XCHRX DORERA LTD. v. LAM KAM MING AND ANOTHER

HCA 4099/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4099 OF 1999

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REASONS FOR DECISION

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Introduction

1. There were 4 applications before me (all taken out by the plaintiff) at the hearing on 23 April 2001:-

(1) a summons dated 12 July 2000 asking for leave to apply for an order for committal against D1 for contempt ("the application for leave to commit");

(2) a summons dated 12 July 2000 asking for leave to amend the order dated 13 September 1999 made by Master B. Kwan ("the amendment application");

(3) a summons dated 12 July 2000 asking for leave to enter judgment against D1 to forthwith deliver to the plaintiff the diamonds on consignment entrusted to D1 (set out in the 3rd Schedule to the Statement of Claim herein) without the option to pay for their value ("the judgment application");

(4) a summons taken out on 17 April 2001 asking for an extension of time to file and serve affirmations/affidavits for use in the application for leave to commit ("the time extension application").

(a) The Time Extension Application

2. D1 indicated that he would not object to the time extension application but asked the plaintiff not to serve court documents on him belatedly again. The plaintiff's reason for asking for time extension was the difficulties in securing evidence from deponents residing overseas. Plaintiff's counsel also stated in effect that there was no intention to keep relevant information from D1. In view of the above, an order was made in terms of the time extension application.

(b) The Judgment Application

3. Plaintiff's counsel took the view that judgment in terms of that sought in the judgment application had already been entered on 3 December 1999 (see the Amended Judgment herein dated 3 December 1999). For this reason, he asked, and was given leave, to withdraw that application at the hearing on 23 April 2001 with no order as to costs.

(c) The Amendment Application

4. The plaintiff took out the amendment application probably due to the observations made in a written Judgment dated 7 July 2000 (especially pp.112M to 3B and 4F to 4K). In short, it was observed that:-

(a) the 13 September 1999 order does not follow or adopt the usual form of order giving conditional leave to defend;

(b) it does not provide for the consequence(s) if D1 should fail to comply with the "conditional leave to defend" given therein.

5. According to the plaintiff's revised skeleton argument dated 20 April 2001, the amendment application was made pursuant to the "slip rule" (RHC Ord. 20 r. 11) and/or the court's inherent jurisdiction. I enquired with plaintiff's counsel whether the usual practice is to apply to the court which made the original order and counsel did not dispute that would be the usual practice. I also indicated to counsel that it would be most difficult, if not impossible, for me to amend an order made by another court ("in order to bring it into harmony with the order which the Judge obviously meant to pronounce" according to The Supreme Court Practice 1999, para. 20/11/1), not knowing what the original intention of the court which made the order was. This is not a case where the original court is no longer available to hear the amendment application.

6. I also indicated to counsel that if the plaintiff wishes me to deal with the amendment application, I may have to approach the matter afresh in accordance with what I would perceive to be the real intention of the court which made the order of 13 September 1999.

7. At the end, counsel asked me to adjourn the amendment application so that it can be dealt with by Master B. Kwan. In setting out the reasons for adjourning the application for leave to commit (in subsequent paragraphs below), I will mention matters relevant to the amendment application again.

(d) The Application for Leave to Commit

8. Despite the adjournment of the amendment application, counsel invited me to proceed with the application for leave to commit. I disagreed that that could properly be done before the amendment application has been dealt with and accordingly adjourned it sine die with liberty to restore (not before the determination of the amendment application). The following are the reasons for that decision.

The Previous Proceedings

9. The plaintiff commenced this action on 11 March 1999 against the 2 defendants for wrongfully failing to return the plaintiff's diamonds which the plaintiff claims were delivered "on consignment". The prayer for relief of the Statement of Claim asked for:-

(1) an order that the defendants do forthwith return the said diamonds;

(2) damages for detinue, together with interest and costs of the action.

10. On 27 May 1999, the plaintiff applied under Ord. 14/Ord. 18 r. 19 for judgment against D1. D1 appeared in person at the hearing of the said application on 13 September 1999. At the end of the hearing, the learned Master made an order the drawn-up version of which reads:-

"... Conditional leave to defend upon payment of the sum claimed i.e. US$843, 616.13 into Court within 28 days from the date hereof ...

Costs of today be costs in the cause ... ".

11. D1 defaulted in complying with the above condition. Judgment was entered against him subsequently. I understand the usual practice to be, and this was confirmed by plaintiff's counsel in this case, that judgment was applied for on an ex parte basis. Upon the plaintiff's further ex parte application, that judgment was amended on 26 November 1999 in the form it now appears (in effect, the judgment sought in the judgment application).

12. The application for leave to commit was brought by the plaintiff on the basis that D1 was in contempt of court by failing to comply with that Amended Judgment.

Reasons for Adjourning the Application for Leave to Commit

13. The argument of Plaintiff's counsel as to why I could, and indeed should, proceed with the application for leave to commit despite that the amendment application is pending determination is in short that it is impossible for the learned Master to refuse to amend the order dated 13 September 1999 as sought by the plaintiff in the amendment application.

(a) The Amendment Application

14. I disagreed with that argument for the following reasons. 2 lines of defence were raised by D1 in this action. One, D1 was not a contracting party in his own right and therefore should not be liable to the plaintiff's claim which is contractual in nature. Two, D1 no longer has the diamonds in his possession because they were already sold by D2 to third parties. D1 also disputed the diamonds were delivered "on consignment" and contended that they were delivered by way of credit sale but this appears to be irrelevant to the matters now pending before the court.

15. The contention that D1 no longer has the diamonds in his possession was raised in the following documents:-

(1) para. 5 of the "home-made" defence of D1 dated 8 April 1999;

(2) para. 11 of D1's affidavit dated 2 July 1999;

(3) para. 1 of D1's affidavit (answers to the plaintiff's interrogatories) dated 28 August 1999.

All these documents must have been considered by the learned Master before she granted conditional leave to defend to D1.

16. It is unclear what the learned Master intended when "conditional leave to defend" was given on 13 September 1999. For example, leave to defend might have been given on the basis of D1's first line of defence (namely, D1 was not liable under any contract) or second line of defence (namely, the diamonds were no longer with him) or both. Equally, leave to defend might have been given (on any of the above basis) only in relation to the plaintiff's claim for the return of the diamonds, or only for the monetary claim, or both.

17. Plaintiff's counsel argued that the learned Master could not have given D1 leave to defend on the basis of D1's first line of defence. This is because all the contemporaneous contractual documents clearly showed that D1 signed them in his right. If that was in fact the reason for the learned Master's decision, she must have found that there are issues which ought to be tried regarding whether D1 still possessed the diamonds. Otherwise, she would have entered final judgment instead of giving him leave to defend. In such case, it is at least possible that she may not grant the relief sought in the amendment application because no finding of fact can properly be made (on affidavit evidence) as to whether D1 still possesses the diamonds.

18. The plaintiff has made it clear at the hearing before me that it would not seek monetary judgment against D1. It is up to the plaintiff to decide what relief it seeks but the risk rests with the plaintiff if the decision results in conferring on a defendant triable issues which the defendant may otherwise not enjoy, with the consequence that the dispute has to await resolution by way of trial.

(b) The Judgment Application

19. If, as is stated above, the learned Master concluded that there are issues to be tried regarding the possession of the diamonds, and if, despite this conclusion, she somehow still found that judgment could properly be entered as it now appears, the plaintiff may (and the word "may" is emphasised because no submission has been made by the parties on this point yet) need to apply for judgment to be entered for the delivery up of the diamonds without an option to pay on an inter partes, and not ex parte, basis (as has happened in November 1999).

20. Plaintiff's counsel further argued that whatever may be the outcome of the amendment application, it is not open to the learned Master to disturb the Amended Judgment dated 26 November 1999. I do not agree. Whether or not she will do so is a matter for the learned Master. However, it appears that there is certainly jurisdiction for her to do so pursuant to Ord. 32 r. 6 (see also the Supreme Court Practice 1999, para. 32/6/30) and/or the court's inherent jurisdiction: see Santori v. Cerebe Design Ltd., HCA No. 3908 of 1995 (p. 6 of the written Judgment). There appears to be an apparent inconsistency between the order giving leave to defend and the Amended Judgment. Further, it may be argued that the plaintiff has not made full and frank disclosure (regarding D1's defence that he no longer possessed the diamonds) when it asked for judgment to be entered.

21. The application for leave to commit is based on the alleged failure by D1 to comply with the Amended Judgment of 26 November 1999. The Amended Judgment in turn has its root in the order of 13 September 1999. By reason of the above matters, it is unknown whether the learned Master will grant the relief sought in amendment application. More importantly, it is unknown whether she will set aside the Amended Judgment.

Conclusion

22. For the above reasons, the application for leave to commit should be adjourned.