XCHRX YUE XIU PROPERTY MANAGEMENT LTD. v. SI TIN YAU

HCMP 2360/1995

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2360 OF 1995

____________

____________

_______________

J U D G M E N T

_______________

1. This is an appeal from a Master's decision when she dismissed the plaintiff's application for an extension of time to obtain an appointment for the attendance of the parties for the hearing of the Originating Summons herein.

The History

2. At the material time the plaintiff was the duly appointed manager of the residential high-rise property known as Marigold Gardens, situated in Marigold Road, Kowloon. The defendant purchased one of the units in Marigold Gardens in September 1992. Thereafter, although charged monthly management fees and required to pay a management services deposit in line with all other owners, he declined to pay anything at all. In February 1994, to protect its debt due, the plaintiff registered a charge against the defendant's title.

3. The default continued. In August 1995 the plaintiff issued this Originating Summons which sought, inter alia, an account of outstanding charges and orders for possession and sale to recover these. The defendant took no steps.

4. In November 1995 the defendant sold his unit with clear title. Completion was due in February 1996. But the plaintiff's charge was an encumbrance. There followed correspondence between the parties' solicitors. The upshot of that was that, by letter of 22 December 1995, the defendant paid $180,000 in favour of the plaintiff to meet the outstanding management charges and other expenditure and $50,000 in favour of the plaintiff's solicitors. The letter concluded:-

"The enclosed cheques are sent to you against your firm's personal undertaking:-

1) To pay in the sum of HK$50,000 into an interest bearing bank account (and our client shall be entitled to the interest thereon) and to hold the same as stakeholders pending result of taxation of costs.

2) To deliver to us on or before 2 January 1996 a duly executed and witnessed Release/Discharge (together with duly signed Memorial thereof) of the Memorandum M/N.5933686 and the registration, if any, of the Originating Summons in the Land Registry.

5. The debt having been repaid, an executed release was sent by return. The sale went through, uneventfully. The $50,000 was paid into a holding, interest bearing account pending taxation. On invitation the plaintiff's solicitors sent their bill of costs to the defendant's solicitors for perusal pending taxation. The letter was dated 29 August 1996, giving the defendant's solicitors seven days to agree it or not. There was no reply; in fact the matter went to sleep for more than 5 years. Then by letter of October 2001 the defendant's solicitors wrote seeking a refund of the $50,000 and accrued interest. The plaintiff's solicitors declined to comply and by application of November 2001 sought an extension of time for the hearing of the Originating Summons. The defendant issued a summons of January 2002 seeking a dismissal of the plaintiff's claim.

6. The matters came before Master Au-Yeung on 28 January 2002, following which she dismissed the plaintiff's application, making no order on the defendant's application with liberty to restore.

7. It is against her order dismissing the plaintiff's application that the plaintiff now appeals.

The Law

8. The granting or refusing of an application for extension of time is the exercise of a judicial discretion under Order 3 rule 5 RHC. It amounts to a balancing exercise, weighing the need for compliance with rules which set time frames to promote speedy resolution of disputes, against a party's right not to be denied an adjudication of his claim. All the circumstances of a given case should be considered, including the length and reason for the delay and the present position of the parties. By and large an application for an extension of time will not be declined where it has had to be made because of a procedural default, unless there is a risk of prejudice for which costs will not compensate, or there is procedural abuse, questionable tactics or contumelious, intentional or repeated default - see, for example, Po Kwong Marble Factory Limited and Wah Yee Decoration Co. Limited (No.2) [1997] 3 HRC at p. 509.

Applying the Principles

9. The delay is very long indeed on any account, but is it prejudicial ?

10. Mr Chan for the plaintiff submits 'No.' It is his case that the parties had in the course of the exchange of correspondence of 1995 settled the dispute giving rise to the litigation save as to the quantum of costs. That is the only matter now to be resolved. Perforce it is necessary procedurally to set the matter down for hearing even though it is the only issue at large; see Ta Tang China & Arts Limited v. Fontana Restaurant Limited and others [1999] 1 HKLRD. Given the issue is limited and straightforward there can be no prejudice; furthermore the defendant by his own inaction contributed to the delay.

11. Mr Cheung for the defendant argues 'Yes.' It is his case that the defendant was pressured into the so-called settlement which resulted in the release of the charge in order not to jeopardise his sale; that his payment of the $180,000 was made under protest . If the matter were to go to hearing he would argue that the claim was still live as to the defendant's right to seek a proper accounting of moneys paid. Furthermore, due to the passage of time, he has not retained documentary evidence or otherwise in his memory particulars of his original protest and why he withheld all fees. So he would be badly prejudiced if the extension were granted. And the delay could not be put at his feet wholly or even partially. It was, after all, for the plaintiff to pursue the taxation.

12. It is not for me at this stage to rule on whether the defendant is barred by settlement to argue the merits of the plaintiff's claim. But I have to say I am sceptical about his chances. He may have paid 'under protest' as has been said, and written, but he did pay and I do not detect a condition or reservation about that in the correspondence; certainly not in the letter enclosing the cheque. Moreover, the plaintiff's terms of release were clear - no money, no discharge. It could hardly, sensibly, have been otherwise; the defendant's self-imposed deadline was of no concern to it. And if the plaintiff's claim was still live, notwithstanding the payment made, why did the defendant not take steps to have that adjudicated? His failure to do so is a telling factor.

13. Mr Cheung raised another issue; the plaintiff has ceased to manage Marigold Gardens and no longer has a locus. I do not accept this to be the case. There is no question but that it did so when the proceedings were brought. The incorporated owners and existing manager have knowledge of the proceedings and have not opposed their continuation in the plaintiff's name. And this, realistically, is the only sensible course. I believe this, too, is an argument unlikely to succeed.

The Outcome

14. When all factors, in particular the length of the delay, the reasons, such as they are, for it, and the degree of prejudice, I exercise my discretion by allowing the appeal and granting the plaintiff's application. The defendant's is dismissed.

15. The order as to costs will be nisi at first instance. The plaintiff by its application sought indulgence. But the defendant had no grounds to oppose. Accordingly costs in the appeal shall be to the plaintiff. Costs below, limited to the hearing, shall also be to the plaintiff. Otherwise there shall be no order as to costs.