MANSION HOUSE SECURITIES LTD. AND ANOTHER v. CHONG CHI YAN

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JUDGMENT

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Clough, J.A.

1. The defendant in this action appeals from the order for costs made by Deputy Judge Sharwood in Chambers on the 21st July, 1986. The order was made on the day the action was to be tried in the Running List, on a summons dated the 18th July, which was a Friday, issued by the defendant and served short of time. The summons was therefore heard at 9:30 a.m. on the day the action was listed for trial. By his summons the defendant applied for the action to be removed from the warned list and restored not before the 12th September, 1986.

2. The action by the two plaintiffs, who are respectively gold dealers and commodity brokers, claims substantial sums (about US$1 million and HK$730,000 or damages in the alternative) against the defendant, arising out of alleged dealings between the parties. The defendant has counterclaimed for US$433,000 odd or damages in the alternative.

3. The background of the action is briefly as follows. The writ was issued on the 2nd October 1984 and amended on the 17th January, 1985. The Statement of Claim was filed on the 10th January, 1985 and amended on the 16th April, 1985.As a result of an unsuccessful application for summary judgment under O.14, Master Betts made a consent order on the 1st July, 1985 giving leave to defend and the usual consequential directions setting the time-table for the action which was directed to be set down for trial, estimated to take three days, in the Running List within 56 days of the order.

4. Accordingly if the Master's directions had been complied with the trial would almost certainly have taken place before the end of 1985. However the directions were not complied with. The pleadings were in fact closed by the 28th September, 1985 or thereabouts. The Master had directed that both parties were to make discovery on affidavit within 14 days after the close of the pleadings and that inspection was to follow within seven days thereafter. In the event the plaintiffs did not make discovery until June this year. On the 9th June, 1986 the plaintiffs' solicitors sent their clients' lists of documents to the defendant's solicitors and asked them to agree to the filing of the lists out of time. On the 17th June the defendant's solicitors made the necessary endorsement of their consent after receiving a reminder from the plaintiffs' solicitors on the same day.

5. On the 21st June the plaintiffs' solicitors indicated that they were pressing on to the trial of the action. By their letter of that date the plaintiffs solicitors required the defendant to file his list of documents on or before the 25th June. They also required to know within four days the number of witnesses the defendant intended to call and whether the original estimate of the length of the trial at three days still held good so far as the defendant was concerned.

6. On the 24th June there was inspection of the plaintiffs' documents by the defendant's solicitors. On the 25th June the defendant's solicitors wrote to the plaintiffs solicitors to complain that the originals of the three transcripts of telephone conversations between a representative of the plaintiffs and the defendant had not been available for inspection. This was because they had been submitted to the court for verification and certification of the English translations. Correspondence followed about the obtaining of copies of the relevant transcripts and of other documents.

7. On the 26th June the plaintiffs' solicitors set down the action for trial.

8. On the 11th July, which was a Friday the action appeared in the warned list. On Monday the l4th July Mr. David Wong, the defendant's then solicitor, telephoned Mr. Spencer Lee, the plaintiffs' solicitor, and asked him to agree to an application for the case to be taken out of the warned list and restored a month later because it was unlikely that Mr. Wong's firm wouldbe ready for trial as matters stood. Mr. Lee evidently said he would only consider a formal request for consent to such an application.

9. On the 15th July there was inspection and verification of the relevant tapes and transcripts by the defendant's solicitors and the defendant. The defence claims, but the plaintiffs do not accept, that there are material additions and mistakes in the transcripts and that full discovery has not been made by the plaintiffs.

10. On the 16th July Mr. Wong sent a telex to plaintiffs' solicitors formally requesting that they consent to an application for the case to be taken out of the warned list. The telex required a reply by 10 a.m. the next day and indicated that if there was no reply the defendant's solicitors would forthith apply to the court for an order. On the 18th July 1986 the plaintiffs' solicitors replied refusing to agree to a consent application to remove the action from the warned list, denying that there were material errors in the transcripts of the tapes and inter alia reminding the defendant's solicitors that there had been no response to the plaintiffs' solicitor's letter dated 21st June, 1986 calling for discovery by the defence in compliance with Master Betts' order.

11. On the same day the defendant's solicitors issued the summons which led to the order of Deputy Judge Sharwood which is the subject of this appeal. The summons was supported by the affirmation of Mr. Wong in which he gave his version of the events leading up to the impasse between the solicitors of the parties. He complained that the case had been set down before discovery had been completed and stressed the high degree of materiality of the tapes and transcripts and the errors he alleged to exist in the transcripts. He further complained about the conduct of the plaintiffs' solicitors in setting down the action when they knew that discovery had not been properly completed and claimed that the defendant would be greatly handicapped in having to prepare for trial in great haste. He invited the court to take these matters into consideration in relation to the costs of the application.

12. On the 21st July, when the summons was heard by the deputy judge, the plaintiffs consented to an adjournment of the trial which was listed to be heard that day. The only dispute was as to costs. The order made by the deputy judge directed the removal of the action from the warned list to be set down in the fixture list with a revised estimate of a 10 day trial. The order also included leave to the defendant to serve his list of documents out of time and leave was given to both parties to serve supplementary lists.

13. The deputy judge took the view that it had been open to the defendant to apply to have the action taken out of the warned list since the 11th July when his solicitors became aware that it was in that list. From then onwards the action could have been listed for trial. He considered that by refraining from making an immediate application to the court to have the action taken out of the warned list and, instead, enlisting agreement of the plaintiffs' solicitors to support a consent application, the defendant had brought about a situation where he was compelled to make the application before the court on the date of the actual trial, which had been aborted with consequential disruption of the court's time.

14. He clearly considered this to have been the paramount factor in relation to the question of costs. He expressed the view that if the defendant had made an earlier application he could then have complained about the conduct of the plaintiffs' solicitors in placing the case in the warned list, as the defendant's solicitors alleged, precipitately, prematurely and improperly, It might well be, he considered, that the defendant would then have been entitled to the costs of such an application.

15. The deputy judge concluded his reasons for his decision by saying that he was not without sympathy for the defendant's solicitors having regard to the matters mentioned in Mr. Wong 's affidavit - namely his efforts to persuade the plaintiffs' solicitors to agree to a consent application to have the action removed from the warned list, which attempts were unsuccessful because the plaintiffs' solicitors would not agree. However he concluded by observing -

16. By his appeal the defendant seeks to set aside the deputy judge's order as to costs and to obtain an order that the plaintiffs pay the defendant's costs of the defendant's' summons and the costs occasioned by the adjournment, or alternatively, that those costs be in the cause or reserved.

17. Under Section 14(3)(e) of the Supreme Court Ordinance (Cap. 4) it is provided that no appeal should lie without the leave of the High Court or the Court of Appeal from an order as to costs only which by law are left to the discretion of the Court.

18. This provision is identical to section 18(1)(f). of the Supreme Court Act 1981 and its predecessor section 31(1)(h) of the Supreme Court of Judicature (Consolidation) Act 1925, except that the English. provisions do not confer power on the Court of Appeal to grant leave to appeal. Under Order 62, rule 3(2) of the local Rules of the Supreme Court the costs in the present case were in the discretion of the court.

19. The defendant has not obtained or sought the leave of the deputy judge or this court to bring this appeal. There is therefore no prima facie right of appeal. As the relevant local legislation is in pari materia with the English legislation the English authorities are material. Mr. Chan has very helpfully taken us through them.

20. Those authorities establish that, although there is no prima facie right of appeal without leave against an order relating to costs only, this court may entertain and allow an appeal without leave, but only where the appellant establishes that the judge below has wholly failed to exercise any judicial discretion in making his order. The leading authority on this matter is Scherer v. Counting Instruments Ltd. ⁽¹⁾ a case which was helpfully explained in another Court of Appeal decision, namely Marshall v. Levine⁽²⁾. That case was not cited to us In that case the Master of the Rolls explained the Scherer case as really deciding in substance that it was necessary to establish that a judge had wholly failed to exercise any judicial discretion when he made an order as to costs, if an appeal without leave against that order only was to succeed.

21. The position was clearly defined in practical terms by Buckley L.J. in the Scherer case, in a passage reported in the note in [1986] 1 W.L.R. at p. 618 which has been cited to us by Mr. Chan -

22. I will not set out the defendant's actual grounds of appeal contained in his Notice of Appeal because they are helpfully developed in his counsel's skeleton argument, in which it is contended that the deputy judge did not exercise his discretion or failed to exercise his discretion judicially, because he decided the question of costs solely on when the application was made or heard and not on the circumstances of the case, including the reasons for the application and the merits. It is contended that the reason for not making an immediate application to take the action out of the warned list was because the consent of the plaintiff was sought to save the court's time and to save costs. Reliance is placed on the several attempts made to obtain the plaintiffs' consent to the application and it is stressed that the application was in fact made immediately after the plaintiffs' consent was refused and only seven days after the case was warned for hearing

23. It is further contended that the deputy judge failed to consider a number of relevant factors. They were the plaintiffs' delay in proceeding with the action, the fact that the tapes and transcripts were available only shortly before the case was warned the complexity of the issues which necessitated time for discovery, the alleged unreadiness of the parties and the need for furthur discovery, the plaintiffs' refusal to consent to the defendant's proposed application until the hearing and the inaccurate estimate of the length of the trial.

24. In my judgment this is a very bold appeal in the absence of leave , and it should be dismissed. I have outlined above the reasoning of the deputy judge when making his order. The tardiness of the defendant's application for an adjournment, made on the very day of the trial, was clearly highly relevant in relation to the issue of costs.

25. The point made by the deputy judge, which seems to have been lost on the defendant's solicitors, is that a day of judicial time was wasted by a last minute application for an adjournment and this might well, indeed probably would have been avoided if the defendant's solicitors had applied immediately for the action to come out of the warned list and not taken up time trying to get the consent of the plaintiffs, who were bent on pressing on with the action and had made their attitude. quite clear.

26. In giving decisive weight to the lateness of the application the deputy judge was certainly not taking into consideration an extraneous or irrelevant matter. Moreover, as I have indicated above, he made it clear in his reasons that he had considered the complaint of the defendant's solicitor regarding the alleged precipitate, premature and improper manner in which the action had been set down. He also made it clear that he had considered Mr. Wong's evidence about his attempts to obtain the approval of the plaintiffs to a consent application for taking the action out of the warned list.

27. The other matters, which it is argued, the deputy judge should have had regard to, might have been in point if this appeal had been brought with the leave of the deputy judge or this court. In that even the position would have been the same as in the case of any other appeal against the exercise of the court's discretion. This is made clear by the decision of the English Court of Appeal in Alltrans Express Ltd. v. CVA Holdings Ltd,⁽³⁾. However, in the context o pre sent appeal, brought without leave, this court is only concerned to determine whether it has been established by the defendant that the deputy judge has wholly failed to exercise any judicial discretion. In my judgment he had regard to and determined the issue of costs by reference to matters which were relevant to the application and he exercised his discretion judicially.

28. I would therefore dismiss this appeal.

Kempster, J.A.

29. I agree that this appeal should be dismissed and with the reasons given by my Lord Clough, J.A.. In an appeal of this nature it is to be assumed by the appellate court that the judge has exercised his discretion and exercised it judicially unless such court is satisfied that he failed so to do. Nothing that has been urged upon us with all possible force by Mr. Chan persuades me that the assumption is in any way displaced.

(1)    [1977] F.S.R. 569 noted in [1986] 1 W.L.R. 615
(2)    [1985] 2 All E. R. 177
(3)    [1984] 1 W.L.R. 394