CHOW YAT FUNG VINCENT v. CHEUK YING WAI BARRY t/a BF PRO MOTOR SERVICE

DCEC 935/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 935 OF 2015

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D E C I S I O N

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1.  The respondent’s application as amended is to apply under Order 2 rule 5 and Order 3 for an extension of time in allowing the respondent to make an application to be relieved from sanction. The relevant sanction is the entry of interlocutory judgment against the respondent consequent on the respondent’s failure to comply with an unless order by serving an answer by the deadline date of 1 April 2016.

2.  The undisputed facts, according to the chronology of events as well as the supporting affirmation, are these. 

3.  After the application was issued on 6 May 2015, the first directions hearing was held on 20 November 2015. The respondent attended that hearing in person.    I gave the usual directions that included a direction ordering the respondent to serve an answer within 21 days. 

4.  After the first directions hearing on 20 November, I also presided at the second directions hearing on 4 March 2016.  There was a period of about 4 months between the first and second directions hearings. Not only had the respondent not served any answer within 21 days as this court had ordered, the respondent had not served any answer during the whole intervening period up to 4 March 2016.

5.  In the second directions hearing, the parties appeared as before, with the respondent again attending in person. As a result of the respondent’s failure to comply with the order for the serving of the answer, I imposed an unless order ordering the respondent to serve his answer by 1 April 2016, with the sanction of the granting of liberty to the applicant to apply for the entry of an interlocutory judgment. 

6.  According to the respondent’s affirmation in support of this application, the respondent avers that after the second directions hearing he consulted his solicitors, Messrs Alan Ho & Co, in around March 2016.  It would therefore appear that the respondent first sought legal advice and engaged Alan Ho & Co after the hearing on 4 March 2016.

7.  That being the case, when the respondent first consulted Alan Ho, he must have told them about the unless order and the deadline date of 1 April for the serving of the answer. One day before the deadline date of 1 April, Alan Ho & Co filed a Notice to Act for the respondent, and nothing was filed by Alan Ho after the Notice to Act.

8.  The respondent stated in his supporting affirmation that he later discovered that the firm of Alan Ho had been intervened in by the Law Society.  The respondent was then left without any legal representative as a result.  The respondent explained in his affirmation that since he became unrepresented as a result of the problem that occurred to his former solicitors, he made an application for legal aid. The respondent’s legal aid application had caused the vacation of the third directions hearings fixed to be heard on 3 June.

9.  The respondent further explained that his application for legal aid in May was not successful.  It was further stated that at that time the respondent was busily engaged in his criminal case in the magistrates’ court which had been scheduled for trial on 1 August. The subject case was related to the applicant’s accident in that the respondent was charged, according to the document exhibited to his affirmation, with an offence of failing to take out an insurance policy for employees.  The respondent was subsequently acquitted on 15 August. Thus, by August, the respondent’s criminal case had been concluded. 

10.  Based on the explanation the respondent had put forward, Miss Siu, on behalf of the respondent, submitted that the court should accede to the respondent’s application by extending the time to allow the respondent to apply for the relief from sanction and then to further grant the relief.  It was further submitted on behalf of the respondent that the application was made promptly, that it was only four and a half months late. It was not the worst type of delay.

11.  It was further submitted that from the evidence that was filed, the failure in complying with the unless order was not intentional and also that the respondent had provided a good explanation for the delay, namely that it was due to the problem caused by the unfortunate incident of his former legal advisers.  So it was submitted that the court should, for this reason, grant the relief.

12.  Mr Yeung, in opposing this application, took the court through the various considerations set out in Order 2 rule 5 which a court is required to consider when deliberating as to whether relief from sanction ought to be granted.  In Order 2 rule 5(1) (a) to (j), the court shall consider all the circumstances, and the relevant consideration, Mr Yeung submitted, would be (a) to (g).

13.  It is submitted that, firstly, so far as (a) is concerned, if relief is granted, that would interfere with the interests of the administration of justice because an unless order was meant to be complied with and relief should not be easily granted.  As for (b), it was suggested that the respondent had failed to make the application promptly; there had been a delay of four and a half months.

14.  As to whether the failure was intentional or not, Mr Yeung suggested it was clearly intentional and it was also suggested that no good reason had been submitted because there had been no specific incident, such as a car accident, personal sickness and so forth.  So it is for that reason that Mr Yeung asks the court not to accede to the respondent’s application.

15.  After having considered the chronology and the background facts leading up to the present application and the evidence or the explanation put forward by the respondent, I accept that to a certain extent the failure of the respondent in complying with the unless order was partially contributed to by, unfortunately, his former solicitors as a result of the intervention by the Law Society. However, I do not accept that it was the blameworthiness of his former legal advisers that has brought about his failure in complying with the unless order.  I do not accept that all the blame, as his counsel seemed to be suggesting, should have been attributed to his former solicitors. 

16.  I take the view that in fact the respondent himself should be substantially responsible for the present default for these reasons.  First, in the first and second directions hearings in November last year and March this year, the respondent was at that time unrepresented.  He appeared in person before me on two occasions.  As it is my practice with all litigants in person, I would have given detailed explanations on the steps a litigant had to take and the things that needed to be done. So there would not have been any exception so far as the respondent was concerned.

17.  So for that reason, I do not accept the respondent’s explanation stated in his affirmation, that the reason for his failure in complying with the unless order was due to the alleged late serving of the draft order on him.  I am satisfied that the respondent was in fact fully aware of the directions that the court gave, and understood his obligation to serve the answer within the stipulated time. I further find that the respondent was fully aware of the sanction or the consequences of non-compliance with the unless order.

18.  In my view, when the respondent went to consult Alan Ho & Co around mid-March 2016, according to his affirmation, he would have pressed upon his legal representative that the deadline date was 1 April. Of course I accept that there must be something not quite right for Alan Ho & Co to file the Notice to Act just a day before the deadline date without thereafter serving an answer before 1 April. But I do not find that the respondent’s responsibility to observe the deadline of 1 April should have been completely shifted to his legal advisers.

19.  Next, when the respondent was subsequently aware that Alan Ho & Co could no longer be his solicitors, he approached Legal Aid. By that time, the respondent would have been fully aware that the deadline date of 1 April had expired. Since the respondent was previously acting in person, I do not find the respondent is able to satisfactorily explain why he could not have at least served a homemade answer in order to comply with the deadline date when he went to apply for legal aid in May. This is so particularly bearing in mind that the respondent would have had explained to him by me in the previous directions hearing in March, in how to complete and file and serve an answer. Accordingly, I do not find the respondent has provided a valid excuse for his failure to comply with the unless order. 

20.  I think what is most telling is that on 20 June 2016, the respondent’s present solicitors had filed a Notice of Change of Solicitors show that by that time the respondent had clearly obtained legal advice and had the service of his current solicitors, who should have been aware by that time that the deadline date of 1 April for the serving of the answer had passed more than two months ago.  No application however was made to rectify the default then and there.

21.  This application for relief from sanction was only made shortly before the directions hearing today.  There is no explanation why his present solicitors did not make the application promptly.  In going through the various considerations set out in Order 2 rule 5(1) (a) to (g), I would firstly take the view that the application for relief had not been made promptly.  The respondent had had many opportunities to make an application and yet he had not done so.

22.  I further find that the respondent’s failure to comply with the unless order was probably intentional.  I cannot speculate as to the reasons - whether it was due to tactical reasons or whether it was because of his concurrent ongoing criminal case.  For the reasons that I have mentioned before, I am unable to find that there was a good explanation for the respondent’s failure to comply with the unless order. 

23.  Insofar as the consideration under (e) - the extent to which the party in default had complied with other rules and court orders – is concerned; I find that the extent of default was significant.  As I stated before, the respondent appeared in person before me on two occasions and he had been given a lot of opportunities between the first directions hearing in November and the second hearing in March this year. Up until now, there was about nine months for the respondent to serve an answer. And yet nothing had been done to comply with the unless order.  I am also not impressed by the lack of a draft answer or an outline of the respondent’s merits in contesting his liability of the applicant’s claim. 

24.  Insofar as to whether the failure to comply was caused by his legal representative is concerned, as I have also stated above, I accept that the default was partially due to the probably unsatisfactory way his former solicitors had dealt with his case. However, I do not find that it is entirely his former solicitors’ own fault.  

25.  As for (g), whether he was aware of the rule or court order, as I have previously explained, I have found that the respondent was fully aware of the court’s directions, and that he was fully aware of the consequence of non-compliance.

26.  For these reasons, I find that the respondent has not put forward good, satisfactory or compelling reasons to enable me to grant him sanction.  However, I have taken into account that it is a drastic order to impose if I were to deny him a chance in defending this claim for two reasons. Firstly, the respondent had indeed been unfortunate with his former solicitors who had got into terrible trouble. Secondly, I have borne in mind that that the respondent might have been so overwhelmed by his concurrent criminal proceedings so much that he might have belittled the importance of complying with the unless order.

27.  For these reasons, I’m inclined to give him a chance by extending the time for the application for relief and granting him relief by allowing him to serve his answer with a condition.   As to the appropriate condition to be imposed, Mr Yeung suggested to me that I require the respondent to make a payment into court of the sum of $200,000, which sum is roughly the amount of compensation that the applicant is seeking.

28.  After having heard from Miss Siu for the respondent that the respondent would have difficulty in meeting a condition that he pays $200,000 into court as a condition of being granted relief from sanction, I’d be disinclined to impose a condition requiring the respondent to make a payment of $200,000.  In my view, a condition that he makes a payment into court in the sum of $80,000 would be justified.  

29.  After having heard the parties, I think it is reasonable to allow 21 days for the respondent to make the payment into court and I make a condition for relief from sanction that the respondent do pay the sum of $80,000 into court.

30.  I further order the respondent to pay the applicant’s costs of the summons, gross sum assessed at $12,650, within 21 days.