WONG KWAI SANG v. CHEUNG WAI MING TURBO

HCA 1726/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1726 OF 2009

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BETWEEN

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DECISION

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THE APPLICATIONS

1.  There are two applications before this court:

a.   Defendant’s summons filed on 7 September 2012 seeking leave to strike out plaintiff’s Statement of claim on the ground that the plaintiff has breached the Order by the Registrar on 25 July 2012 (the unless order); and

b.   Plaintiff’s summons filed on 3 December 2012 for extension of time for exchange of List of Documents and witness statements with the defendant notwithstanding the time limited by the unless order.

2.  The above summonses deal with the common issue, that is, whether leave should be given to the plaintiff to exchange the list of documents.  If leave is granted, the defendant’s application will fail. However, the plaintiff has, in the same summons, apply for extension of time to serve his witness statements out of time. If time is granted to the plaintiff to serve the list of documents, I consider that the same factors will also apply to the plaintiff’s application for extension of time for serving the witness statements. Therefore, I decide to deal with both issues together in my discussion.

3.  Mr. F. Yip, Counsel acts for the plaintiff and Mr. K. Leung, Counsel for the defendant.

THE UNLESS ORDER

4.  It is not disputed that there was an order dated 25 July 2012 by the Registrar that unless the plaintiff exchanged the list of documents with the defendant on or before 5 September 2012, the defendant would be entitled to apply to court for striking out of the plaintiff’s claim.  In this same order, the court had also ordered that unless the plaintiff exchanged the witness statements with the defendant by 4:00 pm by 5 September 2012, the plaintiff should be deemed to have waived his right to adduce witness statement and the defendant be thereupon entitled to serve his witness statements.

5.  It is also common ground that plaintiff is in breach of the unless order in that his previous solicitors had only on 14 September 2012 filed and served the list of documents – 9 days out of time prescribed by the unless order and that the plaintiff had only filed the witness statements of his witnesses on 20 November 2012.

THE PRE-CJR TEST

6.  It is no doubt that on the agreed facts of the matter, the burden is on the plaintiff to explain his non-compliance of the unless order, as seen from Chan Chun Lung Allen and Chan Chung Hing Karen v. Ryland Limited & Others HCA4904/1996 by Ribeiro J. (as he then was) delivered on 26 August 1999 and affirmed by the Court of Appeal in CACV284/1999 delivered on 22 March 2000; at page 18 of the judgment of Ribeiro J., he said:

‘The question is therefore whether the 5th Defendant’s failure to comply was “intentional and contumelious” or whether, on the contrary, he has been able “clearly [to] demonstrate that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances”, keeping in mind that the court should not be astute to find excuses for such non-compliance.

The PT Bank Pembangunan test makes it clear, that, as with any other case in which a party approaches the Court for an indulgence, it is incumbent on the Applicant to adduce evidence upon which an exercise of discretion in his favour may be founded.  As has often been pointed out, the dual requirements of (i) the lack of contumelious conduct and (ii) the existence of extraneous circumstances excusing non-compliance, overlap.  Thus, in Hytec (at p. 1677), Auld LJ stated:-

“There is inevitably some scope for overlap between these two separate notions for an applicant seeking to avoid a strike out. In showing that his failure was due to extraneous circumstances, he would in ordinary circumstances demonstrate that it was not intentional.”

 For non-compliance to be contumelious, there is no necessity for it to involve anything akin to a contempt of court. Non-compliance is contumelious where it is the result of the litigant’s conscious and deliberate decision to ignore or disobey the court’s order in the absence of any extraneous excuse.  Such deliberate conduct may be contrasted, for instance, with cases where the litigant has made a serious effort to comply in good faith but has been unsuccessful through bad luck or incompetence (c.f., Ka Wah Bank Ltd v Lo Chung-song & Anr [1989] 1 HKLR 451), or with cases where the litigant has not complied because of circumstances outside his control (including cases where his solicitor has negligently or otherwise missed the deadline through no fault of the litigant).’

THE POST CJR TEST

7.  Mr. Yip submits that the court should apply the test in In re Jokai Tea Holdings Ltd. [1992] 1 WLR1196 (Eng CA) at 1203B (per Sir Nicolas Browne-Wilkinson VC), referring also to HKCP 2013, Vol. 1 para 3/5/6, which poses the question whether such failure to comply with the unless order is intentional and contumelious and if a party can clearly 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 is not to be  treated as contumelious and therefore does not disentitle the litigant to rights which he would otherwise have enjoyed.[1]  This test was adopted by the Court of Appeal in PT Bank Pembangunan Indonesia (Persero) v. Tan Eddy Tansel [1997] HKLRD 57 as mentioned in Ribeiro J’s judgment quoted above.

8.  Chan Chun Lung Allen case was before the CJR. After CJR, the court has approached this issue again.  In Top One International (China) Property Group Company Limited & The Bank of New York Mellon v. Top One Property Group Limited & Others [2011] 1 HKLRD 606 by Fok J. (as he then was) delivered on 9 December 2010.  At paragraph 34 of the judgment, Fok J. said:

“34. Thus, the relevant principles applied by Ribeiro J in Chan v Ryland were set out in §§45 to 47 of his judgment and are summarised below:

(1) The court will ask whether a defendant’s failure to comply with an unless order was “intentional and contumelious” or whether, on the contrary, he has been able “clearly [to] demonstrate that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances”, keeping in mind that the court should not be astute to find excuses for such non-compliance.

(2) As with any other case in which a party approaches the court for an indulgence, it is incumbent on an applicant to adduce evidence upon which an exercise of discretion in his favour may be founded.

(3) Non-compliance is contumelious where it is the result of the litigant’s conscious and deliberate decision to ignore or disobey the court’s order in the absence of any extraneous excuse. Such deliberate conduct may be contrasted, for instance, with cases where the litigant has made a serious effort to comply in good faith but has been unsuccessful through bad luck or incompetence or with cases where the litigant has not complied because of circumstances outside his control (including cases where his solicitor has negligently or otherwise missed the deadline though no fault of the litigant).

35. Ribeiro J declined to lower the threshold, a trend which he noted was detectable in some of the English authorities, in particular Hytec Information Systems Ltd v Coventry City Council [1997] 1 WLR 1666 where, at p.1677, Auld LJ said:

“In my judgment, there is no need to confine the test to that of an intentional disregard of a court’s peremptory order, whether or not it is characterised as flouting, contumelious, contumacious, perverse, obstinate or otherwise.  Such an intent may be the most usual circumstance giving rise to the exercise of this jurisdiction.  But failure to comply with one or a number of orders through negligence, incompetence or sheer indolence could equally qualify for its exercise.  It all depends on the individual circumstances and the existence and degree of fault found by the court after hearing representations to the contrary by the party whose pleading it is sought to strike out.”

He noted that PT Bank Pembangunan case was regarded as representing a binding precedent so far as the Court of First Instance was concerned (§40) and he did not consider that the Hytec approach “as yet to represent the law in this jurisdiction” (§44).

36. Mr Douglas Lam, counsel for the plaintiffs, submitted that, in the light of the Civil Justice Reform (“CJR”), the time had come to adopt the English approach in Hytec.

37. For his part, Mr William Wong, counsel for the 1^st and 3^rd defendants,[2] submitted to the contrary because, first, Hytec did not suggest that the threshold for refusing an extension of time had been lowered in the post-CJR era, and secondly because various authorities held that striking out a defence is a draconian sanction and, save where there has been contumelious disobedience with the court’s order, it is not part of the court’s function to punish the party who has failed to comply by making a striking out order.

38. In my view, Mr Lam is right in his submission. It is noteworthy that, in Chan v Ryland, Ribeiro J simply said that the Hytec approach did not “yet” represent the law in this jurisdiction. Since his decision in that case, in August 1999, the CJR has since come into effect. There is now a trend towards the greater use of orders to specify automatic consequences of non-compliance and for placing the onus on a party guilty of non-compliance to seek relief from those consequences. The rules themselves reflect this trend: see, for example, RHC O.25 r.1C (failure to appear at case management conference or pre-trial review).

39. To this end RHC O.2 r.4 now specifies that where a party has failed to comply with a rule or court order, any sanction for failure to comply imposed by the rule or order has effect unless the party in default applies to court for relief from the sanction within 14 days of the failure. Relief is not automatic and RHC O.2 r.5 specifies the circumstances which the court shall consider on an application for such relief.

40. …..

41. In my view, the passage quoted above from Hytec is entirely consistent with the more pro-active case-management approach encouraged by the CJR and, in my view, the CJR has had the effect that the Hytec approach now reflects the approach that should be applied in this jurisdiction.  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 RHC O.2 r.5, the court should consider all the individual circumstances including those listed in r.5(1) at sub-paragraphs (a) to (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 (RHC O.1A r.3) and on the court to do so by actively managing cases (RHC O.1A r.4(1)).”

9.  It appears that the Court should not adopt the more restricted approach as in Chan Chun Hing Allen case, but instead should adopt the Hytec approach.

ORDER 2 R. 5 CONSIDERATION

10.  The Court has to take into consideration the factors under Order 2 r. 5 of the RHC:

5. Relief from sanctions (O. 2, r. 5)

(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.

THE FACTS NOT DISPUTED

11.  The plaintiff has put forward the following in his affidavit:

a.  In December 2011, the locks of the gate and the door to the property and the lock of the main gate of the building on the ground floor were changed and the plaintiff could not gain access to the property.[3]

b.  On 25 July 2012 at the Case Management Conference, the plaintiff had told the Registrar that he had difficulty in getting the documents because he could not gain access to the property.[4]  He had to seek police’s assistance.

c.  On 13 September 2012, the plaintiff had finally, with the assistance of a locksmith, gained access to the property, which had become a mess, wherein he had found some important documents for the list of documents.[5]

d.  The plaintiff passed the documents to his solicitors who had filed and served the list of documents on 14 September 2012 for him.[6]

12.  The above alleged facts are not disputed by the defendant by way of his affirmations.

DISCUSSION

A.   The facts

13.  However, Mr. Leung has raised the query as to under what circumstances the plaintiff had lost access to his property.  In his affirmation in support of this application[7], he only said that he reported the matter to the police. But what did he do for self-help in the meantime?  However, paragraph 14 of the plaintiff’s affirmation (p.83) states that the plaintiff was told by the police not to enter the building pending the investigation.

14.  Mr. Leung also says that the plaintiff did not explain what documents he was kept from the property. It is irrelevant to gain access to the property in order to prepare the list of documents.  The duty of discovery is continuous and if he had found some other documents, he could then produce them in supplemental list of documents, which the plaintiff should have, but has failed to do. Mr. Yip replies that the plaintiff was entitled to look at his own properties on the premises before he made the list of documents.  He had an obligation to disclose all the documents in his possession.

15.  Mr. Leung has also commented that there is nothing to show that the plaintiff needed the documents in the property to prepare the witness statements.  What the plaintiff said is that he had the documents, but not all the documents, which was what he had said in his application for an injunction, which he had failed. Nevertheless, the plaintiff should have applied for time to exchange the witness statements.  Now the defendant had served the witness statements and the plaintiff will therefore have the advantage of reading the witness statements first and might tailor his own evidence if time is granted to him.  He submits that it will be unfair to his client.

16.  I can appreciate this prejudice to the defendant. But this can be remedied by giving the defendant an opportunity of replying to the plaintiff’s witness statement by way of supplemental or further witness statements.

17.  Mr. Leung says that if the plaintiff wanted to apply for sanction for having been in breach of the unless order, under Order 2 r. 4, he must apply to court for leave for relief within 14 days.  Nothing was done by the plaintiff under Order 2 r. 4. Even today’s summons, the application is expressed to be made under Order 3 r.5 whereas it should have been made under Order 2 r.4.  But he takes it that it is made under Order 2 r. 4.

18.  Mr. Leung has rightly conceded that the form of the application is not determinative of the issues, but rather the substance, that is the reasons of the plaintiff for the 9 days’ delay for the list of documents and longer period for the witness statements.  The Court will consider the applications on this basis.

B.   Application of the test to the facts

19.  It is trite the factors under Order 2 r. 5 RHC should not be applied mechanically, but should be considered as a whole, taking the relevant circumstances of the case into consideration.

20.  Adopting the Hytec approach as decided in Top One International (China) Property Group Company Limited & The Bank of New York Mellon v. Top One Property Group Limited & Others [2011] 1 HKLRD 606, the plaintiff now relies upon the extraneous matters as set out above to ask for extension of time for the filing and service of the list of documents and for the filing of the witness statements.

21.  The court has to consider whether the evidence put forth for the applications are believable. Without any evidence from the defendant to rebut the plaintiff’s evidence, I will adopt the facts undisputed as the prima facie facts. I consider that the plaintiff should be, at least, given a chance to go back to his residence to look for whatever evidence or documents that he might find to prepare his list of documents and his witness statements.

22.  I also consider that the delay was 9 days for the list of  documents.  With the obstacles that the plaintiff has set out in his affirmations, I consider that leave should be given to him to file and serve the list of documents out of time.  To deny the plaintiff a fair trial because of this short delay is not just and fair in the circumstances. After all, there is no milestone dates affected by the delay.

23.  For the same reasons, I also grant the extension of time to the plaintiff to serve the witness statements on the defendant out of time.

24.  On the questions of costs, the court will consider that the plaintiff should have taken out applications for extension of time prior to the deadline imposed  by the unless order, which the plaintiff has failed to do. But today’s argument has been heard and the plaintiff is successful. In the circumstances, I consider that the just order will be the plaintiff’s costs (with counsel’s certificate) be in the cause, to be taxed, if not agreed for both summonses.

ORDER

25.  I shall make an order in terms as follows:

a.  Leave to the plaintiff to file and serve the List of documents within 7 days from the date hereof;

b.  Leave to the plaintiff to serve the witness statements and the defendant be at liberty to serve the supplemental or further witness statement in response thereto within 21 days from the date hereof;

c.  Costs of both summonses, including the costs reserved and the hearing today (with certificate for counsel) be in the Plaintiff’s cause, to be taxed, if not agreed.