HUNG LUEN KWAN v. SHIU LIN FONG AND ANOTHER

DCCJ 676/2018

[2018] HKDC 872

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 676 OF 2018

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DECISION

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Introduction

1.  There are two summonses before me this morning:-

(a)  the plaintiff’s summons applying for default judgment under Order 19, rule 7 of the Rules of the District Court; and

(b)  the defendants’ summons applying for retrospective leave to file their defence out of time.

2.  In this action, the plaintiff alleges that there has been water leakage from the defendants’ premises to his premises since early 2016.  He seeks damages and injunctive relief.

Procedural history

3.  The writ, endorsed with the statement of claim, was sent to the defendants’ address by registered post on 6 March 2018.  Hence, it was deemed served on the defendants on 13 March 2018.  The deadline for the lodging of the acknowledgment of service fell on 26 March 2018.  No acknowledgment having been lodged by either defendant, the deadline for the filing of defence fell on 23 April 2018.  No defence was filed.  On the following day, ie 24 April 2018, the plaintiff took out the default judgment summons.

4.  That summons came before me on 17 May 2018.  Mr Lam Man Cheuk, one of the defendants, appeared in person.  He stated to the court that the other defendant, Madam Shiu Lin Fong, is his mother and presently lives in Canada. He confirmed that he had received various letters and court documents from the plaintiff’s solicitors from late 2017, but he did not know how to deal with them.  Mr Lam further indicated that he should not be held liable for the alleged water leakage.

5.  I then directed that the plaintiff’s default judgment summons be adjourned to today and that if they so wish, the defendants should take out an application to extend time for filing of their defence on or before 14 June 2018, with a draft defence attached.  Although Mr Lam was not legally represented and pleaded ignorance of legal procedure, costs were wasted by reason of the adjournment and I ordered that he bear such costs. 

6.  Notwithstanding my express direction, the defendants, who have had legal representation after the last hearing, filed a defence on 13 June 2018 without leave and took out a summons for retrospective leave to file their defence on the following day.  Mr Billy Ma, the defendants’ counsel, has not been able to put forward any explanation on behalf of the defendants for failing to comply with an express court order, save to say that there has been some misunderstanding.  It is accepted by the defendants that it was not procedurally desirable for the defence to be filed without leave.

Legal principles

7.  Where a court is faced with an application made by a plaintiff to enter judgment in default of the filing of defence and a defendant’s application to extend time to file the defence at the same time, it is more efficient (and hence more logical) to consider first the application for extension of time. This is because if an extension is given, the application for default judgment falls away.  On the other hand, if the default judgment application was to be considered first and then granted, the defendant would have to set aside that judgment, in accordance with the usual principles, before an extension of time could be considered.  This would be potentially time-consuming and inefficient: see Schindler Lifts (Hong Kong) Ltd v Ocean Joy Investment Ltd [2002] 1 HKLRD 279 at para 19.

8.  When considering the time extension application, the court should have regard to the merits of the defence (where a draft is provided or the pleading is filed out of time without consent or leave).  Where the defence is at least arguable, it is an important factor to be taken into account in the court’s exercise of its discretionary power whether to extend time or not: see California Insurance Company Ltd v Choung Suk Wah HCA 172/2002, 19 September 2002, paras 20 and 48, per Deputy High Court Judge A Cheung.

9.  As to how a court should exercise its discretion in a time extension application, it should look at all relevant matters and consider the overall justice of the case.  A rigid and mechanistic approach is to be eschewed.  The court is to balance two conflicting principles.  First, a party being required to observe the procedural rules, the default of which may result in judgment being entered against it.  Second, a party should not be deprived of an adjudication on the merit due to a procedural default unless there is prejudice to the other party which cannot be compensated by costs.  These two principles are not absolute.  See The Decurion [2012] 1 HKLRD 1063 at para 11(1).  The Court of Appeal’s approach there was described as “the broad, unrestricted approach” by the Court of Final Appeal in Astro Nusantara International BV v PT First Media TBK [2018] HKCFA 12 at para 59.

Discussion

10.  I should therefore deal with the time extension application first.  The dispute concerns the parties’ flats in a residential building in Hang On Street, Kowloon.  The plaintiff’s flat is situated immediately below the defendants’ flat.  The plaintiff’s complaint is that water has been dripping from the defendants’ flat since early 2016 causing damage to his flat, including the kitchen and bathroom.  In his statement of claim, the plaintiff relies on a finding made by the Joint Office of Food and Environmental Hygiene Department and Buildings Department in June 2017 that the water infiltrated from the floor slab of the kitchen inside the defendants’ flat and that was the source of the water leakage at the plaintiff’s flat.

11.  The defendants’ position, as disclosed in their defence, is that their flat was not the source.  Instead the defendants point to the incorporated owners of the building as the culprit.  They allege that the building is an old one and “is currently in the state of having serious defect requiring for urgent repair and maintenance including but not limited to the common areas of the Building” and this “has directly caused to the defects and sufferings” to the plaintiff’s flat.  The defendants say that the incorporated owners should be held responsible and in fact the defendants have also suffered from such defects.

12.  In a water leakage claim such as the present one, the burden is squarely on a plaintiff to prove the source of the water leakage.  There is no presumption in law that water found at the flat below must have originated from the flat above: 張秀玲v鄭禮莊 CACV 268/1998, 9 April 1999, para 21.  It is not for a defendant to find out or identify the correct source of water leakage or to prove that its origin did not come from his property: see, eg, Hui Ling Ling v Sky Field Development Ltd HCA 35/2007, 8 May 2012, para 23.

13.  In view of the burden of proof and the nature of water leakage claims in general, I fail to see, in the absence of other countervailing factors, how I can possibly refuse to extend time for the defendants to file their defence. Again, absent other countervailing considerations, they should be allowed to proceed to trial on the strength of their denial and their plea of an alternative origin of the water leakage.  It is therefore pertinent to consider whether there are other countervailing factors which the court should consider in the overall assessment.  The plaintiff points to two – delay with no good explanation and prejudice.

14.  I accept that the delay on the part of the defendants is not justified. Ignorance of law or legal procedure is not a good reason.  Litigants in person are subject to the same set of rules and procedure as all others.

15.  On prejudice, it is now generally recognised that delay in itself may constitute prejudice.  However, to put things in context, the delay was for about two months.  I consider that the effect of prejudice may not be very significant in this case.

16.  On the whole, the balance should come down in favour of the defendants. They should be allowed to proceed to defend the claim and should not be shut out from the proceedings when the substantive rights and obligations of the parties are yet to be proved.  On the other hand, their dilatoriness and conduct so far in these proceedings ought to be formally disapproved and an appropriate costs order should reflect that.

Conclusion

17.  I dismiss the plaintiff’s application for default judgment and grant leave to the defendants to file their defence out of time.  They should however file and serve a statement of truth made by or on behalf of Madam Shiu in compliance with Order 41A, rule 3(1)(b) of the RDC within 14 days from today. The plaintiff should file and serve a reply, if any, within 28 days thereafter.

Costs

18.  I order that the plaintiff should have costs of both summonses.

19.  On the time extension application, the defendants are seeking indulgence from the court.  It has been argued on behalf of the defendants that they should not bear costs of today’s hearing as the plaintiff should not have resisted their application.  On the other hand, Mr Timothy Lam, acting for the plaintiff, argues that it is not glaringly obvious that extension would be granted and merits aside, there are indeed other factors which would go to the discretion of the court in his favour.  Mr Lam also refers me to the remark made by Ma J in Schindler Lifts at para 18.  In essence, there is nothing inherently wrong for a plaintiff to enforce his strict legal rights by insisting that a defendant complies with the timetable laid down in the rules. It is indeed an indication of the plaintiff’s intention to prosecute the action efficiently and expeditiously.

20.  I accept that submission.  Furthermore, as mentioned above, I consider that it is appropriate to award costs in such a way as to mark the court’s disapproval of the defendants’ conduct in this action so far.

21.  On the default judgment application, Mr Ma accepts that it was properly taken out at the time.  There is no reason why costs should not be granted to the plaintiff accordingly.  The application is dismissed solely on the ground of the time extension now granted to the defendants.  For practical purposes, today’s hearing is not spent on the default judgment application.

( Discussion re quantum of costs )

22.  The costs of the two summonses be summarily assessed in the sum of $42,720, payable by the defendants within 21 days from today.