CON-TECH FRANCHISE ASIA LTD v. CENTURY CITY HOLDINGS LTD AND ANOTHER

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1343 OF 1990

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JUDGMENT

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Introduction

1. This is an appeal from the Master's order dated 15 February 2001 dismissing an application by the plaintiff in the original action to extend the time to file an affirmation in opposition to the 1st defendant's application to dismiss the action for want of prosecution.

2. Pursuant to the order of 17 November 2000, the plaintiff was to file the affirmation in opposition on or before 8 December 2000. That was not done until 23 January 2001. By a letter dated 12 February 2001, the 1st defendant's solicitors indicated that they objected to the late filing of the affirmation, and that they would take out an application for extension of time of 14 days to file the affirmation in reply. In the event, the 1st defendant's summons and the plaintiff's time summons to file the affirmation in opposition out of time came before the Master on 15 February 2001.

3. At the hearing before the Master, the explanation given by the plaintiff's solicitors for the time extension was that the 1st defendant took out the summons hence the plaintiff had to take out the summons as well. The Master rejected argument and dismissed the plaintiff's summons. She also dismissed the 1st defendant's summons on the basis that there was simply no evidence in opposition to reply to.

Reason for delay

4. At the hearing before me, I have given leave to the parties to file fresh evidence: an affirmation of Mr Chan But Sui on behalf of the plaintiff and an affirmation by Mr Wither on behalf of the 1st defendant. Mr Chan explained the delay in filing the affirmation in opposition thus. There was a dispute between the plaintiff and his former solicitors as to the costs payable. As a result, the plaintiff's former solicitors refused to release the papers to the plaintiff. As at today, the plaintiff still has not got all the papers from his former solicitors. The plaintiff was only manage to file the affirmation in opposition on 23 January 2001. The plaintiff also complains that the 1st defendant's attitude towards the late affirmation was ambiguous. On the one hand, they objected to the late filing of the affirmation. On the other, they indicated that they would apply for extension of time to file an affirmation in reply, implying that it might, after all, not object to the late affirmation. There are also differences between the parties regarding the telephone conversations between the handling solicitors. But I do not think it is necessary for me to go into detail of the evidence in this respect.

Discretion

5. The appeal before me is a re-hearing. I am entitled to look at the evidence in the round and exercise my discretion afresh. The principle for extension of time has been summarized in Po Kwong Marble Factory Ltd v. Wah Yee Decoration Co. Ltd [1997] HKLRD 341.

6. The first principle in relation to granting an extension of time was that the rules of the Court and the associated rules of practice, devised in the public interest to promote the expeditious dispatch of litigation, must be observed. The second principle was that a plaintiff should not be in the ordinary way be denied an adjudication of his claim on its merits because of procedural default, unless default caused prejudice to his opponent to which an award of costs could not be compensated. This principle was reflected in the general discretion to extend time conferred by Order 3 rule 5, a discretion to be exercised in accordance with the requirements of justice in a particular case. It was a principle also reflected in the liberal approach generally adopted in relation to the amendment of pleadings.

7. However, neither of these principles was absolute. If the first principle was rigidly enforced, procedural default would lead to the dismissal of actions without any consideration of whether the plaintiff's default had caused prejudice to the defendant. But the Court's practice had been to treat the existence of such prejudice as a crucial and often decisive factor. If the second principle were followed without exception, a well to do plaintiff willing and able to meet orders for costs made against him could flout the rules with impunity, confident that he would suffer no penalty unless or until the defendant could demonstrate prejudice. But in the ordinary way, and in the absence of special circumstances, a Court would not exercise its inherent jurisdiction to dismiss a plaintiff's action for want of prosecution unless the delay complaint of after the issue of proceedings had caused at least a real risk of prejudice to the defendant. Save in special cases or exceptional circumstances, it would rarely be appropriate, on an overall assessment of what justice required, to deny the plaintiff an extension (whether the denial will stifle his action) because of a procedural default which, even if unjustifiable, had caused the defendant no prejudice for which he could not be compensated, by an award of costs. In short, an application for extension should ordinarily be granted where the overall justice of the case required that the action be allowed to proceed.

8. The prerequisite of an application to extend time was a clear statement as to the reason for the time limits not being observed and for any delay then applying for an extension.

9. Mr Wither for the 1st defendant first complains that the explanation on delay is too general. Secondly, there is prejudice against the 1st defendant. This is a sizable claim with interest alone accumulating at the rate of $18 million per month. Further, there may be further delay if the appeal is allowed. While his client will try its very best to prepare an affirmation in reply, there is a risk that it may not be able to do so before the substantive hearing on 13 March 1991. The 1st defendant with no default on its part is now pressed to prepare the affirmation in reply within 7 days before the hearing. This is unfair. In reply, Ms Yeung for the plaintiff submits that the affirmation in opposition was served on 23 January, the 1st defendant had been given sufficient time to consider the affirmation in opposition and prepare its own in reply. Indeed, in the letter of 12 February, the 1st defendant indicated that they would filed the affirmation in reply within 14 days. As a result, there is no real prejudice. Ms Young for the 2nd defendant supported the submissions of Mr Wither.

10. I accept the explanation given by the plaintiff for the delay in filing the affirmation in opposition. I have also considered the question of prejudice. On the question of compound interest, I think it is too early to say whether it is a real prejudice because the merits of the case have not come to be decided yet. On the question of fairness, I note that the affirmation in opposition was served on the 1st defendant on 23 January 2001. I also note that in the letter of 12 February, the 1st defendant indicated that an affirmation in reply would come its way within 14 days. Mr Wither told me that after the summons of the plaintiff had been dismissed by the Master, no preparation work had been undertaken for the affirmation in reply. That may well be true. But in the circumstances, I believe with due diligence the 1st defendant would be able to come out with the affirmation in reply within the short time available.

11. I also take into account that the substantial application is to dismiss the plaintiff's action for want of prosecution. In the absence of any affirmation in opposition, the plaintiff would be placed in a difficult position to argue the case. Balancing the interests of the parties, I think an extension of time ought to be given to the plaintiff.

Conclusion

12. After I have indicated that I would allow the application, Mr Wither did not apply for an adjournment of the hearing date while Ms Young applies for leave to file an affidavit in reply. Ms Yeung does not oppose it. I therefore allow the appeal, give leave to the plaintiff to file and serve the affirmation in opposition out of time and leave to the defendants to file and serve the affirmation in reply by 12 noon, 10 March 2001.

Costs

13. I would not disturb the costs order made by the Master because the appeal is allowed on fresh material before me.

14. As to the costs of the appeal, I order that costs of and occasioned by this appeal to be borne by the plaintiff to be paid forthwith, to be taxed if not agreed. I make an order for costs to be paid forthwith because it is clearly a default on the part of the plaintiff and all these could have been avoided had the plaintiff properly taken out an application for extension of time back in January 2001.