MAN’S (ASIA) DEVELOPMENT LTD v. SECRETARY FOR JUSTICE

HCA 2252/2013

[2022] HKCFI 3757

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2252 OF 2013

_____________

_____________

________________________

REASONS FOR DECISION

________________________

1.  This was the Plaintiff’s application by summons dated 22 June 2022 (“the summons”) for an extension of time for leave to appeal from the Order and Final Judgment made on 13 January 2022 (“the Order”), leave to adduce new evidence, and stay of execution. At the conclusion of the hearing, the application was dismissed with costs in favour of the Defendant, such costs to be taxed if not agreed. My reasons are set out below.

Background facts

2.  This matter has a long history. The Plaintiff had erected illegal structures which straddled areas including land owned by the private owners (“the other lots”) and unleased Government Lands in the New Territories. In November 2013, it made a claim in adverse possession, the defendant being the Secretary for Justice.

3.  On 15 November 2019, the parties entered into a consent order (“the Order”) incorporating a Tomlin Schedule (“the Tomlin Schedule”).

4.  On 13 January 2022, following the Plaintiff’s breaches of the Tomlin Schedule, upon the application of the Secretary for Justice (“the Government”) to enforce the Order and as the breaches were not disputed, this Court entered final judgment in favor of the Government.

5.  The events culminating in the Order are set out in the Reasons for Decision dated 14 January 2022 (“the Reasons”) to which reference should be made.

I. EXTENSION OF TIME

6.  It is common ground that the principles to be applied are those set out by the Court of Appeal in Wong Yuk Tung v Wong Po Ling and anor [2018] HKCA 109 at §17. The factors to be taken into consideration in deciding whether or not the court should exercise its discretion to grant an extension of time are (1) the length of delay; (2) the reasons for delay; (3) the chances of success of the proposed appeal; and (4) prejudice to the potential respondent.

7.  Those principles were recently repeated in the Court of Appeal’s judgment in Wilmes Franz Josef v Coroner, West Kowloon Court [2022] HKCA 949 at §16, citing a passage from the judgment of Kwan JA in Lee Chick Choi v Best Spirits Co Ltd, HCMP 371/2015 (21 May 2015) at §19 where, after reiterating the 4 factors stated in the Wong Yuk Tung case, went on to state as follows:

“Where the delay is substantial and not wholly excusable, the applicant must show a real prospect of success on the merits, not merely a reasonable prospect of success. In other words, he would need to demonstrate a strongly arguable case (Secretary for Justice v Hong Kong & Yaumati Ferry Co Ltd & Anr [2001] 1 HKC 125 at 127D to 128D, 132F; KNM v HTF, HCMP 288/2011, 7 September 2011, §§2, 19, 20; YN v NA [2014] 5 HKC 49 at §§16, 17).”

8.  The 4 factors are considered in turn.

(1)   Length of delay

9.  The 28-day period for appealing the Order expired on 10 February 2022. The summons was not taken out until 22 June 2022, more than 4 months later. Such a period of delay is considered ‘substantial’: see Wong Yuk Tung at §18.5.

(2)   Reasons for the delay

10.  The Plaintiff relied on 3 grounds. The 1^st ground concerns alleged handover issues. The affirmation dated 15 June 2022 of the Plaintiff’s director Chan Wai Leung Jacky (“Chan 1^st[1]”) sought to suggest that delay occurred in the handover of court documents from the Plaintiff’s former solicitors’ firm (“C & N”) to the Plaintiff’s current solicitors (“RC & C”).

11.  That allegation was refuted by C & N’s letter dated 9 February 2022 to RC & C which stated that upon receipt of RC & C’s letter of 27 January 2022, RC & C was informed that the Plaintiff “had already collected all the documents we have on 26 January 2022”.

12.  It was then submitted that RC & C had to conduct a search of the Court file. But the exercise involved could not have taken much time and cannot be an excuse for the inordinate delay.

13.  The 2^nd ground is Covid related. It was alleged that the prevalence of Covid had caused delay in its communication and meetings with its legal representatives. That is no excuse since communication was possible and prevalent via electronic means. Nor is Judiciary’s GAP arrangement during a period of only 5 weeks (between 7 March and 11 April 2022) any excuse when the delay is more than 4 months.

14.  The 3^rd ground is the delay caused by that the present application having been made to the wrong court[2]. That error is entirely of the Plaintiff’s (or his legal representatives’) own making and cannot constitute a valid excuse.

15.  In short, the explanations/excuses proffered do not withstand scrutiny.

(3)  Merits of the proposed appeal

(a)  Preliminary matters

16.  It is necessary to refer to the sequence of events at the hearing 13 January 2022 summarised in §§2-6 of the Reasons:

“2.  At the commencement of the hearing, the plaintiff’s solicitors, Messrs Cheng & Ng (“the Firm”) made an application through counsel for leave to cease to act as solicitors for the plaintiff pursuant to RHC Order 67, rule 6 (1).

The Firm’s application

3.  This late application by summons dated 13 January 2022 came about because on 12 January 2022, at a meeting with the plaintiff’s sole director, Mr Chan Wai Leung Jacky (“Mr Jacky Chan”) from whom the Firm had been receiving instructions, the Firm’s retainer was terminated.

4.  It transpired that the Firm had obtained advice from counsel on the merits of the case with which Mr Jacky Chan disagreed and his instructions on the plaintiff’s behalf would conflict with the Firm’s duty to the court causing a serious breakdown in confidence between the plaintiff and the Firm.

5.  When the Firm was informed that Mr Jacky Chan wished to appear in person and explain the plaintiff’s position to the court, the plaintiff was advised that it requires legal representation unless leave had been obtained from the court.

6.  Having read the affirmation filed in support of the Firm’s application, this court made an order that the Firm ceases to be the solicitors for the plaintiff upon compliance with Order 67, rule 6 (1).”

17.  The Plaintiff’s case is that because its director Mr Jacky Chan (“Mr Chan”) was not allowed to make representations on behalf of the Plaintiff, the Plaintiff was unable to apply for leave to adduce further evidence as to the existence of a common understanding between the Plaintiff and the Lands Department (on behalf of the Government) which varied and replaced §2 of the Tomlin Schedule[3].

18.  That raises the preliminary question as to whether this Court could have allowed Mr Chan to make representations at the January hearing.

19.  Under Order 5, rule 6 (2), a company must be represented by a solicitor except where leave is given under rule 6 (3) for it to be represented by one of its directors.  Only the Registrar or a Master of the High Court has power to grant for corporate debt to be represented by its director: see per Chu J in China Top Consultants Limited v Prosperity Construction and Decoration Limited, HCA 6903/2000, unrep., 29 August 2003 at §14 citing the Court of Appeal’s judgment in: Kone Elevator (HK) Ltd v Senfield Ltd, CACV 216 of 2002, unrep., 24 February 2003 at §14 where it was also held that there is no right of appeal against that order.

20.  It is not a question of this Court not exercising its discretion to allow Mr Chan to be heard. Rather, this Court had no power to dispense with compliance with Order 5, rule 6(2) and (3).

21.  It is now said that since the order granting leave to the Plaintiff’s former solicitors (“C & N”) to cease to act was only made at the hearing the Court should have adjourned it to enable Mr Chan to obtain leave to represent the Plaintiff. It was unfair to the Plaintiff that it could not make representations.

22.  In fact, as appears from §5 of the Reasons[4], the Plaintiff received advice from C & N on 12 January 2022 when Mr Chan verbally terminated C & N’s retainer and intimated he wished to appear at the hearing by himself and explain the Plaintiff’s position to the court[5]. The Plaintiff did not heed that advice.

23.  On 10 January 2022, the Plaintiff had already lodged its skeleton submission advising the Court that the Plaintiff was not disputing the Defendant’s summons for enforcement and that negotiations for settlement had reached a final stage.

24.  To adjourn the hearing in those circumstances appeared to the Court to be a total waste of resources and the Court’s time. The Court proceeded with the hearing as there was nothing in the papers to suggest that the Plaintiff wished to advance a new defence to the enforcement action. It is thus strictly unnecessary to consider the Plaintiff’s intended ground of appeal based on the existence of a common understanding. Nevertheless, its merits are considered below in the context of the main topics raised at the hearing.

(b)  “Common Understanding”

25.  In outline, it is Mr Chan’s evidence that in order to comply with §2 of the Tomlin Schedule, he had attempted to obtain the written consent and authorisation from the registered owners of the other lots affected by the illegal structures (“the Structures”) but because of litigation between the Plaintiff and those owners, consent had not been forthcoming.

26.  Then in and around September 2021, Mr Chan allegedly had a conversation with a Lands Officer named Tung Kwok Ping (“Mr Tuon[6]”) who was visiting the Government lands. The topics of that conversation comprised the following:

(a)  the inability of the Plaintiff to obtain the written consent and authorisation of the registered owners of the other lots affected by the Structures;

(b)  revision of the engineer’s report and the surveyor’s to reflect the area of the Structures located on Government lands but not on the other lots; and

(c)  the intended construction of a drainage system by the Drainage Services Department (“DSD”) covering and crossing through Government lands and the Plaintiff’s land within the Structures.

27.  According to Mr Chan, that discussion resulted in the following common understanding[7]:

“(I) [Mr Chan] would assist the [DSD] to construct and complete the Drainage System;

(2) [Mr Chan] would use [his] best endeavour to demolish and remove the Structures on the Other Lots, as at the start, [Mr Chan] told the Defendant [he] had difficulties with owner of Other Lots. [Mr Chan] would also revise the Surveyors' Report and the Engineers' Report to reflect the revised area of the Structures; and

(3) The Lands Department would grant the Plaintiff the Waiver of Compliance; and

(4) Upon the completion of the Drainage System and the revision of the Surveyors' Report and the Engineers' Reports, the Lands Department would forthwith grant the Short-term Tenancy and the Short-term Waiver to the Plaintiff.

(collectively, the "Common Understanding").”

28.  As will become apparent, that is disputed by Mr Tuon’s account is set out §§33-37 below.

(c)      Detrimental reliance

29.  Mr Ian Chu, counsel for the Plaintiff, submitted that the Plaintiff had acted on the Common Understanding to his detriment in 2 respects. Mr Chan’s evidence is that the Plaintiff spent around $300,000 for the surveyor’s report and the engineer’s report[8] including the cost of a contractor to demolish part of the Structures. That is the first item of damage.

30.  The evidence relating to the surveyor’s report is confused and confusing. Such a report is not part of §2 of the Tomlin Schedule which only requires a structural engineer’s report[9] to certify the structural safety of the Structures. Quite why the surveyor’s report should be raised at all in the alleged conversation defeats comprehension. It would seem that it had featured in the pre-Tomlin Schedule negotiations[10] but, unlike the engineer’s report, was never incorporated into the Tomlin Schedule as a requirement on the part of the Government.

31.  The surveyor’s report exhibited to Mr Chan’s affirmation dated 22 October 2021 (“Chan 1^st”) (at §21) is a “Report on Boundary Redefinition of Lot Nos. 34, 86, 87 & 88 in DD 98, Yuen Long”, requested by the Plaintiff “to redefine the lots for redevelopment”. Seemingly, this report has nothing to do with the requested revision which was “to reflect the area of the Structures located in the Government lands only”[11].

32.  The demolition of the Structures on the other lots never featured in Mr Chan’s description[12] of his conversation with Mr Tuon. It emerged as part of the “Common Understanding” as defined by Mr Chan.

33.  Mr Tuon is a Land Executive of Special Duties Task Force of the Lands Department whose duties included taking lease enforcement actions in Yuen Long including the present case from 8 June 2020 to 3 July 2022. Following the receipt of a public complaint, DSD sought assistance from DLO/YL to gain entry to Government lands that had been fenced off by hoarding, being lands involved in the present proceedings. A site inspection was therefore arranged for 31 August 2021 to update the site situation and to check the flow of the existing channels or culverts within the Structures, consent having been obtained from the Plaintiff for access.

34.  Mr Tuon’s account of the site meeting is recorded in a contemporaneous internal memo dated 2 September 2021 from Mr Tuon to his superiors. The memo records that Mr Chan joined this site inspection with officers of DLO, HAD and DSD on 31 August 2021 and made a number of requests. He

(i)    claimed that he had demolished all the structures on lot Nos 89 SC and 102 RP in DD 98 (the other lots) and requested DLO to give him a copy of the aerial photo for his reference and that he would clarify with DSO site boundary;

(ii)   would not remove the hoarding as he was still having a litigation with other parties for other lots:

(iii)  wanted to keep the area shown in red (as illustrated in the plan incorporated into the memo) and would apply for a STT; and

(iv)  requested DSD and HAD to handle the flooding issue as soon as possible and he was willing to provide free access to DSD and HAD’s officers and contractors to the Government land despite the present court case.

35.  In that memo, Mr Tuon stated that he only recorded the site situation and told Mr Chan that he would forward the above messages to his superiors. On 1 September 2021 he received a call from Mr Chan who enquired if he could have a meeting with the senior management of DLO to discuss the way forward for the present case. Mr Chan was told that he should make his request directly to DOJ in writing if appropriate.

36.  As regards the allegation that DSD intended to construct a drainage system covering and crossing Government lands as well as adjoining lands belonging to the Plaintiff within the Structures which Mr Chan called “the Drainage System”, that is flatly contradicted by the evidence of Mr Tuon who also denied there was any “Common Understanding” as alleged arising from the conversation he had with Mr Chan.

37.  Mr Tuon exhibited an email exchange on 22 September 2022 between Stephanie Feng of DSD and Billie Tsang of the DLO, Yuen Long in which DSD confirmed that DSD had neither sought any assistance from the Plaintiff to construct and complete any drainage system nor made any agreement with the Plaintiff in that regard. Further DSD had no intention and did not express any intention to construct a drainage system covering and crossing through the Government land and its adjoining lands occupied by the Plaintiff.

38.  Although in his reply affirmation dated 19 October 2022, Mr Chan appeared to disagree[13] with what is recorded in the email exchange exhibited, the Plaintiff has not adduced evidence to the contrary, for example, by showing that drainage works were being carried out.

39.  The second respect in which the Plaintiff allegedly suffered detriment is his giving consent for the Drainage System to be implemented. No monetary damage is alleged in this regard. It is said that the giving of consent which would otherwise have been withheld constituted ‘detrimental reliance’ on the Common Understanding. However, as appears from the email exchange described in the preceding paragraph, DSD has not carried out any drainage works nor does it have any intention to do so.

(d) Conclusion

40.  Given the evidence that is before the court, the Plaintiff’s case is not grounded on solid evidence and has every appearance of an opportunistic attempt to cobble together random elements to form a ground of appeal which in my view has no substance.                   

(4)  Prejudice to the potential respondent

41.  This action commenced 9 years ago. Despite the settlement reached in November 2019 when the parties agreed to the Tomlin Schedule, there have been repeated defaults on the part of the Plaintiff in terms of meeting the scheduled payments. §2 of the Tomlin Schedule stipulated for performance of the 3 items therein specified within 2 months i.e. by January 2020. Almost 2 years have now elapsed without the Plaintiff having discharged any of its obligations under §2 of the Tomlin Schedule.

42.  Meanwhile, the litigation between the Plaintiff and the illness of the other lots appears to be continuing. The current situation is that the Government land concerned is still fenced off by the Plaintiff and the unauthorized structures continue to pose potential issues of public safety and flooding.

43.  Further delay is bound to exacerbate the situation, and will have the effect of prolonging the prejudice to which the Government is subjected.

Conclusion on extension of time

44.  For the reasons stated above, all 4 factors lead to the ineluctable conclusion that the Plaintiff’s application for an extension of time to appeal should be dismissed.

II. LEAVE TO ADDUCE NEW EVIDENCE

45.  There is only one matter that should be addressed and that is condition 1 of the Ladd v Marshall[14].

46.  The Common Understanding was allegedly reached in September 2021, more than 3 months before the hearing date. There would have been ample time for the Plaintiff to apply for and obtain leave to file an affirmation relating to the matters that occurred at the September meeting. Not only was no application made, there is no explanation as to why that had not been done.

47.  Mr Chu attributed that to the disagreement between Mr Chan and the Plaintiff’s former legal representatives. However, there is simply no evidence before the Court as to when Mr Chan first informed his former legal advisers of the Common Understanding and the date they first fell out over the merits of this issue as the timeline is relevant.

48.  The new evidence, namely the Common Understanding was allegedly reached during the site inspection on 31 August 2021. Since Mr Chan was the person representing the Plaintiff, the Plaintiff must have known of the new evidence on that date which is several months prior to the hearing in January 2022.

49.  That evidence could and should have been presented to the Court at the hearing but it was not done. The Plaintiff relies on Chan Chiu Yin v Chan Ki Kau, unrep., CACV 468/2001, 28 May 2003 but in that case the letter from the Commissioner of Rating and Valuation postdated the hearing.

50.  It is disingenuous for the Plaintiff to suggest that Chan 1^st (which came into existence on 15 June 2022) qualifies as “new evidence”. For the reasons set out in §§46-48 above, the Plaintiff cannot show that the evidence could not have been obtained at the trial with reasonable diligence.

51.  Even if (contrary my view) there is merit in the proposed appeal, condition 1 of Ladd v Marshall constitutes an insuperable obstacle for the Plaintiff to overcome.

52.  For present purposes, it is unnecessary to deal with the other Ladd v Marshall conditions.

III. STAY OF EXECUTION

53.  As the Plaintiff has failed to persuade this Court to grant an extension of time for it to appeal coupled with the fact that it has not shown that it has an arguable appeal, the question of a stay of execution of the Order does not arise.