FONG MENG SUNG, JOHN v. LUK MAN LOK ROCKY AND OTHERS

HCMP 1959/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO1959 OF 2009

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DECISION
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1.  Before the Court is the 2^nd and 3^rd Defendants’ appeal against Master Levy’s decision dated 29 May 2014[i] which

(1) ruled that the Notice of Discontinuance served by the Plaintiff on the 2^nd and 3^rd Defendants (“Discontinuance Notice”) was effective from its service on 29 July 2013; and

(2) expunged the Defence and Counterclaim filed and served by the 2^nd and 3^rd Defendants on 2 August 2013.

Relevant procedural history

2.  The procedural background from which this appeal arose is somewhat tortuous as follows:

DATE	STEP TAKEN
2.10.2009	Issue of Originating Summons by the Plaintiff under Order 88, rule 1
5.10.2009	Service of the Originating Summons on all 3 Defendants by registered post to the abovementioned suit premises
19.10.2009	Filing of Acknowledgment of Service with notice of intention to defend by the 1st Defendant
2.11.2009	Last day for the filing of affidavit evidence in support of the Originating Summons by the Plaintiff under Order 28, rule 1A(1) with which the Plaintiff did not comply
11.1.2011	Issue of Summons and filing of supporting affirmation by the 1st Defendant to strike out the Originating Summons on grounds (including lack of reasonable cause of action against all Defendants)
DATE	STEP TAKEN
12.1.2011	Service of the striking out Summons and supporting Affirmation by the 1st Defendant on the 2nd and 3rd Defendants by ordinary post to the suit premises
25.1.2011	Filing of Affidavit of the Plaintiff in opposition to the 1st Defendant’s striking out application
6.5.2011	Consent Summons by the Plaintiff and the 1st Defendant for the proceedings to be continued as if the same had been begun by writ with directions for, inter alia, the filing and service of pleadings
11.5.2011	Service of the Consent Summons by the 1st Defendant on the 2nd and 3rd Defendants by ordinary post to the suit premises
18.5.2011	Hearing at which, by consent between the Plaintiff and the 1st Defendant (with the 2nd and 3rd Defendants being absent), Master A Ho ordered the proceedings to be continued as if the same had been begun by writ and gave directions for the filing and service of pleadings (“Conversion Order”)
17.6.2011 (Friday)	Filing and service of Statement of Claim by the Plaintiff (by ordinary post to the suit premises insofar as the 2nd and 3rd Defendants were concerned)
20.6.2011 (Monday)	Day on which service of the Statement of Claim would have been deemed to have been effected on the 2nd and 3rd Defendants pursuant to paragraph 2(b) of Practice Direction 19.2[ii] if such service had been regular and valid
15.7.2011	Filing of Defence and Counterclaim by the 1st Defendant
18.7.2011	Last day for the filing and service of Defence by the 2nd and 3rd Defendants under Conversion Order[iii] had the Statement of Claim been effectively served on them
23.8.2011	Entry of judgment in default of defence against the 2nd and 3rd Defendants (“Default Judgment”)
5.11.2012	Filing of Notice to Act by solicitors for the 2nd and 3rd Defendants
7.3.2013	Issue of Summons by the 2nd and 3rd Defendants to set aside the Default Judgment and filing of supporting affirmation by each of the 2nd and 3rd Defendants which deposed to (1) the non-receipt of Court documents purportedly served upon them at the suit premises which they had vacated since 1995 and (2) the existence of substantive grounds of defence to the Plaintiff’s claims against them
17.4.2013	Filing of the Plaintiff’s 2nd Affidavit, in opposition to the 2nd and 3rd Defendants’ application to set aside the Default Judgment
DATE	STEP TAKEN
10.6.2013	Filing of the 2nd Affirmation of each of the 2nd and 3rd Defendants in reply to the Plaintiff’s 2nd Affidavit
20.6.2013	Amendment of the 2nd and 3rd Defendants’ Summons to set aside the Default Judgment which, inter alia, spelt out grounds why the Default Judgment was said to be irregular:
	(1) that they had not been served with and had not received the Plaintiff’s Originating Summons;
	(2) that they had not been served with and had no knowledge of the Conversion Order; and
	(3) that the Default Judgment was entered in breach of Order 88, rule 6[iv]
10.7.2013	Order by Master M Wong:
	(1) setting aside the Default Judgment on grounds that (a) it was irregular due to invalid service as the 2nd and 3rd Defendants had vacated the suit premises since 1995 and had not received the Court documents sent to that address and (b) that the 2nd and 3rd Defendants had shown a meritorious defence; and
	(2) giving the 2nd and 3rd Defendants leave to file and serve their Defence and Counterclaim (if any) on or before 7.8.2013
29.7.2013	Service of the Discontinuance Notice by the Plaintiff on the 2nd and 3rd Defendants
2.8.2013	Filing and service of Defence and Counterclaim by 2nd and 3rd Defendants

3.  Upon the 2^nd and 3^rd Defendants’ challenge to the Plaintiff’s right to discontinue the proceedings against them without leave of the Court (which was not resolved by correspondence), by a Summons dated 26 August 2013 (“Plaintiff’s Summons”), the Plaintiff sought:

(1) primarily, a ruling that the Discontinuance Notice was validly served and took effect from its service on 29 July 2013 with the consequence that the 2^nd and 3^rd Defendants’ Defence and Counterclaim, having been lodged after discontinuance, should be expunged or struck out; or

(2) alternatively, leave to discontinue these proceedings against the 2^nd and 3^rd Defendants and an extension of time to file and serve his Defence to the 2^nd and 3^rd Defendants’ Counterclaim.

4.  In case there be any misunderstanding, although they opposed the Plaintiff’s Summons and (failing such opposition) lodged this appeal, the 2^nd and 3^rd Defendants do not in fact object to the Plaintiff discontinuing his claims against them.  They are however adamant that the Plaintiff should make an application for leave to do so (which they do not oppose).  The 2^nd and 3^rd Defendants take such position not because they wish the Court to impose terms in exercising the discretion to grant leave to discontinue, e.g. that no other action shall be brought by the Plaintiff against the 2^nd and 3^rd Defendants in respect of the same subject-matter.[v]  Rather, they insist on leave being sought by the Plaintiff because:

(1) A discontinuance by leave of the Court would take effect from the date on which such leave is granted since the Court has no power under the rules or its inherent jurisdiction to back-date an order of discontinuance under Order 21, rule 3 (Covell Matthews & Partners v French Woods Ltd [1978] 1 WLR 1477 at 1485G-1486F per Bridge LJ and 1487E-F per Buckley LJ).

(2) A counterclaim already filed would not be affected by discontinuance of the action by the plaintiff (Order 15, rule 2(3)), whereas a counterclaim cannot be set up after discontinuance: The Salybia [1910] P 25.

In short, the 2^nd and 3^rd Defendants desire to have their counterclaim tried in these proceedings.

5.  With respect, it appears to me that the time and costs incurred by the parties in pursing/opposing the Plaintiff’s Summons and this appeal are hugely disproportionate to whatever advantage/ disadvantage that they perceive they can gain/avoid by contending for the validity/invalidity of the Discontinuance Notice.

6.  Indeed, I fail to see any such real or meaningful advantage/ disadvantage from either party’s point of view, at least not one worth preserving/avoiding at such costs.

(1) Insofar as the 2^nd and 3^rd Defendants are concerned, they could have pursued their counterclaim against the Plaintiff by fresh action and then have such action consolidated with the outstanding proceedings herein between the Plaintiff and the 1^st Defendant, at relatively little costs.[vi]

(2) As for the Plaintiff:

(a) First, an application for leave to discontinue (especially if it is unopposed) would have been much less costly and time-consuming than one for upholding a discontinuance notice the validity of which is hotly contested and not at all clear. 

(b) Second, a ruling of validity of the Discontinuance Notice would not improve the Plaintiff’s substantive position.  The 2^nd and 3^rd Defendants would pursue their cross claims against the Plaintiff one way or another.

7.  On this note, I turn to the validity of the Discontinuance Notice.

Governing rules

8.  A complete code on the discontinuance of the whole, or withdrawal of part, of an action, defence and counterclaim in the Court of First Instance is provided for in Order 21, rules 2 to 5 of the Rules of the High Court.  Insofar as it is material to the question with which the Court is presently concerned, rules 2 and 3 stipulate as follows:

“2. Discontinuance of action, etc., without leave

(1) … the plaintiff in an action begun by writ may, without leave of the Court, discontinue the action, or withdraw any particular claim made by him therein, as against any or all of the defendants at any time not later than 14 days after service of the defence on him or, if there are two or more defendants, of the defence last served, by serving a notice to that effect on the defendant concerned.

(2) … a defendant to an action begun by writ may, without leave of the Court -

(a) withdraw his defence or any part of it at any time,

(b) discontinue a counterclaim, or withdraw any particular claim made by him therein, as against any or all of the parties against whom it is made, at any time not later than 14 days after service on him of a defence to counterclaim or, if the counterclaim is made against two or more parties, of the defence to counterclaim last served,

by serving a notice to that effect on the plaintiff or other party concerned.

…

(3) Where there are two or more defendants to an action begun by writ not all of whom serve a defence on the plaintiff and the period fixed by or under these rules for service by any of those defendants of his defence expires after the latest date on which any other defendant serves his defence, paragraph (1) shall have effect as if the reference therein to the service of the defence last served were a reference to the expiration of that period.

This paragraph shall apply in relation to a counterclaim as it applies in relation to an action begun by writ with the substitution for references to a defence, to the plaintiff and to paragraph (1), of references to a defence to counterclaim, to the defendant and to paragraph (2) respectively.

(3A) The plaintiff in an action begun by originating summons may, without leave of the Court, discontinue the action or withdraw any particular question or claim in the originating summons, as against any or all of the defendants at any time not later than 14 days after service on him of the defendant’s affidavit evidence filed pursuant to Order 28, rule 1A(4) or, if there are two or more defendants, of such evidence last served, by serving a notice to that effect on the defendant concerned.

(3B) When there are two or more defendants to an action begun by originating summons not all of whom serve affidavit evidence on the plaintiff, and the period fixed by or under these rules for service by any of those defendants of his affidavit evidence, paragraph (3A) shall have effect as if the reference therein to the service of affidavit evidence last served were a reference to the expiration of that period.

(4) If all parties to an action consent, the action may be withdrawn without leave of the Court at any time before trial by producing to the Registrar a written consent to the action being withdrawn signed by all parties.”

3. Discontinuance of action, etc., with leave

(1) Except as provided by rule 2, a party may not discontinue an action (whether begun by writ or otherwise) or counterclaim, or withdraw any particular claim made by him therein, without the leave of the Court, and the Court hearing an application for the grant of such leave may order the action or counterclaim to be discontinued, or any particular claim made therein to be struck out, as against all or any of the parties against whom it is brought or made on such terms as to costs, the bringing of a subsequent action or otherwise as it thinks just.

…

4. Effect of discontinuance

Subject to any terms imposed by the Court in granting leave under rule 3, the fact that a party has discontinued an action or counterclaim or withdrawn a particular claim made by him therein shall not be a defence to a subsequent action for the same, substantially the same, cause of action.” (emphasis added)

9.  The scheme under Order 21, rules 2 and 3 seems plain enough.  These rules allow the discontinuance of the whole, or withdrawal of part, of an action, defence and counterclaim:

(1) by consent at any time before trial under rule 2(4);

(2) without leave by a notice served within, and no later than, the time prescribed under rule 2(1), (3), (3A) and (3B); or

(3) with leave of the Court under rule 3.

10.  Leaving aside discontinuance by consent which can be effected at any time prior to trial, the opening words of Order 21, rule 3 make it clear that a plaintiff can discontinue without leave by notice only if the conditions in rule 2 can be and have been fulfilled. One such condition is that the time, as specified in rule 2(1), (3), (3A) and (3B) before which such discontinuance/withdrawal can be effected without leave, has not lapsed.  The time limit fixed by these sub-rules is said to be rigid and must be strictly adhered to.  See Hong Kong Civil Procedure 2015, Volume 1, §21/5/3. 

11.  In relation to an action begun by writ, the plaintiff may without leave discontinue against any or all of the defendants at any time not later than:

(1) where there is only one defendant: 14 days after the service of the defence (rule 2(1));

(2) where there are two or more defendants:

(a) if all of them serve a defence: 14 days after the service of the defence last served (rule 2(1));

(b) if any of them does not serve a defence: 14 days after the service of the defence last served or the expiry of the period fixed by or under the Rules of the High Court for the service of such defendant’s defence, whichever is the later (rule 2(3)).

12.  In relation to an action begun by originating summons, the plaintiff may without leave discontinue against any or all of the defendants at any time not later than:

(1) where there is only one defendant: 14 days after the service of the defendant’s affidavit evidence filed pursuant to Order 28, rule 1A(4) (rule 2(3A));

(2) where there are two or more defendants:

(a) if all of them serve affidavit evidence pursuant to Order 28, rule 1A(4): 14 days after the service of such evidence last served (rule 2(3A));

(b) if any of them does not serve affidavit evidence pursuant to Order 28, rule 1A(4): 14 days after the service of the affidavit evidence last served or the expiry of the period fixed by or under the Rules of the High Court for the service of such defendant’s affidavit evidence, whichever is the later (rule 2(3B)).

13.  It is to be noted that, where there are 2 or more defendants, the time for service of a notice of discontinuance on any one of the defendants is not fixed by reference to the date when the defence or the affidavit evidence of that defendant has been served, but by reference to:

(1) the date of the defence or the affidavit evidence last served if all defendants served a defence or affidavit evidence; or

(2) the date by which any other defendant ought to have served his defence or affidavit evidence.

See again Hong Kong Civil Procedure 2015, Volume 1, §21/5/3.

The rival contentions

14.  Although these proceedings were commenced by originating summons, both parties treat those parts of rule 2(1) and (3) concerning a writ action with multiple defendants to be the operative provisions.  They so proceed apparently by reason of the Conversion Order, upon the making of which, by virtue of Order 28, rule 8(4), any reference in the rules to an action begun by writ shall be construed as including a reference to proceedings begun by originating summons that are ordered to continue as if they had been begun by writ.  Mr Frederick H F Chan, Counsel for the 2^nd and 3^rd Defendants, also refers to Kempster JA’s statement in The Board of Trustees of Chung Chi College v Chanway Investment Co Ltd [1993] 1 HKLR 203 at 206(32)-(40) that the wording of Order 28, rule 8 suggests that an order made thereunder relates back to the date when proceedings were begun by originating summons.[vii]

15.  The parties however disagree as to how rule 2(1) and (3) should be read and applied.  Stated broadly, the difference is as to whether the time allowed under these sub-rules for a plaintiff to discontinue without leave of the Court had by 29 July 2013 already expired when the Plaintiff served the Discontinuance Notice on the 2^nd and 3^rd Defendants.

16.  According to Mr Chan, where there are two or more defendants:

(1) One should go to rule 2(1) if all the defendants serve a defence within time.  In such a case, the plaintiff need not obtain leave to discontinue if he acts within 14 days from being served with the defence last served.

(2) Rule 2(1) does not apply if not all the defendants serve a defence within time.  In that situation, one turns to rule 2(3) which gives the plaintiff time to discontinue without leave right up to 14 days from the expiry of “the period fixed by or under” the Rules of the High Court for service of a defence by the defendant who has not done so.

17.  Since the 2^nd and 3^rd Defendants did not serve a defence within the time directed by the Conversion Order (which expired on 18 July 2011[viii]), rule 2(3) should apply with the consequence that the Plaintiff had, by 29 July 2013 (i.e. the date of service of the Discontinuance Notice), long lost the right to discontinue without leave.  In so arguing, Mr Chan essentially treats the period provided for in the Conversion Order for the service of defence by the Defendants as being “fixed by or under these rules” as referred to in rule 2(3).  He does so on the basis that such period was laid down by the Master pursuant to the power given to him by the rules, in particular, Order 28, rule 8.

18.  Further, Mr Chan, citing Re Fong Ching Lin, HCB 8046/2005, unreported, 26 October 2006, §§44-55 per Chu J which was affirmed on appeal in Fong Ching Lin v Nan Fung Credits Ltd [2008] 4 HKLRD 153, §7 per Cheung JA, argues that once a plaintiff who sues multiple defendants has obtained judgment against a defendant, he can no longer discontinue the action against the remaining defendant(s) by notice without leave of the Court.

19.  On the other hand, Mr Joseph Vaughan, Counsel for the Plaintiff, contends that rule 2(3) is applicable only where the period for service of the defence is “fixed by or under the rules” which must mean the Rules of the High Court. He disagrees with Mr Chan that the period within which the 2^nd and 3^rd Defendants must serve their defence under the Conversion Order was “fixed by or under the rules”.  He identifies rule 2(1) to be the material provision and suggests that it is applicable so long as all the defendants (eventually) served a defence, as in this case, so that the Plaintiff had up to 14 days after being served with the 2^nd and 3^rd Defendants’ Defence and Counterclaim to discontinue his claims against them by notice without leave.  According to Mr Vaughan, it did not matter that the time fixed by the Conversion Order for service of the defence had long expired or that judgment had in the interim been entered against the 2^nd and 3^rd Defendants in default of defence.  In so contending, he relies on the subsequent setting aside of the Default Judgment and giving of time to the 2^nd and 3^rd Defendants to file their defence.

The Master’s decision

20.  Master Levy rejected Mr Chan’s submissions and upheld the Discontinuance Notice and expunged the 2^nd and 3^rd Defendants’ Defence and Counterclaim for the following reasons:

(1) When the Court fixed a fresh timetable for the 2^nd and 3^rd Defendants to serve their defence after setting aside the Default Judgment, it procedurally re-set the time limit as specified in Order 21, rule 2(1) and (3) again.  See §11.

(2) The Default Judgment had already been set aside when the Plaintiff served the Discontinuance Notice.  Fong Ching Lin could be distinguished as the plaintiff there filed a notice of discontinuance while there was a subsisting judgment.  See §9.

The issue

21.  The question arising in this appeal is whether either rule 2(1) or rule 2(3) of Order 21 applies to enable the Plaintiff to discontinue without leave in the peculiar circumstances of this case where:

(1) the proceedings were commenced by originating summons as a mortgage action under Order 88, rule 1 against multiple defendants;

(2) the originating summons was properly served on just one of the 3 defendants so that only such defendant received notice of the proceedings and acknowledged service;

(3) the plaintiff did not file and serve any affidavit evidence as required by Order 28, rules 1A(1) and (3) so that none of the defendants (not even the one who had been properly served and had acknowledged service) filed any affidavit evidence pursuant to Order 28, rule 1A(4);

(4) the proceedings were, following an application by the defendant who had been served to strike out the originating summons for inter alia want of a reasonable cause of action against any of the defendants, converted into a writ action with a timetable for service of pleadings laid down by directions of the Court;

(5) such conversion order was however not properly served upon the 2 defendants who had hitherto not been served with the proceedings so that they had no notice of the period fixed by the Court for service of their defence;

(6) service of the statement of claim (with reference to which the time for filing and service of defence by the defendants had been fixed) had likewise not been properly effected on those 2 defendants;

(7) only the defendant who had been properly served with the proceedings served his defence within the time fixed by the Court;

(8) judgment was then irregularly obtained against the 2 defendants who had not served any defence for want of notice;

(9) the default judgment was subsequently set aside with the time for the affected defendants to file and serve their defence re-fixed by directions of the Court; and

(10) the plaintiff served a notice of discontinuance on those defendants before they served their defence pursuant to such directions.

Discussion

22.  As I see it, the key to answering this question lies in the effect of the Conversion Order which, as explained in paragraph 14 above, is treated by the parties as bringing these proceedings within Order 21, rule 2(1) (as contended by Mr Vaughan) or rule 2(3) (as advocated by Mr Chan).

23.  I am not with either party.

24.  The requirement in Order 28, rule 8(4) to construe any reference in the rules to an action begun by writ as including a reference to a cause or matter proceedings in which are ordered under rule 8 to continue as if it had been begun by writ is not absolute and does not apply if the context otherwise requires.

25.  In my opinion, the context of Order 21, rule 2(1) and (3) requires the references therein to an action begun by writ to be construed as referring just to a cause or matter actually begun by writ and excluding proceedings commenced by an originating summons but ordered to continue as if begun by writ. 

(1) First, Order 21, rule 2 separately provides for discontinuance without leave of originating summons proceedings under rule 2(3A) and (3B). 

(2) Second, regardless of whether a cause or matter is initiated by writ or originating summons, the right to discontinue without leave can be exercised only within a very narrow window from commencement of proceedings.  In practice, the period for discontinuance of originating summons proceedings would normally have run and expired before they are ordered to continue as if begun by writ.  The application of rule 2(1) and (3) to proceedings so converted would in effect give the plaintiff a second chance to discontinue without leave.

26.  In this case, the Conversion Order was made by consent between the Plaintiff and the 1^st Defendant following the 1^st Defendant’s application to strike out the Originating Summons on grounds including merits.  This is not quite the usual backdrop for an order converting proceedings begun by originating summons into a writ action.  I believe the objection in principle to the application of Order 21, rule 2(1) and (3) to originating summons proceedings upon their conversion into a writ action can be identified and better explained by an examination of the more common scenario leading to the making of an order under Order 28, rule 8(1).

27.  As noted in Hong Kong Civil Procedures 2015, Volume 1, §28/8/2, the main reason for a cause or matter begun by originating summons to be continued as if begun by writ is the existence of genuine or substantial issues of fact between the parties.  

28.  I think it is right to say that such issues are normally raised by service of the defendant’s affidavit evidence.  In this connection, Order 28, rule 1A(1) and (3) requires the plaintiff in a cause or matter begun by originating summons to file with the Court and serve upon the defendant the affidavit evidence on which he intends to rely before the expiration of 14 days after the defendant, or at least one defendant if there are two or more, has acknowledged service.  Where a defendant who has acknowledged service wishes to adduce affidavit evidence, he is obliged by rule 1A(4) to file with the Court and serve upon the plaintiff (and on any other defendant who is affected thereby) his own affidavit evidence within 28 days after being served with the plaintiff’s affidavit evidence.

29.  Hence, while a direction under Order 28, rule 8(1) can be given by the Court at any stage of the proceedings, in practice, an assessment of the suitability of the originating summons procedure for a cause or matter would normally take place after service by the defendant of his affidavit evidence, at the earliest.

30.  It will be recalled that in relation to proceedings begun by originating summons, the service of the defendant’s affidavit evidence pursuant to Order 28, rule 1A(4) would start the clock ticking under Order 21, rule 2(3A) in that the plaintiff has only 14 days thereafter to discontinue the proceedings if he wishes to do so without leave.  

31.  Given the brevity of the period permitted by Order 21, rule 2(3A) for discontinuance of originating summons proceedings without leave, I believe it is right to say that such period would normally have run its course and expired by the time of the making of a conversion order under Order 28, rule 8.

32.  That being the case, the application of Order 21, rule 2(1) and (3) (governing the discontinuance of writ action without leave) to proceedings continuing as if begun by writ by virtue of an order under Order 28, rule 8 would, in effect, give the plaintiff another opportunity (until the expiry of 14 days after service of the defence, if so ordered) to discontinue without leave. 

33.  I do not think that a second bite of the cherry under Order 21, rule 2 is intended, especially having regard to the legislative intention behind the enactment of the procedural rules for discontinuance in their present terms, which one can ascertain by tracing the legislative history and the pre-existing position at common law that these rules changed.

34.  Briefly, a plaintiff formerly had the power to claim a non-suit at common law (or dismiss his bill in equity) at any time at his own option, for example, after he found that the case was going against him or that he did not have sufficient evidence to support his claim, without prejudice to his right to bring a fresh action on the same subject-matter.

35.  Then, the 1875 Rules of the Supreme Court provided by Order XLI, rule 6 that:

“any judgment of nonsuit, unless the Court or a judge otherwise directs, shall have the same effect as a judgment upon the merits for the defendant; but in the case of mistake, surprise, or accident any judgment of nonsuit may be set aside on such terms as to payment of costs and otherwise as to the Court or a judgment deem just.”

This rule fettered the right of a plaintiff to be nonsuited in a common law action and protected the defendant from being harassed with further litigation on the same subject matter after he had been nonsuited (see Fox v Star Newspaper Company [1898] 1 QB 636 (CA) at 637-638, per A L Smith LJ).

36.  The provision in Order XLI, rule 6 of the 1875 Rules was omitted, and thereby repealed, in the 1883 Rules of the Supreme Court, following the introduction of which the High Court in England and Wales retains no power to enter a non-suit (Fox v Star Newspaper Company, supra, at 637-638, per A L Smith LJ and [1899] AC 19 (PC)).  Instead, Order XXVI, rule 1 of the 1883 Rules, which was “intended to form a complete code applicable to the whole subject of discontinuing an action”,[ix] stipulated that:

“the plaintiff may, at any time before receipt of the defendant’s defence, or after the receipt thereof before taking any other proceeding in the action (save any interlocutory application), by notice in writing, wholly discontinue his action against all or any of the defendants … and thereupon he shall pay such defendant’s costs of the action … Save as in this rule provided, it shall not be competent for the plaintiff to withdraw the record or discontinue the action without leave of the Court or a judge.”

The effect of Order XXVI, rule 1 was that the plaintiff ceased to be competent to discontinue the action without the leave of the Court after the stage in proceedings mentioned therein.

37.  The words “or after the receipt thereof before taking any other proceeding in the action (save any interlocutory application)” in Order XXVI, rule 1 of the 1883 Rules had, however, created much uncertainty which gave rise to a body of case law on whether something that a plaintiff had done after being served with the defence amounted to taking a proceeding in the action. 

38.  Order XXVI was eventually replaced by Order 20, rules 2 to 5 of the Rules of the Supreme Court (Rev) 1962 (as amended by the Rules of the Supreme Court (No 2) 1963), to which our Order 21, rules 2 to 5 can be traced.  Rule 2 was introduced with a view to providing certainty and eliminating controversy by replacing the said rather elastic formula under the old Order 26, rule 1 with a fixed and certain time before which discontinuance of a claim may be made without leave and after which discontinuance requires the leave of the Court.  See again Hong Kong Civil Procedure 2015, Volume 1, §21/5/3.

39.  In summary, the statutory code of discontinuance was restrictive, rather than relaxing, in effect in origin.  It was enacted and revised over the years to fetter the otherwise unqualified option of a plaintiff in a common law action to discontinue the action at any time without prejudice to his right to bring a fresh action on the same subject matter and to leave it to the Court to decide whether a plaintiff can still discontinue after his action has reached a certain stage and, if so, whether he should be allowed to do so only on terms.

40.  Chitty LJ explained the principle underlying the requirement for leave in Fox v Star Newspaper Company, supra, at 639 as follows:

“It is that after proceedings have reached a certain stage the plaintiff, who has brought his adversary into court, shall not be able to escape by a side door and avoid the contest. He is then to be no longer dominus litis, and it is for the judge to say whether the action shall be discontinued or not and upon what terms. … The substance of the provision is that, after a stage of the action has been reached at which the adversaries are meeting face to face, it shall only be in the discretion of the judge whether the plaintiff shall be allowed to withdraw from the action so as to retain the right of bringing another action for the same subject-matter” (emphasis added)

41.  In relation to originating summons proceedings, Order 21, rules 2(3A) and (3B) and 3 draw the line at the service of affidavit evidence by the defendant.  This is the stage at which the adversaries are meeting face to face (to quote Chitty LJ).  By serving his affidavit evidence, the defendant informs the plaintiff of his ground(s) of defence as well as the evidence by which he intends to make good his defence.

42.  It is, to my mind, inconsistent with the legislative intention underlying the requirement of leave to discontinue “after the stage at which the adversaries are meeting face to face” if the plaintiff in proceedings begun by originating summons, not having discontinued the proceedings under Order 21, rule 2(3A) within 14 days after being served with the defendant’s affidavit evidence under Order 28, rule 1A(4), were to be given another option to discontinue without leave through the application of Order 21, rule 2(1) and (3) to proceedings directed to continue as if begun by writ under Order 28, rule 8.

43.  For these reasons, I have come to the view that rule 2(1) and (3) is not intended to, and does not, apply to originating summons proceedings that are ordered to continue as if begun by writ. 

44.  In so concluding, I have not overlooked the fact that the Conversion Order in this case was not made after the service of affidavit evidence by the parties under Order 28, rule 1A(3) and (4).  The nature and effect of an order under Order 28, rule 8 should be consistent irrespective of the detailed circumstances in which it was made, particularly given the legislative aim of the current Order 21, rule 2 to provide certainty and avoid controversy.  Therefore, it should not matter that neither sides served affidavit evidence pursuant to Order 28, rule 1A(3) and (4) and that the Conversion Order was made in the midst of the 1^st Defendant’s application to strike out the Originating Summons. 

45.  Indeed, it is obvious that neither rule 2(1) nor rule 2(3) could have been said to be applicable without the directions for service of pleadings in the Conversion Order.  But for the fact that the Defendants were ordered to serve a defence, it is difficult to see how this case could even begin to fit into rule 2(1) or rule 2(3).  However, the Court has wide discretion under Order 28, rule 8.  Rule 8(1) expressly authorises the Court to order any affidavits to stand as pleadings.[x] In a case where the Court does so order, Order 21, rule 2(1) and (3) cannot possibly apply.  A proposition that results in the application or otherwise of Order 21, rule 2(1) and (3) to originating summons proceedings upon their conversion into a writ action being dependent upon whether the Court also directs the service of defence by the defendant(s) strikes me as being too random and irrational to be correct.  I see no reason why a plaintiff should have the right to discontinue without leave after the making of a conversion order if the Court also directs the service of pleadings, but not when the Court leaves the affidavits to stand as pleadings.

46.  This is sufficient to dispose of this appeal.  However, for the sake of completeness, I should also say that I have reservation as to whether the time limit specified in Order 21, rule 2(1) and (3) could be ‘re-set” by the timetable laid down by the Court for the 2^nd and 3^rd Defendants to serve their defence after setting aside the Default Judgment.  This is particularly so when the Default Judgment was set aside also on merits.  The parties were meeting face to face upon service by the 2^nd and 3^rd Defendants of their affirmations in support of the setting aside application, deposing to ground(s) of defence with a reasonable prospect of success.  It seems to me to be inconsistent with the principle underlying the requirement for leave to continue (paragraph 40 above) if the Plaintiff could, after opposing the 2^nd and 3^rd Defendants’ application to set aside the Default Judgment made on grounds including merits, then discontinue without leave under Order 21, rule 2(1) or (3).  I think the better view is that Order 21, rule 2(1) should be confined to cases where the defence is served within the time laid down by Order 18, rule 2 and that the words “the period fixed by or under these rules” in Order 21, rule 2(3) should be construed to mean the period specified by Order 18, rule 2, and not a period fixed by the Court in consequence of setting aside a default judgment.

47.  For these reasons, I find the Discontinuance Notice invalid but for reasons different from those advanced on behalf of the 2^nd and 3^rd Defendants.

48.  Accordingly:

(1) the 2^nd and 3^rd Defendants’ appeal is allowed;

(2) Master Levy’s Order dated 29 May 2014 is set aside;

(3) paragraph 1 of the Plaintiff’s Summons dated 26 August 2013 is dismissed;

(4) the Plaintiff shall have leave to discontinue these proceedings against the 2^nd and 3^rd Defendants with effect from the date of this Order; and

(5) the Plaintiff shall have 14 days from today to file and serve his Defence to the 2^nd and 3^rd Defendants’ Counterclaim.

49.  I also make an order nisi that the Plaintiff should pay the 2^nd and 3^rd Defendants their costs of and occasioned by this appeal and the Plaintiff’s Summons with Certificate for Counsel, to be taxed if not agreed.  The 2^nd and 3^rd Defendants’ own costs should be taxed in accordance with the Legal Aid Regulations.