Fong Meng Sung, John v. Luk Man Lok Rocky and Others
Read the full judgment text of HCMP 1959/2009 on BabelCite. This High Court CFI judgment was delivered on 7 September 2015.
1. Before the Court is the 2 nd and 3 rd Defendants’ appeal against Master Levy’s decision dated 29 May 2014 [i] which
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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 1.Before the Court is the 2nd and 3rd Defendants’ appeal against Master Levy’s decision dated 29 May 2014[i] which
Relevant procedural history 2.The procedural background from which this appeal arose is somewhat tortuous as follows:
3.Upon the 2nd and 3rd 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:
4.In case there be any misunderstanding, although they opposed the Plaintiff’s Summons and (failing such opposition) lodged this appeal, the 2nd and 3rd 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 2nd and 3rd 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 2nd and 3rd Defendants in respect of the same subject-matter.[v] Rather, they insist on leave being sought by the Plaintiff because:
In short, the 2nd and 3rd 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.
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:
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:
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:
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:
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:
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 2nd and 3rd 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 2nd and 3rd Defendants. 16.According to Mr Chan, where there are two or more defendants:
17.Since the 2nd and 3rd 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 2nd and 3rd 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 2nd and 3rd 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 2nd and 3rd 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 2nd and 3rd 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 2nd and 3rd Defendants’ Defence and Counterclaim for the following reasons:
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:
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.
26.In this case, the Conversion Order was made by consent between the Plaintiff and the 1st Defendant following the 1st 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:
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 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:
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 1st 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 2nd and 3rd 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 2nd and 3rd 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 2nd and 3rd 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 2nd and 3rd Defendants. 48.Accordingly:
49.I also make an order nisi that the Plaintiff should pay the 2nd and 3rd 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 2nd and 3rd Defendants’ own costs should be taxed in accordance with the Legal Aid Regulations.
Mr Joseph Vaughan, instructed by Edmund Cheung & Co., for the plaintiff Mr Frederick H F Chan, instructed by Cheng & Wong, for the 2nd and 3rd defendants [i] Which has since been reported at [2014] 3 HKLRD 619. [ii] Which provides that delivery in the ordinary course of post under the relevant rules of court governing proceedings in the High Court shall be deemed, subject to proof to the contrary, to have been effected on the second working day (i.e. excluding Sunday and public holidays) after posting in the case of ordinary post. [iii] Within 28 days after service of the Statement of Claim. [iv] Which prohibits the entry of default judgment in a mortgage action begun by writ except with leave of the Court and requires the application for such leave to be made by summons which must be served on the defendant. [v] The discontinuance of an action does not prevent a plaintiff from commencing a subsequent action for the same or substantially the same cause of action (see Order 21, rule 4). This is so whether the discontinuance is effected with or without leave. However, where leave is required, the Court will consider all the circumstances and, if it seems just, will impose a term that no other action shall be brought: Trend Publishing (HK) Ltd v Vivien Chan & Co [1996] 2 HKLR 227 and Li Zhuo Ming v Huayao Bio-Technology Holding Group Ltd, HCA 2701/2004, unreported, 10 April 2006 (Registrar C Chan). In an extreme case (e.g. Fox v Star Newspaper Company, supra, in which the application was made at trial), the court may refuse leave to discontinue and give judgment for the defendant. [vi] As suggested in §17 of Master Levy’s Decision dated 29 May 2014. [vii] In that case, proceedings begun by originating summons pursuant to Order 113 were ordered to continue as if begun by writ pursuant to Order 28, rule 8. The operation of the “relation back” principle enabled the plaintiff to add a claim for damages for trespass when he filed the statement of claim, notwithstanding that no such claim could have been made in the originating summons in the outset. [viii] If the Statement of Claim had been properly served on the 2nd and 3rd Defendants. [ix] Fox v Star Newspaper Company, supra, at 639 per Chitty LJ. [x] Although the editors of the Hong Kong Civil Procedure 2015 advise against letting affidavits stand as pleadings. See §28/8/1. |
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