CHAN CHOI TENG v. CHINA YOUTH TRADING LTD

[English Translation - 英譯本]

CAMP 206/2022, [2023] HKCA 546

On Appeal From [2022] HKDC 352

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 206 OF 2022

(ON APPEAL FROM DCCJ NO. 562 OF 2021)

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BETWEEN

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JUDGMENT

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Hon Chu VP (giving the judgment of the Court):

A. Background

1.  The plaintiff was employed by the defendant on 5 January 1994 and dismissed on 21 November 2000.

2.  The plaintiff filed a claim in the Labour Tribunal in 2001 against the defendant for payment in lieu of notice, end of year payment, severance payment, long service payment and an order for reinstatement. After the hearing, Mr Hui Ka-ho, presiding officer of the Labour Tribunal (as he then was), on 27 June 2001 found the case against the plaintiff and dismissed his claim, and on 24 July 2001 refused the plaintiff’s application for a review. The presiding officer pointed out in his Reasons for Decision dated 12 September 2001 that the defendant had proper reasons to dismiss the plaintiff summarily under sections 9(1)(a)(i), (ii) and (iv) of the Employment Ordinance, Cap 57.

3.  In 2005, the plaintiff commenced civil proceedings in the District Court (DCCJ 6511/2005) to claim against the defendant for damages for the dismissal. On 1 November 2006, a master of the District Court ordered that the plaintiff’s statement of claim be struck out and the action be dismissed. The plaintiff’s appeal against the master’s order was dismissed by a Deputy District Judge on 1 December 2006.

4.  On 4 February 2021, the plaintiff filed a civil claim again in the District Court (DCCJ 562/2021) for damages for the dismissal. In his statement of claim, he requested that the court should “uphold justice”, “handle the tort seriously” and make an order for “reinstatement”.

5.  On 12 January 2022 Master Siu-ling Leung of the District Court ordered that the statement of claim be struck out and the action be dismissed.

6.  Under Order 58, rule 1(3) of The Rules of the District Court, Cap 336H, the plaintiff’s appeal must be lodged within 14 days from the date of the order of Master Leung (ie, by 26 January 2022). On 9 February 2022, the plaintiff lodged an appeal out of time against the order of Master Leung.

7.  Deputy District Judge Siu-ho Lee (“trial judge”) disposed of the plaintiff’s appeal, which was filed out of time, on paper and delivered the judgment[1] on 26 April 2022, refusing leave to appeal being filed out of time and dismissing the application for appeal.

8.  On 23 May 2022, the plaintiff applied to the trial judge for leave to appeal to the Court of Appeal. After the hearing, the trial judge delivered the judgment[2] on 17 June 2022, refusing the application and ordering the [plaintiff] to pay costs to the defendant in the sum of HK$400.

9.  On 21 June 2022 the plaintiff commenced the present proceedings by making a fresh application to the Court of Appeal for leave to appeal. The plaintiff submitted a “Written Statement on Reasons for Granting Leave to Appeal” and “The Applicant’s Submissions” on the same day. On 2 August 2022, the defendant submitted a statement opposing the application.

10.  On the other hand, the defendant took out a summons on 27 July 2022 and filed an affirmation in support of an application for an order for security for costs to be paid by the plaintiff into court in the sum of HK$177,300. The plaintiff opposed the application and filed an affidavit. Thereafter, the defendant filed an affirmation in reply. Both parties also submitted written submissions respectively in relation to the application.

11.  Having considered the papers and the written submissions from the parties in the present case, we consider that it is appropriate for us to determine the present application without an oral hearing on the basis of the written submissions only in accordance with Order 59, rules 2A(5) and 14A(1), The Rules of the High Court, Cap 4A.

B. The defendant’s application for security for costs

12.  We shall first deal with the defendant’s application for security for costs.

B.1 Related legal principles

13.  The defendant cited in its summons Order 59, rule 10(5) of The Rules of the High Court, Cap 4A. The rule provides: “The Court of Appeal may, in special circumstances, order that such security shall be given for the costs of an appeal as may be just.”

14.  However, this is an application for leave to appeal, not an appeal. The costs to be incurred by the defendant in the present application are not “costs of an appeal”. Moreover, there will not be any “costs of an appeal” before the plaintiff is granted leave to appeal. Therefore, Order 59, rule 10(5) does not apply to the present application.

15.  Order 1B, rules 1(2)(e) and (l), 1(3) and 1(4) of The Rules of the High Court provide as follows:

“(2) Except where these rules provide otherwise, the Court may by order—

…

(e) stay the whole or part of any proceedings or judgment either generally or until a specified date or event;

…

(l) take any other step or make any other order for the purpose of managing the case and furthering the underlying objectives set out in Order 1A.”

“(3) When the Court makes an order, it may—

(a) make it subject to conditions, including a condition to pay a sum of money into court; and

(b) specify the consequences of failure to comply with the order or a condition.”

“(4) Where a party pays money into court following an order under paragraph (3), the money is security for any sum payable by that party to any other party in the proceedings.”

16.  The above rules are the same as rules 3.1(2)(f) and (m), 3.1(3) and 3.1(4) of the Civil Procedures Rules (CPR) in England. It has been determined in cases from the English Court of Appeal[3] that these rules empower the Court of Appeal with case management powers so that it may order the applicant to provide the other party with security for costs in an application for leave to appeal.

17.  Order 1B, rule 1(1) of The Rules of the High Court provides that the list of case management powers in that rule is in addition to any powers it may otherwise have by way of any other rule or practice direction or any other enactment. We take the view that, although The Rules of the High Court do not expressly provide that the Court of Appeal can make an order for security for costs in an application for leave to appeal, according to Order 1B, rules 1(2)(e) and (l), 1(3) and 1(4) the Court of Appeal may at its discretion exercise the case management powers in an application for leave to appeal to order the applicant to provide the other party with security for costs of that application, to stay the proceedings until the applicant has complied with the order, and to specify the consequences of not complying with the order of security for costs.

18.  Moreover, when the Court of Appeal considers whether to make the discretionary order for security for costs in an application for leave to appeal, the guidelines and legal principles applicable should be the same as those adopted for an application for security for the costs of an appeal under Order 59, rule 10(5); see: Golubovich v Golubovich (paragraphs 12 and 13) and Shlaimoun & Anor v Mining Technologies International Inc (paragraph 14). These guidelines and legal principles include the following:

(1) Where the applicant for leave to appeal is impecunious or the other party may encounter delay or difficulty in enforcing a costs order, these may be seen as the circumstances in which an order for security for costs will be made.

(2) Even if the court is satisfied that the applicant for leave to appeal is impecunious, it retains a discretion to consider any countervailing factor to determine whether it would be “just” to order that security for costs be provided. A common countervailing factor to resist it are the merits of the application for leave to appeal.

(3) When the court deals with an application for security for costs, a detailed examination is not required (or desirable) but the court should do a preliminary assessment. If the court takes the preliminary view that the grounds for the application for leave to appeal are merely arguable and it could really go either way, the court will, in the absence of any other countervailing factor, exercise its discretion to order that the applicant pay the security for costs.

(See: Chung Kau v. The Hong Kong Housing Authority & Ors [2004] 2 HKLRD 650 (paragraph 14), Man Chan Wing v Cheung Hing Wo & Anr CACV223/2015 (unreported) 1 March 2016; and Cheung Chiu Hei v China Resources (Group) Co Ltd & Others [2020] HKCA 433.)

19.  Moreover, in an application for leave to appeal involving an interlocutory judgment, especially a simple one, the respondent should consider carefully whether it is worth applying for security for costs. This is because if the costs and/or time involved in an application for security for costs are similar to the costs and/or time involved in defending an application for leave to appeal, it is highly likely that the application for security for costs does not conform to the underlying objectives of Order 1A, rule 1 of The Rules of the High Court; as a result the case management powers empowered by Order 1B, rule 1(2) and (3) will become inapplicable and the court should refuse to make an order for security for costs.

B.2 Grounds of the parties

20.  The defendant relied on two grounds for the application for security for costs:

(1) The plaintiff was of poor means and impecunious. If he failed in his application and was ordered to pay costs to the defendant, he would be unable to discharge the costs order.

(2) The plaintiff’s proposed grounds of appeal were weak, and he had been pestering the defendant with these proceedings instituted every now and then for the past 20 years.

21.  The plaintiff’s grounds of objection can be summarized as follows:

(1) The defendant had been involved in a number of frauds. He came to know that he could institute proceedings only after consulting a number of professionals; therefore, he was not abusing the judicial process.

(2) The plaintiff was the one being persecuted. The defendant should shoulder its own costs and not transfer the same to the plaintiff.

(3) A just way would be to strike out the application for security for costs and penalize the defendant for its fraudulent acts.

B.3 This court’s reasons for judgment

22.  With no proof to the contrary from the plaintiff, we accept what the defendant has pointed out; namely, the plaintiff does not have a stable source of income, does not seem to own any real e property in Hong Kong, and has not complied with the trial judge’s costs order of $400 (see paragraph 8 above). Objectively speaking, therefore, the plaintiff is impecunious. If the defendant has to recover from the plaintiff the costs of the present application awarded to it, there will likely be delays or additional expenses to be incurred. Moreover, we are also of the view that the plaintiff’s application for leave to appeal and his intended appeal do not have any reasonable prospect of success (see below for details).

23.  Be that as it may, in our view, we should refuse to exercise our discretion to make an order for the plaintiff’s payment of the security for costs for the following reasons:

(1) This is a brief application for leave to appeal and not a lot of documents are involved. The focus of the issues is simple and direct. The costs and time to be incurred in the hearing is limited.

(2) The defendant’s application for security for costs has given rise to 3 affirmations with 7 appendices, which involves quite a sum of costs, as apparent from the defendant’s statement of costs.

(3) Moreover, immediately after the defendant had made the application for security for costs, it filed a statement of objection to the application for leave to appeal. The proceedings on the application for leave to appeal were approaching the last step, which was the adjudication of the court. The application for security for costs would then become pointless, and would simply add on steps to the proceedings, prolong the hearing time and lead to costs escalation.

(4) Furthermore, the defendant had not invited the plaintiff in writing to provide any security for costs before making the application for the same. Even if the court would allow the application for security for costs, generally it would not make any order as to costs of the application; see: Hong Kong Civil Procedure 2023, Volume I, paragraph 59/10/34.

(5) Order 1A, rule 2(1)(a) of The Rules of the High Court provides that when the court exercises its powers, it should seek to give effect to the underlying objectives set out in Order 1A, rule 1(1). The underlying objectives in rules 1(1)(a) to (c) are:

(a) to increase the cost-effectiveness of any practice and procedure to be followed in relation to proceedings before the court;

(b) to ensure that a case is dealt with as expeditiously as is reasonably practicable; and

(c) to promote a sense of reasonable proportion and procedural economy in the conduct of proceedings.

(6) Based on the analysis in (1) to (4) above, the defendant’s application for security for costs is obviously in conflict with the underlying objectives in rules 1(1)(a) to (c) above. In such circumstances, the court should refuse the application for security for costs.

24.  Accordingly, the defendant’s summons is dismissed with no order as to costs.

C. The plaintiff’s application for leave to appeal

25.  Regarding the plaintiff’s application for leave to appeal, since the parties have filed written submissions in relation to the application for leave to appeal, we are of the view that this judgment should deal with the plaintiff’s application for leave to appeal and achieve the underlying objectives set out in Order 1A, rule 1(1) of The Rules of the High Court and to carry through the provision in rule 2(1)(a) of that order.

C.1    The trial judge’s decision

26.  The trial judge’s reasons for dismissing the appeal lodged by the plaintiff against Master Leung’s order can be summarized as follows:

(1) The plaintiff did not lodge the appeal against Master Leung’s order within time and he did not give any reasonable explanation for his appeal being filed out of time.

(2) It was incorrect for the plaintiff to submit that his claim was a “mixed claim” of “half civil, half criminal”. It can be clearly seen from the statement of claim that what the plaintiff made was a civil claim based on the previous employment relationship between the defendant and him[4].

(3) The plaintiff’s claim was time-barred. According to section 4(1)(a) of Limitation Ordinance, Cap 347, the period of limitation for claims founded on simple contract or on tort is 6 years. The plaintiff’s claim was founded on the dismissal of employment in 2001 and the time had obviously expired in 2021 when he commenced the action in DCCJ 562/2021[5].

(4) The plaintiff had commenced proceedings regarding his dismissal by the defendant in 2001 in the Labour Tribunal and the District Court respectively. Judgments were entered against him. According to the principles of res judicata and issue estoppel, the plaintiff must not re-litigate the same matter. The plaintiff commenced the proceedings in DCCJ 562/2021 to make the same claim, which constituted an abuse of the process of the court[6].

(5) No reasonable cause of action has been disclosed in the plaintiff’s statement of claim. It was also filed out of time. It constituted an abuse of the process of the court and is vexatious in nature. Therefore, we should exercise our discretion to strike out the statement of claim and dismiss the action.

C.2 The plaintiff’s proposed grounds of appeal

27.  The plaintiff filed a “Written Statement on Reasons for Granting Leave to Appeal” and “The Applicant’s Submissions”[7], the gist of which can be summarized as follows:

(1) The plaintiff did not file an appeal out of time. It was Master Leung who did not send him the order in time.

(2) The trial judge did not read his claim clearly, in which he pointed out that the defendant had on many occasions persecuted him with false information. As the defendant had committed multiple frauds and the court was not aware of the past incidents, it could not handle the present case.

(3) The present case is not a repetitious, frivolous or vexatious claim. It was only a misunderstanding on the trial judge’s part.

(4) He did not commit any particular mistake but was dismissed, so where is the justice?

(5) Even if the plaintiff’s case is weak and does not have a prospect of success, the court should not strike out his statement of claim so hastily because he had a reasonable cause of action.

C.3 Our reasons for judgment

28.  We have perused the judgment of the trial judge on the dismissal of the appeal and the one in which he refused the application for leave to appeal. We take the view that the trial judge had a correct understanding of the matters and the general legal principles to be considered when the court exercises the power to strike out a statement of claim under Order 18, rule 19(1) of The Rules of the District Court. There is also no obvious error in the trial judge’s detailed analysis of the plaintiff’s claim in his statement of claim and his submission.

29.  The reasons put forward by the plaintiff in the present application do not constitute reasonably arguable grounds of appeal. First of all, the plaintiff said Master Leung did not send the order to him in time so he was unable to lodge the appeal within time. However, he did not put forward this explanation before the trial judge[8].

30.  Moreover, the plaintiff pointed out that the defendant had committed fraud, but he did not mention such an allegation in the statement of claim, nor did he give any particulars of the allegation of fraud.

31.  Thirdly, although the plaintiff does not agree with the trial judge’s ruling that he could not re-litigate the dispute that had been adjudicated by the court and that the action was time-barred, he has not pointed out what error the trial judge had made in the question of law and the analysis. We are of the view that the trial judge had conducted a detailed analysis of the related legal principles and his viewpoint is correct.

32.  Based on the above reasons, the plaintiff’s intended appeal has no prospect of success. There does not exist any ground conducive to the attainment of justice in the present case such that a hearing of the intended appeal should be held. Hence, we refuse the plaintiff’s application for leave to appeal and dismiss the summons dated 21 June 2022.

33.  Separately, as the plaintiff’s application for leave to appeal is totally without merit, we order that, in accordance with Order 59, rule 2A(8) of The Rules of the High Court, no party may under rule (7) of that Order request the determination to be reconsidered at an oral hearing inter partes.

34.  As to the costs of the application for leave to appeal, the plaintiff who does not succeed in his application should, by usual practice, pay the defendant’s costs, to be assessed summarily.

35.  Upon considering the defendant’s updated statement of costs dated 27 July 2022 (exhibit “Tsang-4” to the affirmation of Tsang Sau Mei), we consider that, after deducting the items in relation to the application for security for costs and the inapplicable items in phase 2 and phase 3, the appropriate amount of costs to be awarded is HK$25,000.

Orders

36.  This court makes the following orders:

(1) The defendant’s summons is dismissed with no order as to costs.

(2) The plaintiff’s summons is dismissed.

(3) The plaintiff shall pay the costs of the application for leave to appeal to the defendant, summarily assessed at HK$25,000.

Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr. Walter Lee, solicitor.