XCHRX HUNG TAK KAY AND ANOTHER v. MANSION HOLDINGS LTD. AND OTHERS

HCA7199/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.7199 OF 2000

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D E C I S I O N

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1. This is an appeal by the plaintiffs against the Order of the Master made on 29 November 2000, dismissing the plaintiffs' claim for non-compliance with an unless order for supply of further and better particulars of the Statement of Claim. Shortly before the hearing of the appeal, the plaintiffs issued an application for extension of time to comply with the unless order notwithstanding that the time for doing so has expired.

Background

2. Briefly stated, the plaintiffs' claim herein is for loss and damages in breach of agreement, misrepresentation and breach of fiduciary duties. The 1st defendant has filed a defence which indicates that it may plead further after being provided with the further and better particulars of the Statement of Claim. One of the lines of defence now pleaded is that its former director, Mr Jason Yip, and the 3rd defendant had no authority to bind the 1st defendant to the agreement alleged by the plaintiff.

3. The 1st defendant sought from the plaintiffs further and better particulars of the Statement of Claim by way of a letter of 28 September 2000. The request is an extensive one. The plaintiffs' solicitors requested 28 days to seek counsel's opinion on the request, but the 1st defendant's solicitors were only prepared to extend time until 12 October 2000. In the meantime, counsel was retained by the plaintiffs to deal with the request for further and better particulars. On 17 October 2000, the plaintiffs' solicitors wrote to the 1st defendant's solicitors indicating that the Answers to the Request would be available in the following week. The 1st defendant's solicitors replied by indicating that they would issue a summons if the Answers were not received by 25 October 2000. Then on 25 October 2000, the plaintiffs' solicitors requested for a few more days' extension. On 26 October 2000, the 1st defendant issued a summons seeking an unless order for the supply of the further and better particulars. The summons was heard on 31 October 2000 and the Master granted an unless order to expire by 4 p.m. on 6 November 2000. The plaintiffs served the Answers to the Request on 6 November 2000 before 4 p.m.

4. The Answers served by the plaintiffs only cover 31 of the 46 requests. Of the remaining 15 requests, the plaintiffs stated that the 1st defendant is not entitled to 13 of them. These requests relate to the averment that Mr Jason Yip was acting for and on behalf of the 1st defendant. In respect of the other 2 outstanding requests, the plaintiffs stated that the Statement of Claim will be amended to withdraw the averments. The 1st defendant was not satisfied with the Answers received and on 24 November 2000, issued a summons applying to dismiss the plaintiffs' claim for non-compliance with the unless order. The summons was heard on 29 September 2000 by the same Master who granted the unless order. The Master granted the application and dismissed the plaintiffs' claim against the 1st defendant with costs. It is against this order that the present appeal lies.

Reasons for decision

5. Counsel appearing for the plaintiffs accepts that by reason of the unless order made on 31 October 2000, the plaintiffs are bound to provide all the particulars sought by the 1st defendant : Ming Pao Enterprise Corp Ltd v. CIM Co. Ltd [1999] 1 HKC 497. In so far as the plaintiffs had not provided the particulars to 13 of the requests by contending that the 1st defendant is not entitled to them, the plaintiffs had clearly failed to comply with the unless order. At the hearing before the Master on the summons to dismiss the claim, the plaintiffs' solicitors applied to adjourn the summons for argument. That application is bound to fail in that the plaintiffs are clearly in default of the unless order as the law stands. There was no attempt nor indication that the plaintiffs would seek time or would endeavour to comply with the unless order. The plaintiffs' position then was that they were entitled not to provide the particulars to the outstanding requests. In the circumstances, the only conclusion and order that the Master could have made is to refuse the adjournment and to grant the order dismissing the claim. There is no room for criticism on the Master's order as the matter stood before her.

6. The position at the appeal hearing is, however, different. According to the affirmation of Chan Kin Chung, the plaintiffs had hitherto been acting on counsel's advice that the particulars provided were adequate to meet the unless order and that they were entitled not to provide the outstanding requests. Counsel appearing for the plaintiffs (who did not render the advice) accepts that the advice given is bad in law and that the plaintiffs are not entitled to withhold particulars on the outstanding requests in view of the unless order. The plaintiffs instead apply for time to comply with the unless order. Counsel argued that the default of the legal adviser should not be equated with or imputed to the lay litigants, relying on the authorities of Ming Pao Enterprise Corp Ltd v. CIM Co. Ltd, supra; Dongguan Dongxiang Decoration Co. Ltd v. UTan Eddy Tansil v. PT Bank Pembangunan (Indonesia) Perseroniversal Right Ltd [1999] 1 HKC 790, following the dictum of Bokhary JA (as he then was) in  [1996] 1 HKC 231.

7. Counsel for the 1st defendant does not dispute that legal proposition, but argues that the present case is different from the situations in the Ming Pao Enterprise Corp Ltd case and also the Dongguan Dongxiang Decoration Co. Ltd case, in that the default here does not involve matters of law. It is observed that the issue of Mr Jason Yip's authority is an integral part of the plaintiffs' pleaded case and the outstanding requests relate to the source of the alleged authority, which are matters of facts on which instructions have to be taken from the plaintiffs. I accept that insofar as the contents of the particulars to be provided, they are matters of fact for the plaintiffs. But insofar as the decision whether to provide the particulars, which is the nub of the matter in this appeal, that is a matter of legal advice to be rendered by the legal advisers, having regard to the law on pleadings and particulars thereof. The plaintiffs, as layman, are entitled to rely on the professional advice of their legal advisers. The failure or mistake of the plaintiffs' legal advisers should not adversely affect the plaintiffs' interest if that can be avoided without injustice to the 1st defendant.

8. The 1st defendant has mounted two further objections in this appeal. Firstly, it is pointed out that there is no affirmation from the legal advisers themselves to explain the matter. Secondly, it is said that the affirmation of Chan Kin Chung does not set out that Mr Chan was authorized by the 1st plaintiff in making the affirmation and does not accept that the plaintiffs are in default of the unless order. I agree that it would be prudent practice for the legal advisers to set out and explain the matter by way of affidavit evidence. It is also plain from the contents of the affirmation of Chan Kin Chung that the plaintiffs did not, up to the time of the making of the affirmation, accept that they have been in default of the unless order. The omission in paragraph 1 of the affirmation as to whether Mr Chan was authorized by the 1st plaintiff to make the affirmation also leaves open the question of whether the 1st plaintiff's failure to comply with the unless order is for the reasons and background stated in the affirmation. All these, however, are not fatal in the circumstances of this case. There is no challenge to the assertions that the plaintiffs had retained counsel to advise on and deal with the 1st defendant's requests for particulars, and that the decision not to provide the outstanding particulars, was pursuant to counsel's advice. It is plain that the advice of counsel is wrong in the light of the decided cases. It is equally plain that lay clients are entitled to rely on the advice given by their legal advisers. That being the case, it would still be open to the plaintiffs to argue the appeal along the line adopted at the appeal hearing, despite the shortcomings in the evidence as identified by the 1st defendant.

9. The final question in deciding whether the error of the plaintiffs' legal advisers should be held against the plaintiffs themselves is whether there is any injustice or prejudice occasioned to the 1st defendant if the plaintiffs were to be granted further indulgence. Counsel has submitted that there is prejudice to the 1st defendant by not having the case determined as soon as possible. This is of course a form of prejudice, but not one which is irreparable or cannot be adequately compensated by costs. The action is in the early stage. There will be no injustice to the 1st defendant by granting the plaintiffs a few more days to provide the outstanding particulars. On the other hand, any dismissal of the claim on account of non-compliance with order is not an adjudication on the merits of the case. The plaintiffs are at liberty to institute a fresh set of proceedings to pursue the matter.

10. By reason of the matters aforesaid, the appeal is to be allowed and the order of the Master be set aside.

Costs

11. There can be no doubt that the costs below and the costs of this appeal should be borne by the plaintiffs. The 1st defendant asks for the costs to be paid forthwith and on an indemnity basis. The plaintiffs do not agree, arguing that there is no exceptional circumstances justifying costs on a higher than usual basis. In my view, the exceptional circumstances here is the fact that the plaintiffs have failed to comply with a court order for which there can be no justification and excuse at all. The order dismissing the claim is set aside merely on the basis that the failure and default, though deliberate and without justification, is on the part of the legal advisers and that the plaintiffs had been acting under wrong advice of their advisers. The 1st defendant was entitled as well as led to adopt the course it had taken by reason of the stance and attitude of the plaintiffs up to as late as the filing of the affirmation of Chan Kin Chung. The 1st defendant ought, therefore, to be compensated for the costs wasted. The 1st defendant's costs below and the costs of the appeal should therefore be paid by the plaintiffs on indemnity basis. The costs of the time summons should, however, be on the usual party and party basis.

Conclusion

12. The appeal of the plaintiffs is allowed and the order of the Master made on 29 November 2000 is set aside. The time for the plaintiffs to comply with the unless order dated 31 October 2000 is extended to 4 p.m. on 28 December 2000. The 1st defendant's costs below on the summons filed on 24 November 2000 and on this appeal be paid by the plaintiffs forthwith to be taxed on indemnity basis, if not agreed. The costs of and occasioned by the plaintiffs' summons filed on 15 December 2000 for time be to the 1st defendant against the plaintiffs in any event.