THE HONG KONG HOUSING AUTHORITY v. HSIN YIEH ARCHITECTS & ASSOCIATES LTD AND OTHERS

HCCT 39/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION & ARBITRATION PROCEEDINGS

NO. 39 OF 2001

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J U D G M E N T

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I.   Introduction

1.  AXA applies to set aside my Order of 27 September 2005.  That Order grants the Housing Authority leave to serve a Concurrent Re-Amended Writ (issued on 26 January 2005) in accordance with the Hague Convention on AXA in Germany.

2.  AXA has mounted a similar application in the past.  By a Summons of 19 January 2005 AXA applied to set aside the leave which I had granted to the Housing Authority to serve a cost summons on AXA in Germany.  That costs summons sought to hold AXA liable for the costs of the Housing Authority’s action against B+B.

3.  I dismissed AXA’s earlier application on 7 February 2005.  My reasons were set out in a Judgment dated 15 February 2005.  Those reasons were largely upheld by the Court of Appeal in a Judgment dated 5 October 2005.  The matter is now pending before the Court of Final Appeal.

4.  The Housing Authority counters AXA’s application by a summons seeking a declaration that the Authority has effected valid service on AXA under the Hague Convention.

II.  Background

5.  The essential facts are summarised in the Background Section of my Judgment of 15 February 2005.  It is only necessary here to bring that summary up-to-date.

6.  In my previous Judgment, I noted in §84 that the costs summons and original Writ had not been served on AXA in Germany in accordance with the Hague Convention.  But I stated my view that service had been in accordance with Hong Kong procedural law and accordingly I was bound to regard the service on AXA as valid.  In this Judgment, I shall refer to this service as “the Original Service”. 

7.  Whether any judgment or order made by the Hong Kong Court against AXA on the strength of the Original Service can later be enforced on AXA in Germany, is a different question.  On that, it might be a valid consideration for the German Court to assess whether service had been properly effected under the Hague Convention as required by German law.

8.  No doubt conscious to ensure that any Hong Kong Order in its favour was enforceable in Germany, on 7 February 2005 the Housing Authority applied to serve the Concurrent Writ on AXA in Germany in accordance with the Hague Convention.  I granted such leave.  I directed that AXA was to have 28 days in which to acknowledge service.

9.  The High Court Registry of Dusseldorf is the designated Central Authority through which foreign proceedings are to be served on AXA in Germany under the Hague Convention.  The Central Authority initially rejected the service of the Concurrent Writ.  This was because the Housing Authority’s request did not include a certificate on its reverse side and a time limit for acknowledgement of service had not been stated in a requisite “Summary of Document”.

10.  The Housing Authority’s solicitors addressed the Central Authority’s concerns by a letter dated 9 March 2005.  As a result, service of the Concurrent Writ was effected on 18 April 2005.  By a certificate of that date the Central Authority confirmed that the relevant material had been delivered to AXA in accordance with the Hague Convention.

11.  But AXA complained that this service was invalid because not all documents served had been translated into German.  In particular, the page entitled “Directions for Acknowledgment of Service; the page before the back sheet of the Concurrent Writ; and the page entitled “Summary of the Document to be Served” had not been translated. 

12.  As a precaution, without prejudice to its contention that valid service under the Hague Convention had already been effected, the Housing Authority applied to me for leave to serve the Concurrent Writ once again, this time entirely translated in German, pursuant to the Hague Convention.  I granted such leave by Order of 27 September 2005.

13.  A request for service on AXA was then made to the Central Authority on 13 October 2005.  That request was rejected.  The reason was that the period for AXA to acknowledge service was unclear.  The typed portion of the Concurrent Writ specified 28 days for acknowledging service.  But the standard printed directions on the Concurrent Writ stated that the period was only 14 days.

14.  The Housing Authority applied to the Court for clarification by a letter dated 20 December 2005.  On 21 December 2005 I confirmed that the time for acknowledgment was 28 days in accordance with my Order of 7 February 2005.

15.  On 3 January 2006 the Housing Authority’s solicitors re-submitted the request to the Central Authority, this time including a copy of my confirmation.  Service on AXA was effected on 1 February 2006 and certified by the Central Authority on 8 February 2006.

III. Discussion

A.  AXA’s case for setting aside

16.  Mr. Chua Guan Hock SC (appearing for AXA) says that my Order of 27 September 2005 should be set aside on 4 grounds:

(1) There is no statement in the Concurrent Writ of the relief or remedy being claimed against AXA.

(2) The validity of the Concurrent Writ had expired by the time of service on 1 February 2006 and should not be extended.

(3) There has been no valid service of the Concurrent Writ.

(4) Any defect in the Concurrent Writ cannot be cured under Order 2, rule 1.

17.  In my view, none of the grounds has substance.

A.1  Ground 1: No statement of the remedy claimed

18.  Mr. Chua argues that the Concurrent Writ is defective because it does not include any statement of the claim made or relief sought against AXA.  In fact, apart from being identified as “4th Defendant” in the heading, AXA is not mentioned anywhere else in the document.

19.  This (Mr. Chua says) is contrary to Order 6, rule 2 which requires that a writ either be endorsed with a statement of claim or include “a concise statement of the nature of the claim being made or the relief or remedy required in the action begun thereby”.

20.  In response, Mr. Jin Pao (appearing for the Housing Authority) submits that Order 6, rule 2 is not applicable in the present context.  The rule (Mr. Pao submits) applies to the situation where proceedings are commenced through the assertion of a cause of action against some party.

21.  Further, Mr. Chua’s 1st ground (Mr. Pao says) is wholly technical and lacking in substantive merit.

22.  I think that Mr. Pao is right.  I would make 3 comments.

23.  First, here (as pointed out in my February 2005 Judgment at §40) the Court is concerned with:

“the situation where a person X takes (or has taken) such steps in relation to an ongoing action that render it appropriate for the Court to consider a claim by an existing party for relief against X within the current action.”

24.  The relief sought against AXA is ancillary or incidental to the Housing Authority’s pleaded causes of action against B+B.  The claim is brought against AXA only because, at some point in the course of the ongoing proceedings against B+B, it undertook and funded B+B’s defence.  Such circumstance falls outside the contemplation of Order 6, rule 2, which concerns the beginning of civil proceedings against some party by writ and statement of claim.

25.  Second, it might be thought that Mr. Chua’s submission is substantially a complaint that, from a perusal of the Concurrent Writ, AXA cannot discern the basis of the case against it.  But that is not Mr. Chua’s grievance.

26.  Mr. Chua frankly accepts that AXA knows the nature of the purported claim for costs against it.  Nor does Mr. Chua contend that AXA is prejudiced by the alleged failure to particularise a case in compliance with Order 6, rule 2.

27.  Mr. Chua can hardly adopt any other position. 

28.  When first served on AXA in Germany, the original Writ was accompanied by a cost summons which set out the nature of the relief sought by the Housing Authority against AXA.  The Original Service (not being in German) may not have complied with the Hague Convention.  But such service was valid under Hong Kong procedural law and cannot be ignored.  The costs summons served thereby would have given (and did give) AXA a clear idea of the claim being made by the Housing Authority.

29.  Since the Original Service of the cost summons and Writ, the Housing Authority has filed a “Skeleton Argument in Relation to AXA’s Liability for the Costs of Action” on 5 November 2005.  This document was prepared pursuant to directions given by me on 12 October 2005.  If there was doubt about the Housing Authority’s case, there can no longer have been any after service of the “Skeleton Argument”.

30.  On whatever footing, AXA must now be fully apprised of the nature of the Housing Authority’s case on costs.  There is no embarrassment arising from a lack of particularisation by the Housing Authority.

31.  Third, Mr. Pao argues that there is issue estoppel or res judicata.  Mr. Pao submits that the proper time for Mr. Chua to have made his Order 6, rule 2 point was during the application to set aside the Original Service.  Had the point been raised then, it could have been dealt with in my February 2005 judgment along with AXA’s other arguments against the Original Service. 

32.  Referring to Yat Tung v. Dao Heng Bank [1975] AC 581 (PC), Mr. Pao says that it is now too late to raise the Order 6, rule 2 point.  It is an abuse of procedure to raise matters which have (or could have) been determined in earlier proceedings.  A Court will not allow a party to put forward arguments which might have been advanced in prior litigation between the same parties.

33.  The Order 6, rule 2 argument first surfaced on 20 December 2005.  This was during an application before the Court of Appeal for leave to appeal against the Court of Appeal’s dismissal of AXA’s challenge to my February 2005 Judgment.

34.  At the leave hearing, Tang JA dealt with the Order 6, rule 2 argument as follows (at Reasons for Decision §6):

“As for the matters raised in paras. 2(a) and (b) of the Notice of Motion, it is now complained that even if it was not necessary to make a substantive claim against the 4th defendant, insofar as the plaintiff is making a claim for costs against the 4th defendant, the fact that costs is so claimed and the basis for such claim should have been stated in the amended writ as required by O. 6, r. 2 RHC and O. 18, r. 7, r. 12 and r. 15, RHC.  There may be merit in this point.  However, this is a new point.  It had not been raised before the judge.  Certainly the judge did not understand that such a point had been raised and did not deal with it in his judgment.  This was not raised in the Notice of Appeal.  Nor did it figure in the written submissions to us, which ran to 19 pages.  Mr. Chua said that it was mentioned by him orally in his submission.  We do not recall that at all.  We believe that he must have mentioned the point in such a way that it did not catch our attention.  We would not have been willingly to entertain the point without a suitable amendment to the Notice of Appeal, which in turn would have required leave.  As appeared from the written submission of Mr. Jin [Pao], who appeared for the plaintiff, he had understood para. 2 as raising the no cause of action submission in yet another way.  We do not believe it right to give leave to raise a new point on appeal to the Court of Final Appeal.  Nor is this a point of great general public importance.  This is not a point which goes to the substantive merit of the plaintiff’s claim against the 4th defendant.  The most we would say is that if this is a good point, by failing to make it at the appropriate time the 4th defendant has lost the opportunity of scoring a technical victory.  Had the point been taken at the outset, and found to be valid, the plaintiff could have asked for and obtained leave to serve a further amended writ out of the jurisdiction months ago.  Thus this is at best a technical point of pleading which if taken at the right time might have resulted on a temporary technical set back to the plaintiff.  Nor should the failure to take this point result in any lasting detriment to the 4th defendant, since if required, the court can order pleadings on the issue of costs so that the matter could be properly adjudicated upon.”

35.  For the reasons explained above, I do not believe that there is merit in the Order 6, rule 2 point.  Nor do I think that reference to Order 18, rules 7, 12 and 15 adds anything to Mr. Chua’s present submission.  If anything, Order 18, rule 15(1) (which states that “costs need not be specifically claimed”) militates against AXA’s argument.

36.  Even if there were merit in the Order 6 rule 2 point, I agree with the Court of Appeal that at best it could only amount to a “temporary technical set back”.  It would be open to cure the alleged defect by (say) directions for the Housing Authority to particularise its case.  In fact, the cost summons in the Original Service and the “Skeleton Argument” on costs have already performed the function of informing AXA of the Housing Authority’s claim.

37.  Thus, strictly, there is no need to consider whether Mr. Pao is right on issue estoppel.  Nonetheless, since this matter is likely to go further, it may be useful briefly to state my views on the question.

38.  In my judgment, Mr. Pao is correct that there is an issue estoppel or res judicata.  But I do not believe that Mr. Chua’s Order 6, rule 2 argument is estopped because it could have been (but was not raised) previously.  I think that there is res judicata on the straightforward basis that the substance of Mr. Chua’s apparently “new” point has previously been decided against AXA.

39.  In my view, the Order 6 rule 2 argument is no more than a variation of the allegation that the Original Service was bad because no cause of action was thereby asserted against AXA.  This “no cause of action asserted” point was canvassed and rejected by me at first instance in February 2005 and later by the Court of Appeal in October 2005.  The Order 6, rule 2 variation of the argument may not have been previously articulated until December 2005.  But in substance it is the same thing as the “no cause of action asserted” argument.

40.  In my February 2005 Judgment (at §§20-26) I held that, so long as there was a good cause of action against B+B and a “real issue” which ought reasonably to be tried as between AXA and the other parties to the action, the lack of a pleaded cause of action “cannot be an obstacle to the [Housing] Authority obtaining leave”.  The Court of Appeal upheld this view in its October 2005 Judgment (at §18).

41.  It follows that the absence of a cause of action or remedy against AXA in the Statement of Claim which initiated this action cannot be a fatal objection to either the Original Service or the service of the 1st and 2nd Concurrent Writs. 

42.  AXA is being served outside the jurisdiction on the simple basis that there is a “real issue” (within the terms of Order 11, rule 4(1)(d)) which ought to be determined between it and other parties to the action.  Service outside of the jurisdiction is being effected regardless of whether there is a cause of action or other specific remedy claimed against AXA in the original Writ or Concurrent Writ.  On its terms, Order 6, rule 2 is not relevant to (and does not affect) the leave to serve out granted under Order 11, rule 4(1)(d).  My previous Judgment and its approval by the Court of Appeal have the consequence that Mr. Chua’s Order 6 rule 2 argument is untenable.

43.  Of course, to the extent that it seeks any sort of relief against AXA, the Housing Authority needs to inform AXA of its case at some stage.  But the Housing Authority has done precisely this with the result that AXA is perfectly aware of that case.

44.  In summary, whether solely as a matter of the technical construction of Order 6, rule 2 or more generally in substance, there is no merit in AXA’s 1st Ground.

A.2  Ground 2: No amendment to original Writ possible

45.  Order 6, rule 8(1) provides that a writ is valid for service for a period of 12 months from date of issue.  The rule further stipulates that a concurrent writ:

“is valid in the first instance for the period of validity of the original writ which is unexpired at the date of issue of the concurrent writ.”

46.  Hong Kong Civil Procedure 2006 Note 6/8/2 (p. 67) states:

“The service of the writ on one of two or more defendants within the appropriate period does not make it valid for service on any of the other defendants outside the appropriate period, and therefore even though the writ may have been duly served on one defendant, renewal of the writ must be obtained so as to make it available for service as against each defendant who has not been served within the appropriate period...”

47.  The Re-Amended Writ expired on 17 December 2005 (that is, 12 months after issue on 17 December 2004).

48.  Mr. Chua argues that, whether or not service of the Concurrent Writ in April 2005 was valid, the renewed service in February 2006 must have been invalid.  According to Mr. Chua, this is because the Concurrent Writ expired on 26 January 2006 (that is, 12 months after date of issue).

49.  Mr. Pao submits that, since the original Writ was validly served on AXA in accordance with Hong Kong law, the 12 months period for service of a writ “does not operate to limit the time for re-service [of the Concurrent Writ] under the Hague Convention”. 

50.  I note that Mr. Pao is prepared to be less generous than Mr. Chua, as he considers that strictly the Concurrent Writ would have expired on 17 December 2005, at the same time as the Re-Amended Writ.

51.  In my view, Mr. Chua is right on limitation.  Technically, the 2nd service of the Concurrent Writ in February 2006 was outside the period of the document’s validity (however calculated).  Therefore, the real issue is whether the Concurrent Writ’s validity should retrospectively be extended to cover service of the Concurrent Writ on 1 February 2006.

52.  Mr. Chua submits that there is no good reason for granting an extension.  In particular, Mr. Chua contends that:

(1)     The Housing Authority failed to serve the Concurrent Writ promptly.

(2)     The irregularity of the Concurrent Writ has not been waived by AXA.

(3)     The defect in service is a fundamental one.

53.  I do not find Mr. Chua’s reasons persuasive.

54.  On the alleged failure by the Authority to serve the Concurrent Writ promptly, the service of 1 February 2006 is merely the last of several attempts at serving the Concurrent Writ.

55.  The Concurrent Writ was initially served within its period of validity.  In April 2005 the Central Authority certified that the Concurrent Writ had been validly served under the Hague Convention. 

56.  But the Housing Authority decided to renew service to deal with AXA’s point that not all parts of the Concurrent Writ had been translated into German.  I think that it would be wrong to penalise the Housing Authority for seeking to correct what was plainly an inadvertent omission, namely, the failure to translate some of the printed pro forma or standard portions of the Concurrent Writ into German.

57.  Mr. Chua argues that, if there were delays to service of the Concurrent Writ arising out of an apparent contradiction in the time (whether 14 or 28 days) for acknowledging service, that ambiguity had been pointed out by AXA to the Housing Authority in June 2005.  Mr. Chua suggests that the Housing Authority has only itself to blame if it did nothing in June 2005 to correct the error.

58.  I do not regard this objection as compelling.

59.  The contradiction in the time for acknowledgment was clarified and the Concurrent Writ finally re-submitted to the Central Authority by 3 January 2006.  That was well within the validity of the Concurrent Writ on Mr. Chua’s own reckoning.  It was only late by a little over 2 weeks on Mr. Pao’s calcuation.  From then on, the precise moment when the Central Authority would effect service on AXA was outside the Housing Authority’s control.  It would be up to the timetable and resources of the Central Authority.

60.  That the Central Authority eventually served the Concurrent Writ on 1 February 2006, only a few days or weeks outside the validity of the Concurrent Writ, is a purely fortuitous happening.  Such service should not be invalidated or set aside on the basis of the mere chance event.

61.  It is true that AXA refuses to waive the irregularity.  But AXA suffers no prejudice from a retrospective validation.  On the contrary, the attempt to translate everything in German was done to accommodate AXA.  In those circumstances, I cannot regard AXA’s non-waiver as a compelling factor.

62.  It will be apparent from the foregoing that I do not regard the defect as fundamental.  Instead, in my view, the defect is merely formal.  It arises out of an attempt by the Housing Authority to meet AXA’s pedantic complaint on non-translation.

63.  Mr. Chua argues that the operative limitation period for bringing the Housing Authority’s claim for costs has expired.  He submits that there is thus reason why the expiry of the Concurrent Writ is a fundamental defect.

64.  But Mr. Chua does not strongly advance this point.  He acknowledges that, to the extent that there is no “cause of action” against AXA, no question of limitation can arise.

65.  However, Mr. Chua says that, to the extent that the claim for costs is “dependent” on the claim against B+B, there is a limitation issue.  The claim against B+B having expired by September 2005 at the latest (that is, 6 years from the time when (according to Mr. Chua) B+B’s wrongful piling should have been discovered), the Housing Authority’s ancillary claim against AXA must (Mr. Chua reasons) also have expired.

66.  I do not accept Mr. Chua’s submission. 

67.  The claim against AXA is ancillary in that the Housing Authority seeks to make AXA liable for the costs of proceeding against B+B.  Any right against AXA for an indemnity or contribution against costs fully crystallises only after the making of a costs award by the Court against B+B in the Housing Authority’s favour. 

68.  Here the Housing Authority only obtained a costs order nisi in its favour on 2 September 2005.  If Mr. Chua is right, the claim against AXA for costs would have expired at around the same time as when the costs order nisi was made and the Housing Authority’s claim for costs became fully crystallised.  That cannot be right.

69.  I suggested to Mr. Chua that a more apposite time limit for the Housing Authority’s claim against AXA was to be found in Limitation Ordinance (Cap. 347) s. 6 (governing claims for contribution).  This is because the Housing Authority is in reality seeking contribution or indemnity in respect of damage (namely, costs) for which B+B and AXA are both responsible.  If I am right in this, the time limit would be 2 years from 2 September 2005, the date of the judgment against B+B.

70.  It is unnecessary for me to decide this point finally.  For the purposes of this Judgment, it is enough that I am not persuaded that Mr. Chua’s proposed September 2005 limitation is correct in law.

71.  In all the circumstances, it is (I believe) appropriate to extend the validity of the Concurrent Writ to cover the service on 1 February 2006.

A.3  Ground 3: No valid service of the Concurrent Writ.

72.  Order 11, rule 5(5) states that:

“An official certificate stating that a writ as regards which rule 5A or rule 6 has been complied with, has been served on a person personally, or in accordance with the law or the country or the place in which service was effected, on a specified date, , being a certificate:-

    (a)     by a British consular authority in that country or place, or

    (b)     by the government or judicial authorities of that country or place, or

    (c)     by any other authority designated in respect of that country or place under the Hague Convention,

shall be evidence of the facts so stated.”

73.  Order 11, rule 6(2A) provides for a writ to be served under the Hague Convention “through the authority designated under the Convention in respect of that country”.

74.  Mr. Chua submits that neither the April 2005 nor February 2006 service of the Concurrent Writ was valid under German law or the Hague Convention.

75.  Mr. Pao counters that I cannot go behind the certificates given by the Central Authority.  By Order 11, rule 5(5)(b), those certificates constitute evidence that as far as the German Court is concerned service has been effected pursuant to the Hague Convention.

76.  Here I agree with Mr. Pao.  Given the certificates, I am entitled to assume that proper service has been made under the Hague Convention.  There is no compelling evidence from AXA which prompts a different conclusion.

77.  I appreciate that the service of 18 April 2005 may have been strictly deficient because some parts of the Concurrent Writ were not translated into German.  But, in light of the certificate of proper service given by the Central Authority for the 18 April 2005 service, I must assume that the Central Authority did not regard the deficiency as material.

78.  Mr. Pao asks for a Declaration that the service made on 18 April 2005 and 1 February 2005 complies with Order 11, rules 6(2A), (4) and (5).  I am prepared to make the Declaration sought.

A.4  Ground 4: Order 2, rule 1 inapplicable to cure defects

79.  There is no question of using Order 2, rule 1 to cure any defect.  I am extending the validity of the Concurrent by recourse to the Court’s power under Order 6, rule 8.  There is no other deficiency needing rectification.

B.  Housing Authority’s case for a Declaration

80.  I have already dealt with the Housing Authority’s application for a Declaration in the course of discussing AXA’s contentions.  I have also concluded that the validity of the Concurrent Writ should be extended to cover the period up to and including 1 February 2006.

IV. Conclusion

81.  The Housing Authority succeeds in its application.  AXA’s application is dismissed.

82.  The validity of the Concurrent Writ is extended to 1 February 2006.  There will also be a Declaration that there has been valid service of the Concurrent Writ under Order 11, rules 6(2A), (4) and (5).

83.  There will be an Order nisi that AXA pay the Housing Authority’s costs of the applications before me, such costs to be taxed if not agreed in any event.