HSIAO HSIU YANG v. CHU WAI TING

HCA5909/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.5909 OF 1999

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D E C I S I O N

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1. This is the defendant's application by summons for leave to appeal against the order of the Master out of time. At the conclusion of the hearing, I dismissed the summons with costs. My reasons appear below.

Background

2. In these proceedings commenced on 12 April 1999, the plaintiff claims against the defendant, inter alia, for an order that the defendant do transfer to him 1/4 share of Flat C 24th Floor Block 12A Provident Centre, 45 Wharf Road, Hong Kong ("the Property") and also one share in one Parkgate Development Limited ("the Company"). The remaining 3/4 share in the Property and the other one share in the Company is held by the plaintiff. It is the plaintiff's case that the defendant holds the interests in the Property and the one share in the Company on trust for him.

3. The defendant defends the claim on the ground that the one share in the Company was given to her by the plaintiff in return for her contributions to the business of the Company. As for the 1/4 share in the Property, the defendant's case is that it was given to her pursuant to an oral agreement. Alternatively, the defendant contends that she is entitled beneficially to the Property by reason of her contributions to the outgoings of the Property, relying also on the presumption of advancement. The defendant further counterclaims for declaratory and other relief in relation to the interests in the Property and the Company.

The action

4. In determining the application, it is necessary to look at the history of the action. Initially, the defendant did not file an Acknowledgement of Service. Consequently, judgment was entered against her on 20 May 1999. On 6 January 2000, the defendant applied by summons to set aside the judgment. On 29 March 2000, the application was granted and the judgment was set aside. The defendant filed her Defence and Counterclaim on 12 April 2000 and the plaintiff's Reply and Defence to Counterclaim was filed on 12 May 2000.

5. Thereafter the action was inactive until 23 January 2003 when the defendant filed a Notice of Intention to Proceed. The plaintiff then issued a summons for direction. At the hearing on 14 March 2003, the parties were directed to serve lists of documents and to exchange witness statements within 21 days. On 30 April 2003, the defendant gave notice of change of solicitors. On 5 June 2003, the plaintiff's solicitors ("YC") requested by letter for exchange of witness statements. The defendant's solicitors ("PC") did not respond.

6. The parties filed their respective checklists on 13 June 2003. At the checklist review hearing on 18 June 2003, the Listing Master adjourned the hearing to 23 July 2003 and awarded costs of $1,500 against the defendant. The Listing Master further granted the defendant an extension of time to exchange witness statements and to file hearsay notice. On 18 July 2003, YC enquired by letter whether the defendant intended to exchange witness statements, and also demanded payment of the costs ordered by the Listing Master. There was no response from PC. At the adjourned hearing on 23 July 2003, PC was absent and the hearing was further adjourned to 3 September 2003.

7. On 24 July 2003, the plaintiff applied by summons for an order pursuant to Order 25, rule 6(3) of Rules of the High Court for an order that unless the defendant complied with the order for exchange of witness statements, the Defence and Counterclaim be struck out and judgment be entered for the plaintiff as claimed. Owing to the summer vacation, the summons was only heard on 1 September 2003. At the hearing, PC was present and informed the Master that they could not contact the defendant. The Master granted the application and the time for compliance was stipulated to be by 4:00 p.m. on 15 September 2003 ("the Unless Order").

8. In the meantime, PC did not attend the adjourned checklist hearing on 3 September 2003, and the checklist hearing was adjourned for a third time to 15 October 2003.

9. Notwithstanding the Unless Order, the defendant did not exchange witness statements with the plaintiff nor filed her hearsay notice. On 16 September 2003, the plaintiff applied for judgment pursuant to the terms of the Unless Order. The ex parte application was approved on 23 September 2003. The judgment was sealed on 24 September 2003.

The application

10. On 3 October 2003, the defendant changed her solicitors for a second time. On the same day, she issued two summonses. The first is the summons for extension of time to appeal against the Unless Order under Order 58, rule 1(3), Rules of the High Court, being the subject matter of the present application. The second is for an order under Order 2, rule 1, Rules of the High Court to set aside the Unless Order, which was ordered by Master to be adjourned sine die.

11. It is common ground that in an application to extend the time for appeal, the court will have regard to the following matters :

(1) the length of the delay;

(2) the reason for the delay;

(3) the merits of the appeal, and

(4) the prejudice to the opponent :

Hong Kong Civil Procedure 2002, vol.1, para.58/1/4.

Delay

12. It was more than two weeks after the time for appealing against the Unless Order had expired that the present application was made. It was a serious delay. Despite that, the draft Notice of Appeal was only handed in at the hearing, two weeks after the summons was issued.

13. In her affirmation leading the application, the defendant explained that after she retained PC as her solicitors, she left for Xiaomen in the Mainland for business. She was informed of the checklist review hearing in June, but she did not return to Hong Kong for conference with PC as she had to attend to an urgent matter in the Mainland. There was no elaboration on the urgent matter. She knew in late June that the hearing was adjourned to July, and she also promised PC to return to Hong Kong in early July for a conference. The defendant said she lost her mobile phone in July, but forgot to notify PC of her new number. She returned to Xiaomen in August with her daughter and forgot to contact PC. It was only on 12 September that she learnt from a friend that PC was looking for her. She contacted PC and was told to return to Hong Kong "soonest", otherwise she might lose the action. The defendant said she returned to Hong Kong on 14 September and attended PC's office the following day. It was then that she was told of the Unless Order. Despite being explained, the defendant said she "remained in a mess", which I take it to mean that she did not understand what had happened.

14. In my view, the defendant's explanations are hardly satisfactory. Firstly, it is not her evidence that she did not know of the very first Order for exchange of witness statements made at the summons for direction hearing on 14 March 2003. Additionally, given that PC had told her about the adjournment of the checklist review hearing, it is most probable that PC would also have told her about the further directions on witness statements and hearsay notice. Curiously, there is no explanation as to why the witness statements and hearsay notice were not ready despite a lapse of six months (i.e. March to September) and why she did not comply with the two Orders.

15. Secondly, while she claimed that she had no knowledge of the Unless Order until 15 September 2003, she must have been told of the gist of the Unless Order when she spoke to PC on around 12 September 2003. More importantly, it was through her own fault that PC could not communicate the Order to her before 12 or 15 September 2003.

16. Thirdly, despite having knowledge of the Unless Order on 15 September 2003, no step to either extend the time for compliance or to set aside or appeal against the Unless Order was taken until 3 October 2003, some 18 days later. In fact, 15 September 2003 is the last day for the issue of the Notice of Appeal. The defendant, however, gave no reason for the inaction between 15 September and 3 October 2003.

17. This, when viewed against the history of the action, leads justifiably to the conclusion that the defendant's default is more than inadvertent. As Mr Wong for the plaintiff submits, it is pertinent to note that the defendant had throughout not applied for any extension of time to comply with the Orders on exchange of witness statements and filing of hearsay notice. No such order was sought either in her draft Notice of Appeal. Mr Chua for the defendant argues that the plaintiff had been guilty of delay and the action was inactive for almost two years after pleadings were closed. But it must not be overlooked that the defendant has a Counterclaim, which she is also under a duty to prosecute diligently.

18. Mr Chua also refers to a series of correspondence between PC and YC, and argues that the defendant could have applied for an extension of time, but was deprived of the opportunity to do so by reason of the plaintiff's conduct. To understand this argument, it is necessary to summarize the contents of the correspondence as follows :

19 September 2003	PC informed YC that the defendant returned to Hong Kong on 18 September, and asked for an extension of time to 15 October to comply with the Unless Order.
	(The defendant pointed out in her affirmation that the date of 18 September was a mistake, and that she in fact returned on 14 September.)
23 September 2003	YC replied it could not obtain instruction on the request because the plaintiff was out of Hong Kong and would revert in two days' time.
25 September 2003	YC informed PC that the plaintiff did not agree to an extension.
25 September 2003	PC replied that the letter of 23 September gave the impression that the plaintiff would consider the extension proposal, and the defendant would proceed forthwith to set aside the Unless Order.
27 September 2003	YC queried how the impression could have arisen, and informed PC that the plaintiff had already applied for judgment on 16 September.

19. On the basis of these letters, Mr Chua's says that the defendant had been misled by the plaintiff and she had not applied for extension of time before judgment was entered. He further complains that YC proceeded to obtain judgment despite PC's request for extension of time.

20. In my view, these arguments are wholly misplaced. Firstly, when PC wrote to request for time until 15 October 2003, the plaintiff had already lodged with the Court Registry the ex parte application for judgment. Secondly, YC's letters in no way gave rise to a promise to extend the time. It may be said that YC could have informed PC of the application for judgment before 27 September 2003. But the point cannot be taken too far because YC has no duty to look after the defendant's interests. Likewise, the plaintiff is not obliged to accommodate the defendant's request for time. It is for the defendant to take the appropriate steps to protect her interests, including to seek extension of time from the court. Thirdly, despite the suggestion that the defendant could have applied for extension of time, it remains a fact that the defendant has thus far never made such an application. As noted above, the defendant did not even sought such relief in its draft Notice of Appeal.

Merits of appeal

21. The crux of the defendant's ground of appeal is that the Unless Order should not have been made. It is said that the Master should not have fettered the trial judge's discretion, and should have left the matter to the trial judge. It is also said that the failure to comply with the Orders for exchange of witness statements and filing of hearsay notice is not contumelious and is only a procedural error.

22. In my view, these arguments ignore the fact that the plaintiff's summons was issued, and the Unless Order was made, under Order 25, rule 6(3), Rules of the High Court. The relevant part of Order 25, rule 6(3) provides as follows :

"(3) If the Court on any hearing of the summons for directions requires a party to the action or his solicitor or counsel to give any information or produce any document and that information or document is not given or produce, then, subject to paragraph (4), the Court may -

(a) ... ...

(b) if it appears to the Court to be just to do so, order the whole or any part of the pleadings of the party concerned to be struck out, or if the party is plaintiff or the claimant under a counterclaim, order that the action or counterclaim to be dismissed on such terms as may be just."

23. The hearing on 14 March 2003 was a hearing of the plaintiff's summons for direction. On that occasion, the Master ordered that the affidavits filed in the defendant's application to set aside the default judgment to stand as the witness statements, and directed for additional witness statements be exchanged. The direction has not been complied with, despite the plaintiff's request. The hearing on 18 June 2003 was an adjourned hearing of the summons for direction. Despite the extension granted on that occasion and the further request by the plaintiff, the defendant did not comply with the direction. In these circumstances, the Master is entitled under Order 25, rule 6(3) to make a pre-emptive Order in the terms of the Unless Order.

24. On the other hand, while Mr Chua does not dispute that the defendant was aware of these Orders, the defendant has given no explanation for her non-compliance. To the extent it is suggested that she was otherwise occupied in the Mainland, it is not a reason that can exonerate her. Indeed as noted by Mr Wong, even at the hearing of the present application, there is no indication that the defendant is ready and willing to comply with these directions. It is therefore not open to the defendant to say that the non-compliance is no more than a procedural error and is not contumelious.

25. In short, I do not accept that there are merits in the defendant's intended appeal.

Prejudice to the plaintiff

26. Mr Wong submits that further delay in the resolution of these proceedings may adversely affect the plaintiff in his intended application to cancel a Vesting Notice against the Property. What happened was there had been default in paying government rent and the Property had been vested in the Financial Secretary Incorporated. The plaintiff, who is resident in Taiwan, only learnt of this in April 2003. The time for applying to cancel the Notice had lapsed in May 2003. It is said that the plaintiff is deliberating on whether to put up the $60,000 odd for making the cancellation application and wishes to resolve these proceedings without delay. While I can understand that the plaintiff desires finality and certainty before incurring the money for the application, I am unable to accept that it amounts to a prejudice flowing from the defendant's delay in appealing against the Unless Order.

Conclusion

27. For the reasons set out above, the defendant has not made out a case for exercising the court's discretion in her favour. I therefore dismiss the summons for leave to appeal out of time. There is no reason for not following the usual order that costs follow event. I further order that the defendant pays the plaintiff the costs of this application to be taxed if not agreed.