THOMAS V. PREVENSLIK v. K. F. CHENG and Others

1996, No.A216

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. This is an appeal from Master O'Donnell's decision by the plaintiff.

2. There are two issues to determine:

(a) whether there should be an extension of time for appeal; and

(b) whether the appeal has merits.

3. After he heard the parties on 29 March 1996, Master O'Donnell made an order to dismiss the plaintiff's claim on the ground that it disclosed no reasonable cause of action against the defendants and that the claim was frivolous vexatious and an abuse of process of the court. The plaintiff took out a notice of appeal on 29 April 1996 against the Master's decision, exactly a month afterwards, whereby he also sought an extension of time to appeal. The time for the appeal is governed by Order 58, rule 1(3) of the Rules of the Supreme Court, which provides:

"(3) Unless the Court otherwise orders, the notice must be issued within 5 days after the judgment, order or decision appealed against was given or made ..."

The rule differs in terms from Order 59, rule 4(1) that applies to an appeal to the Court of Appeal in which the time for serving the notice of appeal is not later than the expiration of a certain period after the date on which the judgment or order of the court below was sealed or otherwise perfected. It is therefore clear that the proper time within which the plaintiff should have taken out his notice of appeal was 5 days after the decision was made on 29 March 1996, and taking into account the intervening holidays, the deadline should have been 9 April 1996.

4. In the document that he filed in support of his appeal and extension of time, the plaintiff gave reasons for his delay. It was stated that he was forced to leave Hong Kong at the expiration of his visa sponsorship by the University of Hong Kong ("HKU") on 31 March 1996 and was unable to return to Hong Kong until 21 April 1996. He further stated that he was not aware of the irregularities until he reviewed the court file of this case on 22 April 1996. By irregularities, the plaintiff told me that they meant that the defendants' written submissions that were handed to him just minutes prior to the hearing before Master O'Donnell on 29 March 1996 had not been filed with the court, and no sufficient notice of them had been given him prior to that hearing. He complained of a further irregularity that there was no recording of the proceedings before the Master and no reason was given for the dismissal of his claim, by reason of which he did not know how to attack the decision on appeal. Obviously, the allegation of irregularities was caused by the plaintiff's ignorance of the law and procedure applicable in the Hong Kong courts. As I explained to the plaintiff during the hearing, the defendants' written submissions are not evidence and they do not need to be filed. A Master in circumstances such as the present case is not obliged to give reasons for his decision either. The hearing before me is in fact a substantive rehearing. The so-called irregularities raised by the plaintiff are entirely without merit in support of his application for extension of time. The only matter to concentrate on is whether the plaintiff has offered sufficient explanation for the delay in launching his appeal. Had the notice of the plaintiff's appeal been lodged within 5 days after his return to Hong Kong, I would without more be satisfied with his explanations to grant an extension. However, there was delay for a few days which has not been explained.

5. The unexplained delay was short. The plaintiff is, after his studentship with HKU was determined, not a local resident. Counsel for the defendants did not address me on any prejudice that was or could have been suffered by the defendants. He only took the point that extension should not be granted as there was no merit in the appeal proper.

6. The recent approach of the English courts on the matter of enlargement of time is summarized in the Supreme Court Practice, 1995, Vol. 1, para. 3/5/6, as follows:

"... save in special circumstances it should rarely be appropriate to deny the plaintiff his extension (where denial would stifle his action) because of a procedural default which even if unjustifiable, has caused the defendant no prejudice for which he cannot be compensated by an award of costs."

I do not see any justification to differ from that approach. Having considered the merits of the claim, which will be dealt with below, and taking into account that the unexplained delay is only for a few days, I consider that it appropriate to exercise my discretion to grant the plaintiff the extension of time sought.

7. The plaintiff's Statement of Claim is obviously not drawn by a person trained in Hong Kong or English law. It contains a lengthy account of events leading up to his claim, without distinguishing between facts and evidence. What is most unacceptable is the arguments and comments, vituperative at times, which apparently were used to air his grievance rather than presenting the matter to the court with clarity or precision. However, I do not take any of these against the plaintiff as he has been acting in person. As far as I can make out, it appears to me that the plaintiff's claim against the 2nd and 3rd defendants is based on various representations or statements made by them to him. The crux of the plaintiff's complaint is that he had been told by the two defendants that he could pursue his specified research interests as a Ph. D. student at HKU and he was debarred from doing so eventually. The allegation is that the 2nd defendant and the 3rd defendant had represented to him that he could pursue his particular research interests as described in his application of 10 November 1993 to participate in the Ph. D. research programme. The 3rd defendant made a similar representation to him on 23 December 1993 when he visited HKU. Another complaint is that he was told by the 2nd defendant that he could work in Hong Kong while joining the Ph. D. programme, when in fact he was not allowed to work in Hong Kong on a student visa. The remainder of the Statement of Claim deals with how the plaintiff was blocked from obtaining a Ph. D. or a lesser M. Phil. degree by the acts of the 2nd defendant and perhaps, the 1st defendant.

8. Although it is not at all clear from the Statement of Claim, it seems that the quantification of the plaintiff's claim of $188,000 is based on the tuition fees that he had paid for the programme and his living and other expenses while pursuing the programme.

9. If the plaintiff's claim is based on misrepresentation in contract, the only proper person against whom he should lay his claim is HKU, for the defendants were clearly the University's agents or servants when making those representations from the contractual stand-point. The principal, and not the agent, will be liable for such representations if proved. In such a situation, I agree with counsel that the plaintiff's claim must be struck out for want of proper party, as HKU is not a defendant in this action.

10. If the plaintiff's claim is based on tortious liability for economic loss resulting from negligent misstatement, there must be a duty of care owed to him by a defendant for the claim to be sustainable against that defendant. A duty of care will be owed whenever there is a special relationship between the plaintiff and defendant (see Hedley Byrne v. Heller & Partners Ltd. [1964] AC 465).

11. The questions of duty of care and special relationship regarding negligent misstatement are succinctly summarised in Clerk & Lindsell, 17th Ed., paras. 7-61 to 7-64. They are covered by prolific recent authorities.

12. In Candler v. Christmas [1951] 2 KB 164, at pp. 179-183, in his dissenting judgment which was approved in Hedley Byrne, Denning LJ suggested circumstances in which a duty to use care in statement existed apart from a contract in that behalf, in the following terms:

"First, what persons are under such a duty? My answer is those persons ... whose profession and occupation it is ... to make reports on which other people ... rely in the ordinary course of business. Secondly, to whom do these professional people owe this duty? I will take accountants, but the same reasoning applies to the others. ... The test of proximity in these cases is: did the accountants know that the accounts were required for submission to the plaintiff and use by him? ... Thirdly, to what transactions does the duty of care extend? It extends, I think, only to those transactions for which the accountants knew their accounts were required ..."

13. In Hedley Byrne, ibid., at p. 486, Lord Reid opined that the liability was not confined to statements made or advice given in the exercise of a profession involving the giving of such advice but it would extend to:

"all those relationships where it is plain that the party seeking information or advice was trusting the other to exercise such a degree of care as the circumstances required, where it was reasonable for him to do that, and where the other gave the information or advice when he knew or ought to have known that the inquirer was relying on him."

At 529 of the report, Lord Devlin described the special relationship as one including

"relationships which ... are 'equivalent to contract,' that is where there is an assumption of responsibility in circumstances in which, but for the absence of consideration, there would be a contract."

14. In Smith v. Bush [1990] 1 AC 831, Lords Templeman and Jauncey identified the "assumption of responsibility" by the defendant to the plaintiff as the criterion for determining whether such a relationship existed. At p. 847F, Lord Templeman described the duty of care as one "which arises when the proximity between tortfeasor and victim is akin to contract". Lord Griffiths, at pp. 864H-865B, on the other hand, relied on the threefold foreseeability, proximity and fairness test and held that "in the case of a surveyor valuing a small house for a building society the application of these three criteria leads to the conclusion that he owes a duty of care to the purchaser."

15. In Caparo v. Dickman [1990] 2 AC 605, after intimating that Lord Griffiths's threefold criteria was "a label which ... embraces not a definable concept but merely a description of the circumstances from which, pragmatically, the courts conclude that a duty of care exists", Lord Oliver went on to analyse the ratio of Hedley Byrne at p. 638C-E:

"the necessary relationship between the maker of a statement (the adviser) and the recipient who acts in reliance upon it (the advisee) may typically be held to exist where (1) the advice is required for a purpose, whether particularly specified or generally described, which is made known, either actually or inferentially, to the adviser at the time when the advice is given; (2) the adviser knows, either actually or inferentially, that his advice will be communicated to the advisee, either specifically or as a member of an ascertainable class, in order that it should be used by the advisee for that purpose; (3) it is known, either actually or inferentially, that the advice so communicated is likely to be acted on by the advisee for that purpose without independent inquiry, and (4) it is so acted on by the advisee to his detriment."

16. In White v. Jones [1995] 2 WLR 187, at p. 212B, Lord Browne-Wilkinson also based his analysis on assumption of responsibility but stressed that it referred to an "assumption of responsibility for the task" and not an "assumption of legal liability".

17. The learned editors of Clerk & Lindsell conclude, and I agree with them, as follows:

"Whichever labels are used, it is suggested that the existence of a duty will depend on two questions: first, whether it can be said that the defendant intended someone such as the plaintiff to rely on his statement in the way in which he did, and secondly, whether to all the circumstances it was reasonable for the plaintiff to rely on the defendant being legally accountable for care having been taken in the making of the statement. Provided it is remembered that the questions interrelate, that they are opposite sides of the same coin, they provide a helpful basis for the analysis of the law."

18. Applying the law as best I can on the allegations contained in the Statement of Claim, without making any definitive decision, I cannot without hesitation say that the plaintiff will be unable to establish a special relationship between him and the 2nd and 3rd defendants for him to found his claim against them. The plaintiff made his application to HKU to participate in a Ph. D. programme with the Department of Chemistry, Faculty of Science. He wished to pursue a particular topic in Chemical Physics. Both the 2nd and 3rd defendants were teachers in that Department, and the 3rd defendant was to supervise the plaintiff in the programme. Whether the plaintiff's proposed topic was pursuable in a Ph. D. programme in the Department should be within the ambit of the 2nd and 3rd defendants. When the plaintiff visited HKU before his application was approved, he discussed his proposed topic with both of these defendants. The alleged misstatement that the plaintiff could pursue his particular research interests is pleaded as being made to him by the two defendants, and the 2nd defendant is alleged to have told him that working in Hong Kong while pursuing the programme with HKU was not a problem. I do not see how the plaintiff can be precluded from arguing that the 2nd and 3rd defendants must have known his application to join the programme, and that they must have known his particular topic of interest in research. They were allegedly told by the plaintiff that he would need to work in Hong Kong to make an income in order to sustain his participation in the programme. If they did, as alleged, advise him that he was able to pursue his specified topic of interest in the Ph. D. programme and that he was able to work in Hong Kong while pursuing that degree, then it seems to me not unarguable that they reasonably intended him to rely on their advice, and that they appreciated that he would likely rely on the advice. I do not see how it is impossible in such circumstances that the plaintiff may be able to establish a special relationship between him and the two defendants for him to lay a claim against them for negligent misstatement.

19. Mr Reyes argued that based on the judicial utterances of Lord Devlin and Lord Templeman of "equivalent to contract" and "akin to contract", the defendants could not be liable to the plaintiff on tort for their alleged misstatements made to the plaintiff, for they must have made those statements qua agent or servant but not qua principal. It followed, so the argument went, whatever tortious liability based on the misstatements there was, it should only attach to HKU and not any of the defendants. I do not accept that the two judicial utterances of the learned Law Lords have the effect of transforming the nature of liability from one being tortious to a contractual one in the sense that the capacity of the maker of the negligent misstatement, being an agent, will exempt him from personal liability in tort. It suffices for me to cite the crisp statement in Halsbury's Laws of England, 4th Ed., Vol. 7(1), para. 969 regarding the law about the agent's personal liability for torts:

"An agent who commits a tort in the course of his employment is himself liable in damages to the full amount, and if more than one act, each agent is so liable. This applies to a company's agent in the same way as to any person's agent; but one of two or more agents is not liable for the acts of the other unless he has expressly or impliedly authorised such acts."

Notwithstanding, I accept that negligent misstatement is a special area of tort the ambit of which the courts have jealously confined (see for example Caparo). Anyhow, I am not in disagreement with Mr Reyes's submission that the litmus test for the defendants' liability for negligent misstatement is whether there was a special relationship between them and the plaintiff.

20. I have not dealt with the question of fraudulent misrepresentation, for as I have concluded that the plaintiff cannot be excluded from making a claim in negligent misstatement, it is unnecessary for me to touch upon the former subject.

21. On the other hand, while there are allegations against the 1st defendant, they must be directed at him as representing the Faculty of Science or HKU. I cannot see how the plaintiff can have a sustainable claim against the 1st defendant, whose alleged involvement only took place after the plaintiff's admission to the programme. There is no allegation against him that he personally made any misstatement to the plaintiff. If there is any sustainable claim against him, it has not been pleaded in the Statement of Claim clearly or at all.

22. In the circumstances, I set aside the Master's Order insofar as it relates to the writ and the claim against the 2nd and 3rd defendants. The part of the writ and of the Statement of Claim against the 1st defendant is struck out so long as it relates to him personally and not as a representative of HKU or its Faculty of Science. The plaintiff is allowed to pursue his claim against the 2nd and 3rd defendants.

23. The plaintiff seeks and has been granted indulgence to enlarge time, and that must be granted on the basis that no prejudice other than that which can be compensated for by way of costs is suffered by the defendants. It is therefore only proper that the costs relating to the extension of time must be borne by the plaintiff. On the other hand, he is successful on his appeal regarding his claim against the 2nd and 3rd defendants. I think the appropriate order for costs would be for the 2nd and 3rd defendants to bear the plaintiff's costs of the hearing before the Master and three-quarters of his costs of this appeal. The plaintiff must bear the costs of the 1st defendant here and below. I make an order nisi for costs accordingly.