XCHRX CHUNG FAI ENGINEERING CO. (a firm) v. MAXWELL ENGINEERING CO. LTD.

HCMP 4473/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 4473 OF 2000

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HCA 10504/96

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J U D G M E N T

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Introduction

1. On 27 June 2000, Burrell J gave judgment in the Court of First Instance in two actions which had been consolidated. The date on the order giving effect to that judgment is unclear. The date was either 5 July or 7 July. One of the parties, Chung Fai Engineering Co. ("Chung Fai"), wished to appeal. Its notice of appeal was not served in time, and it applied under Ord. 3 r. 5 for an extension of time to do so. Eventually, that application was granted by me, and the question now arises as to whether Chung Fai's solicitors should be responsible for the costs thrown away.

The background facts

2. Chung Fai had always wanted to appeal against Burrell J's judgment if such an appeal had merit. It was originally advised, either by its previous solicitors ("the previous solicitors") or by counsel who had represented it at the trial, that its time for appealing would expire on about 17 August. That advice was wrong. The previous solicitors had been unaware of the recent reduction of the time limit from six weeks to 28 days from the perfection of the judgment. The incorrectness of that advice was brought to Chung Fai's attention by its new solicitors ("the new solicitors") on 18 August (though until recently I had been told that that advice had been given on 15 August). Their advice was that Chung Fai's time for serving its notice of appeal had expired by then, and accordingly on 26 August they filed a summons purporting to seek an extension of time for serving the notice of appeal.

3. The new solicitors' advice was also wrong, though as will become apparent in due course, little blame can be attached to them. The advice happened to be wrong because the reduction of the time limit to 28 days had meant that the time for serving the notice of appeal did not run during the month of August.

4. The summons of 26 August was placed before me for me to consider it without a hearing. For the reasons set out in the judgment handed down by me on 21 September, I held that there should be a hearing of the summons, and that the hearing should be inter partes. In that judgment, I explained why the time limit for serving the notice of appeal had not run during the month of August, and I noted that Chung Fai's time for serving the notice of appeal (on the assumption that the order giving effect to the judgment had been sealed on 7 July) had not in fact expired until 4 September. It had therefore not needed to apply on 26 August for an extension of time since it had then been in a position to serve its notice of appeal in time. The irony was that the time had expired by the time I gave judgment. Accordingly, a new summons was issued on 26 September seeking an extension of time for serving the notice of appeal, and I heard that summons on 29 November. By then, I had been told that the order giving effect to the judgment had been sealed on 5 July, and that meant that Chung Fai had had until 2 September to serve its notice of appeal.

5. It was not suggested that the previous solicitors had made any inquiries or conducted any research into what the time limit then was. I proceeded on the basis that the previous solicitors had simply assumed that the time limit was as it had been for many years. It had not been suggested that the reduction of the time limit had been given particular publicity, and if a time limit has been in place for many years I did not suppose that it would have occurred to many lawyers to take the precaution of checking that the time limit had not recently been reduced.

6. Nor had it been suggested that the new solicitors had made any inquiries or conducted any research into whether Chung Fai's time for serving the notice of appeal ran during the month of August. They had simply assumed that it did. I concluded that that had not been an unreasonable assumption because the impact of the relevant statutory provisions on the reduced time limit may not have occurred even to experienced and knowledgeable litigators. In all the circumstances of the case, I concluded that the overall interests of justice required the grant of the extension of time which Chung Fai sought, and I extended its time for serving the notice of appeal. However, I ordered Chung Fai to pay to Maxwell Engineering Co. Ltd. ("Maxwell"), the other party to the litigation, Maxwell's costs of the application in any event.

The hearing to show cause

7. I did not see why Chung Fai should be out of pocket as a result of any mistakes on the part of its solicitors for which it was not apparently responsible. I therefore requested the new solicitors to discuss the matter with the previous solicitors with a view to an undertaking being given to the court that

(a) they would not charge any fees to Chung Fai for their services in connection with the application for an extension of time to serve the notice of appeal, and

(b) they would indemnify Chung Fai in respect of the costs which I had on 29 November ordered Chung Fai to pay to Maxwell.

Unfortunately, my request was misunderstood. It was thought that I had requested an undertaking in respect of (a) only. Thus, on 23 December, the new solicitors wrote to my clerk requesting that I be informed that they had agreed with Chung Fai that Chung Fai would bear Maxwell's costs, but that Chung Fai would not be charged any costs by the new solicitors. The new solicitors thought that they were complying with my request.

8. Because I had not known that my request had been misunderstood, I regarded this agreement as unsatisfactory. I did not think it fair to saddle Chung Fai with Maxwell's costs, and in any event the agreement did not cover the costs which the previous solicitors may have already charged Chung Fai in connection with the advice which they had given about the time limit for appealing. I therefore directed that there be a hearing in chambers, pursuant to Ord. 62 r. 8(2) of the Rules of the High Court, for the previous solicitors and the new solicitors to show cause why orders should not be made under Ord. 62 r. 8(1)

(a) directing them to indemnify Chung Fai in respect of the costs which, on the order for costs made by me on 29 November, Chung Fai would have to pay to Maxwell's solicitors, and

(b) disallowing the costs of the previous solicitors and the new solicitors in respect of the application for an extension of time for serving Chung Fai's notice of appeal.

The letter from my clerk of 29 December to the new solicitors which incorporated that order ended as follows:

"Finally, although Mr Justice Keith has directed that there be a hearing for cause to be shown, he is quite content for that hearing to be dispensed with if an acceptable undertaking is given to him. The only undertaking which Mr. Justice Keith currently regards as acceptable is an undertaking along the lines of the orders set out [above]."

No such undertaking was offered, and accordingly the hearing to show cause was fixed for 21 March. Since Chung Fai was obviously affected, I directed that it be informed that it was entitled to attend the hearing.

9. In the event, I received written representations from both sets of solicitors as well as Chung Fai. It was confirmed to me that the solicitors had shown their representations to each other and to Chung Fai, and that the new solicitors had seen Chung Fai's representations. The only person to attend the hearing was a representative of the previous solicitors. She had not seen Chung's Fai's representations, and I adjourned the hearing for a few minutes to enable her to read them. She had nothing to say about them, but she made the point that there had been no causal connection between such mistakes as may have been made by her firm and the costs incurred. At the conclusion of the hearing, I reserved judgment, and this is now my judgment on whether orders should be made under Ord. 62 r. 8(1).

The new information

10. The evidence before me when I handed down my judgment of 21 September had been that Chan Kwok Fai, Chung Fai's project manager, had approached the new solicitors on about 4 August asking for an opinion on the merits of an appeal. After seeking counsel's views, they advised Mr Chan that an appeal had "a fairly good chance" of success. Mr Chan was asked for a copy of the sealed order of the judgment so that the time limit for the appeal could be checked, but he told the new solicitors that the previous solicitors had advised him that the deadline was 17 August. It was on 14 August that a copy of the sealed order was sent to the new solicitors, with firm instructions to proceed with the notice of appeal.

11. The new solicitors' written representations contain a startling, but decisive, new piece of information. That is that on 17 August they purported to file the notice of appeal, but the Registry refused to accept it! The need to file it was so urgent that they had not considered whether the time limit had expired (though as I have said they advised Chung Fai the following day that the time limit had already expired). But the fact that the new solicitors purported to file the notice of appeal on 17 August is borne out by the fact that the notice of appeal is franked with the date and confirmation that the filing fee had been paid. And the Registry has confirmed to me that the reason why it had not been accepted for filing was because it was thought that the 28-day time limit for serving it had not been complied with. That was because the clerk in the Registry who was processing the filing of the notice of appeal had not appreciated that the reduction of the time limit to 28 days had meant that the time for serving the notice of appeal did not run during the month of August.

12. At first blush, the attempt to file the notice of appeal on 17 August makes all the difference. Subject to an important reservation to which I shall come shortly, the subsequent need to apply for an extension of time would not have occurred if the Registry had appreciated that the time for serving the notice of appeal had not expired. Thus, the costs incurred in the application for an extension of time were attributable to that error on the part of the Registry. If the Registry had been alive to the impact which the relevant statutory provisions might have had on the new time limit, the course which it should have considered taking was to refer the attempt to file the notice of appeal to the Registrar of Civil Appeals for his determination, rather than to refuse to accept the notice of appeal for filing altogether.

13. However, it is critical to an understanding of the case to appreciate that another procedural hiccough occurred. The procedure for appealing from a final order of the Court of First Instance commences with the serving of the notice of appeal on the other parties to the appeal. That is the act to which the time limit in Ord. 59 r. 4(1)(c) relates. The relevant documents should only be lodged with the Registry once service of the notice of appeal on the other parties has been effected. That is why Ord. 59 r. 5(1)(b) provides that one of the two copies of the notice of appeal which the appellant is required to lodge must have indorsed on it a certificate of the date on which the notice of appeal was served on the other parties to the appeal. The notice of appeal which the new solicitors attempted to file on 17 August did not bear such an indorsement. Indeed, the new solicitors have confirmed to me that the notice of appeal had not been served on Maxwell's solicitors by then. Thus, even if the Registry had appreciated that the time limit for serving the notice of appeal had not expired, it would still have had to refuse to accept Chung Fai's notice of appeal for filing since Ord. 59 r. 5(1)(b) had not been complied with. That was not in fact the reason why the Registry refused to accept the notice of appeal for filing, but the Registry has confirmed to me that it would have refused to accept it for that reason if it had been appreciated that the time limit did not run in August.

14. To what extent did the new solicitors' failure to serve the notice of appeal on Maxwell's solicitors prior to attempting to lodge it with the Registry make it necessary for an extension of time to be applied for? The answer must be that if the Registry had appreciated that the time limit did not run in August, it would then have informed the new solicitors that the notice of appeal could not be accepted for filing until (a) it had been served on Maxwell's solicitors and (b) a certificate of the date of service had been indorsed on one of the copies lodged for filing. The new solicitors could be expected to have done both of those things within a few days, in which case the notice of appeal would have been served within the time limit laid down by Ord. 59 r. 4(1)(c), and the notice of appeal would have been ready for filing within one week of that service, being the time limit laid down by Ord. 59 r. 5(1). On these not unreasonable assumptions, it can, I think, be said that the costs incurred in the application for an extension of time were attributable to the initial error on the part of the Registry.

15. It is regrettable that the attempt to file the notice of appeal on 17 August was not brought to my attention at the hearing on 29 November. Not only would it have confirmed my view that an extension of time for serving the notice of appeal should then be granted, but I would have been more hesitant about asking either firm of solicitors to show cause why they should not pay the costs thrown away. It looks as if the representative of the new solicitors who appeared at the hearing on 29 November had not been aware of (a) what I had said in my judgment of 21 September or (b) the attempt to file the notice of appeal on 17 August. Although that may explain why I was not informed of the attempt to file the notice of appeal on 17 August, the fact remains that I was not.

16. Since the problems which this case has generated arose from uncertainty as to whether the time for serving a notice of appeal ran during the month of August, it may be helpful if I spell out the position. The summer vacation is the month of August: see Ord. 64 r. 1(1). Section 31(1) of the High Court Ordinance (Cap. 4) provides:

"Where by any law regulating civil procedure, or by any special order of the High Court, any period not exceeding one month is appointed or allowed for the doing of any act or the taking of any proceeding, no days included in the summer vacation shall be reckoned in the computation of such time, unless the Court otherwise directs ....."

Since the 28-day time limit is a "period not exceeding one month", Chung Fai's time for serving its notice of appeal did not run during the month of August. In this connection, it should be noted that Ord. 3 r. 3 provides:

"Unless the Court otherwise directs, the period of the Summer Vacation shall be excluded in reckoning any period prescribed by these rules or by any order or direction for serving, filing or amending any pleading."

However, a notice of appeal cannot be said to be a pleading. I am confirmed in that view by the facts that (a) although there is no definition of the word "pleading" in Ord. 1 r. 4(1), a pleading "does not include a petition, summons or preliminary act", and (b) a similar view of the equivalent provision in the Rules of the Supreme Court in England was taken in Re Beldam's Patent [1911] 1 Ch. 60.

Conclusion

17. It is unfortunate that Chung Fai has incurred legal costs as a result of the Registry's refusal to accept the notice of appeal for filing when it should have done, but for the new solicitors' failure to serve the notice of appeal on Maxwell's solicitors - a failure which could easily have been remedied. But for the reasons I have given, the new solicitors have shown cause why orders should not be made against them under Ord. 62 r. 8(1), and I make no order against them.

18. The same is true of the previous solicitors. They do not admit that they advised Chung Fai that its time for appealing would expire on about 17 August, but even if they had advised that, that erroneous advice would not have resulted in additional costs being incurred if the Registry had accepted the notice of appeal for filing on 17 August (but for the failure to serve it on Maxwell's solicitors). In their written representations, they informed me that they had not charged Chung Fai in connection with the extension of time for appealing, and I have assumed from that that they did not charge Chung Fai for any advice given to Chung Fai as to the time limits for serving and filing the notice of appeal. I make no order against them under Ord. 62 r. 8(1) as well, because whether that assumption is correct or not the problems which arose with the notice of appeal were not attributable to any error on the part of the previous solicitors in the advice they gave about the time limit.

19. Finally, since I have made no order against the solicitors, there has been no need for them to be identified in this judgment or in the particulars of representation set out below.