ASGAIN CO LTD v. CHENG KA YAN

HCMP 1019/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 1019 OF 2017

(ON AN INTENDED APPEAL FROM DCCJ NO 81 of 2014)

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

1.  On 7 June 2017, the Court granted the Defendant leave to appeal against the judgment of Deputy District Judge Tracy Chan of 19 December 2016. Under Order 59 Rule 4, the notice of appeal should have been served within 7 days from the date when leave was granted, viz by 14 June 2017. Due to an oversight on the part of the solicitors for the Defendant, the notice of appeal was only served on 21 June 2017.

2.  Despite repeated requests by the solicitor for the Defendant, the Plaintiff refused to endorse the service out of time.  Thus, the Defendant issued a summons on 28 June 2017 for extension of time.    

3.  In an affirmation of 28 June 2017 the solicitor for the Defendant said it was due to her concern with paragraph 23 of PD 4.1 and enquiry with counsel that she had overlooked the deadline for service of notice of appeal.  All along, the intention of the Defendant was to proceed with the appeal.

4.  It is accepted that in an application for extension of time to serve a notice of appeal, the court should take account of the length of the delay, the reason for the delay, the prejudice to the other party and the merits of the intended appeal.

5.  Both parties referred to Chiu Sin-chung v Yu Yan-yan, Angela [1993] 1 HKLR 225.  That was a case where leave to appeal was not required and there was thus no application for leave (in which the court has to examine the reasonable prospect of success in light of the submissions of both parties) before the application for extension of time was considered by the court.

6.  Recently, in The Incorporated Owners of Freder Centre v Gringo Ltd HCMP 324 of 2015, 10 July 2015, the court considered an application for extension of time to serve a notice of appeal after leave to appeal had been granted.  The court said at [6]:

“ The court has a general discretion to extend time for serving a notice of appeal. Usually, such discretion would be exercised by considering the length of the delay, the reason for the delay, the prejudice to the other party and the merits of the intended appeal, see Norwich & Peterborough Building Society v Steed [1991] 1 WLR 449. However, in the recent judgment of this court in Real Estate Developers Association of Hong Kong v Building Authority, HCMP 1746 of 2014, 27 May 2015, it was emphasized that the exercise is a multi-facet balancing process and the discretion is a broad and flexible one, to be exercised having regard to the facts and circumstances of each case.”

7.  And at [9]:

“ Even so, the court must take account of the explanation for the delay. Having regard to the evidence of Mr Shea, it would be difficult to draw the inference that the respondents did not have any intention to pursue the appeal. Further, this is not a case where the respondents had done nothing for the purpose of appealing. They had applied for leave to appeal in the court below and when leave was refused, come to this court to seek leave …”

8.  And at [11]:

“ When we granted leave, we already accepted that the intended appeal has a reasonable prospect of success. We do not see any reason for revisiting that conclusion, see Cheung Kwong Yuen v Sun huifang HCMP 3306 of 2014, 19 May 2015.”

9.  Extension of time was granted in that case notwithstanding a delay of more than 2 months.

10.  The present application is opposed by Mr Wong on behalf of the Plaintiff.  Counsel said there was no reason why the deadline could have been overlooked.  The fact that the delay was not substantial was not sufficient to support the grant of extension of time.  He said the delay is inexcusable.  He further said the Defendant did not demonstrate that the intended appeal has merits.  He also argued that there was prejudice suffered by the Plaintiff as there was delay in terms of its ability to ascertain the finalized version of the notice of appeal.    

11.  With respect, we cannot see any basis for disbelieving the solicitor’s evidence in the affirmation of 28 June 2017.  We also reject Mr Wong’s submission that the delay is inexcusable.  It was plain that the Defendant had every intention to proceed with the appeal and the 7-day delay was due to inadvertence on the part of the solicitor and her over-cautiousness as to the requirement of PD 4.1 paragraph 23.    

12.  Given that leave had been granted by the court after reading the submissions of the parties on the merits on the intended appeal (including submissions from Mr Wong), in line with the approach in The Incorporated Owners of Freder Centre v Gringo Ltd, supra, we see no good reason why we should revisit the same in the present application.  In the normal course, unless there is any material change of circumstances in the meantime, an application for extension of time (after leave to appeal was granted by a judge of the Court of Appeal) should not be the platform for a second bite of the cherry on the prospects of the appeal.  

13.  We also reject Mr Wong’s submission on prejudice suffered by the Plaintiff.  Pending the service of the notice of appeal, the Plaintiff did not have to do anything in respect of the intended appeal.  The notice of appeal as served was the same as the draft produced in the leave application.    

14.  On the whole, we are satisfied that this is a proper case to grant extension of time to the Defendant to file and serve the Notice of Appeal.  We make an order in terms of para 1 of the summons of 28 June 2017.

15.  Whilst the Defendant accepted that she should bear the costs of the application, her solicitor contended that the Plaintiff should bear the costs of preparation of the affirmation and the submissions as the application was unsuccessfully opposed.  Reliance was placed on Lessy SARL v Pacific Star Development Ltd [1996] 2 HKLR 1 and Man Fong Hang v Man Ping Nam [2002] 4 HKC 538.

16.  On the other hand, Mr Wong relied on Tridant Engineering Co Ltd v Mansion Holdings Ltd CACV 311 of 2000, 19 Sept 2000, Incorporated Owners of So Tao Centre v Lam Kong Wan HCMP 790 of 2007, 31 May 2007 and The Darya Bhakti [2013] 2 HKLRD 926 and contended that the Plaintiff should have the costs as the Defendant is seeking an indulgence and the costs would not have had to be incurred if the notice of appeal had been served within time.

17.  Since the Civil Justice Reform, the court expects the parties and their legal advisors to be more costs conscious and to adopt a procedurally economical and proportionate approach in light of Order 1A.  It is indeed unfortunate that the parties have had to incur the costs of this summons when, as demonstrated by our judgment above, there is simply no good reason for the Plaintiff not giving the endorsement as requested by the solicitors for the Defendant by way of phone calls on 22^nd, 23^rd and 26^th June and a letter of 26 June.  According to the statement of costs placed before us, the Plaintiff incurred $24,000 and the Defendant incurred $16,715 in respect of this summons.       

18.  We have no hesitation in rejecting the course proposed by Mr Wong.  In none of the cases cited by counsel did the court take a dim view of the merits of the opposition to the application for extension as we do in the present case.  There are cases where, though unsuccessful, the opposition is reasonable, particularly when the delay is lengthy.  In contrast, the present case is very different.  The delay is short and there is actually no substance at all in the opposition. 

19.  In the present case, we have come to the clear conclusion that the opposition by the Plaintiff is unreasonable.

20.  Lessy SARL v Pacific Star Development Ltd [1996] 2 HKLR 1 and Man Fong Hang v Man Ping Nam [2002] 4 HKC 538 are simply instances where the court, in the exercise of its discretion on costs, took account of the unreasonable conduct of the litigation by a party.  Thus, notwithstanding that the nature of relief is a matter of indulgence, if the opposition to such indulgence is unreasonably made, the party who unsuccessfully opposed could be ordered to bear some of the costs.  Put in another way, if the court is of the view that the application should not have been opposed based on matters already known to the opposing party, the costs attributable to the unsuccessful opposition were actually caused by the opposition rather than the party seeking indulgence.  In that event, there is no reason in principle why the court could not consider ordering costs against the unsuccessful opposing party.

21.  Applying this principle to the present case, we are of the view that the Plaintiff was entitled to have an affirmation from the solicitor for the Defendant to account for the delay.  Hence, the costs of the preparation of the affirmation should not be borne by the Plaintiff.  However, after sight of the summons and the affirmation of 28 June 2017, the Plaintiff acted unreasonably in opposing the application.  After the filing of the summons and the affirmation, the court enquired by letter on 30 June 2017 if the application was opposed.  After having the opportunity to peruse the summons and the affirmation, by a letter of 5 July 2017 solicitors for the Plaintiff replied that the Plaintiff would oppose the application.  In light of that reply, the court directed on 6 July 2017 that the matter be processed in accordance with PD 4.1 para 36.  The cut-off point is 5 July 2017.

22.  Hence, the order for costs that we would make is that the Defendant shall pay the Plaintiff’s costs up to 5 July 2017 and that the Plaintiff shall pay the costs of the Defendant after that date.  Having considered the statements of costs of the parties, we fix the costs of the Plaintiff up to 5 July 2017 at $5,400 and the costs of the Defendant after 5 July 2017 at $12,000.

23.  By now, solicitors should be familiar with the underlying objectives in Order 1A and their duties in litigation.  Hopefully, the present instance is a momentarily lapse.  By way of reminder, a copy of this judgment will be circulated to the Law Society and the Bar Association through the Registrar.