ANANT RAM DEVGUN t/a M/S A.R. DEVGUN AND SONS (HK) CO v ARJAN WADHMAL NANDWANI

HCSA20/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

SMALL CLAIMS TRIBUNAL APPEAL NO. 20 OF 2006

(ON APPEAL FROM SMALL CLAIMS TRIBUNAL

CLAIM NO.  22149 OF 2003) 

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REASONS  FOR  JUDGMENT

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1. This is the defendant’s appeal against (1) the order of the adjudicator dated 11 August 2005 (“the Order”) entering default judgment against him and dismissing his counterclaim and (2) her refusal to set aside the Order upon his application at the hearing on 8 February 2006 and 3 March 2006.

2. On 14 December 2006, I allowed the appeal.  These are my reasons.

Proceedings below

3. In March 2003, the claimant commenced proceedings in the Small Claims Tribunal, claiming against the defendant for HK$37,901.75 being costs of textiles sold to the claimant’s customers through the defendant.  The defendant counterclaimed for, inter alia, the repayment of a loan of HK$1,200 and HK$40,704 for the loss incurred in respect of textiles sold by him to a third party for which he alleged that the claimant was responsible.

4. On 5 May 2003, the matter first came before the adjudicator.  Upon the claimant’s application, it was adjourned to 9 July 2003.

5. By consent, the matter was further adjourned for mention on 9 July, 16 September and 21 October 2003.  At the resumed hearing on 1 December 2003, the adjudicator set the matter down for trial on 3 February 2004.

6. At the hearing on 3 February 2004, the claimant raised an objection against the Hindi/Sindhi interpreter.  He alleged that the interpreter was a relative of the defendant’s, which allegation the interpreter denied.  The adjudicator took the view that without his assistance, she could not proceed with the trial.  She then permanently stayed the proceedings until further order.

7. The trial was eventually restored on 28 October 2004.  It was then adjourned for part heard on 12 December 2004, 22 March 2005 and 11 August 2005.

8. At the resumed hearing on 11 August 2005, the defendant was absent.  The adjudicator asked the claimant to confirm his claim and then entered default judgment against the defendant and dismissed his counterclaim for want of appearance.

9. The defendant then applied to set aside the Order.  He alleged that he was absent on 11 August 2005 because of medical reason.  On 11 November 2005, the adjudicator directed the defendant to produce a medical certificate to support his application.  At the hearing on 8 February 2006, the defendant failed to produce the medical certificate.  The adjudicator then dismissed his application for setting aside the Order.  On 3 March 2006, she dismissed the defendant’s application for review.

Fundamental errors

10. In my view, the adjudicator had made two fundamental errors.

11. First, the adjudicator erred in making the Order as if it were a default judgment when the defendant was absent for the part heard hearing of the trial on 11 August 2005.  She could not enter default judgment in the middle of the trial.  She should consider the merits of the claimant’s claim and the defendant’s counterclaim, the evidence adduced by the parties so far and if necessary, receive further evidence from the claimant and conduct further investigation as may be required before making any order disposing of the matter.

12. Second, the adjudicator erred in refusing the defendant’s application to set aside the Order merely because the defendant was unable to produce the medical certificate as directed.  As I have said above, the adjudicator had erred in making the Order.  On this ground alone, she should set aside the Order.  In any event, in considering whether to set aside the Order on the basis that it was a default judgment, she should give proper regard to the merits of the parties’ case, in particular the defendant’s evidence.  For it is trite that in an application to set aside a default judgment, one of the considerations that the tribunal needs to take into account is whether the defendant has a real prospect of success on his defence.

Conclusion

13. For the above reasons, I will allow this appeal, set aside the Order and remit the case back to the Small Claims Tribunal for a trial de novo before another adjudicator.

14. On costs, since the claimant does not object to this appeal being allowed, I will make no order as to costs.

Some observations

15. For completeness, I would like to make the following observations on the conduct of the proceedings below.

16. The Small Claims Tribunal is set up for the purpose of dealing with minor monetary claims that fall within its jurisdiction efficiently and economically.  It is reasonable for the parties appearing before the Tribunal to expect that their disputes will be disposed of within a reasonable time, say, 6 to 9 months from the date when the claim was first lodged, unless there are very special circumstances.  In practice, any case that goes beyond 12 months should be rare.

17. In the present case, the claim was first lodged in March 2003.  The adjudicator took 3 years to dispose of the matter.  The delay is inordinate.  It is the worst case of delay that I have ever come across in tribunal matters, whether in my past capacity as a presiding officer of the Labour Tribunal or in my present capacity as an appellate judge hearing tribunal appeals.  Much of the delay could have been avoided had the matter been processed expeditiously with due diligence.

18. First, on record, the repeated adjournments for mention between May and December 2003 were all made by consent.  But the adjudicator was in control of the proceedings.  She should only allow an application for adjournment (even made by consent) when it was justified, bearing in mind not only the parties’ interest in the present case but also the wider consideration that the resources of the Tribunal and the interest of other Tribunal users might be affected by the adjournments.  If the parties apply for an adjournment with a view to discussing possible settlement, which was apparently the case here, a short adjournment, say, 1 week should normally be sufficient.  And when no settlement could be reached after one or two short adjournments, any further adjournment for settlement discussion is unnecessary.  Having looked at the record of proceedings, I would only say that the matter could have been expedited without repeated adjournments for mention.

19. Second, at the first hearing on 5 May 2003, the adjudicator should give detailed directions for the future conduct of the case even though the parties might be negotiating so that when the discussion failed, the matter could proceed to trial without delay.  But she only did it at the hearing on 21 October 2003 when no settlement was reached after repeated adjournments.  By then more than 5 months had lapsed.  Had the adjudicator managed the case better, the matter could have proceeded to trial at the latter part of 2003.

20. Third, when the trial was to commence on 3 February 2004, the adjudicator permanently stayed the proceedings pending further order.  I doubt if it was proper or necessary to do so when the difficulty that she was then facing concerned the interpreter only.  According to the notes kept by the adjudicator, the interpreter was the only freelance interpreter of the Hindi/Sindhi language then available.  On the materials before me, it is not apparent why an alternative interpreter was only available some 8 months later in October 2004, which was quite unusual.  I hope the Chief Magistrate can look into the matter and see if anything can be done in the future to ensure that as and when required an alternative interpreter can be made available sooner.

21. Fourth, there were repeated adjournments for the trial proper, which spanned some 10 months between October 2004 and August 2005.  They could have been easily avoided with better case management.

22. Now that the matter will go back to the Small Claims Tribunal, I do hope that it will be processed expeditiously with due diligence and disposed of within a reasonable time.  And given the delay, I will direct the principal adjudicator of the Tribunal to give priority to the listing of this matter.