LOUEY PAK YAU AND OTHERS v. YUE SHUI HOI AND ANOTHER

Procedure - summons to strike out re-amended statement of claim on grounds that no reasonable cause of action, vexatious, frivolous and abuse of process - effect of prior ex parte order setting aside judgment which had proceeded to execution - power and practice of one judge discharging ex parte order made by another judge - power of judge in striking out proceedings to discharge ex parte order made in other proceedings where no application made to discharge - Held: 1. As a matter of practice it may often be desirable for judge granting ex parte order also to hear application for discharge but as a matter of law a different judge may order discharge and the latter procedure may depending on the circumstances be the more convenient course; 2. In instant exceptional factual circumstances Court on its own motion prepared to amend striking out summons to include prayer for discharge of ex parte order setting aside prior judgment which had already been substantially executed; 3. Post-judgment re-amended statement of claim struck out.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

Action No.11123 of 1982

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JUDGMENT

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1. I delivered judgment on 6th November 1985 and now hand down my reasons. This was an appeal against an order of a Master on 11th September 1985 refusing to order that the Re-Amended Statement of Claim be struck out and the action be dismissed on the grounds that it disclosed no reasonable cause of action; was frivolous or vexatious; and was otherwise an abuse of the process of the Court. The bare recital of those common and simple grounds does not unfortunately even hint at the complications which have arisen from the multiplicity of actions and interlocutory applications which followed upon the failure in 1982, of the original defendant Madam Yue Luk Kwok Mei, to pay the rent and other monies due in respect of domestic premises situate and known as Flat B, 302B-C, Prince Edward Road, Kowloon. To better understand the present position it is unfortunately necessary to record certain background relevant facts in some detail.

2. The defendant died on 1st August 1982. On 23rd September 1982 the plaintiffs, unaware of her death, commenced proceedings in the Kowloon District Court for recovery of possession, arrears of rent and other monies under KDCCJ Action 16078/82. No defence was filed and the plaintiffs applied to the Deputy Registrar for judgment by default. The Deputy-Registrar, with an admirable grasp of the then complex jurisdictional position in relation to landlord and tenant actions, refused to enter judgment by default, pointing out that as the claim was based on the common law right to terminate the tenancy, arising from the default of the tenant during the contractual tenancy and not on any statutory ground under the Landlord and Tenant (Consolidation) Ordinance, the general District Court jurisdictional limitations applied. The rateable value of the suit premises indicated that the action should have been commenced in the High Court. Thereafter this District Court action remained dormant until it was recently discontinued by the plaintiffs on 2nd July 1985.

3. However, the plaintiffs must have accepted the Deputy Registrar's jurisdictional objection for the present action claiming the same relief as KDCCJ Action 16078/82 was commenced in the High Court on 20th December 1982. The plaintiffs continued to be unaware of the death, of the defendant. No defence being filed, judgment by default was entered on 13th January 1983 and an order for possession was issued on 26th January 1984. The bailiff executed the writ of possession on 4th March 1983 as a result of which the plaintiffs obtained vacant possession. Under the judgment rent, mesne profits and other monies remained unpaid.

4. On 6th September 1983 the present defendants were by this Court granted letter of administration in the estate of Madam Yue Luk Kwok Mei. The net estate was sworn under $28,300 and the Assistant Commissioner of Estate Duty granted a Certificate of Exemption in relation to Section 14(6) of the Estate Duty Ordinance evidencing that no estate duty was payable. By 7th November 1983 the plaintiffs were aware of the death of Madam Yue. On 30th Januaary 1984 they commenced a fresh action in Kowloon District Court being KDCCJ No. 1434/84 against Madam Yue as 1st defendant and the present defendants as 2nd defendants claiming the same arrears of rent, mesne profits and other monies. The new statement of claim disclosed the existence of the prior District Court action and the present High Court action. On 26th September 1984 the new Kowloon District Court Action came on for trial when the parties were represented by Counsel. Apparently the trial judge considered that he was unable to hear an action in the District Court when the same relief was already subject to an action in the High Court. At that date, of course, judgment had long been obtained in the High Court for possession, and for the same rent, mesne profits and other monies claimed in the new District Court action. After a discussion in Chambers, the District Court adjourned into open Court, where Counsel for the plaintiffs applied to discontinue the new action. The application was granted subject to costs being awarded to the defendants. Agreed costs of $5,200 were subsequently paid by the plaintiffs on 17th January 1985.

5. I now return to the present action. The plaintiffs apparently decided that they should next attempt to pursue their claim against the administrators of the estate and that it was open for them to do so in the present action. In any event on 4th March 1985 they filed an ex parte summons in the present action to set the judgment in their favour of 13th January 1983 aside; for an order that the action be carried on against Yue Shu Hoi and Tran Tac in their capacity as administrators of Madam Yu Luk Kwok Mei deceased; and for the defendant's name in the title in the writ of summons to be amended accordingly. This summons was dismissed by a Master on 13th March 1985.

6. The plaintiffs appealed from the Master's order dismissing the summons. The appeal from the Master came before a Deputy High Court Judge on 28th March 1985. The appeal was brought ex parte. An appeal from a Master under R.S.C. Order 58 Rule 1 is by way of actual rehearing. Further the Judge hearing the appeal considers it as if it were an application coming before him for the first time. The appeal was entitled to be heard by the judge ex parte. The appeal was allowed and orders were made in terms of the three paragraphs of the original summons.

7. On 26th April 1985 the writ of summons and statement of claim was amended pursuant to R.S.C. Order 20 Rule 3 by amending the name of the defendant in accordance with the orders made on appeal together with other consequential amendments. The position became more complicated on 5th July 1985 when the plaintiffs filed a further summons applying to re-amend the amended statement of claim. This proposed re-amendment sought to add a new paragraph 7 to the statement of claim under which it was pleaded that the first named defendant had adopted the tenancy. The amendment in effect purported to make the first named defendant personally liable for the rent and other monies claimed in addition to his limited joint liability with the other defendant as administrators of the estate. This summons came before the same Master who granted orders in terms.

8. The present appeal is from the latter orders of the Master. The practical position following the Master's orders was that the plaintiffs were now in the present action for the first time claiming against the first named defendant, in his personal capacity, for substantially the same relief which they had some years earlier obtained judgment for in the very same action, which judgment had in part already been executed.

9. When the appeal first came before me Counsel for the defendants pointed out that the plaintiffs having obtained judgment nearly 3 years ago, had re-entered the suit premises shortly thereafter on 15th December 1982. The tenancy was thereupon forfeited and although rent and other monies remained unpaid, in view of the Certificate of Exemption, it was unlikely that they would be recovered from the Estate. It was further submitted that the multiplicity of actions was itself indicative of abuse of process as was the plaintiffs present belated attempt not merely to reopen the present action but to add a new party and a new cause of action. The multiplicity of actions had already involved the first named defendant in substantial costs which he had not fully recovered under prior party and party orders.

10. On the substantive issue it was submitted that the liability of the first named defendant for rent and other payments was as a matter of law limited to the extent of the deceased's assets and that unless an administrator entered into possession of the leased property there was no privity of estate under which he would become personally liable to pay the rent under the lease - Youngmin v. Heath (1974) 1 All ER 461. I was also referred to Mayor, Aldermen and Burgesses of Stratford-Upon-Avon v. Parker (1914) 2 KB 562, Williams, Mortimer & Sunnucks on Executors, Administrators & Probate (16th Edn.) 428, 429, and R.S.C. Order 15 Rule 6A and Order 18 Rule 19(1). Finally, it was submitted that if the pleading that the first named defendant had adopted the tenancy was based on Section 50(4)(a) of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7, it was misconceived for that provision was merely available for the protection of a widower.

11. Counsel for the plaintiffs submitted that whatever the earlier procedural position, all other actions claiming the same or similar relief had been discontinued. There was now only the present action. The prior judgment had been set aside so there was no judgment existing between the original parties. It was open to the plaintiffs under the Rules to re-amend and that on the present facts the Master had properly dismissed the defendants summons. I was referred to R.S.C. Order 32 Rule 6 and in particular to the note appearing in 1 'The Supreme Court Practice 1985' 32/1-6/14 at page 497. dealing with setting aside ex parts orders. In the plaintiffs submission, I was obliged to approach the appeal on the basis that no judgment existed. I could not go behind the ex parte order setting aside judgment. It was pointed out that it had always been open to the defendants to have applied to set aside the ex parte order but they had not followed that course.

12. Counsel for the plaintiffs further submitted that while the deceased died on 1st August 1982, possession was not obtained by the plaintiffs until 4th March 1983. The first named defendant claimed that his personal occupation of the suit premises was only as licencee from the deceased. However, on the affidavits, he admitted that he only moved his personal belongings out of the suit premises as late as 18th October 1982. There was, it was submitted, a triable issue of fact as to his status during at least that latter period. So far as the estate was concerned there were assets, even if exempt from duty, which might be available in payment of some of the rent and other monies due by the estate. The doctrine of relation back referred to in Youngmin v. Heath resulted in the defendants being liable as administrators for those debts.

13. In reply Counsel for the plaintiff submitted that even if all the allegations of fact of the plaintiffs were established in evidence, that would not advance their case because of the limited effect of the relation back principle. The liability of the defendants related back, was merely their liability as administrators. As to the existence of the ex parte order it was submitted that while it was open to the defendants to have applied for its discharge that was not a necessary step. Ex parte orders may be set aside on a number of grounds including material non-disclosure. The Court had power on the present appeal to strike out the action notwithstanding the existence of the ex parte order. The re-amended statement of claim continued to include a claim for possession when not merely had judgment for possession been obtained but after execution the Court's bailiff had obtained and delivered up vacant possession to the plaintiffs. To continue to claim for possession, it was submitted, was not only frivolous and vexatious but was certainly an abuse of the process of the Court.

14. After adjourning for consideration I was not satisfied whether I was entitled to look behind the ex parte order so long as it existed. I was even more concerned that whether I upheld or dismissed the appeal, the present involved procedural position would not have been finally resolved. I recognised I had the power, which is frequently exercised, to strike out where no judgment existed. This is the usual position which exists when striking out summonses are heard. But in the present exceptional circumstances, a number of the grounds for striking out were inextricably related to the judgment which had been set aside and its partial execution. At least prima facie, it seemed, that the existence of the ex parte order did on the facts inhibit the exercise of the Court's powers. On the other hand, if the Court were to take a bold approach and held that the appeal should be upheld, the plaintiffs would end up in a less advantageous position than they enjoyed immediately before the prior judgment was set aside. For that judgment having been set aside, they would be unable to attempt to complete execution. Although I recognised that it was arguable that in that event the plaintiffs might only have themselves to blame, since it was they who previously had successfully applied ex parte to have the judgment set aside.

15. After consideration, I became increasingly concerned that whatever conclusion I arrived at procedural problems in this much litigated dispute would remain. Indeed, while the factual situation was quite different, the reality was not dissimilar to the procedural tangle which led Donaldson M.R. in WEA Records Ltd, v. Visions Channel 4 Ltd. (1983) 2 All ER 589, which was subsequently cited to me by both Counsel, to observe:

"I regard this as wholly absurd. The courts are concerned with the administration of justice not with playing a game of snakes and ladders."

It seemed to me that if the present game of snakes and ladders was to have any chance of coming to a just and expeditious conclusion it was desirable for a single court to grapple with the present appeal without at the same time being fettered by the ex parte order which, by definition, was in any event merely a provisional order.

16. I therefore resumed the hearing on notice inviting Counsel, if they wished, to make submissions whether on the present appeal the Court had power to discharge the ex parte order. At the resumed hearing both Counsel again appeared and I am most grateful for the very helpful and comprehensive submissions Mr. Eddis and Mr. Ismail, at short notice, developed from detailed written skeleton arguments, each tendered to me at the beginning of the resumed hearing.

17. Counsel for the defendants submitted that the summons to strike out was wider than a summons to set aside an ex parte order. Counsel recognised that if the defendants succeeded in striking out and the action were dismissed, the plaintiffs would be left without any judgment against the Estate. In that event the defendants did not intend to apply to have the ex parte order set aside in order to restore a valid judgment. If the Court considered it necessary the Court itself had jurisdiction under R.S.C. Order 32 Rule 6 and its inherent jurisdiction to discharge the ex parte order. Rule 6 provides that:

" 6. The Court may set aside an order made ex parte."

I was also referred to Beckett v. Noel (Practice note) (1971) 2 All E.R. 1248 where Lord Denning M.R. stated that a Court has inherent power to revoke leave given ex parte. I was also referred to WEA Records Ltd. v. Visions Channel 4 Ltd. and to Yau Fook Hong Ltd. v. Attorney General MP No. 1479/84. If it was considered necessary for the ex parte order to be discharged, it was submitted that the Court should exercise its inherent jurisdiction. If not, it was pointed out that it was open to the defendants to apply pursuant to Order 20 Rule 8, for leave to amend the summons by inserting a further prayer to discharge the ex parte order. After consideration Counsel informed me that the plaintiffs elected not to so apply and were content to leave the matter to the Court. Finally, I was reminded that the objections to setting aside an ex parte order in WEA Records Ltd. v. Visions Channel 4 Ltd. were limited to that power being exercised at an appellate level in the Court of Appeal and were not relevant to the power being exercised in the High Court were what was formally an appeal was in substance a rehearing in which the High Court Judge was obliged to treat the matter as coming before him for the first time.

18. Counsel for the plaintiffs submitted that at this stage the Court had no jurisdiction to discharge the ex parte order. It was submitted that the ex parte order could only be discharged by the Deputy High Court Judge who made it or by another judge, if there was first an application before either to discharge the order. The instant appeal was wholly separate and distinct from an application to discharge the ex parte order. Alternatively, if this Court did have jurisdiction, it should decline to exercise it as the defendants had made not made any appropriate application to discharge the ex parte order. I was referred to WEA Records Ltd. v. Visions Channel 4 Ltd. as support of the proposition that the defendants were themselves abusing the Court's process by playing snakes and ladders in seeking under striking out procedure to in effect discharge an ex parte order. The defendants appeal should wholly fail for it depended on the existence of the very judgment which at present was already set aside. It was pointed out that the ex parte order could not be ignored but must be given effect to on which point I was referred to 26 Halsbury's Laws of England (4th Edn.) para. 550; Chiu Ming-sun v. Ma (1981) HKLR 69; and Cohen v. Jonesco (1926) 2 KB 1. Finally, it was submitted that if the ex parte order were to be reviewed, then the proper procedure was for a separate application to discharge first being heard which, if successful, could then be followed by an application to strike out.

19. After considering these submissions I am satisfied that I do have inherent power to discharge an ex parte order. Where an ex parte order has been made I appreciate that the better practice is that the question of possible discharge should, whenever practical, be referred back to the judge who made the order. The factual position is that the Deputy High Court Judge who made the ex parte order does not currently hold a warrant. I appreciate that a new warrant could be issued but the present situation is not dissimilar to that which was referred to in Yau Fook Hong Co. Ltd. v. Attorney General where Hunter J. held that there was no difficulty in a judge hearing an application to discharge where the prior order was made by another judge. I am also satisfied that I may properly consider discharging an ex parte order made by another judge particularly where that judge no longer holds a warrant.

20. The next question is whether, in the absence of an application to discharge the order, I should consider that possible course. In normal circumstances it would, as a matter of principle, be most undesirable that a Court should do so unilaterally, on its own motion. The present position is rather different. Both Counsel have fully argued the matter. Counsel for the defendants, while not being prepared to go so far as to apply to have the order discharged, expressly stated that the defendants had no objection to the order being discharged. Counsel for the plaintiffs, while opposed to the order being discharged on the present appeal, recognised that the arguments adduced on the striking out issue were not only relevant to an application to discharge but that some of them were even more appropriate to the latter kind of application. However, he considered that if that were to occur, the first application should be for discharge followed if successful, by a striking out application.

21. I recognise that there is merit in all these submissions. I am equally satisfied that so long as the striking out and discharge issues are considered separately or are the subject of parallel applications, the arguments tend to be at least circuitious and even risk being artificial and pedantic. For example, if a discharge application were considered first as a separate application and granted, the post judgment amended and re-amended statements of claim would survive and either have to be dealt with consequently or under a separate and subsequent application.

22. In my view the time is long overdue when one judge should deal at the one hearing with all these matters. I am satisfied that both parties at the initial hearing and at the resumed hearing have had full opportunity to put forward their case on all matters. Under R.S.C. Order 20 Rule 8 the Court has express power, on its own motion, to amend the notice of appeal for the purpose of determining the real question in controversy between the parties. Having given the parties full opportunity to present their arguments, I propose to exercise the power under Rule 8 and amend the notice of appeal by adding a further prayer that the ex parte order be discharged.

23. I now turn to consider whether the ex parte order should be discharged. An ex parte order is, of course, merely a provisional order. Usually only the party seeking the order appears, although sometimes the other party also appears although the summons is not formally an inter partes summons. In the instant action the summons was ex parte in form and in fact. The solicitor for the plaintiffs alone appeared and after an 11 minute hearing the ex parte order was made. If the judge who made the ex parte order knew that the judgment sought to be set aside had some years earlier been substantially executed, I very much doubt, with respect, that he would have made the order. I am satisfied on the facts now before me including the fact that this relatively long standing judgment had been in part executed, that there were not proper grounds for setting it aside.

24. In fairness to the plaintiffs I do recognise that, while a number of their actions and other procedural steps were misconceived, the various proceedings do indicate an attempt to regularise matters once they learned of the death of the original defendant. The Kowloon District Court actions were discontinued if belatedly. They then seem to have approached the present action concerned that, when it was begun, the original defendant was already dead. This situation is dealt with by R.S.C. Order 15 Rule 6A (3) which provides that if an action is commenced against a person dead at its commencement, it shall be treated as having been commenced against her estate. The Rule goes on to require plaintiffs to obtain an order that the personal representatives be made parties; an order that the proceedings be carried on against the personal representatives; and an order making the appropriate amendments to the pleadings.

25. All that was necessary to comply with Rule 6A was an application in terms of the latter two paragraphs of the ex parte summons. There was no necessity to apply to have the judgment set aside. In view of the prior substantial execution of the judgment, no such order, if the facts were fully known or appreciated by a Court, was likely to have been made. The inclusion of that initial ground, significantly affected the nature of the ex parte summons. The proper course for me to follow, having had the benefit of argument from both parties extended over two separate hearings, is to discharge paragraph (1) of the ex parte order under which the judgment was set aside.

26. I now proceed to consider the striking out application against the procedural background that the judgment entered on 13th January 1983 remains in full force and effect. The re-amended statement of claim, more than 2 years after judgment, adds a new cause of action against in effect a new party. The action is now additionally against the first named defendant but in his personal capacity when previously he was merely one of two joint defendants sued solely in their capacity as administrators of the original defendant's estate. I might also add that while the re-amended statement of claim does add this new claim in paragraph 7, no amendment has been sought to alter the intituling of the action by adding the first named defendant, now additionally being sued in his personal capacity, as a 2nd defendant.

27. To re-amend the statement of claim at this late stage I consider to be both vexatious and an abuse of process. It is unnecessary for me to consider whether the new paragraph 7 discloses a reasonable cause of action. However, in view of the long standing judgment, if it does add a new cause of action, the proper procedure is not to attempt to re-amend the statement of claim. If such a cause of action exists other remedies would be open to the plaintiffs, such as issuing the appropriate separate proceedings.

28. I am satisfied that the appeal should be upheld by striking out the re-amended statement of claim. The appeal also seeks to have the action dismissed. Where a statement of claim is struck out before judgment the action as well is often dismissed. However, as the judgment entered in this action was fatal to the survival of the re-amended statement of claim, so conversely it is fatal to the dismissal of the action. I therefore am not disposed to dismiss the action. In the result the plaintiffs, while substantially unsuccessful on this appeal have had the judgment reinstated. One consequence is that it is open to them to attempt to enforce the unexecuted part of that judgment relating to rent and other unpaid monies.

29. The defendants are entitled to their costs of and occasioned by this appeal. I also record that as the Master ordered that costs should be in the cause for the summons to strike out dated 17th May 1985 at the hearing before him, those costs also are consequently payable by the plaintiffs to the defendants. There will be a certificate for 2 Counsel.