AU YEUNG WAN AND ANOTHER v. TSUI SAU YING AND ANOTHER

HCA 484/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 484 OF 2010

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DECISION

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THE ISSUES FOR DISCUSSION

Whether leave should be obtained to issue the third party notice

1.  There are a number of issues before this Court.  One of the issues is whether the 1^st defendant requires leave to issue the notice of third party proceedings under O.16 of the RHC, which the 1^st defendant had served.  This issue was raised by Master Ho in the case management hearing.  The 1^st defendant has lodged the written submissions on 21 May 2015 and argues that it is not necessary to apply for leave to issue the third party notice (“the notice”).

2.  It is not disputed that the 1^st defendant had filed the Amended Defence and Counterclaim. O.16, r. 1(2) provides:

“(2) A defendant to an action may not issue a third party notice without the leave of the Court unless the action was begun by writ and he issues the notice before serving his defence on the plaintiff.”

On a literal interpretation of the statutory provision, it is a mandatory provision for leave to be obtained.

3.  The 2^nd plaintiff had withdrawn from the proceedings.[1]  The reference here to the plaintiff refers to the 1^st plaintiff only.

4.  The 1^st defendant argues that the reason for the notice to be issued without leave before a defendant serving the defence on the plaintiff is obvious that the notice will serve for the purpose of the writ itself.  The plaintiff had amended the Statement of Claim upon an application taken out by the 1^st defendant to strike it out and the updated version of the Statement of Claim has new causes of action and new claims, which should be tried between the plaintiff and the 1^st defendant and the third parties.  The plaintiff originally applied to remove the executrixes of the deceased’s estate, but subsequently amended the Statement of Claim to seek a declaration that the property of the estate was held on trust by the estate for the Ho family as beneficial owners absolutely and therefore the Ho family should be added as the third parties.

5.  The 1^st defendant therefore argues that notwithstanding the fact that the 1^st defendant had served the Defence and the Amended Defence and Counterclaim on the plaintiff, the plaintiff’s latest version of the writ and the Statement of Claim should be treated as if it were the first writ.

6.  The 1^st defendant relies upon the decisions of the Court of Final Appeal in T v Commissioner of Police (2014) 17 HKCFAR 593 §127 and China Field Ltd v Appeal Tribunal (Buildings) (No.2) (2009) 12 HKCFAR 342 at §36 to interpret O.16, r.1(2), giving effect to the legislative intent that the 1^st defendant should be given the chance to issue the notice “at the first available opportunity”.[2]

7.  There is no question about the decisions of the Court of Final Appeal.  But to say that giving the first available opportunity to the applicant is the legislative intent is a misconception.  The concept of first opportunity is not present in the rule.  “The court cannot give effect to the legislative intention if the text does not permit it.”  §117 of Ho Choi Wan v Hong Kong Housing Authority (2005)8 HKCFAR 628 per Lord Millett NPJ.  The primary principle is that if the meaning of the language is clear, the court should give effect to its meaning.  The meaning is clear “if it is free from ambiguity, that is, it is not reasonably capable of sustaining competing alternative interpretations”.  See paragraph 26 of Vallejos Evangeline Banao, also known as Vallejos Evangeline B v Commissioner of Registration & Another (unreported, CACV204/2011, A. Cheung CJHC, 28 March 2012).

8.  Sometimes, even where there is no ambiguity, the court should construe the statutory language in light of the context and purpose.  See HKSAR v Li Kwok Cheung (2014)17 HKCFAR 319 Mr Justice Ribeiro and Mr Justice  Fok PJJ.  As can be seen from the other provisions under O.16, the court has the unfettered discretion over the application.  The application is made ex parte.  But the court may direct a summons for leave to be issued.  O.16, r.2(1).  In the application for leave, the applicant has to support the application by affidavit setting out:

(a)   the nature of the claim made by the plaintiff in the action;

(b)   the stage which proceedings in the action have reached;

(c)   the nature of the claim made by the applicant or particulars of the question or issue required to be determined, as the case may be, and the facts on which the proposed third party notice is based; and

(d)   the name and address of the person against whom the third party notice is to be issued.[3]

9.  In my view, the legislative intent for leave to be obtained is to vest the case management power in the court so that the court may exercise its discretion as to whether the application should be allowed without calling the plaintiff or the third party to answer the application, or alternatively, should call upon the plaintiff or the third party to make submissions on the application.  This is more so in view of the power of pro-active case management given to the court under the CJR. The court, of course, retains the power to disallow the application on various reasons, such as proportionality.  See §22 of my Decision in Chinacast Education Corporation & Others v Chan Tze Ngon & Others (unrep. HCA 1062/2012, 9 October 2014)  At the same time, this power will be translated into a duty on the court itself.  This explains why Master Ho had raised the issue with the 1^st defendant.  He is perfectly right to do so.  In fact, it is the duty of those appearing before him to bring to his attention this procedural irregularity. See O.1A, r.3.

10.  To construe the statutory provisions as proposed by the 1^st defendant is tantamount to depriving the court of its case management power, which is clearly not necessary and should not be adopted.

11.  The 1^st defendant asks this Court to grant the leave if it holds that leave must be applied for.  It is submitted that the third parties have the 1^st defendant’s submissions and although there is no formal ex parte application, the Court should consider granting leave under these circumstances in order to save costs and time.

12.  Since two of the third parties are present, this Court should ask them if they have any objection to the 1^st defendant’s proposal.  The third parties say that they will oppose the application.  They do not want to be involved and they are concerned about the costs.

13.  The 1^st defendant’s proposal cannot be entertained because there is no application before me today.  Nor is there any affidavit in support of the application, which coupled with the third parties’ objection and they have not enough time to prepare for the argument, still less where they do not have the supporting materials on affidavit, it would be unfair to the third parties for me to entertain the 1^st defendant’s application here.  This is not one of the agenda for this hearing.  I therefore decline to entertain the 1^st defendant’s proposal.  I will simply order that the third party notices served on the third parties are set aside as the 1^st defendant had not obtained leave to issue the third party notice under O.16, r.1.

The application for costs order against Non-party

14.  The defendants ask this Court to make an order against Madam Ho, who was the 2^nd plaintiff and had discontinued her claim already.  The defendants thus ask this Court to treat her as a non-party and Mr. Yeung, the solicitor acting for the defendants ask me to make an order in terms as follows:

“A costs order against Ho Wing Chung Pauline, the former 2^nd plaintiff and now the 1^st Third Party, to pay the cost of this action. The hearing of this application be adjourned to the trial judge at the end of the trial of this action.”

15.  Mr. Yeung refers me to the authority of Sun Focus Investment Ltd v Tang Shing Bor & Another [2012] 5 HKLRD 853 where Mimmie Chan J held that the court has the power to make such an order and there are two stages, the first being whether the court should make such an order.  In determining this issue, the court should make the order unless the application can be seen to be manifestly and fundamentally misconceived as to be an abuse by the applicant.

16.  I hold that the defendants’ application is manifestly and fundamentally misconceived because as the defendants admit, Order 62, r.10 gives them the costs against Madam Ho when she discontinued her action against the defendants.  The costs against Madam Ho, as far as the action is concerned, should be calculated up to that stage only.  To ask this Court to make an order in accordance with the terms proposed seems to be very odd.  I simply refuse to entertain this application and dismiss it with costs assessed under O.62, r.9A.  As Madam Ho confirms that she does not ask for costs, I shall therefore make no order as to costs.

17.  This Court now makes an order in terms as follows:

a.   The  third party notice requires leave and the ones issued by the 1^st defendant without leave of the court be set aside;

b.   The defendants’ application for non-party costs be dismissed;

c.   The costs of and incidental to the hearing on leave on the third party notice be no order as to costs between the parties and the 1^st defendant’s own costs be taxed in accordance with the Legal Aid Regulations but with no certificate for counsel; and

d.   The costs of the defendants’ application for non party costs be as per paragraph 16.