JOHN JUDE MONTEIRO AND ANOTHER v. THE INCORPORATED OWNERS OF BLOCK NOS. 41, 42, 43 & 44, baguio villa AND OTHERS

HCA362/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 362 OF 2007

----------------------

----------------------

----------------------

J U D G M E N T

----------------------

1. On the papers which were initially before me there was a certain amount of confusion concerning what orders had been made by Master De Souza when he heard three summonses on 3 September 2008.

2. The unless order made by the master provided that if its terms were not complied with the defence would be struck out and judgment would enter.  However when the master heard the application which was the subject of this appeal he ordered that he would defer entering judgment until the conclusion of the hearing.  The problem which was encountered was that there was ambiguity as to whether judgment had in fact been entered by virtue of the order and whether the intervention of the master was redundant.

3. However, the parties, by consent, agreed an amended notice of appeal and I am now essentially seized of an appeal from an order (the unless order) he made that the 1^st defendant’s and 2^nd defendant’s (the defendants’) defence be struck out and judgment be entered for the plaintiffs.

4. The basis upon which the master made the order was the non-compliance by the defendants of the unless order made by the master on 18 June 2008 that the defendants serve and file an affidavit stating that the documents referred to in an order made by Master Kwang, dated 6 May 2008, were in their possession or satisfactorily accounted for.

5. Unless this order was complied with by 4 p.m. on 25 June 2008 the defence would be struck out and judgment entered against them with damages to be assessed.

6. The order was not complied with.  On the day in question the typhoon signal no. 8 had been hoisted and the Court Registry was closed.

7. Here, perhaps, it is best to take up the story from the affidavits of Ms Lee, a partner in Messrs Deacons, the solicitors representing the defendants.  Her affidavit of 30 June 2008 states :

“3. So as to comply with the said Order, I had arranged to meet with the Property Manager, Mr. Law Yee Hang at 10:30am on 25 June 2008 to sign his affirmation on behalf of the 1^st and 2^nd Defendants.  His draft affirmation had already been sent to Mr. Law for approval earlier on.  In fact, when the Plaintiffs’ solicitor, Miss Lee, telephoned me seeking my comments to the draft index of the hearing bundle, I informed her that Mr. Law’s affirmation would be ready to serve on her firm by noon time on 25 June 2008 if she wished to wait for a copy of the same before finalising the additional documents for use at the adjourned hearing.

4.   Unfortunately, typhoon signal no. 8 was hoisted on the morning of 25 June 2008.  I did not have Mr. Law’s contact number so I was unable to call him until I got into the office around 12pm on that day.  I immediately tried to contact Mr. Law at his office but to no avail.  I finally managed to speak to him around 2pm when he agreed to come to my office straight away for signing the affirmation.  However, he did not turn up until around 6pm.  He had been out dealing with various emergencies and damage to properties caused by the typhoon during which time I was unable to make contact with him.  His affirmation was eventually signed at around 6:10pm, and after making copies of the same, my clerk served the affirmation upon the Plaintiffs’ solicitors Messrs. Richard Butler at 6:27pm on 25 June 2008.

5.   As the court was closed all day on 25 June 2008, I had earlier instructed my clerk that he only needed to serve the affirmation on the Plaintiffs’ solicitors, it was unnecessary to file the affirmation.  Due to an unfortunate misunderstanding, the affirmation was not filed the following day when the court re-opened.  It was not until I received the telephone call from the Learned Master Kwang’s clerk on 27 June 2008 when I realised that my clerk had omitted to file the affirmation.  It was immediately rectified in the afternoon of 27 June 2008.”

She supplemented this by an affidavit sworn on 22 July 2008 :

“2. I crave leave to refer to my earlier affidavit dated 30 June 2008 setting out the reasons for the failure to comply with the said Order.  I do not intend to repeat the same here save I wish to add that given Mr. Law Yee Hang’s position as a Property Manager with the responsibility of managing a number of housing estates, Mr. Law had to deal with a large number of emergencies (including but not limited to damage to properties and flooding) caused by the typhoon.  Even though the typhoon signal no. 8 was lowered at 11:15am on the same day, Mr. Law was unable to attend my office for signing the affirmation until around 6pm after he had attended to his work commitments.  The service of Mr. Law’s affirmation on the Plaintiffs’ solicitors was late by 2 hours and 27 minutes as a result.”

8. Mr Wright, for the defendants, submitted that it was manifest from the evidence before me that it had been the intention of Ms Lee and the defendants to comply with the unless order.

9. Also, he contended that there was no evidence which reasonably suggested that the defendants or Ms Lee intended to disobey a court order.

10. Mr Bowers, for the plaintiffs, submitted that to obtain a full picture of what had transpired it was necessary to have regard to all of the background situation.

11. Considerable delays had been and were being encountered in satisfactorily completing the defendants’ list of documents.  Only a small fraction of the relevant documents had initially been produced and there was a statement in correspondence from Messrs Deacons that there were other relevant documents which would be produced in due course.

12. What also had to be borne in mind was that the number of documents to be produced was not unduly numerous as the dispute between the parties was a relatively simple one involving damage done to the plaintiffs’ flat and garden at Baguio Villa, Pokfulam by the 3^rd defendant, a contractor, and the defendants’ role in the proceedings was the extent to which they had properly ordered and supervised the activities of the 3^rd defendant.

13. Mr Bowers contended that when all of this was considered together with the unsatisfactory way in which there had been non-compliance with the unless order, it could be said that the defendants and those representing them had manifested a course of conduct which could properly be described as “stubborn disobedience” which was analogous with contumelious behaviour.

14. Master Kwang entertained the application relating to what documents should be discovered.  At the conclusion of the hearing it was ordered that approximately half of the documents in dispute must be discovered.  Mr Wright described this as being “a draw”.

15. The relevance by this is that it demonstrates that there must have been a genuine dispute on the subject between the parties and accordingly it is not right to draw an adverse conclusion that the defendants have been guilty of contributory contumelious conduct in respect of the discovery.

16. Accordingly the plaintiff can only place reliance upon the factual matrix of the events occurring on 25 June 2008 and immediately thereafter.

17. The law on this subject is conveniently encapsulated in the judgment of Ribeiro J (as he then was) in Chan Tai Ho v. Chan Chun Lung & Ors, unreported, HCA4904/1996 :

“The legal principles

38. In PT Bank Pembangunan Indonesia (Persero) v Tan Eddy Tansil [1997] HKLRD 57 (a case decided on 14 November 1995), the Court of Appeal was faced with deciding whether to extend time to permit compliance with an unless order for disclosure in aid of a Mareva injunction.  Bokhary JA, as he then was, laid down the test as follows (at p 59):-

‘The test to be applied here is, in my judgment, the one laid down by Sir Nicolas Browne-Wilkinson VC giving the leading judgment in the case of In re Jokai Tea Holdings Ltd [1992] 1 WLR 1196 when he said this at p. 1203 B:

‘In my judgment, in cases in which the court has to decide what are the consequences of a failure to comply with an “unless” order, the relevant question is whether such failure is intentional and contumelious.  The court should not be astute to find excuses for such failure since obedience to orders of the court is the foundation on which its authority is founded.  But if a party can clearly demonstrate that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances, such failure to obey is not to be treated as contumelious and therefore does not disentitle the litigant to rights which he would otherwise have enjoyed.’’

39. Applying that principle, the Court of Appeal held that where non-compliance with the unless order is due to the default of the solicitor rather than the litigant himself such default should be regarded as an extraneous cause of non-compliance so far as the litigant is concerned, inclining the court towards granting him an extension of time.

40. This decision has since been regarded by Courts at first instance in Hong Kong as representing a binding precedent on the principles to be applied (although not without the expression of some reservations): Chow Kai Sang v Toi Samuel [1996] 4 HKC 330; Ming Pao Enterprise Corp Ltd v CIM Co. Ltd. [1999] 1 HKC 497; and Dongguan Dongxian Decoration Co. Ltd. v Universal Right Ltd [1999] 1 HKC 790. 

41. That the PT Bank Pembangunan case represents the law appears also to have been the view of the Court of Appeal in Lessy SARL v Pacific Star Development Ltd [1997] HKLRD 1248.  While Godfrey JA in that decision referred to the guidance given by the English Court of Appeal in Hytec Information Systems Ltd v Coventry City Council [1997] 1 WLR 1666, and recommended that practitioners bear it in mind, his Lordship expressly pointed out that no such guidance has yet been given by the Court of Appeal here.

42. In so far as they may be relevant, the reservations which have been expressed in relation to the Jokai approach concern the non-attribution of a solicitor’s default to the litigant in question.  That is however an issue that does not arise in the present case since it is clear that the non-compliance here resulted entirely from the 5^th Defendant’s instructions and not through any default on the part of his solicitor.

43. I pause also to note that a trend is detectable in some of the English authorities to lower the threshold for refusing extensions of time where unless orders have been disobeyed.  Thus, in the Hytec case, Auld LJ (at p. 1677) stated (with the agreement of Lord Woolf MR) as follows:-

‘In my judgment, there is no need to confine the test to that of an intentional disregard of a court’s peremptory order, whether or not it is characterised as flouting, contumelious, contumacious, perverse, obstinate or otherwise.  Such an intent may be the most usual circumstance giving rise to the exercise of this jurisdiction.  But failure to comply with one or a number of orders through negligence, incompetence or sheer indolence could equally qualify for its exercise. It all depends on the individual circumstances and the existence and degree of fault found by the court after hearing representations to the contrary by the party whose pleading it is sought to strike out.’”

18. Having considered all the relevant circumstances I have come to the conclusion that it had indeed been the defendants’ intention to comply with the unless order, and even taking cognisance of the problems encountered in relation to discovery they have not been guilty of contumelious conduct.

19. Adopting the legal principles pronounced by Ribeiro J, I am satisfied that I should make the order sought by the defendants.  I now so order.

20. I also make an order nisi that the plaintiffs will have the costs of this appeal and that there will be a gross sum assessment in the amount of $96,850.