AU DIN HAR ELLEN v. AU YEE WAN also known as YEE WAN AU AND OTHERS

HCA 1591/2022

[2024] HKCFI 199

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1591 OF 2022

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D E C I S I O N

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A.  INTRODUCTION

1.  By a notice of appeal of 5th September 2023, the Plaintiff appeals against the Master’s order of 13th June 2023, giving leave to the Plaintiff to discontinue the action against the 3rd to 5th Defendants, and ordering her to pay the costs of the action, the application for discontinuance and the 3rd to 5th Defendants’ application to strike out the Plaintiff’s claim on an indemnity basis (“the Appeal”).

B.  THE FACTS

2.  The following is undisputed or indisputable.

3.  The Plaintiff issued her writ, with a statement of claim endorsed thereon, on 17th November 2022.

4.  The 3rd Defendant filed an acknowledgment of service on or around 15th December 2022.  The 5th Defendant filed an acknowledgment of service on 3rd January 2023.  The 4th Defendant filed an acknowledgment of service on 16th January 2023.

5.  The 4th and 5th Defendants filed their defences on 13th February 2023.  On the same day, the 3rd Defendant filed a summons to strike out the claim insofar as it related to the 3rd Defendant (“D3’s Strike Out Summons”).

6.  On 24th February 2023, Master Man gave directions regarding D3’s Strike Out Summons, and ordered that the time for the 3rd Defendant to file and serve her defence be extended to 42 days after the final disposal of the summons.

7.  On 14th March 2023, Messrs Cheng & Wong, solicitors for the 3rd to 5th Defendants (“CW”), wrote to Messrs Ellen Au & Co, solicitors for the Plaintiff (“EA”), indicating that the 5th Defendant (also) intended to apply to strike out the Plaintiff’s statement of claim.

8.  On 22nd May 2023, EA wrote to CW, stating that the Plaintiff would wholly discontinue the action forthwith.  The letter went on to say that D3’s Strike Out Summons would no longer be necessary, and that to save time and costs, the Plaintiff agreed to bear the costs of and occasioned by that summons, and asked to vacate an upcoming hearing of 30th June 2023.

9.  On 22nd May 2023, the Plaintiff issued a Notice of Discontinuance to all of the Defendants, giving notice that the Plaintiff wholly discontinued the action.  There is no dispute that this was served on the 3rd and 5th Defendants through EA on the same day, and on the 4th Defendant (who was acting in person at the time, and until 5th June 2023) on 23rd May 2023.

10.  On 23rd May 2023, CW wrote to EA, enclosing a bundle index for an upcoming hearing on 30th May 2023 (regarding the 5th Defendant’s summons to vacate certain lites pendentes from the Land Registry), and asked for comments.

11.  CW wrote again on the same day to EA, saying that the Plaintiff could not unilaterally discontinue the action without leave being obtained under RHC O.21 r.3, and asking whether the Plaintiff was prepared to take out an application to seek leave from the court with costs on an indemnity basis.  CW indicated that meanwhile it would proceed with filing submissions for the hearing on 30th May 2023.

12.  On the same day EA replied to CW, reiterating that the Plaintiff had wholly discontinued the action, and saying that they had already written to CW to indicate that they would not oppose the summons to vacate the lites pendentes and indeed had agreed to an order in terms of the summons, so that the hearing was unnecessary and should be vacated.

13.  On 6th June 2023, CW wrote an 11-page letter to EA, seeking further and better particulars of the Plaintiff’s statement of claim on behalf of the 4th Defendant, and asking for a reply within seven days.

14.  By a separate 14-page letter of the same date to EA, CW sought further and better particulars of the statement of claim on behalf of the 5th Defendant.  A number of the queries were identical to those posed on behalf of the 4th Defendant.

15.  By a further letter of the same date to EA, CW sought specific discovery of numerous documents referred to in the statement of claim on behalf of the 4th Defendant, and asked for copies to be provided within six days.

16.  By a yet further letter of the same date, CW sought specific discovery of documents referred to in the statement of claim on behalf of the 5th Defendant, and asked for copies to be provided within six days.  The request was similar, but not identical to that made on behalf of the 4th Defendant.

17.  Also on 6th June 2023, CW filed a list of documents for the 4th Defendant, and another list of documents for the 5th Defendant.

18.  On 7th June 2023, the Plaintiff issued a summons seeking leave to discontinue the action against the 3rd to 5th Defendants (“P’s Discontinuance Summons”).  EA wrote to CW enclosing the summons. EA expressed the view that since the Plaintiff was seeking leave to discontinue the action, the hearing of D3’s Strike Out Summons on 13th June 2023 was unnecessary, and asked whether CW would agree to vacate the hearing by way of a consent summons.

19.  In support of P’s Discontinuance Summons, the Plaintiff filed a short affirmation, saying that “after serious consideration and extreme pressure and in order to keep the harmony of the family, I decide to discontinue this action against the 3rd, 4th and 5th Defendants”.

20.  On 9th June 2023, CW wrote to EA, indicating its stance that EA had issued P’s Discontinuance too late, so that the 3rd Defendant would continue to pursue D3’s Strike Out Summons, and the claims against the 4th and 5th Defendant ought also to be struck out.  CW proposed that the Plaintiff enter into a consent summons to (inter alia) strike out her statement of claim, dismiss her claim, dismiss P’s Discontinuance Summons, debar the Plaintiff from instituting any action against the 3rd, 4th and 5th Defendant on the (same) subject matter, and pay costs of the action and both summonses on an indemnity basis.  If no consent summons could be agreed, then CW had instructions to contest P’s Discontinuance Summons and apply to strike out the statement of claim.

21.  On 13th June 2023, the date fixed for substantive hearing of D3’s Strike Out Summons and the callover of P’s Discontinuance Summons, the position of the 3rd to 5th Defendants was that D3’s Strike Out Summons should still be proceeded with.  The Plaintiff’s stance was that there should be discontinuance of the action against the 3rd to 5th Defendants, with the Defendants’ costs paid up to the time of the Notice of Discontinuance.

22.  The Master gave leave to the Plaintiff to discontinue the action, and ordered that the Plaintiff pay the costs of the action, P’s Discontinuance Summons and D3’s Strike Out Summons on an indemnity basis.

C.  THE PARTIES’ POSITIONS

23.  The Notice of Appeal asked for the Master’s order to be set aside on the grounds that no leave was required for the Plaintiff to discontinue the action against the 3rd to 5th Defendants.  Counsel for the Plaintiff, Mr Jeff Yau (appearing with Mr Cyrus Lau), submitted that given the time for the 3rd Defendant to file his defence had not yet expired as at 22nd May 2023, the Plaintiff was entitled to discontinue the action without leave of the court, pursuant to RHC O.21 r.2(1) and 2(3).

24.  Counsel for the 3rd to 5th Defendants, Mr Martin Ho, frankly accepted that:

24.1  the Plaintiff had indeed been entitled to serve the Notice of Discontinuance to discontinue the action without leave;

24.2  the Notice of Discontinuance was served on the 3rd to 5th Defendants on 22nd or 23rd March 2023, and the discontinuance would have taken effect from the time of such service;

24.3  by virtue of O.62 r.10(1) and 10(5), an order for the costs of the action was deemed to have been made in favour of each of the 3rd to 5th Defendants, at the time of service of the Notice of Discontinuance on each of them;

24.4  there were authorities to suggest that once a notice to discontinue an action has been filed under O.21 r.2(1), there is nothing under O.21 r.2 which preserves the court’s jurisdiction to deal with the question of costs or otherwise keeps the action alive: Lau Cho Kwan Leo v Lau Siu Fan Elaine [2020] HKCFI 2779 at [10] to [11].

25.  Mr Ho’s submission was that on an objective view of the facts, the Plaintiff had abandoned the Notice of Discontinuance, and the 3rd to 5th Defendants had consented to such a course of action.  The Master therefore had the jurisdiction to make the order of 13th June 2023.  Mr Ho relied on the fact that (1) the Plaintiff had issued P’s Discontinuance Summons without any qualification (to say that the Notice of Discontinuance was still valid or that the Plaintiff relied on it), (2) the Plaintiff’s supporting affirmation similarly did not contain any qualification, (3) the Plaintiff had instructed counsel to argue P’s Discontinuance Summons, (4) the Plaintiff’s counsel^[1] had not given any indication that the Notice of Discontinuance was effective or relied upon in any way, and (5) the Plaintiff was an experienced solicitor of some forty years’ standing and ought to have known the relevant procedural rules.  The submission^[2] was that by reason of these matters, the Plaintiff was estopped, either by representation or by convention, from arguing that the Notice of Discontinuance had not been withdrawn by consent or was otherwise still effective.  At the hearing, Mr Ho put the point as being that the parties must have had a shared common assumption that the Master had jurisdiction to deal with the Plaintiff’s application for leave to discontinue the action (by reason of the abandonment of the Notice of Discontinuance by consent), so that jurisdiction was conferred on the Master by consent.

26.  Mr Ho cited Champion Concord Ltd v Lau Koon Foo (No.2) (2011) 14 HKCFAR 837 in support of this submission.  The appellants in that case contended that the Court of Appeal which gave the judgment under appeal had not been properly constituted, as the parties had not first filed a consent to the appeal being heard by two justices of appeal pursuant to s.34B(4) of the High Court Ordinance (Cap.4).  The Court of Appeal had raised a concern, prior to the hearing of the appeal, as to whether the order being appealed from was an interlocutory or final one (if the latter, then the need for the consent would have arisen).  The court had indicated that if an undertaking to sign the appropriate written consent was given, it would proceed on the basis that the requirements of s.34B(4)(c) had been satisfied. Counsel gave the undertaking.  (See [23], [35], [36], [41].)  The Court of Final Appeal considered that the parties had clearly given their consent to the constitution of the Court of Appeal and had given an undertaking to sign the requisite documents with a view to enabling the Court of Appeal to proceed to hear the appeal on the basis that the statutory requirements were treated as satisfied.  Whilst in general, where a court had no jurisdiction to deal with a particular matter, the parties could not confer jurisdiction on it by consent, nor could the operation of an estoppel confer jurisdiction where none existed, the position was qualified where the parties’ consent was the very foundation for the jurisdiction.  (See [3], [4], [54].)

27.  Mr Ho argued that similarly, in the present case, the Plaintiff is estopped from denying that the Notice of Discontinuance had been withdrawn by consent; and that this would be the case even if a formal order were needed to rescind the Notice of Discontinuance.

D.  NO ESTOPPEL

28.  Assuming for present purposes that notwithstanding that a plaintiff has given notice of discontinuance, with the attendant consequence that the discontinuance has taken effect and an order for costs is deemed to have been made, the parties can nevertheless revive the action by consent, I do not agree that in the present case, any consent was given, or that the Plaintiff is estopped from denying that the Notice of Discontinuance had been withdrawn by consent.

29.  As Mr Yau pointed out, in order for a common assumption to give rise to an estoppel by convention, it must sufficiently certain to enable the court to give effect to it (Unruh v Seeberger (2007) 10 HKCFAR 31 at [138]); and in order for there to be an estoppel by representation, the representation must be clear and unequivocal (Wilen and Ghaly, The Law of Waiver, Variation, and Estoppel, 3rd ed., paragraph 9.32.

30.  Here, the starting point is that the Plaintiff never stated that the Notice of Discontinuance was being withdrawn or was of no effect.  On the contrary, the result contended for before the Master by the Plaintiff’s then counsel was that the Plaintiff should be able to discontinue the action, on payment of costs up to the date of the Notice of Discontinuance (but not on an indemnity basis), and that the Plaintiff should not be responsible for costs thereafter – all of which were consistent with the legal effect of the Notice of Discontinuance, and which would have presupposed, at the very least, that the notice did have some sort of effect or significance.

31.  Mr Ho’s submission hinges on the argument that for P’s Discontinuance Summons to have been entertained by the Master at all, the parties must, as a matter of logic, have accepted that the Master had jurisdiction to deal with the matter, which could only have been the case if the Notice of Discontinuance had been treated as withdrawn.  However, there is no reason why it must be assumed that the parties acted logically, or on a correct understanding of the law.  Another equally (if not more) possible interpretation of the events which happened is that the Plaintiff issued P’s Discontinuance Summons without considering whether it was legally consistent with the effect of the Notice of Discontinuance.  The correspondence as set out above shows that EA took the position that the action had been discontinued by the Notice of Discontinuance, and accordingly protested when CW nevertheless continued to take steps in the action.  As Mr Ho fairly accepted, it was these continued steps which prompted the Plaintiff to issue P’s Discontinuance Summons.  EA’s letter of 7th June 2023 shows that the issue of the summons was an attempt to obviate the need for the hearing of 13th June 2023 to deal with D3’s Strike Out Summons, which CW was at that stage insisting would be substantively argued.  In other words, P’s Discontinuance Summons was issued not so much for the purpose of withdrawing the Notice of Discontinuance, but for the purpose of dealing with D3’s Strike Out Summons.  Indeed, CW’s letter of 9th June 2023 complained that P’s Discontinuance Summons had been issued “too late and serves no practical purposes.  Our client is prepared and ready to proceed with the substantive hearing of the Strike Out Summons and we are of the considered view that the Court will grant an order in terms of the Strike Out Summons after hearing our submission.  Your client’s seeking at the eleventh hour a call-over hearing for the Discontinuance Summons at the same time as the substantive hearing for the Strike Out Summons will not hinder our application for the striking out.” The parties were focused on whether P’s Discontinuance Summons could pre-empt D3’s Strike Out Summons, rather than on whether or not it presented any conflict with the Notice of Discontinuance.  Indeed, the parts of the transcript which have been placed before the court show that at the start of the hearing, the parties were in dispute as to whether D3’s Strike Out Summons should be substantively heard in any event, and that counsel for the 3rd Defendant^[3] had filed submissions asking the Master to hear D3’s Strike Out Summons and adjourn P’s Discontinuance Summons.

32.  Mr Ho submitted that the facts had to be assessed objectively, so that whether or not the Plaintiff and EA were in actual fact labouring under a misconception of the law is irrelevant.  I agree.  There is no evidence from the Plaintiff as to her state of mind or EA’s state of mind, so that what they were actually subjectively thinking at the material time is unknown.  The point, however, is that on an objective view of events, the Plaintiff’s conduct cannot be said to be consistent only with a stance of having abandoned the Notice of Discontinuance. It is equally, if not more, consistent, with the Plaintiff acting without regard to whether there might be any inconsistency between the Notice of Discontinuance and P’s Discontinuance Summons.  This inconsistency has now been identified, with the benefit of hindsight and now that the issue of striking out has fallen away, but it does not follow that the facts need to be assessed on the basis that the parties must have acted logically and without inconsistency.  An objective assessment of the facts does not preclude a conclusion that the parties (or the Plaintiff, at least) acted illogically or self-inconsistently.

33.  This may be contrasted with what happened in Champion Concord Ltd, where the parties expressly, and consciously, gave a clear and unequivocal undertaking to the Court of Appeal that the requisite written consents would be signed and filed, specifically directed to the purpose of enabling the court to proceed with hearing the appeal on the basis that the statutory requirements as to the giving of consent had been satisfied and that the court was therefore properly constituted for the hearing of the appeal (cf. Champion Concord at [41]).

E.  THE APPEAL

34.  There being no estoppel, it is open to the Plaintiff to argue that no leave was required for discontinuing the action, and that by virtue of O.62 r.10(1) and 10(5), an order for the costs of the action was deemed to have been made in favour of each of the 3rd to 5th Defendants at the time of service of the Notice of Discontinuance on each of them.  As indicated above, Mr Ho accepted that this is the correct position should the estoppel argument fail.  In the circumstances, the Master’s order of 13th June 2023 should be set aside, and I so order.

35.  It remains to consider what costs orders should be made in respect of the period after the service of the Notice of Discontinuance on each of the 3rd to 5th Defendants.

36.  At the hearing, Mr Yau accepted that P’s Discontinuance Summons was misconceived, but given that costs were incurred in having to deal with D3’s Strike Out Summons, there should be no order as to costs in respect of the period between the service of the Notice of Discontinuance up to the institution of the Appeal.  Mr Yau also sought the costs of the Appeal.

37.  Mr Ho submitted that there should be no order as to costs even if the Appeal were to be allowed, having regard to the fact that the Plaintiff is taking the extraordinary step of asking the court to set aside the very order which she had originally applied for, and that the precise nature of the Plaintiff’s argument was not known until her skeleton submissions were filed.

38.  In essence, this is a case where the Plaintiff discontinued her action without leave, as she was entitled to, and was agreeable to pay costs, as mandated by O.62 r.10.  However, the 3rd to 5th Defendants did not accept this, and took steps, perversely, to keep the action alive and to pursue D3’s Strike Out Summons.  The Plaintiff then compounded the procedural muddle by taking out P’s Discontinuance Summons, which is now admitted to be misconceived, and the consequence of which it has had to come to court to rectify.  In all the circumstances, it seems to me that the fairest order is for both sides to bear the costs of the steps which they have taken. I make no order as to costs.