EVA KWOK & CO. SOLICITORS v. DADA OLUWASEUN JOHN

HCSA 48/2021

[2022] HKCFI 441

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

SMALL CLAIMS TRIBUNAL APPEAL NO 48 OF 2021

(ON APPEAL FROM SMALL CLAIMS TRIBUNAL CLAIM

NO 3184 OF 2021)

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D E C I S I O N

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A.  Introduction

1.  This is an application for leave to appeal from an award/order made by the Adjudicator of the Small Claims Tribunal (“Tribunal”).  The intended appellant was the defendant to the claim, brought by the claimant for its unpaid fees for legal services rendered.

2.  The particular award/order from which the defendant seeks leave to appeal is dated 29 November 2021.  On that day, the Tribunal lifted its prior order dated 31 August 2021 granting a stay of execution of the default judgment given against the defendant on 16 June 2021.  The Tribunal did so because of the defendant’s failure to meet a condition imposed at a hearing on 15 October 2021 for setting aside the default judgment.

3.  The application for leave to appeal is dated 10 December 2021, and is brought pursuant to section 28 of the Small Claims Tribunal Ordinance Cap 338 (“Ordinance”).  The application is made on the grounds that the award/order was erroneous in point of law and/or outside the jurisdiction of the Tribunal.

4.  At the hearing, the defendant acted in person, and (as typical on such an application)  the claimant had not been served with the application and was absent.  At the conclusion of the hearing, I reserved my decision.

5.  This is my Decision.

B.  Procedural Background

6.  It is necessary to rehearse the relevant procedural background leading to the particular award/order under challenge.

7.  The claimant is a firm of solicitors. Originally, it claimed against the defendant legal fees of $23,700, said to be the balance owed in breach of contract.

8.  The defendant made a counterclaim on 10 March 2021, based on the assertions that credible services were not delivered, deliverables were not recovered, and services were not rendered within a reasonable timeframe, causing losses to the defendant.  The amount counterclaimed was $9,000.

9.  The first call over hearing was on 15 March 2021.  Both parties were present.  The claimant was permitted to amend its claim to the sum of $48,700. However, as the defendant suggested that there was some “confusion” regarding the billing and that the bills were unreasonable, the Tribunal directed the defendant to consider whether to take out an application for taxation of the bills pursuant to section 67 of the Legal Practitioners Ordinance Cap 159.  The case was adjourned to 16 June 2021, to enable the defendant to seek legal advice and to commence taxation proceedings (if any).

10.  However, at the hearing on 16 June 2021, the defendant was absent. As a result, the counterclaim was struck out for want of prosecution and default judgment was entered on the claim in the sum of $44,700 with costs of $50.

11.  On 31 August 2021, the defendant applied to set aside that default judgment/award. The application form identifies the reasons for the defendant’s non-appearance on 16 June 2021 as: (1) taxation proceeding in the previous hearing not yet filed; (2) on-going communication with response from the defendant made appearance at the hearing and taxation proceeding filing not yet due; (3) cost discrepancies made re-filing by defendant necessary; (4) evidence will be supplied at hearing when fixed.

12.  On the same day, 31 August 2021, directions were given by the Tribunal that: (1) the setting aside application would be heard on 15 October 2021, and both claimant and defendant were required to attend; (2) the defendant should file and serve within 14 days a witness statement regarding the application together with supporting documents (if any)  including (a) reasons for being absent on 16 June 2021 and (b) the defence against the judgment sum; and (3) there would be a stay of the award dated 16 June 2021 until the determination of the application to set aside the award, or until further order.

13.  At the hearing on 15 October 2021, the defendant admitted failing to comply with the paper directions, namely to file and serve his witness statement.  Nevertheless, after hearing submissions from the parties, the Tribunal granted the order to set aside the default judgment, on condition that the defendant should pay into the Tribunal a sum of $44,750 as security money on or before 26 November 2021, failing which the default judgment should stand and the next hearing date in January 2022 would be vacated.

14.  The Acting Principal Adjudicator of the Tribunal has provided written reasons for the order made on 15 October 2021, in his Reasons for Decision dated 25 January 2022.  The imposition of the condition was explained as being based upon all the circumstances, in particular the lack of good explanation for absence, shadowy defence and counterclaim, and the non-compliance with the Tribunal’s directions.  The imposition of a condition for payment into court for setting aside the default judgment was considered necessary to ensure proper compliance by the defendant with future Tribunal directions.  In determining the appropriate time to be allowed for payment in, the Tribunal took into account that the defendant suggested 3 months to pay in whilst the claimant suggested 1 month, and considered the interests of both parties and the importance of expeditious adjudication in the Tribunal.  Against the chronology of the proceedings to date, and the absence of any plea of impecuniosity, and the lack of any evidence produced by the defendant to prove inability to pay within a period of less than his requested 3 months, 6 weeks was considered appropriate as the time within which the security money should be paid.  Hence, the deadline of 26 November 2021 was set.

15.  By letter dated 24 November 2021, the defendant sought a review of the order/award dated 15 October 2021, and in particular the condition relating to the payment in to the Tribunal.  However, on 25 November 2021, the Tribunal informed the defendant that the application for review was made out of time and would not be entertained, so that the award/order dated 15 October 2021 shall stand.

16.  The condition as to payment in was not met by the defendant.  Therefore, on 29 November 2021, the Tribunal lifted the stay of execution on the judgment.

C.  Intended Grounds of Appeal

17.  In the application for leave to appeal, the defendant described his intended grounds of appeal as follows [sic]:

The grounds on which I desire to appeal are that the *award/order is erroneous in point of law in that - (b)

1.  The award was not done with any trial of the substantive claim, hence no fair hearing.  The adjudicator did not entertain any reasonable oral argument from the defendant concerning the claim before the tribunal because the matter required taxation proceedings in a higher court.  The defendant has not yet argued against the claim or for his counterclaim.  No substantive hearing has been conducted, nor has the service of the arguments of the claimant served on the defendant in any way as regards the substantive matter.  The claim is fraudulent and the award should be allowed to stand.

2.  Claim required taxation and the Tribunal recommended it, but that was delayed due to the behaviour of the claimant who had subtracted from the caim that was filed at the Tribunal through an unofficial communication to the defendant which judicially nullifies the claim; as such the adjudicator was not patient to consider the safe and appropriate mode of delivery of critical evidence which could help the adjudicators to determine revisions filed by the defendant, so as not to jeopardise the substantive trial.  Some of the evidences were available as at the time of the tribunal attendance but the adjudicator rejected any presentation and did not allow the defendant proof his cause in open court; The evidences will be available for consideration at the Higher Court, so please consider a re-trial in the interest of justice and fair hearing, so this important principle of fair hearing for justice to be well served.

3.  The High Court needed to establish whether a bill is appropriate where the defendant has paid the claimant with reciepts.  The rationale behind billing, even after pre-payment without service rendered at the time of claim filing is questionable and the lower court did not find out but Rushton award based on private considerations without just cause, or oral argument from the defendant holding evidence.

4.  The award granted the claimant is ridiculous and prejudicial as the actual amount has not been established since there is no substantive trial.  The adjudicators were not observant that some of their

the *award/order is outside the jurisdiction of the tribunal in that – (c)

1.  The extent of the claim could not be proven without Taxation or fact-finding.  The aggreements and bills have discripancies and timings that proved sharp practises and errors negatively affected the defendant, and the amount that was due to be paid necessitates the High Court to establish.  The defendant has counter-claim and the lower court should have exercised patients with the defendant to establish his counterclaim with a “just cause” without destroying the vital evidence.

2.  It is wrong to accept the an award of the lower court without any fact-finding of the claim.  The bills used in calculating the claim are fictitious and the agreements fraudulent.  The adjudicator doubtfully entertained the matter.

3.  There are several questions on point of law that the High Court needed to establish before a valid claim can be proved.

4.  The entire award needed to be studied before filing this review, and the High Court need to enter into the matter to upturn the fictitious award.

18.  It seems to me that the core (and overlapping)  complaints put forward in those intended grounds are that:

(1)  there should have been a taxation of the bills of costs prior to determination of the small claim;

(2)  alternatively, there should have been some other fact finding prior to determination of the claim and counterclaim;

(3)  the Tribunal did not conduct a trial of the substantive claim, so that there was no fair hearing;

(4)  there are points of law to be established in the High Court before a valid claim can be proved.

19.  At the hearing, I asked the defendant if that was a fair summary of his points, and he agreed that it was.  The defendant further submitted that:

(1)  the claim had been made prematurely, because the legal services had not been rendered at the time of the claim or hearing;

(2)  the Tribunal did not take a complete statement from the defendant;

(3)  in discussions between the claimant and defendant, the claimant has taken off some of the amount claimed;

(4)  filing in the Tribunal was not necessary any longer; and

(5)  the claimant should have withdrawn the claim, but has not.

20.  As can be seen, at least some of those points relate to the merits of the dispute between the claimant and defendant, primarily as a matter of fact.  But, if leave to appeal is to be granted, the defendant must show sufficiently arguably that the Tribunal made an error in point of law or that it decided something outside its jurisdiction.

D.  Are There Any Merits in the Intended Appeal?

21.  The core complaint about the failure to have had a substantive hearing of the merits of the underlying claim and counterclaim is entirely misplaced.

22.  First, the intended appeal is against the order dated 29 November 2021. But that order was simply to confirm the effect of the previous order dated 15 October 2021, when the imposed condition was not met within time (and absent any application for or grant of any extension of time).  There was clearly nothing improper or incorrect, as a matter of law, in confirming the effect of the previous order.

23.  Indeed, the apparent suggestion that the Tribunal acted outside its own jurisdiction in making the order dated 29 November 2021, in consequence of the defendant’s failure to meet the condition imposed on 15 October 2021, is unarguable.

24.  Secondly, even if the intended challenge is thought really to be against the order of 15 October 2021, the suggestion that it amounted to some refusal to deal with the substance of the claim or to have a fair hearing is not correct as a matter of law or even fact.

25.  Whilst it is correct that the default judgment was originally entered against the defendant and his counterclaim was dismissed (when he failed to attend the hearing on 16 June 2021), the default judgment had first been stayed pending the determination of the defendant’s application to set it aside.  Then the default judgment was indeed set aside by the order dated 15 October 2021, precisely to permit the defendant the opportunity to argue the substantive merits.  However, as a matter of the exercise of the Tribunal’s discretion, the setting aside was made on terms, namely conditional upon payment in to the Tribunal of the judgment amount, with a deadline of 6 weeks which expired on 26 November 2021.

26.  As the Tribunal identified in the Reasons for Decision, section 32A of the Ordinance permits a default judgment to be set aside on such terms as the Tribunal thinks just.  A condition requiring a payment in is well within the discretionary terms which might be imposed by the Tribunal when it permits a default judgment to be set aside.

27.  Further, as was also identified in the Reasons for Decision, though it is trite that a court or tribunal should consider whether a defendant can reasonably comply with the conditions imposed, a defendant who seeks to avoid or limit a financial condition by virtue of his own impecuniosity must put sufficient and proper evidence before the court and make full and frank disclosure.  Moreover, he cannot complain that the condition is difficult for him to fulfil, only that it is impossible for him to fulfil.

28.  In this case, no such evidence was deployed by the defendant either in advance of or at the hearing on 15 October 2021, or within the time permitted for seeking a review of the decision made at that hearing.  Indeed, the defendant submitted to me that he had told the Tribunal that he “may not be able to pay”, and when he discovered that he could not pay he put forward his review application.

29.  However, even when the defendant applied for review, albeit well out of time, his letter contained only general assertions as to difficulties or impossibility raised by the imposition of the condition for payment in (without supporting evidence)  – and the thrust of the request for review was that (a) the condition should be removed or significantly reduced so that the hearing fixed for January 2022 could continue as scheduled “in the interest of justice” or to allow a fair hearing, (b) when making the order on 15 October 2021, the Tribunal failed to give sufficient attention to his “spoken address with evidence” at that hearing, and (c) the application for the revision of the amount of the claim should have been allowed because of fresh communication between the parties.

30.  The decisions to impose a condition, and the imposition of the particular condition, were exercises of the Tribunal’s discretion.  The Tribunal has explained how and why that discretion was exercised.  The condition imposed was well within the reasonable range of the proper exercise of discretion.  I see no arguable point of law, and no arguable identified error of law on the part of the Tribunal.

31.  Further, having read the transcript of the hearing on 15 October 2021, I also see no error of law or arguable point of law capable of proper pursuit on an appeal.  The defendant’s suggestion that he has been denied a fair hearing on the substance of the claim and counterclaim is simply incorrect as a matter of law and fact.  He was given that opportunity following the hearing on 15 October 2021 – and as a result of the order made at that hearing – but he simply failed to comply with the condition imposed on him.

32.  In so far as the intended appeal is based upon the suggestion that there should have been a taxation of the bills of costs, the Tribunal had in fact in March 2021 adjourned the claim precisely to permit the defendant to take advice upon and commence such a taxation.  The defendant did not do so.  Where it was open to the defendant, and indeed up to the defendant, to commence any relevant taxation if he wished, there is no arguable error of law on the part of the Tribunal to have ordered the setting aside of the default judgment on a conditional basis, and then to have ordered in confirmation of the effect of a failure to meet that condition.

33.  Further, it remains entirely unexplained what points of law need to be determined in the High Court before the small claim could be determined.

34.  Lastly, I would point out that it is not appropriate or possible for the Court on this application to engage in any factual consideration as to (a) whether the claimant has in fact provided the legal services for which it has charged and claimed, or (b) whether the claimant has agreed to reduce the amount of its claim or to withdraw it.

E.  Conclusion

35.  I am afraid that I see no merit in any of the grounds on which the defendant has stated his desire to appeal.

36.  Therefore, the application for leave to appeal is dismissed.

37.  As to costs, where the claimant was not present at the hearing, I of course make no order as to costs.