GUANGDONG YINGGAO SHIPPING LTD v. SECRETARY FOR JUSTICE

HCA 1677/2015

[2022] HKCFI 554

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1677 OF 2015

____________

_____________

_______________

DECISION

_______________

1.  This is the plaintiff’s application by summons for leave to appeal from the order made on 20 January 2022 dismissing the plaintiff’s appeal from Master Hui’s order extending time for the defendant to file her amended defence.

2.  The procedural history and the reasons for dismissing the appeal are set out in the Reasons for Decision dated 24 January 2022 (“the Decision”) to which reference should be made. For convenience, the nomenclature and abbreviations used in the Decision will be adopted.

3.  It is common ground that the applicable principles for granting leave to appeal are those set out in SMSE v KL [2009] 4 HKLRD 125. Leave under Order 59, rule 2B will not be granted unless the court is satisfied that (a) the appeal has a reasonable prospect of success; or (b) there is some other reason in the interests of justice why the appeal should be heard.

4.  The plaintiff’s draft Notice of Appeal (“NOA”) sets out the 4 grounds set out and considered below.

Ground 1 (“NOA §1”)

5.  There are 3 limbs to NOA §1;

(a)  The Decision is plainly wrong in that the court failed to take into consideration that allowing the extension for the filing of the amended defence has the effect of barring the plaintiff from making an application for default judgment (“the default judgment bar point”).

(b)  Further or alternatively, the court erred in having taken irrelevant matters (namely, the July order) into account when what should have been taken into account is the amended writ enclosed with Form No 14 served on 12 July 2021 on the defendant (“the Form 14 point”).

(c)  Further or alternatively, the court failed to take into account that the acknowledgement of service of the defendant was to be treated as an entry of appearance (O. 12, r. 10), for the purpose of any enactment referring expressly or impliedly to the entry of appearance as a procedure provided by rules of court for responding to the amended writ, whereas such peremptory order has imposed the additional requirement of sanction, or other process issuing out of the CFI and the defendant stated her intention to contest acknowledgement of service filed (“the entry of appearance point”).

6.  As to the default judgment bar and the Form 14 points, it is stated in HKCP 2022 at §19/2/3 that:

“if an amended statement of claim is served after the defence and the defendant does not serve an amended defence, he does not thereby place himself in default, for he is presumed to rely on his original pleading”.

In the present case, as the defence was filed on 2 November 2015, any application by the plaintiff for default judgment must fail.

7.  Mr Brian Lo, counsel for the plaintiff, considers that the ‘peremptory’ order in Form 14 imposes the additional requirement of ‘sanction’. If that were correct, it would be at odds with what is clearly stated in HKCP 2022 §19/2/3 set out above.

8.  Further, the July order dispensed with service of the amended writ of summons endorsed with the amended statement of claim on the defendant and granted leave to the defendant to file an amended defence “if so advised”. By serving the amended writ on the defendant, the plaintiff did not comply with the July order. Even if there was anything in the Form 14 point, the plaintiff cannot unilaterally and without the court’s approval impose any ‘sanction’ on the defendant. It is also a fact that the defendant was not obliged to file an amended defence.  

9.  Form 14 is but part of the process stemming from and governed by the July order. It cannot override the effect of the July order. As explained in the Decision (at §15) there are 2 forms of peremptory orders and the July order does not carry any self-executing sanction for its non-compliance.

10.  As regards the entry of appearance point, in substance, it appears to be no different from the Form 14 point.

Grounds 2 and 3 (“NOA §§2 and 3”)

11.  The court erred in failing to take into account that the defendant failed to serve and file her amended defence within 28 days after the service and filing of the acknowledgement of service. After the 28 days, in the absence of an amended defence, the sanction would be in effect and the proceedings would come to an end unless the defendant had within 14 days after the 28 days’ limit applied for and obtained relief from sanction under O. 2, r. 4, and that such application must be supported by evidence under O.2, rr. 5 (1) and 5 (2) (“the relief from sanction point”).

12.  However, the relief from sanction point does not arise in the absence of an “unless order”. It adds nothing to the points taken under NOA §1.

Ground 4 (“NOA 4[1]”)

13.  The court erred in failing to take into account [the fact] that the defendant failed to comply with the peremptory order that an act be done within the [specified] time and that the defendant failed to apply for relief from sanction of the peremptory order. The sanction [took] effect [upon the] expiration of the [period for] the act to be done [and] the proceedings of the plaintiff [came] to an end. The defendant had erred in relying on O.3, r. 5 for an application for the extension of time [to comply with the] amended writ of summons after 13 days (23 September 2021) of the expiration. Master Hui had no jurisdiction to deal with the defendant’s application for an extension to comply with the amended writ of summons.

14.  The nub of NOA §4 appears to be that on the facts of the present case, the court had no jurisdiction to grant a time extension under O.3, r. 5.

15.  It is to be noted that at the appeal hearing, the plaintiff’s submission was that the master should not have exercised his discretion under O.3, r.5 to grant a time extension and not that the Master had no jurisdiction to so. That the discretion ought not be exercised is not to be conflated with the notion that the court has no jurisdiction it could exercise.

16.  In its reply submissions, the plaintiff resiled from the proposition that the court had no jurisdiction to grant a retrospective time extension absent an explanation from the defendant. While accepting that this court does have jurisdiction to do so, the defendant maintains that the factors identified in O.2, r.5 ought to be taken into account.

17.  But the factors identified O.2, r.5 are only relevant in an application for relief from sanction which (as earlier explained) does not arise in the present case.

18.  In dismissing the plaintiff’s appeal from the Master’s decision, this court exercised its discretion afresh having in mind[2] the statement in HKCP 2022 at §3/5/2 that all matters (including the adequacy of any reason for delay) must be considered. Reasons were given as to why the court considered it appropriate to grant a time extension see §§21-24 of the Decision.

Conclusion on the NOA §§ 1-4

19.  For the reasons stated above, NOA §§1-4 are misconceived and, in my view, have no prospect of success on appeal.

The plaintiff’s written submissions

20.  Unconventionally, the plaintiff’s written submissions do not directly address NOA §§1-4. Rather, they raise the following 3 contentions, namely, that the court erred in

(a)  disregarding the retrospective nature of the defendant’s time summons; in failing to consider the factors for granting relief from sanctions in O.2, r. 5 and the objectives of RHC O.1A (“the 1^st contention”);

(b)  incorrectly applying the principles in Wing Fai Construction Co Limited v Cheng Kit Yin Kelly, CACV 249/2010, unrep., 8 April 2011 and The Decurion [2012] 1 HKLRD 1063 at §11 (1) (“the 2^nd contention”); and

(c)  failing to take into consideration the defendant’s failure to apply for relief from sanction (“the 3^rd contention”).

21.  While the 3^rd contention resembles NOA §3 and so requires no further comment, the 1^st and 2^nd contentions appear to be a mishmash of miscellaneous points some of which had been advanced in the NOA. Those can be dealt with briefly.

(a) the 1^st contention

22.  That this court was well aware of the defendant’s application for a retrospective time extension and without a supporting affidavit is apparent [3]. Equally clear is the firm view taken that the July order, whilst a peremptory order, was not an “unless” order[4]. Accordingly, O.2, r.4 was inapplicable[5].

23.  The reasons for exercising the court’s discretion afresh are set out in the Decision. The criteria for an appellate court to interfere with the exercise of a discretion conferred on the judge in the court below are well established and require no elaboration: see HKCP 2022 at §59/0/54. In my view, in the present case, the plaintiff has no prospects of overturning the exercise of that discretion.

(b) the 2^nd contention

24.  The premise underlying the 2^nd contention is that an explanation by the defendant (as to why the original deadline could not have been adhered to) is a pre-requisite or condition for the exercise of the court’s discretion. As noted earlier, that is no longer the plaintiff’s position. 

Conclusion

25.  Accordingly, the leave summons is dismissed with costs nisi to the defendant with certificate for counsel, such costs to be summarily assessed and payable forthwith.

26.  As the defendant has already lodged her statement of costs, the plaintiff is directed to lodge its objections within 14 days of this Decision and the defendant is directed to lodge her reply (if any) within 7 days thereafter.

[1]  To make better sense of NOA §4, minor changes to the wording of the original version have been made as indicated.

[2]  See §20 of the Decision.

[3]  See the Decision at §8.

[4]  See the Decision at §§15-17.

[5]  See the Decision at §18.