YINGGAO RESOURCES LTD AND OTHERS v. THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD

CAMP 296/2022

[2022] HKCA 1477

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 296 OF 2022

(ON AN INTENDED APPEAL FROM HCA NO. 128 OF 2022)

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JUDGMENT

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Hon Chu JA (giving the Judgment of the Court):

1.  By summons filed on 10 August 2022, the plaintiffs made a renewed application to this Court for leave to appeal against the decision of Au-Yeung J (“the Judge”) given on 6 June 2022 ([2022] HKCFI 1704). By the decision, the Judge dismissed the plaintiffs’ appeal against the decision of Master Yee made on 4 May 2022 extending the time for the defendant to file its defence.

2.  Having considered the papers in this application and the parties’ written submissions, we consider it is appropriate to determine the application on the papers without a hearing pursuant to Order 59 rule 2A(5)(a) of the Rules of the High Court, Cap. 4A (“RHC”). 

Background

3.  The 1^st and 2^nd plaintiffs brought two sets of proceedings against the defendant bank.  The first is HCA 329/2015 (“HCA 329”).  The second is HCA 128/2022 (“HCA 128”), which gives rise to the present application.

(1)   HCA 329/2015

4.  On 12 February 2015, the 1^st and 2^nd plaintiffs commenced HCA 329 against the defendant claiming for damages said to be occasioned by the defendant’s wrongful refusal to carry out the 1^st plaintiff’s instructions and the freezing of the 1^st plaintiff’s bank account.

5.  On 12 August 2021, the plaintiffs applied to re-amend the statement of claim.  On 18 January 2022, Master Alexander Tang allowed one batch of the amendments with the rest of the proposed amendments either abandoned or refused.  The amendments that were allowed introduce a new claim relating to what was termed “Gold Mining Agreement” entered into by the 3^rd plaintiff in HCA 128 on behalf of the 1^st plaintiff.  The plaintiffs claimed that due to the defendant’s breach of contractual mandate and tortious duty of care, the 1^st plaintiff could not fulfil its obligations under the Gold Mining Agreement resulting in the forfeiture of its mining rights and loss in the tune of RMB 34 billion. 

6.  The defendant appealed against the Master’s decision.  The appeal was heard on 28 July 2022 and the decision is pending.  In the meantime, the parties had agreed to extend the time for the filing and service of the Amended Defence to 28 days after the determination of the appeal.

(2)        HCA 128/2022

7.  On 28 January 2022, the 1^st and 2^nd plaintiffs together with the 3^rd plaintiff commenced HCA 128, relying on facts which are substantially the same as those pleaded in the Re-Amended Statement of Claim in HCA 329.  The Statement of Claim has also included a claim relating to the Gold Mining Agreement, which forms the bulk of the plaintiffs’ claim. 

8.  On 8 February 2022, the defendant though its solicitors (“MB”) filed an Acknowledgment of Service, giving notice of intention to defend the claim.  Upon MB’s request by letter dated 3 March 2022, the plaintiffs’ solicitors (“KHM”) agreed by letter dated 7 March 2022 to extend the time for the defendant to file the Defence to 7 April 2022. 

9.  On 28 March 2022, MB wrote to KHM proposing to extend the time for filing the Defence to 28 days after the determination of the appeal in HCA 329.  KHM did not reply to the letter.  On 7 April 2022, MB wrote to inform KHM that a summons applying for an extension of time would be taken out after the closure of the court registry ended (see [10] below).

10.  Between 7 March and 11 April 2022, the High Court registry was closed due to the public health situation caused by the pandemic.  On 12 April 2022, being the first day of the re-opening of the High Court registry, the defendant took out a summons applying for an extension of time to file and serve the Defence to 28 days after the determination of the Appeal.

11.  On 4 May 2022, the summons came before Master Kent Yee, who granted the defendant’s application. 

12.  The plaintiffs appealed the Master’s decision to a judge of the Court of First Instance.  On 20 May 2022, at a listing appointment attended by representatives of KHM and MB, the appeal was listed for hearing on 6 June 2022.  On 23 May 2022, KHM wrote to MB asking to re-fix the appeal on the ground that the plaintiffs’ counsel was not available.  MB replied on the same day disagreeing to re-fix the hearing of the appeal. 

13.  By letter dated 26 May 2022 to the court, KHM requested to re-fix the appeal.  The Judge refused to deal with the letter for the reason that it was not copied to MB.  In the morning of 27 May 2022, KHM served a copy of its letter dated 26 May 2022 and the court’s reply on MB. 

14.  In the afternoon of 27 May 2022, MB wrote to the court objecting to the re-listing of the appeal and setting out the reasons for the objection.  KHM did not respond to MB’s letter.  In the late afternoon of 30 May 2022, the Judge directed that the appeal shall proceed as set down, pointing out that as of 5:00 pm that day the court had not heard further from the plaintiffs’ solicitors.  On 2 June 2022, another firm of solicitors (“CKM”) was appointed to act for the plaintiffs in the place of KHM.  No written submission for the appeal was lodged by the plaintiffs.

The Judge’s decision

15.  At the hearing on 6 June 2022, the plaintiffs appeared by counsel, Ms Cheung, to apply for an adjournment of 21 days, which was refused by the Judge.  Ms Cheung informed the Judge that she did not have instruction to argue the appeal.  She asked for permission for the plaintiffs to address the court directly.  The Judge refused the request as CKM was on record as the plaintiffs’ solicitors. 

16.  In the absence of submissions from the Plaintiff, the Judge dismissed the appeal, going on to hold that the appeal had no merit in any case, giving her reasons as follows: 

“8.  In any case, the appeal has no merits. As disclosed in the affirmation filed by the Plaintiffs before Master Kent Yee, the Plaintiffs considered that the reference notes in Form 14 (the acknowledgement of service), which set out the time limit for a defendant to file its defence within 28 days from expiry of the time for filing its acknowledgement of service, had the effect of an “unless order”. They suggested that the Defendant should seek relief from sanction within 14 days after non-compliance. The Plaintiffs were then legally represented by K H Mak & Co.

9.  The Plaintiffs were plainly mistaken in their interpretation of the reference notes in Form 14. There was in fact no order with an “unless” provision that specified the consequence of non-compliance. The Master had power to extend time for filing a defence pursuant to Order 3, rule 5 of the Rules of the High Court.

10.  Further, the statement of claim in the present case largely overlaps that in HCA 329/2015. If a defence is filed now, it may have to be substantially amended if the Defendant’s Appeal is successful. There will be not much prejudice to the Plaintiffs to defer the filing of the defence in the present action since the Defendant has been given time to file its amended defence in HCA 329/2015 to 28 days after determination of the Defendant’s Appeal.

11.  For the reasons given, I dismiss the appeal as being wholly unmeritorious.”

17.  The plaintiffs’ application for leave to appeal was dismissed by the Judge on 28 July 2022 ([2022] HKCFI 2355), and the plaintiffs were ordered to pay the defendant’s costs on indemnity basis. 

18.  On 10 August 2022, the plaintiffs issued the present summons to renew the application for leave to appeal before the Court of Appeal.

Our reasons for decision

19.  Under section 14AA of the High Court Ordinance, Cap 4, leave to appeal will not be granted unless the court is satisfied that: (a) the appeal has a reasonable prospect of success; or (b) there is some other reason in the interests of justice why the appeal should be heard. 

(1)   The proposed grounds of appeal

20.  The draft notice of appeal annexed to the summons contained three proposed grounds of appeal that run to 18 pages.  This Court has on many occasions reminded the practitioners and the litigants that grounds of appeal should be concise and should state clearly and succinctly the reasons why the appeal court should interfere with judge’s decision: China Gold Finance Limited v CIL Holdings Ltd, unreported, CACV 11/2015, 27 November 2015 at [26] to [28]; and CCMJ v SSM (formerly known as SKL), unreported, HCMP 2059/2015, 7 December 2015 at [6] and [7].  Regrettably, the plaintiffs’ draft notice of appeal failed completely to take heed of the Court’s repeated reminders.  The proposed grounds of appeal are unfocused, argumentative and are in fact a piece of written submissions.   

21.  From what we can discern, the three proposed grounds of appeal may be summarised as follows:

(1)  The Judge erred in disallowing the plaintiffs’ application to adjourn the hearing of the appeal.

(2)  The Judge failed to consider that (a) in the reference notes in Form 14 (Acknowledgement of Service of Writ of Summons), the time limit for the filing and service of Defence is an unless order; and (b) upon the failure to file a defence 28 days after the deadline (14 days) for acknowledging service of the Writ, the plaintiffs are entitled to enter default judgment against the defendant.

(3)  The Judge failed to consider that the causes of action in HCA 392 and HCA 128 are different, that the statement of claim of HCA 128 was served on 28 January 2022 while that of HCA 392 was served on 11 February 2022. 

(2)        Ground (1)

22.  Under Ground (1), the plaintiffs complain that the Judge unreasonably refused the plaintiffs’ application for a 21-day adjournment, pointing out that the hearing date was fixed not in consultation with the dairy of the plaintiffs’ counsel.  It is also said that the Judge held double standard in allowing the defendant an opportunity to make submission to oppose the plaintiffs’ application for adjournment but not affording the plaintiffs the opportunity to reply to the defendant’s opposition.

23.  As the Judge correctly pointed out when refusing leave to appeal under this ground, whether to allow an adjournment is a case management decision.  This Court has repeatedly emphasised that the threshold for disturbing a case management decision is very high.  The Court of Appeal would only intervene if the decision was wrong in principle or otherwise clearly wrong: Standard Chartered Bank (Hong Kong) Limited v Nie Hai Yan Annie (聶海燕)) [2021] 2 HKLRD 425 at [10].

24.  For the reasons given below, we agree with the Judge that this ground is unarguable:

(1)  There is no cause for the complaint that the hearing of the appeal was fixed without consulting the plaintiffs’ counsel’s diary.  First, it is not the court’s practice to fix the hearing of an appeal to a judge of the Court of First Instance in consultation of counsel’s diary, unless there is an order to this effect.  This is particularly so when the appeal, like the one in question, does not appear to involve difficult, complex issues of law or fact.  Second, even if there was an order directing that the appeal be fixed in consultation with counsel’s dairy, the court will only give effect to counsel’s dairy as far as may be convenient to the court diary, which always takes priority.

(2)  There is no basis for the complaint of “double standard”.  The plaintiff’s solicitors could have written to the court had the plaintiffs wished to respond to the defendant’s objections to the adjournment as contained in MB’s letter dated 27 May 2022.  The Judge could not be faulted for directing on 30 May 2022 that the appeal shall proceed as listed, given that the hearing was only a week away and time had to be allowed for the lodging of bundles and written submissions, and having regard to the fact that the plaintiffs had already made submissions on their application in KHM’s letter dated 26 May 2022 and their solicitors chose not to respond to MB’s letter or indicate to the court that it needed time to respond to it.  

(3)  In any event, there is no explanation, and we do not see any proper justification, why the plaintiffs only gave limited instruction to Miss Cheung to appear at the appeal to seek an adjournment, instead of giving her full instruction to also argue the appeal in the event adjournment was refused.  We further note that the plaintiffs had not put in a written submission for their appeal before the Judge when they had no basis to expect that the appeal would not proceed as scheduled.  The plaintiffs’ conduct of the appeal before the Judge is highly unsatisfactory and fallS far short of their duty under Order 1A rule 3 of the RHC. 

(4)  In short, it has not been demonstrated that the Judge erred in the exercise of her discretion in refusing to adjourn the hearing of the appeal.      

(3)       Ground (2)

25.  Under Ground (2), the crux of the plaintiffs’ arguments is that the failure to file and serve a defence within 28 days after the expiry of the 14-day time limit for giving notice of intention to defend, has the effect of an “unless” order such that the defendant must apply for relief from sanction under Order 2 rule 4 of the RHC, and the Master therefore erred in simply extending the time for the defendant to file and serve its defence and the Judge also erred in upholding his decision.

26.  For the reasons set out below, we are of the view that this ground is legally untenable:

(1)  The plaintiffs build their arguments on a part of Form 14 (Acknowledgment of Service of Writ of Summons) which states as follows:

“2. A Defendant who states in his Acknowledgment of Service that he intends to contest the proceedings must also file a Defence written in either the Chinese or the English language with the Registry and serve a copy thereof on the Solicitor for the Plaintiffs (or on the Plaintiffs if acting in person).

If a Statement of Claim is indorsed on the Writ …, the Defence must be filed and served within 28 days after the time for acknowledging service of the Writ, unless in the meantime a summons for judgment is served on the Defendant.

…” (Emphasis supplied)

This is part of the Directions for Acknowledging Service that accompany the Acknowledgment for Service. It is neither a court order nor part of the rules of the court. Accordingly, it is erroneous for the plaintiffs to contend that the sentence underlined has the status of an “unless” order, which has to be an order made by the court (see also (3) below). For this reason alone, the plaintiffs’ argument and this proposed ground of appeal must fail.

(2) The time for a defendant to serve a defence in a writ action is regulated by Order 18 rule 2(1) of the RHC, which provides, inter alia, that:

“a defendant who gives notice of intention to defend an action must, unless the Court gives leave to the contrary, serve a defence on every other party to the action who may be affected thereby before the expiration of 28 days after the time limited for acknowledging service of the writ”.

Order 18 rule 2 does not go on to stipulate the consequence, let alone sanction, for failing to serve a defence within the prescribed time. The consequence that may follow from a failure to serve a defence within the prescribed time is that the plaintiff may, in some types of claims, apply under Order 19 rules 1 to 6 of the RHC to enter final or interlocutory judgment (as the case may be) against the defendant. However, Order 19 rule 8A (1) prohibits a plaintiff from applying for judgment in default of defence without first giving to the defendant no less than two clear days’ notice of the intention to do so. The rule further requires affidavit evidence of the giving of such notice to be filed with the court.

(3) Practice Direction 16.5 (Peremptory Orders) provides a definition of “unless” order, which is to be contrasted with another form of peremptory order which does not provide for the sanction for non-compliance. The relevant part of Practice Direction 16.5 states as follows:

“2. The common form of peremptory order known as an "unless" order should prescribe the period within which an act is to be done, failing which the ordered consequences will follow. These orders fall into two categories:

(a) where the party ordered is not present/represented in which case the wording should be—

"unless within 14 days of the service of this order the defendant [serves his list of documents the defence be struck out and judgment entered for the plaintiff with costs.]"

or

(b) where the party ordered is present/represented, or if a consent order is made, in which case the wording should be—

"unless by [4 p.m. on Thursday, 1st December 1988] etc. as above".

It is desirable that the time be spelt out to avoid future argument.

3. The other form of peremptory order in common use does not carry within its wording the sanction for disobedience, hence: -

"It is ordered that [defendant] do within [14] days of service of this order 'or' do by

[4 p.m. on Thursday,1st December 1988] serve his list of documents on the plaintiff."

An order of this nature is only preliminary to an "unless" order and on disobedience a supplementary order in "unless" form, setting out the sanction, should be obtained. Until then the earlier order cannot be enforced.

4.    The exceptions to these provisions are set out in O.42 r.2(2). In such cases the judgment or order may be enforced immediately unless the court specifies a time for compliance or unless additional requirements are imposed by another rule such as O.45 r.3.”

Plainly, the requirement under Order 18 rule 2 to serve a defence within 28 days from the expiry of the time for giving notice of intention to defend is not an “unless” order.

(4)  It should further be pointed out that the two categories of “unless’ order referred to in paragraph 2 of Practice Direction are (a) an “unless” order made when the defendant is absent or unrepresented, and (b) an “unless” order made when the defendant is present or represented, or when it is made by consent. The plaintiffs’ reference to Order 42 rule 4(2) of the RHC and paragraph 4 of Practice Direction 16.5 is completely misplaced.  The former deals with the types of order that are not required to be drawn up, which has no relevance to the present case.  The latter relates to the second sub-paragraph of paragraph 4 of Practice Direction 16.5 and explains that where Order 42 rule 2(2) of the RHC (which concerns a judgment or order for the payment of money, giving of possession of land or delivery of goods) applies, the judgment or order may be enforced immediately but subject to Order 42 rule 3.  This also has no relevance.  The plaintiffs’ argument that the writ of summons “accompanied by Form 14 is an order without the need to be drawn up, with effective sanction imposed under Order 42 rule 4(2)(3)” is based on a misreading of Form 14 and a misunderstanding of the rules.  The argument is wholly unmeritorious.   

(5)  The plaintiffs also rely on Order 2 rule 4 of the RHC, which provides that:

“Where a party has failed to comply with a rule or court order, any sanction for failure to comply imposed by the rule or court order has effect unless the party in default applies to the Court for and obtains relief from the sanction within 14 days of the failure.” (Emphasis supplied)

Contrary to the plaintiffs’ submission, the requirement under Order 18 rule 12 to serve a defence within the prescribed time does not fall within Order 2 rule 4 because, as pointed out in (2) above, the rule has not imposed any sanction for failure to comply with the rule. Accordingly, Order 2 rule 4 is not engaged.  It follows that the plaintiffs’ argument that the effect of the non-compliance with the requirement to serve a defence within the prescribed time “has effect” is untenable.  What Order 2 rule 4 provides is that “any sanction for failure to comply with the rule or court order has effect”.  This does not arise in the present case since Order 18 rule 2 does not impose a sanction for failing to serve a defence within the prescribed time.

(6)  The cases of 林馬光訴警務處長 [2021] HKCFI 3881, 廖瑋基訴楊日昇及二人 (unreported) HCPI 379/2015, 14 February 2017 at [69], and Order 19 rule 2 are irrelevant and of no assistance to the plaintiffs.    

(7)  We also do not accept that the present case can be distinguished from Guangdong Yinggao Shipping Limited v Secretary for Justice [2022] HKCFI 305 at [12] to [17] and Young Crystal Limited & Ors v Hang Seng Bank Limited [2022] HKCFI 1589 at [17] to [20] by reason of the fact that the summons for extension of time was issued after the time for filing the defence had expired (see also [27] below). The two decisions have correctly held that paragraph 2 of Directions for Acknowledging Service in Form 14 did not create an unless order and Order 2 rule 4 of the RHC has no application.

27.  In addition, insofar as the plaintiffs appear to complain that the defendant’s application for an extension of time was late or out of time, we do not accept this is the case.  Firstly, between 7 March and 11 April 2022, the High Court registry was closed.  Section 71(1A) of the Interpretation and General Clauses Ordinance, Cap. 1, provides that “in relation to the doing of an act or the taking of a proceeding at a court office[1], if the act or proceeding is directed or allowed to be done or taken within a period of time, and the last day of the period is a closure day for the office, the period includes the next following day, not being a closure day for the office”.  In the present case, as the last day for the defendant to file and serve a defence (i.e., 11 March 2022) fell within the period when the High Court registry was closed, it was extended to the first day when the registry re-opened (i.e., 12 April 2022).  The defendant’s summons was not filed after the time for serving defence had expired.  Secondly, given that no filing could be done during the closure of the High Court registry, there is no ground to criticise the defendant for not filing a consent summons or a time summons until 12 April 2022.

28.  For these reasons, we reject Ground (2).

(4)        Ground (3)

29.  Ground (3) is a new ground which was neither agued in the appeal nor in the leave to appeal application before the Judge.  We take the view that, in the absence of any explanation, the plaintiffs should not be allowed to take this new ground: CCMJ v SSM (formerly known as SKL) (unreported) HCMP 2059/2015, 7 December 2015 at [8].

30.  In any event, this ground is not reasonably arguable.  There is firstly no objective basis for contending that the Judge had not considered the affidavit evidence filed by the plaintiffs, or that she was not aware of the plaintiffs’ contention that the causes of action in HCA 329 and HCA 128 are different. 

31.  Further, the issue of whether there is overlapping between the Re-Amended Statement of Claim and the Statement of Claim in the present action was also before the Judge both in the form of evidence and written submission.  Having looked at the two pleadings and the comparison made by the defendant’s solicitors[2], we do not accept that the Judge was wrong in taking the view that the statement of claim largely overlaps with the Re-Amended Statement of Claim in HCA 329.  It is also relevant to note that [81] of the Statement of Claim pleads that “the plaintiffs will apply to the Court for this action to be heard together with the action of HCA 329/2015 in order to save the Court’s time”.  This is an acknowledgment on the plaintiffs’ part that there are overlapping between the two sets of proceedings.  In short, we reject Ground (3).

(5)        Conclusion

32.  For the reasons stated above, the plaintiffs’ intended appeal has no prospect of success.  There is also no other reason in the interests of justice for the appeal to be heard.  Accordingly, we refuse to give leave to appeal and dismiss the plaintiffs’ summons.

(6)        Costs

33.  There is no reason to depart from the usual rule of costs follow the event.  Since all the proposed grounds of appeal are totally unarguable and the plaintiffs have been made aware of the unarguability of the “unless” order argument (i.e., Ground (2)), we agree with the defendant that costs should be awarded on indemnity basis.

34.  We have considered the statement of costs for summary assessment lodged by the defendant, and are of the view that the time and amount claimed are reasonable.  We allow the costs claimed in full and summarily assess the defendant’s costs of this application at HK$ 40,389.80.

Disposition

35.  Accordingly, we order that:

(1)  The plaintiffs’ summons dated 10 August 2022 be dismissed; and

(2)  The plaintiffs pay the defendant the costs of the summons on indemnity basis, summarily assessed at $40,389.80.

36.  As the plaintiffs’ application is wholly unmeritorious, we further make an order pursuant to Order 59 rule 2A (8) of the RHC, that no party may under rule 2A (7) request the determination of this Court to be reconsidered at an oral hearing inter partes.