AMBER PROPERTIES LTD v. AIRGUARD INDUSTRIES (HK) LTD

DCCJ 1262/2024

[2024] HKDC 2055

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1262 OF 2024

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DECISION

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Introduction and Applicable Law

1.  By a Notice of Appeal dated 10 October 2024 (“NOA”), the Defendant (“D”) seeks: (1) an extension of time for D to appeal against the judgment of Master Andrea Yu dated 12 September 2024 (“the Judgment”); (2) the setting aside of the Judgment; and (3) a stay of execution of the Judgment.

2.  Under O 58, r 1(3) of the Rules of the District Court

3.  As the Judgment was given on 12 September 2024, the NOA should have been issued on or before 26 September 2024. Hence an extension of time for appealing is required.

4.  It is well-established that in considering whether to extend time to appeal, the court will take into account the following factors:

(1)  the length of the delay;

(2)  the reasons for the delay (in terms of firstly why the original time limit was not complied with and secondly why the extension of time could not have been made earlier);

(3)  the chances of the appeal succeeding if an extension of time is granted; and

(4)  the degree of prejudice to the other party if the application is granted.

See Postwell Ltd v Cheng Kap Sang [2004] 2 HKLRD 355 at §33.

5.  As for the merits, where the delay is inexcusable although insubstantial, the party seeking extension has to show a reasonable prospect of success. Where the delay is substantial and not wholly excusable, the applicant must show a real prospect of success, ie a strongly arguable case. See Lee Chick Choi v Best Spirits Co Ltd (unrep) HCMP 371/2015, 21 May 2015 per Kwan JA (as she then was) at §19 and The Hongkong and Shanghai Banking Corporation v Sy Shun Wu & Ors [2018] HKCA 736 per Lam VP (as he then was) at §9.

6.  Furthermore, in Postwell Ltd at §35, it was held that in an application for extension of time to appeal an adverse order, as opposed to extension of time to remedy other procedural default, the court should be slow to accede to the application in the absence of an acceptable reason for the delay.

7.  Moreover, there should be a clear statement as to the reasons for the delay in order for the court to exercise its discretion to extend time. See Chiu Sin-Chung v Yu Yan-yan and Another [1993] 1 HKLR 225, where Keith J at 227-228 set out a number of principles applicable to the exercise of the court’s discretion to extend time for appealing an order of a Master which includes:

“(i) ‘The rules of court must prima facie be obeyed, and in order to justify a court in extending the time during which some step in procedure requires to be taken there must be some material upon which the court can exercise its discretion. If the law were otherwise, a party in breach would have an unqualified right to an extension of time which would defeat the purpose of the rules, which is to provide a time table for the conduct of litigation’…

(ii) Accordingly, the prerequisite of an application to extend time is a clear statement as to the reasons for the time limits not having been observed and for any delay in then applying for an extension. …”.

Analysis

8.  In the present case, D has not filed any affirmation in support of the applications. Further, in breach of PD 5.4, no skeleton submissions were filed by D in support of its applications prior to the hearing. As such, there was no clear statement as to why the time limit for issuing the NOA had not been observed by D. There is simply no sufficient basis for this court to exercise its discretion to extend time for appeal. I agree with Mr Chan, counsel for P, based on the authorities, that on this basis alone I can dismiss the application for extension of time to appeal.

9.  Although D is acting in person, the courts have held time and again that litigants acting in person should bear responsibility for the proper preparation of their case in accordance with the rules and procedures of the court. All stakeholders, including litigants in person, should adhere to the rules and procedures of the court: see eg AXA China Region Insurance Company Limited v Leong Fong Cheng (unrep) CACV 113/2016, §§47 and 55.

10.  In Tsui Yuen (formerly known as Ho Wai Hung) v Ho Tse Wai, Philip Li & Partners (A Firm) (formerly known as Ho, Tse & Wai & Partners) [2019] HKCFI 2431 at §14, the Hon Marlene Ng J held that upon receipt of an adverse judgment, it was incumbent upon even those legally unrepresented to take prompt steps to ascertain the proper procedure and time frame for appeal.

11.  Mr Austin, who appeared for D, acting in person, asserted from the bar table that he had looked at the Judiciary’s website and saw the period for appealing the Judgment was 28 days. It was only when he filed the NOA he was told the applicable period was 14 days. Even if I would to have regard to his bare assertions as to why he did not file the NOA within time, I do not find the mistake excusable. Accordingly, on the authorities cited above, D has to show at least a real prospect of success on the merits.

12.  In this action, P claims against D inter alia:

(1)  unpaid rental charges under the Tenancy Agreement dated 24 January 2022 (“the Tenancy Agreement”) entered into between P and D for use of a workshop on 8^th Floor of Remex Centre, No 42 Wong Chuk Hang Road, Hong Kong (“the Premises”) in the sum of HK$362,387.90 after having deducted the deposit and partial payments made by D; and

(2)  damages for the unlawful occupation after termination of the Tenancy Agreement on 6 November 2023 until D returns vacant possession of the Premises to P consisting of: (a) mesne profits at the monthly rate of HK$158,145 from 6 November 2023 to 31 July 2024 and HK$189,774 from 1 August 2024 to 31 July 2025; (b) management charges at a monthly rate of HK$13,595; and (c) rates and government rent per quarter as imposed by the Government.

13.  From the Defence and the affirmation filed to oppose P’s application for summary judgment (Affirmation of Paul Eugene Austin (“the Affirmation”)), essentially D has raised as defence that there had been a valid modification to the Tenancy Agreement in writing such that D would have no obligation to pay further rental charges under the Tenancy Agreement but only interest on the outstanding rental charges until D completes the next round of “Series A” financing in the first quarter of 2024. D relied upon an email from Mr Wilson Liu of P (“Wilson”) to D dated 4 April 2023 (“the Email”) as evidence of the modification.

14.  However, I am of the view the existence of such agreed modification is not believable or credible for all the following reasons:

(1)  On a plain reading of the Email, it does not support the alleged modification. On the contrary, it plainly shows that P continued to insist on payment of the rental charges: “please note that it’s 3 months rental, Feb-Apr 2023, outstanding now… Please let us know when you will arrange the next rental payment”; and

(2)  From the evidence before me, it is clear that P had issued the invoices for rental charges from February, March, April and May 2023 and these were all paid by D (albeit late). If the parties had agreed to the modification on 4 April 2023, there is no reason P would have continued to invoice D and D would have paid those rental charges; and

(3)  Even as late as in November 2023 and January 2024, D had made partial repayments to D which contradicts D’s case the parties agreed that D did not need to pay rental charges.

15.  At the hearing before me, Mr Austin tried to put forward a somewhat different defence (again from the bar table). Firstly, he says that the modification was reached by an oral agreement between him, Wilson and Mr Chellaram (who apparently is the CEO of P). Secondly, he says the agreement to modify was evidenced by not only the Email but other correspondence between the parties (of which there were numerous) as well as by the conduct of the parties. Thirdly, he said that the modification was that so long as D continued to pay the outstanding interest on outstanding rentals and the rental charges, P would not pursue D for the outstanding rental charges.

16.  These matters, as accepted by Mr Austin, were never pleaded in the Defence or deposed to in the Affirmation. There was also no application made by D to amend the Defence or to adduce further evidence. Where the defendant has already filed a defence, as a general principle, the defendant cannot raise and rely upon an unpleaded defence to resist an application for summary judgment: see Hong Kong Topkey Limited v Wintac (Hong Kong) Limited and Another [2023] HKCFI 1711 at §§14-16.

17.  It is trite in an application for summary judgment that where the application is properly constituted, the plaintiff is prima facie entitled to judgment unless the defendant shows cause to the contrary. The mere assertion in an affidavit of a given situation by the defendant does, ipso facto, provide leave to defend since the defendant must satisfy the court that his evidence is capable of being believed and on the basis of such evidence, there is a fair or reasonable probability of the defendant having a real or bona fide defence. See Guanghua SS Holdings Limited v Lim Yew Cheng & Another [2022] HKCFI 1052 at §13 and Hong Kong Civil Procedure 2024, Vol.1, §§14/4/1, 14/4/2 and 14/4/9.

18.  I am simply not satisfied that there is a real prospect of success that D’s case on the modification of the Tenancy Agreement (whether as pleaded or asserted in the Affirmation) affords a real or bona fide defence to P’s claims. On this basis also, I would dismiss the application for extension of time.

Disposition and Orders

19.  Accordingly, the application for extension of time is refused. It follows that the NOA should be struck out for being filed out of time without leave of the court. It also follows that the application for stay of execution should be dismissed as no appeal is pending nor is there any other basis for a stay.

20.  There is no reason why costs should not follow the event. I therefore will order D to pay to P the costs of and occasioned by these applications, with certificate for counsel, to be taxed if not agreed.