YEUNG YAT KWONG PETER v. HARVEST CHINA INVESTMENT LTD AND ANOTHER

DCCJ 3018/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3018 OF 2014

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REASONS FOR DECISION

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1.  This is the 2^nd defendant’s summons (i) to vary an order made by consent by the parties on 29 February 2016 before me (“the Order”) by deleting paragraph 8 thereof; and (ii) for leave to the 2^nd defendant to issue a contribution notice against the 1^st defendant.

2.  At the hearing of the summons on 14 June 2016, I dismissed the 2^nd defendant’s summons with costs to be paid by the 2^nd defendant on an indemnity basis.  I said I would provide my reasons in due course. 

3.  Here are the reasons. 

BACKGROUND

4.  This case concerns the leakage of water allegedly from the 1^st defendant’s roof top property and/or the external wall of the building owned by the 2^nd defendant onto the plaintiff’s premises.  The 2^nd defendant is the incorporated owners of the building which owns the common parts of the building.

5.  On 29 February 2016, at the pre-trial review (“PTR”) of the case before me, the parties (who were all represented by counsel and solicitors) settled the liability issue of the case, leaving only damages and costs to be assessed before a master.  The costs to be determined by the master included the costs of the 1^st defendant and the costs of the PTR.

6.  The draft consent order was prepared by counsel representing the parties and was presented to the court for its approval at the commencement of the PTR hearing.  After some discussion between counsel and the court (with the 2^nd defendant then counsel actively involved in the discussion), some minor changes were made to the proposed consent order.   Those changes mainly concerned the time frame in allowing the 2^nd defendant to carry out the repairs and the dates and mode of the assessment hearing.  They did not in any way alter the substance of the agreement reached by the parties as contained in the Order.  At the end of the PTR hearing, I made an order in terms of the parties’ draft consent order incorporating the abovementioned amendments, ie the Order.

7.  In essence, under the Order, the 2^nd defendant admitted liability with interlocutory judgment entered against it in favour of the plaintiff.  Under paragraph 8 thereof, the plaintiff agreed to discontinue his claim against the 1^st defendant with the costs of the 1^st defendant to be argued before the master at the end of the assessment hearing.

8.  The Order was drawn up by the plaintiff’s solicitors and was approved by the court on 2 March 2016.  The sealed copy was filed by the plaintiff’s solicitors on 7 March 2016.

9.  Paragraph 8 of the Order reads as follows:-

“Leave be granted to the Plaintiff to discontinue his claim against the 1^st Defendant with both the Plaintiff’s costs of this action for suing the 1^st Defendant and the 1^st Defendant’s costs for defending the case to be argued and decided by the Master at the end of the hearing of the assessment of damages on 15^th day of June 2016 with two hours reserved unless otherwise directed by the Master (The 1^st Defendant is excused from attending the argument on costs)”

10.  It is important to note in this case that, more than 5 months prior to the PTR, the 2^nd defendant had already withdrawn its contribution notice against the 1^st defendant without recourse (which was done with leave by consent).  The relevant consent summons was duly signed by the solicitors then representing the 2^nd defendant at the time and was filed with the court on 15 September 2015 (“the 2015 Consent Summons”).  These facts were recorded in the sealed order of Master M Lam dated 30 November 2015. 

11.  Further, also prior to the PTR, the 2^nd defendant had, through the solicitors then representing it, admitted full liability, reserving nothing other than its right to dispute (a) quantum; and (b) its liability for the costs vis-à-vis the 1^st defendant, by way of an open letter dated 25 February 2016 (“Letter of Admission”). 

12.  The Order endorsed by me at the PTR reflected the above admissions and/or action taken by the 2^nd defendant in the 2015 Consent Summons and Letter of Admission.

DISCUSSION

Basis of the application

13.  The only legal basis relied on by the 2^nd defendant in the summons is the purported inherent jurisdiction of the court.  No reference has been stated in the margin of the summons or the submissions of the 2^nd defendant’s counsel to any Rules of the District Court (“RDC”) or any provisions of statues or law.

14.  The 2^nd defendant has filed 2 affirmations in support of the present application.  In short, it says that Ms Karen Ng (“Ms Ng”), the manager employed by the 2^nd defendant, had no authority to instruct its former solicitors to settle the matter on its behalf.  Further, it says that the 2^nd defendant had never given any instructions to the former solicitors to admit liability on its behalf.

15.  Ms Yasmine Zahir, the 2^nd defendant’s counsel, who has been instructed by a new firm of solicitors acting for the 2^nd defendant, told the court that the aim of the application was “for putting D1’s liability in the matter back as an issue at the trial hearing”.  She submits that this is “central to D2’s case that any liability towards P should be apportioned between D1 and D2”.  However, no authority has been cited and no RDC has been referred to in her written submissions as to why she considers that the court would have the power to re-open a settlement reached by the parties by consent, particularly when the same had already been made into a court order, approved, perfected and sealed.

16.  When being challenged by the court, Ms Zahir first resorted to relying on section 6 of the District Court Ordinance, Cap 336 (“DCO”), then the underlying objectives under Order 1A of the RDC.  She was however not able to produce any decided authority to support her proposition.   

17.  While it is in my view debatable whether as a court of a statutory creation the District Court would enjoy “inherent jurisdiction” like the higher courts in our jurisdiction, I was prepared to hear the case de bene esse.    

18.  Hence, Ms Zahir, besides relying on her written submissions, further submitted orally that, after the Order was signed, the 2^nd defendant found out its employee Ms Ng had no authority to instruct the previous solicitors to enter into the agreement.  She further submitted that subsequent to the signing of the Order, the 2^nd defendant has found a new expert which may now able to assist it to prove the seepage / leakage was caused by the 1^st defendant. Thus, in the interest of justice, the 2^nd defendant submits that the court ought to grant the application by exercising its “inherent jurisdiction”.

The law on setting aside a consent order

19.  The general rule is that once an order has been drawn up, entered or otherwise perfected, the court has no further jurisdiction over the case.  The court is functus officio: see Andavani v Chan Oi Ling [2000] 4 HKC 233, CA, per Keith JA at 237 citing the English Court of Appeal case of Millensted v Grosvenor House (Park Lane) Ltd [1937] 1 KB 717. Hence, the proper procedure for setting aside a consent order is by way of starting a fresh action: see Ng Shui Hing v Lai Hang [1983] 1 HKC 158, CA at 162 or bring the matter on appeal.

20.  Further, where a consent order evidenced a contract, the court has no power to set it aside or vary its terms: see Leung Yee & Another v Ng Yiu Ming & Another [2001] 1 HKLRD 309; [2001] 1 HKC 342.

Inherent Jurisdiction of the Court

21.  It has been said that a court exercising judicial functions has an inherent power to regulate its own practice and procedure, save insofar as its procedures has been laid down by the enacted law: see Halsbury’s Laws of Hong Kong (2^nd ed., 2015) Vol 19 [125.005] p 205.  It has also been said that the purpose of the inherent jurisdiction of the courts is to enable them to fulfill their role properly and effectively as courts of law: See Connelly v DPP [1964] AC 1254 at 1301, [1964] 2 All ER 401 at 409, per Lord Morris.

22.  The learned authors in Halsbury’s Laws of Hong Kong, op. cit., state that the inherent jurisdiction of the court enables it to exercise:-

(1)  control over court process by regulating its proceedings, by preventing abuse of process and by compelling the observance of the process;

(2)  control over persons who appear before the court; and

(3)  control over the powers of inferior courts and tribunals.

23.  I do not accept Ms Zahir’s submission that either s 6 of the DCO or Order 1A of the RDC provides the source of power to invoke the “inherent jurisdiction” of the District Court.  As said, as a statutory creation and a “lower” court, it is debatable whether the District Court would enjoy the same inherent jurisdiction as the higher courts like the Court of First Instance and the Court of Appeal of the High Court do.  Even assuming that the District Court enjoys such inherent jurisdiction for the moment (of which I have some reservations), I am of the view that the present application clearly does not fall within any of the above 3 categories and hence has no application in this case. 

24.  In any event, it has been stated that a court cannot adopt a practice or procedure contrary to or inconsistent with rules laid down by statute or adopted by ancient usage: see Wo Fung Paper Making Factory Ltd v Sappi Kraft (Pty) Ltd [1988] 2 HKLR 346; Board of Trustees of Chung Chi College v Chamway Investment Co Ltd [1993] 1 HKLR 203, CA.  A fortiori, a party seeking to set aside or vary a consent order cannot expect the court to go outside the established principles as set out in the decided authorities referred to above in relation to setting aside a consent order under the thin guise of relying on the “inherent jurisdiction” of the court. 

Analysis

25.  In my judgment, this application has been totally misconceived and completely devoid of merits.

26.  First, paragraph 8 of the Order does not concern the 2^nd defendant at all.  It concerned the plaintiff and the 1^st defendant only.  Therefore, the 2^nd defendant simply has no loucs standi to sue the 1^st defendant.  If the plaintiff wishes to discontinue his claim against the 1^st defendant (as he did under paragraph 8 of the Order), it is entirely a matter for the plaintiff and I do not see how the 2^nd defendant could have any say in this.

27.  Second, even taking the 2^nd defendant’s present application at its highest and accepting that Ms Ng and the former solicitors had no authority to enter the consent order for the moment, this matter at best is something between the 2^nd defendant and Ms Ng and/or its former solicitors.  As the court is now functus officio, the redress the 2^nd defendant has will be against Ms Ng and the former solicitors if it considers that they had been negligent and/or acting outside the scope of their authority and/or in breach of their duty as agent or employee, etc.  It is not for the 2^nd defendant to try to re-open a case against the 1^st defendant of whom it had specifically agreed to withdraw the contribution notice under the 2015 Consent Summons.

28.  Third, the 2^nd defendant’s claim that Ms Ng had no authority to give instructions to the former solicitors to enter into the Order is simply not believable.  In the employment contact between Ms Ng and the 2^nd defendant exhibited to the 2^nd affirmation of Chan Chi Chiu, the secretary of the management committee, it has been specifically stated in the contract that Ms Ng had “full authority to handle all matters relating to the building’s management on behalf of the 2^nd defendant” (「代辦一切與大廈管理有關工作」): see Clause 3.1, exhibit CCC-9 to Chan’s 2^nd affirmation.  Thus, it is difficult to see how the 2^nd defendant can now say Ms Ng had no authority to given instructions to its former solicitors.

29.  Fourth, the former solicitors, as solicitors on record for the 2^nd defendant, clearly had the necessary “implied / ostensible / apparent authority” to enter into the Order on behalf of their client.  There is no suggestion that the 1^st defendant was aware of any alleged irregularity in the 2^nd defendant’s internal management or communication with its solicitors.  There is also no allegation of any fraud in relation to the 2015 Consent Summons.  As such, the agreement between the 2^nd defendant and the 1^st defendant as recorded in the 2015 Consent Summons is still valid and legally binding on the 2^nd defendant.  I simply cannot see how the 2^nd defendant could ask the court to re-write the contract for the parties.

30.  Lastly, I do not find there is any evidence (including the latest documents exhibited to the 2 affirmations) to suggest that the 2^nd defendant’s former solicitors, being a reputable firm of solicitors experienced in civil litigation, had anything other than actual or implied authority when acting on behalf of the 2^nd defendant.  As such, any acts done by them armed with such authority will have the effect of binding on the 2^nd defendant as a matter of law: see for example Waugh v H B Clifford & Sons [1982] 1 Ch 374 per Brightman LJ at 387 A-B & 388 D-F.

CONCLUSION

31.  For the aforesaid reasons, I had dismissed the 2^nd defendant’s summons at the hearing. I also ordered the 2^nd defendant to pay the plaintiff and the 1^st defendant’s costs of the summons on an indemnity basis with certificate for counsel, such costs to be assessed summarily by paper application.

32.  Having studied the statement of costs and statement of objection lodged by the parties, I would summarily assess the costs of the plaintiff incurred as a result of the opposing the summons at HK$28,000 and the 1^st defendant’s costs at HK$55,000, such costs to be paid by the 2^nd defendant to the plaintiff and the 1^st defendant forthwith.