damages in lieu of or in addition to specific performance, and damages for breach of contract.

24.  On the other hand, the defendants’ case in their RAD is that it was Mr Zou who initiated the telephone call to Mr Chan[24] and that Mr Chan met with Mr Lai Ka Fai of the plaintiff (“Mr Lai”) in about September 2016 but there was no meeting of minds between Mr Lai and Mr Chan and no oral terms of the alleged Cooperation Agreement were ever agreed[25].  Further, Mr Lai was given notice orally by Mr Chan that Madam Chen is and was at all material times the final decision maker of the defendants and that Mr Chan must report back to Madam Chen[26].

25.  The draft Written Agreement sent to Mr Chan on 13 October 2016 was not signed by Madam Chen[27].  Further, according to the defendants, it was only at the time of the draft Written Agreement that Mr Chan was informed about the existence of the plaintiff and that the plaintiff was then found by Mr Chan, after a company search, to be a company holding one share at a value of HKD1[28].  Further, the defendants’ case is that if they were to sell the Nan Shan Project to another buyer, it should be at market price[29].

26.  On 13 January 2017, the plaintiff commenced an action in the Shenzhen Intermediate Peoples’ Court (“Shenzhen Court”) against seven defendants, namely Mr Xu, Dashijie and two other Dashijie companies, the 1^st defendant, Shin Din Shenzhen and Mr Chan (“Shenzhen Proceedings”). By a judgment handed down on 21 March 2017, the Foshan Court ordered Shin Din Shenzhen to repay the Loan to Mr Feng plus interest and legal costs, but declined to grant other reliefs claimed by Mr Feng including its claim for a confirmation of the Priority Right (“Foshan Judgment”)[30].

27.  The plaintiff says that it was upon reliance on the Cooperation Agreement that it withheld the enforcement of the Foshan Judgment until around September 2017.

28.  On the other hand, the defendants’ case is that the Loan was repaid to Mr Feng by payment into the Foshan Court directly by Mr Xu in early 2017[31].  This is however denied by the plaintiff in its Re‑Amended Reply (“RAR”)[32] who alleged that upon Mr Feng’s application in November 2017, Shin Din Shenzhan, Mr Chan and Mr Xu were all declared by the Foshan Court to be “失信被執行人”.

29.  On 12 October 2017, the plaintiff issued the writ in the present action.

30.  On 27 April 2018, the plaintiff applied to the Shenzhen Court to withdraw its claim against 1^st defendant, Shin Din Shenzhen, and Mr Chan and proceeded only against Mr Xu and Dashijie and its other companies over the breach of the Bilateral Agreement.

B2.  The procedural background leading to the Relief Summons

31.  The checkered procedural background leading to the Relief Summons and the hearings before Master Nip and the Judge is not in dispute.  It has been helpfully set out in detail by the Judge at [33] ‑ [60] of the Judgment.

32.  For present purposes, we need to highlight the following in some details.

33.  On 12 February 2019, the plaintiff filed its ASOC.

34.  On 5 March 2019, the defendants filed their RAD.

35.  On 23 April 2019, the plaintiff filed its RAR.

36.  On 6 August 2019, Master Ho ordered at a case management summons hearing that the defendants take out any applications to re‑re‑amend the defence and to seek further security of costs on or before 6 September 2019.

37.  On 6 September 2019, the defendants issued a summons (“1^st RRAD Summons”) to file and serve a re-re-amended defence with the draft re-re-amended defence (version 1) (“RRAD (version 1)”) attached.  Subsequent to that, the defendants filed a summons to amend the 1^st RRAD Summons.

38.  The 1^st RRAD Summons was later withdrawn by the defendants on 4 December 2019 by consent.

39.  On 19 June 2020, the defendants issued a new summons (“2^nd RRAD Summons”) seeking leave to file and serve another draft RRAD (version 2) (“RRAD (version 2)”).  It is noted that RRAD (version 2) and RRAD (version 1) are almost identical, except with some minor typo and stylistic changes in some of the proposed amendments.

40.  On 22 June 2020, Master Ho made the Unless Order ordering, amongst other things, that unless by 4pm on 6 July 2020 the defendants take out an application (a) to further amend their pleadings, and (b) for expert directions, they will be debarred from doing so.

41.  On 29 June 2020, counsel Jeremy Cheung (“Mr Cheung”) joined the defendants’ legal team.  Subsequently on 23 October 2020, Mr Cheung advised the defendants that the RRAD (version 2) prepared by their former counsel was “woefully inadequate” and thus he advised the defendants to issue a summons to withdraw the 2^nd RRAD Summons and that Mr Cheung himself would prepare a fresh draft RRAD.  The defendants’ then solicitors acted upon Mr Cheung’s advice and issued a summons (“Withdrawal Summons”) to withdraw the 2^nd RRAD Summons on 23 October 2020.

42.  On 28 October 2020, Mr Cheung had a conference with the defendants and its then solicitors, Zhang Lawyers, and only then did Mr Cheung realise the existence of the Unless Order.  Mr Cheung therefore advised the defendants to withdraw the Withdrawal Summons and issue a fresh summons to amend the 2^nd RRAD Summons by replacing the RRAD (version 2) with Mr Cheung’s fresh draft (“RRAD (version 3)”).

43.  On 30 October 2020, the defendants issued a summons to withdraw the Withdrawal Summons.

44.  On 2 November 2020, the defendant’s present solicitors, Messrs Au-Yeung, Cheng, Ho & Tin, replaced Zhang Lawyers and came on record.

45.  On 3 November 2020, the defendants issued a summons to amend the 2^nd RRAD Summons and to replace the RRAD (version 1) with Mr Cheung’s RRAD (version 2), and to amend the expert summons.

46.  On 5 November 2020, the 2^nd RRAD Summons (and the expert summons) was heard before Master Winnie Tsui.  Master Tsui dismissed both the 2^nd RRAD Summons and the expert summons on the same day.

47.  On 27 November 2020, the defendants issued the Relief Summons to apply for relief from sanction imposed under the Unless Order and for leave to file and serve the RRAD (version 3)[33]. By that time, they were already out of time for nine days to apply for relief against sanction and they therefore also asked for extension of time to file the Relief Summons[34].

48.  On 26 February 2021, the Relief Summons was dismissed by Master Nip.  The defendants appealed the dismissal to the Judge.

49.  On 30 July 2021, by way of the Judgment, the Judge dismissed the appeal with indemnity costs against the defendants.  The Judge later further refused to grant leave to the defendants to appeal from the Judge’s Order by way of her decision dated 23 November 2021[35].

50.  On 7 December 2021, the defendants renewed their application to the Court of Appeal for leave to appeal against the Judge’s Order.

51.  On 1 June 2023, this court heard the rolled-up hearing of the renewed application of the defendants’ application for leave to appeal against Judge’s Order.

C.  THE JUDGMENT

C1.   Merits of the Proposed Amendments

52.  In the draft RRAD (version 3), the Judge categorized the major proposed amendments into three groups:

(1)  Those amendments relating to the defendants’ case that PRC law is the proper law of the Cooperation Agreement and/or other alleged agreement(s) and that the Cooperation Agreement is invalid, ineffective and/or unenforceable under the relevant PRC law (“Group 1 Amendments”)[36].

(2)  Those amendments relating to defendants’ defence of estoppel arising from the previous PRC proceedings (“Group 2 Amendments”)[37].

(3)  Those amendments relating to defendants’ defence(s) of the Cooperation Agreement and/or other alleged agreement(s) being void for want of consideration and void for uncertainty (“Group 3 Amendments”)[38].

53.  In relation to the Group 1 Amendments, the Judge accepted the plaintiff’s submissions that the resolution of whether the Cooperation Agreement was concluded depended on whether there was an agreement reached[39]. The Judge also made specific reference to clause 9 of the draft Written Agreement, where the plaintiff claims if certain provisions of clause 9 cannot be complied with, it has an option to elect not to proceed with the terms of the agreement[40].  The Judge then decided that it was only if the plaintiff decided to proceed with the terms of the Cooperation Agreement, then PRC law might become relevant.  Because of that, the issue of PRC law was not one which the court needed to determine for the purpose of the present action[41].

54.  For Group 2 Amendments, the defendants attempt to raise a new defence of estoppel relying on the Foshan Judgment and Shenzhen Proceedings.  The Judge however was of the view that the Shenzhen Proceedings did not adjudicate on whether the Cooperation Agreement was concluded on the terms as alleged by the plaintiff, therefore she came to the view that there was no abuse of process nor estoppel established by reason of the Shenzhen Proceedings[42].

55.  For Group 3 Amendments, the defendants argue that the plaintiff would have difficulty identifying the terms of the alleged Cooperation Agreement as it is unclear what is meant by “non‑controversial” commercial terms and therefore should be void for uncertainty.  The Judge was of the view that the main issue at trial would be to determine whether there was the Cooperation Agreement which was concluded on the terms as alleged by the plaintiff, and if the court were to so find, the defendants’ pleas of want of consideration or void for uncertainty were unsustainable[43].

56.  In conclusion, the Judge found no merits in all the three groups of amendments.

57.  Regarding other amendments, the Judge found that they are mere embellishment and are not necessary for the just resolution of the parties’ disputes[44].

C2.   Issues of delay

58.  The Judge has not lost sight of other factors when considering whether the relief should be granted.

59.  The Judge however was of the view that given her conclusion that the proposed amendments were not necessary and/or not relevant and therefore not meritorious, the defendants would not suffer any prejudice by the court in not allowing them relief from sanction and extension of time to file the RRAD (version 3), and the Judge accordingly dismissed the appeal.[45]

D.  THIS APPEAL

D1.  Grounds of appeal

60.  In the draft Notice of Appeal, the defendants put forward two grounds of appeal.  They can be summarized as follows:

(1)  The Judge is plainly wrong in the exercise of discretion in refusing to grant relief to the defendants against the sanction imposed under the Unless Order on the wrong bases (“Discretion Ground”); and

(2)  The Judge is plainly wrong in rejecting (a) the Group 1 Amendments concerning PRC law by holding that PRC law is not relevant; (b) the Group 3 Amendments on the point that the Cooperation Agreement is void for uncertainty as they have no merits; and (c)  other amendments by dismissing them as mere embellishments not necessary for the just resolution of the parties’ dispute (“No Merits Ground”).

61.  It is pertinent to note that the defendants in their proposed appeal do not seek to appeal against the Judge’s refusal of the Group 2 Amendments and the want for consideration amendment[46].  These amendments therefore no longer concern this court.

D2.  Applicable principles

62.  The legal principles for an application for relief from sanction imposed by an unless order are trite.

63.  The factors and circumstances taken into account are well set out in Hong Kong Civil Procedure 2024, para 2/5:

“The Court shall consider all the circumstances including:

(a) the interests of the administration of justice;

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

(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.”

64.  In Top One International China Property Group Co Ltd v Top One Priority Group Ltd[2011] 1 HKLRD 606, Fok J (as he then was), at [41], reviewed Order 2, rule 5 of the Rules of the High Court, and said as follows:

“41. […] That is to say, although intentional and contumelious disregard of a court’s peremptory order may be the most usual circumstance leading to the refusal of an extension of time to comply with a peremptory order, the exercise of the discretion to refuse an extension or to relieve a party from sanctions is not limited to cases of intentional and contumelious default. As directed by O.2 r.5 of the Rules of the High Court, the court should consider all the individual circumstances including those listed in r.5(1) at subparas. (a)-(j). 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 is an existence and degree of fault which warrants a refusal of an extension of time, so that relief from a sanction for non-compliance specified in a peremptory order (including an order striking out a pleading) should not be granted. Any other conclusion would, in my opinion, be to ignore the positive duty placed on parties to assist the court to further the underlying objectives of CJR (O.1A r.3 of the Rules of the High Court) and on the court to do so by actively managing cases (O.1A r.4(1) of the Rules of the High Court).”

65.  However, mere non-compliance of Order 2, rule 4 of the Rules of the High Court does not necessarily mean that the court will reject the application for relief from sanction outright, see Lee Sai Nam v Li Shu Chung & Ors, HCA 1711/2009 (unreported) 31 May 2013, at [120] ‑ [122].  The court instead will consider all relevant factors, particularly (a) the length of the delay, (b) the reasons for the delay, (c) the merits of the proposed application for relief from sanction, and (d) the degree of prejudice to the other party.  Further at [148], Deputy High Court Judge Marlene Ng (as she then was) said:

“148. In my view, there can be no doubt that the application for relief from sanction is made substantially out of time. However, this is only one of the factors for deciding whether to grant extension of time for making such application. I bear in mind that notwithstanding KJ’s failure to issue proper application under Order 2 rules 4 and 5 of the RHC until recently, on 13 July 2012 KJ Solicitors had already intimated KJ’s intention to serve supplemental and/or further statements as to facts and even provided copies of the Draft Statements to FS Solicitors. Hence, even though KJ had gone down the incorrect procedural route, FS had been alerted to the KJ’s aforesaid intention to serve further witness evidence for 8 months, which is the substantive purpose of the Relief Summons, ie to lift the sanction under the Unless Order in order to serve the witness statements as to facts as per the Draft Statements.” (emphasis added)

66.  In the weighing exercise to be undertaken by the court on a fresh exercise of discretion, a weighty factor is the question of proportionality of the sanction in the circumstances of the case.  See Daimler AG v Leiduck [2012] 3 HKLRD 119, at [56] and [57].

67.  Bearing those principles in mind, we now turn to look at the grounds of appeal.

D3.  No Merits Ground

68.  For reasons that will become clearer later, we would first deal with the No Merits Ground.

69.  This ground relates to the Judge’s refusal to grant leave to the defendants to introduce the Group 1 Amendments (ie, the plea on PRC law) and Group 3 Amendments (ie, the plea on uncertainty of the terms).  She found those proposed amendments to be of “no merits” as both the Groups 1 and 2 Amendments were irrelevant to the issues at trial.  The Judge explained her reasons in the Judgment as follows:

“WHETHER THE PROPOSED RRAD IS MERITORIOUS

79. In the Relief Summons, what Ds are seeking relief and/or extension of time to file is yet another new version of the RRAD drafted/settled by Mr Cheung (‘Version 3’) which Ds now rely on.

80. It is submitted by Mr Li on behalf of Ds that their application to file and serve the RRAD is meritorious and goes to the crucial issue of whether the alleged Cooperation Agreement, even if found by the Court to have been reached between the parties, would be invalid under the PRC law which is arguably the proper law of that agreement. Also there are other legal defences which would render P’s claim unsustainable.

81. Mr Li further submits that many of the proposed amendments in the RRAD are unlikely to be controversial and are only amendments to clarify the position or to more clearly plead Ds’ case or semantic changes.

82. On the other hand, Mr Wong submits that apart from the impugned amendments, the other amendments are embellishments of matters already pleaded and unnecessary.

83. Anyway, the major controversial proposed amendments or the ‘impugned amendments’ in Version 3 of the RRAD are as follows :

(1) Those amendments relating to Ds’ case that the PRC law is the proper law of the alleged Cooperation Agreement and/or other alleged agreement(s) with specific PRC law provisions (paragraphs 17(6A)-(6B) & 17(7B)) and the alleged Cooperation Agreement is invalid, ineffective and/or unenforceable under the PRC law (paras 17 (6C)-(6G) ) – ‘Group 1 Amendments’

(2) Those amendments relating to Ds’ defence of estoppel arising from the previous PRC proceedings (paragraphs 17(7A) & (7C)) – ‘Group 2 Amendments’

(3) Those amendments that relating to Ds’ defence(s) of the alleged Cooperation Agreement and/or other alleged agreement(s) being void for consideration and void for uncertainty (paragraphs 25A, 25C) – ‘Group 3 Amendments’)

Group 1 Amendments - paragraphs 17(6A)-(6B) & 17(7B), paras 17 (6C)-(6G) – re PRC law

84. Paragraphs 15 to 21 of the ASoC are in relation to the alleged Cooperation Agreement between P and Ds. In the RAD, Ds have denied paragraph 15 of the ASoC and in relation to paragraphs 16-21, save as averred by them, those paragraphs have also been denied. Ds have further averred that there was no meeting of minds at the meeting in September 2016 between Mr Chan and Mr Lai. In short, Ds deny there was the Cooperation Agreement as pleaded by P and that there was no Cooperation Agreement concluded on the terms as alleged by P.

85. By those proposed extensive proposed amendments in paragraphs 17(6A), (6B), and (7B), Ds have set out the specific provisions in the PRC law relied by them for their case that the proper law of the alleged Cooperation Agreement and/or other alleged agreements is the PRC law and that the alleged Cooperation Agreement is invalid, ineffective and/or unenforceable under the PRC law.

86. It is submitted by Mr Wong on behalf of P that the present case involves the resolution of whether the Cooperation Agreement (on terms alleged by P) was concluded and that the dispute is only whether an agreement was reached and that the PRC law sought to be introduced by Ds is irrelevant.

87. What has been averred by P in their ASoC is that the Cooperation Agreement will be subject to warranties and due diligence. P has relied on the Cooperation Agreement being evidenced by the Written Agreement, and the relief of specific performance sought by P is subject to Ds doing all things necessary to assist P to conduct due diligence as per clause 9 of the Written Agreement. Under clause 9, if certain provisions of clause 9 cannot be complied with, P has an option to elect not to proceed with the terms of the agreement .

88. It is thus Mr Wong’s submission that at this stage, the PRC law is not relevant.

89. Having considered P’s pleaded case, I agree with Mr Wong. It is only if P decides to proceed with the terms of the Cooperation Agreement (if such agreement is held to have been concluded between the parties), after due diligence provided in clause 9 of the Written Agreement, then PRC law may become relevant. The issue of PRC law is not one which the Court needs to determine for the purpose of the present action.

...

Group 3 Amendments – want of consideration and void for uncertainty

106. Mr Li made no submissions on want of consideration in Ds’ Skeleton Arguments .

107. It is submitted by Mr Li that P itself has difficulty identifying the terms of the alleged Cooperation Agreement as it is pleaded that the agreement ‘shall be subject to conditions in usual commercial transaction’ with the terms ‘where necessary [supplemented] with ancillary terms’ and that the Essential Terms ‘supplemented by ancillary terms which were not controversial’, and that it is not clear what P means by ‘not controversial’ and that had those terms been agreed by Ds orally, they should have been pleaded as part of the alleged Essential Terms. Otherwise, those were not agreed terms. Thus, it is submitted by Mr Li that P’s own pleadings render the alleged Cooperative Agreement are void for uncertainty.

108. The main issue at trial will be to determine whether there was the Cooperation Agreement which was concluded on the terms alleged by P. If the Court were to so find, it is not clear how the pleas of want of consideration or void for uncertainty are sustainable.

Conclusion on the merits of the proposed amendments in Version 3 of the draft RRAD

109. As for the other amendments, even on Mr Li’s own submissions, they are merely to clarify the position of Ds or to more clearly plead Ds’ case or semantic changes. I agree they are merely embellishments and those other amendments are not necessary for the just resolution of the parties’ disputes. As for those 3 groups of major (or impugned) amendments, I have come to the view that there are no merits in those amendments.” (emphasis added)

70.  Under this ground, Mr Li for the defendants complains that the Judge erred in these conclusions as:

(1)  First, she had adopted the wrong test of “no merits” in summarily dismissing those amendments, instead of the proper test of whether the proposed amendments are “bound to fail”[47] in exercising her discretion not to grant leave to the defendants to amend.

(2)  Second and in any event, those proposed amendments are plainly at least arguable, as the Judge’s reasons for finding them to be irrelevant are wrong.

71.  For the following reasons, we agree with Mr Li.

72.  First, Mr Ho for the plaintiff does not dispute that the proper test to be applied in considering whether the proposed amendments should be allowed is the “bound to fail” test. However, he contends that that was what the Judge had actually applied in finding that they were of no merits.

73.  We are unable to agree.

74.  As it is apparent from the parts of the Judgment quoted above, the Judge proceeded to consider the proposed amendments under the context of whether they were “meritorious” (heading before [79]), and after discussions, concluded at [109] that there were “no merits” in those amendments.  Properly read objectively, we agreed with Mr Li that the Judge did not adopt the test of “bound to fail”.

75.  But in any event, even if the Judge had adopted the “bound to fail” test, and concluded that the Group 1 and Group 3 Amendments were bound to fail, we are of the view that she was plainly wrong, as those proposed amendments are at least arguable at the pleading stage.  We will explain why.

76.  It is pertinent to start by looking at the relevant paragraphs of the ASOC and the Group 1 and Group 3 Amendments at the draft RRAD (version 3).

77.  Paragraphs 17 ‑ 25 of the ASOC plead as follows:

“Agreement between the Plaintiff and the Defendants

...

17. The Plaintiff avers that the Plaintiff and the Defendants entered into an agreement on or around 26 September 2016 where the Plaintiff agreed to buy and the Defendants agreed to sell all of the Defendants' interests in the Nan Shan Project and the 2^nd Defendant's entire shareholdinq in Shin Din Shenzhen for a consideration of RMB 489.64 million and subject to warranties and due diligence (the ‘Cooperation Agreement’).

18. The Cooperation Agreement is partly oral and partly evidenced in writing.

19. Insofar as the Cooperation Agreement was formed orally, it was concluded at a meeting which took place at the Plaintiff's office in Hong Kong on 26 September 2016. The Cooperation Agreement was entered into by Mr. Lai Ka Fai of Plaintiff and Mr. Chan of the Defendants to give effect to the Tripartite Understanding pleaded at paragraph 10 above.

20. At the said meeting, the Plaintiff and Defendants agreed·to the following expressed terms (collectively ‘the Essential Terms’):-

Particulars of the Oral Terms

(1) The Plaintiff would acquire Shin Ho Group's interests in the Nan Shan Project for RMB 489.64 million.

(2) The 1^st and 2^nd Defendants confirmed that the Compensation Agreement with Dashijie has been terminated and Dashijie's payment of RMB 110.3.6 million to the Defendants has been forfeited.

(3) The 2^nd Defendant shall transfer its entire shareholding in Shin Din Shenzhen to the Plaintiff in order to enable the Plaintiff to develop the NanShan Project with Baiwang.

(4) The Plaintiff shall assume all the rights and liabilities of the 1st and 2^nd Defendants arising under the Compensation Agreement with Dashijie, subject to a cap of RMB110.36 million.

(5) The transfer of the 2^nd Defendanr s entire shareholding in Shin Din Shenzhen and Shin Ho Group's interests in Nan Shan Project as mentioned in paragraphs 20(1) and (3) herein shall be subject to conditions in usual commercial transaction.

(6) The Plaintiff will draft a written agreement documenting the above terms Essential Terms and where necessary supplementing the Essential Terms with ancillary terms and the Defendants shall execute the written agreement in around October 2016 or within reasonable time. The Plaintiff specifically avers that the Essential Terms comprised of a binding and enforceable agreement and the supplementing of the Essential Terms with ancillary terms did not render the Cooperation Agreement incomplete.

21. Insofar as the Agreement was evidenced in writing, it is evidenced by the draft written agreement prepared by Jianwei (Shenzhen) Law Firm on or around 6 October 2016 setting out the Essential Terms supplemented by ancillary terms which were not controversial (the ‘Written Agreement’).

22. In reliance of the Cooperation Agreement and in good faith, the Plaintiff withheld the enforcement of the Foshan Judgment against Mr. Chan and Shin Din Shenzhen until around September 2017.

23. By an email dated 13 October 2016, the Plaintiff attached the Written Agreement to the Mr. Chan of the Defendants for signature.

24. On various occasions, Mr. Chan of the Defendants affirmed that he had read the terms of the Written Agreement and that the Defendants agreed to the terms stated therein:-

Particulars

(1) On 18 October 2016, Mr. Chan confirmed with Mr. Zou via telephone that the Defendants had no objections to the terms of the draft Written Agreement and that it accurately recorded the oral agreement formed between the parties at the meeting on 26 September 2016;

(2) On 28 October 2016, Mr. Zou again met with Mr. Chan in Shenzhen. Mr. Chan reassured Mr. Zou that the draft Written Agreement was in order and that the Defendants would execute the same. Mr. Chan suggested that he was in the process of understanding whether Dashijie had any potential claims against Shin Ho Group and wanted the Plaintiff to give him a few days before signing the Written Agreement;

(3) On 7 November 2016, upon inquiry by Mr. Zou, Mr. Chan again reassured Mr, Zou on the telephone that the Defendants would perform the Cooperation Agreement and execute the Written Agreement as soon as possible.

25. Further, in reliance of the Cooperation Agreement and Written Agreement, the Plaintiff further agreed to indemnify the 1^st Defendant against all potential claims by Dashijie against the 1^st Defendant under the Compensation Agreement up to the amount of RMB 110.36 million. A draft agreement of the indemnity was sent to the 1st Defendant along with the Written Agreement on 13 October 2016.” (emphasis added)

78.  In reply to these paragraphs of the ASOC, the defendants in the RAD (a) deny that there were any oral terms as pleaded at paragraph 20 of the ASOC, (b) pleaded that the Written Agreement was never signed or executed by the defendants, and hence (c) further pleaded that no contract whether orally or in writing or at all were reached and/or executed amongst the plaintiff and the defendants or at all[48].

79.  By way of the proposed amendments under the Group 1 Amendments, the defendants further seek to plead that, in any event, the proper law of the plaintiff’s pleaded oral agreement of the Cooperation Agreement is PRC law, as the contract relates to the Nan Shan Land located in the Mainland, and that that oral agreement would be in law either not cognizable or enforceable under the relevant PRC Law (the particulars of which have been further pleaded).  See: paragraphs 17(6A) ‑ (6G) and 7(B).

80.  In our view, these proposed amendments cannot be regarded as “bound to fail” and thus should prima facie be allowed:

(1)  It is the plaintiff’s pleaded case that the Cooperation Agreement is partly oral and partly in writing (see paragraph 18 of the ASOC).

(2)  The oral part of the agreement relates to the Essential Terms as particularised under paragraph 20 of the ASOC.

(3)  The written part of the agreement as pleaded is said to have contained the Essential Terms as well as the other ancillary terms which were contained in the Written Agreement (see paragraph 21 of the ASOC).

(4)  It is common ground that the Written Agreement was not signed or executed by the defendants.  In the premises, it is at least arguable that the Written Agreement itself (which is said to have contained the Essential Terms in writing and the other ancillary terms) was not agreed by the defendants and thus not binding on them (as pleaded by the defendants).

(5)  However, it is pertinent to note that it is the plaintiff’s specific pleaded case at paragraph 20(6) of the ASOC that, “the Essential Terms comprised of a binding and enforceable agreement and the supplementing of the Essential Terms with ancillary terms did not render the Cooperation Agreement incomplete” (emphasis added).

(6)  In the premises, it is part of the plaintiff’s pleaded case that the oral Essential Terms themselves constituted a binding agreement under the Cooperation Agreement with or without the ancillary terms set out in the Written Agreement.

(7)  At the hearing, when this part of the ASOC was pointed out to him, Mr Ho for the plaintiff also confirmed that it was not the plaintiff’s case that it would succeed or fail at trial depending on whether it could prove that the Written Agreement was a binding agreement.  It would alternatively rely on proving the oral agreement relating to Essential Terms even if it failed to prove the Written Agreement.

(8)  Thus, there is a possibility that the trial judge at the end would find that the plaintiff has proved that the Cooperation Agreement was formed orally containing the Essential Terms only but not the Written Agreement (especially given that it was not executed or signed by the defendants).

(9)  In the circumstances, it is plainly at least arguable that the proper law of the Cooperation Agreement containing only the oral Essential Terms is PRC law given that it relates to a landed property situated in the Mainland.

(10)  The Group 1 Amendments therefore cannot be regarded as “bound to fail”.

(11)  The Judge’s reliance on clause 9 of the Written Agreement (which provides for the right of the plaintiff to carry out due diligence) to say that the PRC law may only become relevant if the plaintiff decides to proceed with the terms of the Cooperation after due diligence, and thus PRC law is not relevant is with respect incorrect, as she had overlooked the pleaded case that the plaintiff also relies only on the oral Essential Terms as constituting the binding Cooperation Agreement.

81.  Mr Ho at the hearing sought to further argue that the Group 1 Amendments were bound to fail as it had been provided in the Written Agreement that the proper law was Hong Kong law.

82.  There is no merit in this argument.  As explained above, given that the plaintiff relies also on a case that the Cooperation Agreement constituting only the oral Essential Terms is binding and valid, the fact that a choice of law clause was provided in the Written Agreement (which was never executed by the defendants) is neither here nor there.

83.  In relation to the Group 3 Amendments, they are pleaded in the RRAD (version 3) as follows:

“25C. Further and alternatively, the 1^st and 2^nd Defendants aver that if there is any agreement, which is denied, be that oral and/or written and/or otherwise as alleged or at all, it is void for uncertainty.

Particulars

(1) The Essential Terms alleged in paragraph 20.

(2) The alleged acquisition in respect of Shin Ho Group's interests in the Nan Shan Project for RMB 489.64 million in paragraph 20(1).

(3) In particular the alleged term i.e. "condition in usual commercial transaction" in paragraph 20(5).

(4)  In particular, the alleged term i.e. "where necessary supplementing the Essential Terms with ancillary Terms" in paragraph (20)(6).”

84.  The Judge’s reason at [108] of the Judgment that this plea had no merits because if the court found the terms of the Cooperation Agreement were as alleged by the plaintiff, the defendants’ plea on uncertainty would be unsustainable is also wrong as she had overlooked the plaintiff’s alternative case that the Cooperation Agreement was constituted only with the oral Essential Terms without the other terms set out in the Written Agreement.

85.  In the premises, the defendants’ proposed void for uncertainty plea under the Group 3 Amendments is not “bound to fail” as a matter of law at this stage.

86.  For all the above reasons, we find that the Group 1 Amendments and Group 3 Amendments (insofar as they relate to the void for uncertainty case) are at least arguable at this stage.  Insofar as the other proposed amendments are concerned, they also could not be said to be mere embellishments as held by the Judge, in particular, when Groups 1 and 3 Amendments are to be allowed.

87.  In the premises, subject to the question of whether relief against sanction should be granted to the defendants, we would allow these amendments.

88.  We therefore now turn to the Discretion Ground.

D4.  Discretion Ground

89.  As mentioned above, by way of the Relief Summons, the defendants asked for relief against sanction for their non-compliance with the Unless Order.  As they were already about nine days late in taking out the application, they further asked in the Relief Summons for an extension of time to take out the summons[49].

90.  The Judge dealt with the question of whether she should grant relief against sanction in the following way in the Judgment.

91.  The Judge first noted that, although the delay in applying for relief against sanction was not substantial, there was no explanation for such delay.  On the other hand, she further accepted that the defendants’ non-compliance of the Unless Order was not intentional or contumelious.  See [72] ‑ [78] of the Judgment.

92.  Then she went on to consider the merits of the proposed amendments and considered them of no merits (as discussed above).  See [79] ‑ [109] of the Judgment.

93.  The Judge then further decided to refuse to grant relief against sanction to the defendants for the reasons set out at [110] of the Judgment as follows:

“WHETHER RELIEF SHOULD BE GRANTED

110. The present action was started on 12 October 2017, which was some 3 years and 8 months ago, and up to now, the action has not been set down, and no trial dates have been fixed.  To allow Ds relief from sanction would mean a fresh round of pleadings, and introduction of expert evidence which means that the action will not be ready for trial yet.  There will be substantial delay to trial and P will no doubt be prejudiced by such delay if relief were granted.  On the other hand, in light of my views that the proposed amendments are not necessary and/or not relevant and/or not meritorious, Ds cannot be said to suffer any prejudice by this Court not allowing them relief from sanction and extension of time to file the RRAD.  In any event, having considered all the circumstances of this case, I have come to the view that it cannot be said to be in the interests of the administration of justice to grant Ds relief.”

94.  In other words, when [72] ‑ [78] and [110] of the Judgment are read together, when the Judge exercised her discretion not to grant relief against sanction, she took into account that (a) there was an unexplained delay in making the application for relief, (b) the defendants’ non‑compliance of the Unless Order was not intentional or contumelious, (c) the plaintiff would suffer prejudice if relief was granted as there would be further delay of the proceedings, (d) on the other hand, the defendants would not suffer any prejudice as the proposed amendments were of no merits in any event, and (e) having taken all circumstances into consideration, it would not be in the interest of the administration of justice to grant relief to the defendant.

95.  Given our above conclusion that she was wrong in finding that the proposed amendments were of no merits, in the exercise of her discretion when the Judge considered that the defendants would not suffer prejudice if relief was not granted, the Judge had plainly erred.  In other words, she had failed to take into account the relevant factor that the proposed amendments have arguable merits in her weighing exercise.  We would therefore set aside her conclusion and re-exercise the discretion afresh.

96.  In this respect, Mr Ho submits that this court in its own exercise of discretion should still refuse to grant relief against sanction for the following main reasons:

(1)  First, given that there is an unexplained delay on the part of the defendants in taking out the application for relief, which factor should carry significant weight, the court should refuse to grant an extension of time to the defendants to file the Relief Summons.  On that basis alone, the Relief Summons should be dismissed.

(2)  Second, the court is faced with “double defaults” on the part of the defendants, in that they first defaulted in complying with the Unless Order, and then further defaulted in taking out an application for relief within time and without any explanation. When these two factors are considered together with all the other factors, including the prejudice the plaintiff would suffer by further delay in the proceedings, the court should exercise its discretion against granting of relief.

97.  With respect to Mr Ho, we are not persuaded by his submissions.

98.  It is well established that, in considering whether the court should extend time to a party to make a relevant application, generally it will take into account (a) the length of delay, (b) the reasons for delay, (c) the merits of the underlying application, and (d) the prejudice, if any, caused to the other side if extension of time is granted (although the mere lack of prejudice does not by itself support the granting of extension of time).

99.  In other words, whether or not extension of time should be granted in the present case, the court must also take into account the merits of the Relief Summons.

100.  In this respect, applying the principles set out in [63] ‑ [66] above, there are in our view good merits in the Relief Summons:

(1)  As explained above, the proposed amendments are plainly at least arguable.

(2)  Further, the non-compliance was to a certain extent unfortunate and technical, since as set out in [37] ‑ [40] above, the defendants had in fact already issued the 1^st and 2^nd RRAD Summonses seeking to amend even before the making of the Unless Order.  It is also pertinent to note that in the respective drafts RRAD (version 1) and (version 2), there was already an amendment relating to the plea of PRC law being the proper law of the Cooperation Agreement[50], albeit the proposed amendments were much less particularized and comprehensive than those which later appeared in the draft RRAD (version 3).

(3)  The Unless Order was somehow still made by Master Ho despite the fact that the 2^nd RRAD Summons was already issued and yet to be determined.  Further, as held by the Judge, the breach of the Unless Order is not intentional or contumelious.  The failure to comply with the Unless Order was caused by the sloppiness of the defendants’ former legal representatives (as leading counsel for the defendants now openly and rightly describes and admits).

(4)  Given the above context, for the purpose of administration of justice, the proposed amendments should in principle be allowed so that all the proper issues could be tried.

(5)  Furthermore, at the time of the breach, the parties were only still in the pleading stage.  Any impact on the trial dates (which have not been fixed and in any objective view are still quite some time away) upon the granting of relief against sanction would be remote and insignificant.  In this respect, it is also pertinent to note that there is nothing to suggest that the prior three years odd delay in the proceedings was caused by the defendants.  Hence, the prejudice that the plaintiff would suffer and which is not compensatible by costs is also insignificant.

(6)  On the other hand, the prejudice that the defendants would suffer if relief is not granted would be significant as they would be deprived of some arguable defences.

101.  In light of the above considerations, the sanction in debarring the defendants from amending the defence in the circumstances of the present case is disproportionate and thus relief from sanction should be granted.

102.  In the premises, despite the lack of explanation for the delay, given the strong merits of the Relief Summons, coupled with the insubstantial delay (nine days) in making that application, and that the prejudice suffered by the plaintiff would be insignificant, this is a case where we would exercise our discretion to extend time.

103.  Once extension of time is granted, for the same reasons set out at [100] above, we would also grant relief against sanction to the defendants in relation to their non-compliance with the Unless Order.

E.  DISPOSITION

104.  For all the above reasons, we allowed the appeal and made the CA Order, the exact terms are these:

(1)  Under CAMP 551/2021:

(a)  The 1^st and 2^nd defendants do by 4:00pm on 2 June 2023 lodge with the court and serve on the plaintiff a replacement draft Re-Re-Amended Defence to exclude the abandoned parts referred to in paragraph 4(a) of the draft Notice of Appeal attached to the Summons;

(b)  The 1^st and 2^nd defendants do have leave to appeal against the Judge’s Order; and

(c)  The 1^st and 2^nd defendants do file and serve the Notice of Appeal by 2 June 2023.

(2)  Under the Appeal proper (which became CACV 170/2023):

(a)  The Appeal be allowed, and the Judge’s Order and the Master’s Order be set aside;

(b)  Relief be granted to the 1^st and 2^nd defendants from paragraphs 2 and 3 of the Unless Order;

(c)  The 1^st and 2^nd defendants do have leave to file the Re‑re‑amended Defence under HCA 2361/2017 (which excludes the abandoned parts referred to in paragraph 4(a) of the Notice of Appeal) by 9 June 2023; and

(d)  The plaintiff do have leave to file a Re-re-amended Reply under HCA 2361/2017 within 35 days thereafter.

F.  COSTS

105.  As to costs, Mr Li for the defendants asks for the costs of the appeal, and accepts that (given the sloppiness of how the matter was handled by the defendants’ former legal representatives before the issue of the Relief Summons) the plaintiff should have the costs below, though he submits that it should be on a party to party basis rather than an indemnity basis.

106.  Mr Ho for the plaintiff however asks for the lower courts’ indemnity costs orders not to be disturbed as the defendants are asking for an indulgence of the court and in particular in light of their double defaults.  As for the appeal, counsel contends that the plaintiff should also be entitled to costs given the same reasons that the defendants are asking for the court’s indulgence, in particular when there is no good explanation for their delay in taking out the Relief Summons.  The plaintiff is therefore justified and entitled to come and resist the setting aside of the orders below.  Alternatively, Mr Ho says there should be no order as to costs in the appeal.

107.  We agree that the costs below (including the costs before the Master and the Judge) should be taxed on a party to party basis. The fact that the defendants were seeking an indulgence of the court even in the context of a double-default has already been reflected in a costs order against the defendants even though they ought to have succeeded in the application.  In this regard, we note that in the Relief Summons, the defendants also already asked for the costs of the application be to the plaintiff.  There is no additional basis to award costs on an indemnity basis.

108.  Insofar as the appeal is concerned, Mr Li submitted that there is no reason to depart from the starting position that costs should follow the event.  However, it is not unreasonable for the plaintiff to come and resist the appeal given the fact that even by the time of the hearing before this court, the draft RRAD was still in an unsatisfactory state, and there was an alternative application for an open-ended summons to amend (paragraph 4(b) of the Notice of Appeal).

109.  In the premises, we order that:

(1)  There be no order as to the costs of the leave to appeal applications (both before the Judge and this court under CAMP 551/2021) and the costs of the appeal itself (under CACV 170/2023).

(2)  The respective costs orders of Master Nip and the Judge be varied to the extent that costs of the Relief Summons be to the plaintiff, to be taxed if not agreed, on a party to party basis.