YANG KERWIN CATHERINE v. WOO MA MAN

HCA 2502/2016

[2019] HKCFI 3032

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2502 OF 2016

_________________

_________________

________________

J U D G M E N T

________________

Introduction

1.  On 14 November 2018, Master Chow granted an Order (“Chow Order”) in terms that “The Defendant do, within 14 days from the date hereof, make and file an affidavit stating whether the documents specified in the Schedule annexed hereto are or have at any time been in his possession, custody or power, and if the same have at any time been but is no longer in his possession, custody or power, stating when he parted with the same, and what has become thereof”.

2.  On 5 December 2018, Master Ho granted an Order (“Unless Order”) in terms that “Unless by 4:00 pm on 19^th December 2018, the Defendant do file and serve the Affidavit in compliance with the Order of Master Chow dated 14^th November 2018, the Defence be struck out and the Plaintiff be at liberty to apply for judgment to be entered against the Defendant with costs”.

3.  The Unless Order was not complied with by the Defendant.

4.  On 1 March 2019, Registrar Kwang, after hearing the parties, ordered that Judgment be entered in favour of the Plaintiff against the Defendant for the sum of HK$7.065 million together with interest and costs (“Order”).  Pursuant to the Order, Judgment was duly entered for the Plaintiff against the Defendant (“Judgment”).

5.  There are before this court:

(1)  The Defendant’s Notice of Appeal dated 24 October 2019 (“Notice of Appeal”) seeking an extension of time to appeal against the Order and the Judgment and an Order setting aside the Order and the Judgment (“Appeal”).

(2)  The Defendant’s Summons dated 19 November 2019 (“Relief Summons”) seeking an extension of time to apply for relief from the sanction contained in the Unless Order (“Sanction”) and relief from the Sanction by way of reinstatement of the Defence filed herein on 12 January 2017 (“Relief Application”).

6.  There is also before this court the Plaintiff’s Summons dated 22 November 2019 for an Order that the Notice of Appeal be struck out.  After exchanges with the bench at the hearing, Ms Ho accepts that it would not be necessary for this court to both dismiss the Appeal and strike out the Notice of Appeal at the same time.  She accepts that it is sufficient just to dismiss the Appeal if the court agrees with the points set out in her skeleton submissions.

Salient Procedural History

7.  On 5 November 2018, the Plaintiff applied by Summons under RHC O 24 r 7 for specific discovery of the statements of 4 securities accounts of the Defendant held with Bright Smart Securities International (HK) Limited and Bright Smart Futures & Commodities Co Limited (“Statements”).  The application was granted by Master Chow; hence the Chow Order.

8.  By 28 November 2018, the Defendant failed to comply with the Chow Order. 

9.  On 3 December 2018, the Plaintiff applied by Summons under RHC O 24 r 16 which resulted in the Unless Order.

10.  The Defendant filed an affirmation on 19 December 2018 (“December Affirmation”) in purported compliance with the Unless Order.  The Defendant attached some of the Statements which he confirmed were all he had.  The Plaintiff then found out that he had not provided all the Statements covered by the Chow Order and the Unless Order and applied by Summons dated 21 January 2019 to enter Judgment against the Defendant (“Judgment Summons”). 

11.  The Judgment Summons was first heard by Registrar Kwang on 25 January 2019.  The learned Registrar adjourned the application to 1 March 2019 and granted leave to the Defendant to file an affirmation in opposition within 28 days.  The Defendant only did so out of time on 28 February 2019 (“February Affirmation”).  At the hearing on 25 January 2019, Registrar Kwang further directed that any application for relief against the Sanction must be made before 1 March 2019.  The Defendant did not do so.

12.  While the Defendant filed the February Affirmation prior to the 1 March hearing, it still admittedly failed to provide all the Statements covered by the Unless Order.  In these circumstances, on 1 March 2019, Registrar Kwang made the Order and entered the Judgment against the Defendant.

Deliberation

13.  As stated in Hong Kong Civil Procedure 2020 Vol 1 at para 58/1/9, in considering whether to extend time to appeal, the Court has to consider all relevant factors, particularly, (1) the length of delay, (2) the reasons for delay, (3) the merits of the proposed appeal and (4) the degree of prejudice to the other party: Postwell Ltd v Cheng Kap Sang [2004] 2 HKLRD 355 at [33]; Hady v Bazar [2012] 3 HKLRD 29 at [45].  In Postwell, DHCJ Wong SC held at [35] that although the absence of an acceptable explanation for the delay did not preclude the court’s discretion to extend time, in applications for extension of time to appeal against an adverse order, the court should be slow to accede to the application in the absence of an acceptable reason for the delay. 

14.  As far as (1) is concerned, the length of delay is very substantial.  The Defendant had 14 days to appeal against the Order and the Judgment.  The Notice of Appeal was dated 24 October 2019 and was filed only on 28 October 2019.

15.  As far as (2) is concerned, the reason for the delay is said to be the fault of the Defendant’s former legal advisers in failing to properly advise him on the time limit to appeal.  This is denied by the Defendant’s former legal advisers.  Even assuming that the reason for the delay was as stated by the Defendant, this is still not an acceptable excuse for the kind of delay displayed in the present case: KNM v HTF unrep, HCMP 288 of 2011, 7 September 2011, Hartmann and Fok JJA (as they then were) at [18]; Tsang Wai Fan v Hui Siu Kwong unrep, HCMP 409 of 2016, 12 April 2016, Chu JA and Poon JA (as he then was) at [23].  The delay is therefore inexcusable. 

16.  As for (3), ie the merits of the proposed appeal, in KNM v HTF at [19]-[20], the Court of Appeal held that where a delay is inexcusable although insubstantial, a party seeking an extension of time must show a real prospect of success on the merits.  A fortiori, where the delay is both inexcusable and substantial, as in the present case.  When asked by this court at the hearing, Mr Tam frankly admitted that the Defendant had not put forward any grounds for the intended appeal, whether in the affirmation in support of the Notice of Appeal or in his skeleton submissions.  Indeed, it is difficult to see what grounds of appeal Mr Tam can put forward. 

17.  In Piper Jaffray Asia Securities Limited v Lam Ying Yu, unrep, HCA 38 of 2009, 15 September 2010, DHCJ L Chan, at [5] to [7], it was held that no appeal lied against a judgment entered as a result of a self-executing unless order taking effect automatically upon default by the defendant, since there was no judicial decision in the entry of the judgment that can be appealed against.  If a defendant wanted to set aside the judgment so entered, he should have appealed to set aside the unless order or sought relief from sanction for breach of the unless order under RHC O 2 r 4.  It would indeed appear from the transcript of the hearing before Registrar Kwang on 1 March 2019 that the Defendant’s solicitor accepted that his client was in default for failing to comply with the Unless Order and therefore the Sanction would be imposed automatically. 

18.  Lastly, as for (4), given the substantial length of delay, the degree of prejudice to the Plaintiff cannot be regarded as minimal—after so long a period of inaction on the part of the Defendant, the Plaintiff is entitled to regard the Judgment as being final and to arrange her affairs accordingly.

19.  In these circumstances, this court is not minded to exercise its discretion to extend time for the Defendant to appeal against the Order and the Judgment.  If so, the Appeal must therefore be dismissed.

Relief Summons

20.  This court now turns to the Relief Application.

21.  RHC O 2 rr 4-5 provide: 

“4. Sanctions have effect unless defaulting party obtains relief (O. 2, r. 4)

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.

5. Relief from sanctions (O. 2, r.  5)

(1)   On an application for relief from any sanction imposed for a failure to comply with any rule or court order, the Court shall consider all the circumstances including—

(a)   the interests of the administration of justice;

(b)   whether the application for relief has been made promptly;

(c)   whether the failure to comply was intentional;

(d)   whether there is a good explanation for the failure to comply;

(e)   the extent to which the party in default has complied with other rules and court orders;

(f)   whether the failure to comply was caused by the party in default or his legal representative;

(g)   in the case where the party in default is not legally represented, whether he was unaware of the rule or court order, or if he was aware of it, whether he was able to comply with it without legal assistance;

(h)   whether the trial date or the likely trial date can still be met if relief is granted;

(i)   the effect which the failure to comply had on each party; and

(j)   the effect which the granting of relief would have on each party.”

22.  In Top One International (China) Property Group Co Ltd v Top One Property Group Ltd [2011] 1 HKLRD 606, Fok J (as he then was) set out the relevant legal principles as follows:

“35. Ribeiro J [in Chan Chun Lung Allen & Anor v Ryland Limited & Ors, unrep, HCA 4904/1996, 26 August 1999] declined to lower the threshold, a trend which he noted was detectable in some of the English authorities, in particular Hytec Information Systems Ltd v Coventry City Council [1997] 1 WLR 1666 where, at p.1677, Auld LJ said:

‘In my judgment, there is no need to confine the test to that of an intentional disregard of a court’s peremptory order, whether or not it is characterised as flouting, contumelious, contumacious, perverse, obstinate or otherwise. Such an intent may be the most usual circumstance giving rise to the exercise of this jurisdiction. But failure to comply with one or a number of orders through negligence, incompetence or sheer indolence could equally qualify for its exercise. It all depends on the individual circumstances and the existence and degree of fault found by the court after hearing representations to the contrary by the party whose pleading it is sought to strike out.’

...

38. ... It is noteworthy that, in Chan v Ryland, Ribeiro J simply said that the Hytec approach did not ‘yet’ represent the law in this jurisdiction. Since his decision in that case, in August 1999, the CJR has since come into effect. There is now a trend towards the greater use of orders to specify automatic consequences of non-compliance and for placing the onus on a party guilty of non-compliance to seek relief from those consequences. The rules themselves reflect this trend: see, for example, RHC O.25 r.1C (failure to appear at case management conference or pre-trial review).

39. To this end RHC O.2 r.4 now specifies 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 order has effect unless the party in default applies to court for relief from the sanction within 14 days of the failure. Relief is not automatic and RHC O.2 r.5 specifies the circumstances which the court shall consider on an application for such relief.

...

41. In my view, the passage quoted above from Hytec is entirely consistent with the more pro-active case-management approach encouraged by the CJR and, in my view, the CJR has had the effect that the Hytec approach now reflects the approach that should be applied in this jurisdiction. That is to say, although intentional and contumelious disregard of a court’s peremptory order may be the most usual circumstance leading to the refusal of an extension of time to comply with a peremptory order, the exercise of the discretion to refuse an extension or to relieve a party from sanctions is not limited to cases of intentional and contumelious default. As directed by RHC O.2 r.5, the court should consider all the individual circumstances including those listed in r.5(1) at sub-paragraphs (a) to (j). Depending on the circumstances, failure to comply with one or a number of orders through negligence, incompetence or sheer indolence may be such as to lead the court to conclude there is an existence and degree of fault which warrants a refusal of an extension of time, so that relief from a sanction for non-compliance specified in a peremptory order (including an order striking out a pleading) should not be granted. Any other conclusion would, in my opinion, be to ignore the positive duty placed on parties to assist the court to further the underlying objectives of CJR (RHC O.1A r.3) and on the court to do so by actively managing cases (RHC O.1A r.4(1)).” (emphasis added)

23.  This court respectfully agrees and adopts the principles set out by Fok J above.

24.  In Hytec Information Systems Ltd v Coventry City Council [1997] 1 WLR 1666 at 1674H-1675C, Ward LJ explained the philosophy behind the “trend” referred to in para 35 of Fok J’s judgment as follows:

“(1) An unless order is an order of last resort. It is not made unless there is a history of failure to comply with other orders. It is the party’s last chance to put his case in order. (2) Because that was his last chance, a failure to comply will ordinarily result in the sanction being imposed. (3) This sanction is a necessary forensic weapon which the broader interests of the administration of justice require to be deployed unless the most compelling reason is advanced to exempt his failure. (4) It seems axiomatic that if a party intentionally or deliberately (if the synonym is preferred) flouts the order then he can expect no mercy. (5) A sufficient exoneration will almost inevitably require that he satisfies the court that something beyond his control has caused his failure to comply with the order. (6) The judge exercises his judicial discretion in deciding whether or not to excuse. A discretion judicially exercised on the facts and circumstances of each case on its own merits depends on the circumstances of that case; at the core is service to justice. (7) The interests of justice require that justice be shown to the injured party for the procedural inefficiencies caused by the twin scourges of delay and wasted costs. The public interest in the administration of justice to contain those two blights upon it also weighs very heavily. Any injustice to the defaulting party, though never to be ignored, comes a long way behind the other two.” (emphasis added)

25.  Of the circumstances listed in RHC O 2 r 5(1), it seems to this court the following weigh very heavily against the Defendant such that no extension of time and no relief from the Sanction should be granted to him.

26.  First, the interests of the administration of justice require that orders of the court must be complied with and that the parties are held to their obligation to assist the court in furthering the underlying objectives of the RHC.  It is not in the interests of the administration of justice to relieve a party from his obligation under an unless order save where the most compelling reason is advanced to exempt his failure.  No such reason is advanced in the present case.

27.  Second, the Defendant is also way out of time in issuing the Relief Summons.  No reason for the delay is given in evidence, although Mr Tam did say in submissions that he was not aware of the decision in Piper Jaffray Asia Securities Limited v Lam Ying Yu.  That is not an acceptable reason for the delay at all—RHC O 2 r 4 is there for all to see. Further, Registrar Kwang had in fact reminded the Defendant’s legal advisers at the January 2019 hearing that relief from the Sanction should be applied for, but the Defendant still did nothing.

28.  Third, as to whether the failure to comply was intentional, Mr Tam made a bald assertion that it was not but there is little evidence to support that assertion.  Indeed, the evidence referred to in his skeleton submissions, namely, the 2^nd Affirmation of the Defendant filed on 24 October 2019 in support of the Appeal out of time, only explains the delay in filing the Notice of Appeal ie the fault of the Defendant’s former solicitors in failing to advise him properly, and refers to events after the Order and the Judgment.  As Ms Ho submits which this court accepts, it is difficult to see how those subsequent events can show the non-compliance with the Unless Order was unintentional.  For the same reason, this court does not accept that there is a good explanation for the Defendant’s failure to comply with the Unless Order. 

29.  Fourth, the effect of granting an extension of time and granting the Relief Application now would be to deprive the Plaintiff of the benefit of the Judgment.  As this court stated earlier, after so long a period of inaction on the part of the Defendant, the Plaintiff is entitled to regard the Judgment as being final and to arrange her affairs accordingly.

30.  Looking at the matter in the round, whether or not the Defendant’s default was unintentional and whether the delay was caused by his former legal representatives, this court is of the firm view that the circumstances of this case show that there is an existence and degree of fault which warrants a refusal to extend time for the Relief Application and that relief from the Sanction should not be granted.

31.  In these circumstances, this court must dismiss the Relief Summons.

Disposition and costs order nisi

32.  For the above reasons, both the Notice of Appeal and the Relief Summons are hereby dismissed.  There shall be an Order nisi that the costs of and occasioned by the Notice of Appeal and the Relief Summons be to the Plaintiff, to be taxed if not agreed, and paid by the Defendant forthwith, certificate for counsel.